business review issue 31, sept 7-13, 2009

A N A L Y S I SThe First House program has received applica-tions amounting to a mere EUR 79 million as ap-plicants complain about bureaucracy

S e e page 9

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY SEPTEMBER 7 - 13, 2009 / VOLUME 14, NUMBER 31

www.business-review.ro

N E W SPepsi’s newly opened plant in Dragomiresti, set tobecome its biggest European factory, will mainlyserve the Romanian market

S e e page 7

Publishing houses have seen more demand for business books

than ever from both recession-fearing readers and firms that

prefer to pay for texts than costlier training courses See page 13

Publishing houses have seen more demand for business books

than ever from both recession-fearing readers and firms that

prefer to pay for texts than costlier training courses See page 13

N E W SRadu Georgescu, owner of Gecad Group, hastransferred his shares in the firm to ConcentricLimited, which becomes major shareholder

S e e page 4

BOOK VALUEBOOK VALUE

ENESCU MUS IC F ES T I VAL I S ON IN BUCHA REST UNT I L S EPT 26 ; S EE PAGE 14

BUSINESS REVIEW / September 7 - 13, 2009 3

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ROMANIA’S PREMIERE BUSINESS WEEKLY SEPTEMBER 7 - 13, 2009 / VOLUME 14, NUMBER 31

P u b l i s h e r

BILL AVERY

E d i t o r - i n - C h i e f

SIMONA FODOR

Deputy Editor-in-Chief

CORINA S~CEANU

Senior Journalists

DANA CIURARU

OTILIA HARAGA

Copy Editor

DEBBIE STOWE

C o n t r i b u t o r

MICHAEL BARCLAY

P h o t o g r a p h e r

LAURENTIU OBAE

Executive Director

GEORGE MOISE

Sales & Events Director

OANA MOLODOI

Marketing Manager

ADINA MILEA

Sales Consultant

GIUSEPPINA BURLUI

Advertising Sales

IULIAN BABEANU

CLAUDIA MUNTEANU

L a y o u t

B E A T R I C E G H E O R G H I U

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DAN MITROI

Distribution

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Research & Subscription

ALEXANDRA TOADER

N E W S

BUSINESS REVIEW / September 7 - 13, 20094

Concentric Limited has recently be-come the major shareholder in the com-panies that are members of GECADGroup. The move gathers together oth-er investments by entrepreneur RaduG e o rgescu, who described it as “a nor-mal consolidation of the businesses Iown and which have developed in timein different directions.”

“This was not a transaction, as the

shares owned by Radu Georgescu incompanies in GECAD Group weremerely brought into Concentric Limit-ed. Georgescu still owns the compa-nies, but through Concentric,” says Iu-liana Butuc-Cerchez, corporate aff a i r so fficer at GECAD.

G e o rgescu added that the creationof this holding-type structure comes as“a normal stage in the development of

the business meant to lay the ground-work for the lasting future developmentof the business directions, eitherthrough its own resources or by attract-ing foreign investors.” The latter pre-supposes the existence of a modern leg-islative environment which is alignedwith the demands of the EuropeanUnion, including in the domain of hold-ings, said the businessman. “At the mo-

ment, there is no such legislation in Ro-mania and, consequently, I was com-pelled to choose another country in theEuropean Union that allows the cre-ation of this holding-type structure,”said Georgescu. Concentric Limitedwhich has headquarters in Cyprus, hasas shareholders Radu Georgescu andhis wife.

Otilia Haraga

GECAD Group welcomes Concentric Limited as new majorityshareholder, Radu Georgescu still owner

Romanian generic pharma makerLaborMed Group has acquired throughits subsidiary Ozone Laboratories Phar-ma the 12 phytotherapy brands of Cluj-based company PlantExtrakt. The newlyacquired brands will be included in theOzone natural division.

Through this transaction, theLaborMed Group intends to continue itsexpansion strategy on the Romanian andregional pharma markets, by also build-ing a presence in the fast-growing natu-ral products segment of healthcare treat-ments and preventative remedies.

PlantExtrakt is the second acquisi-tion made by LaborMed and comes on-ly one month after the firm bought theOzone branded portfolio of OTC andprescription generic pharmaceuticalproducts which are sold across CEE.

Elsewhere, drug producers Te r a p i aRanbaxy and Daiichi Sankyo have start-ed selling osteoporosis drug Evista inRomania and together are planning tolaunch several new products. In 2006,Daiichi Sankyo obtained the rights tosell Evista in six European countriesfrom Eli Lill, expanding the rights cov-erage in 2008 to all European states ex-cept Greece.

Staff

LaborMed Groupacquires brand portfoliofrom PlantExtrakt

This is the second acquisition for LaborMed

N E W S


Romania will not escape recessionearlier than 2010, according to a reportby the financial assessment agencyM o o d y ’s. The report found that Roma-nia was struck by the crisis when it wasalready in a difficult economic situationand the government was compelled toresort to a stabilization plan with the In-ternational Monetary Fund and the Eu-ropean Union in March.

M o o d y ’s confirmed the Baa3 coun-try rating for Romania in March, shortlybefore the announcement concerning theagreement with the IMF and the Euro-pean Union. “The funds from the inter-national institutions triggered the stabi-lization of the economy and have dimin-ished the pressure regarding refinancingdebts,” shows the report. The agreementwith the IMF significantly reduced Ro-m a n i a ’s need for external financing andthe risk of a crisis in the payment bal-ance.

Romania will recover slowly but itsrecovery will still be more rapid thanthat of countries such as Bulgaria andthe Baltic states due to the flexible ex-change rate, which facilitates the adjust-ment of the balance sheet and the rela-

tively low private sector debt. Long-term growth rates will amount to 3-4percent and will be limited by slowstructural reforms and the lack of infra-structure. However, this developmentrate will be 2-3 percent higher than thelong-term level of growth of the overallEuro-zone. “The main reason we antici-pate higher growth rates in Romania isthat the state is much poorer than in oth-er countries which are members of theEuropean Union, which means that ithas a high potential in recuperating thesedelays,” says the report.

Low cost airline SkyEurope, whichoperated routes to and from Romania,has officially declared bankruptcy andcanceled all its flights. The Slovak com-p a n y, a subsidiary of SkyEurope Hold-ing AG in Austria, suspended its opera-tions after its special administrator ap-plied for the company's bankruptcy.

SkyEurope was a low cost airlineserving Central and Eastern Europe.From Bucharest, the airline operatedflights to Amsterdam, Bratislava, Brus-sels, Nice, Paris, Rome and Vienna. Fel-low low cost carrier WizzAir said itwould re-route through its flights all theSkyEurope passengers left stranded afterthe bankruptcy announcement wasmade.

SkyEurope had posted a EUR 45million loss between October 2007 andOctober 2008. At the time, the companysaid the increasing cost of fuel was themain reason for the figure. In June,SkyEurope two airplanes were held atBaneasa airport due to a EUR 529,000debt to the airport operator.

Corina Saceanu

SkyEurope goesbankrupt, cancelsall flights

BRIEFSSELGROS OPENS BUCHARESTSTORE IN PARTNERSHIP WITHDEDEMANé Cash & carry operator Selgros hasopened its fourth store in Bucharest,following a EUR 38 million invest-ment. The shop, located in theDrumul Taberei area of the capital,was opened in partnership with localdo-it-yourself retailer Dedeman. Theinvestment sum includes the cost ofthe land. It is the first time Selgroshas opened a store in partnershipand the firm will continue to partnerDedeman for stores in Constanta,Craiova and Bacau.

CARREFOUR OPENS LOGISTICSHUB IN DEVA, OUTSOURCESTO DLH DELAMODEé French retailer Carrefour, whichruns 22 hypermarkets and 24 super-markets in Romania, has recentlyopened a new logistics center inHunedoara county. The new storagefacility covers 20,000 sqm, out ofwhich 1,500 sqm host offices. It willsupply products to Carrefour's chainof hypermarkets and supermarkets inTransylvania, Banat and Oltenia.

Romania will see economic growth next year

Romania will not escape recession before2010, says Moody's agency

N E W S


Heineken Romania has reported a12 percent turnover growth in the firsthalf of the year, compared to the sameperiod of 2008, reaching a net figure ofabout EUR 101 million.

“The sustained investments made inour focus brands, the consolidation ofBere Mures, as well as our strategy to fo-cus on the core assets of the business,enabled us to grow our turnover. T h ecareful review of investments, cost man-agement programs and working capitalmanagement contributed to improvingour cash generation,” said Jan Derck van

Karnebeek, Heineken Romania GM.The company will focus mainly on fiveHeineken Romania brands: Heineken,Ciuc Premium, Golden Brau, Neumarktand Bucegi, he added.

“In the first half of the year, all thesebrands delivered results in line with ourestimations. We will continue investingin our brands,” said van Karnebeek.

In the first six months of the year, theentire beer market decreased by approx-imately 11 percent in sales volume, ac-cording to Heineken Romania estima-tions. The fall is the result of the eco-nomic situation both at international andlocal level, which affects Romanians’purchasing power and consumer confi-dence.

The Heineken Romania GM saidthat it was very difficult to predict howthe beer market would evolve until theend of the year, because of the uncertaineconomic context at global and locallevel. Heineken Romania has five brew-eries located in Constanta, Craiova,Hateg, Miercurea Ciuc and Ta rg uMures, staffed by 1,300 employees.

Dana Ciuraru

The Romanian branch of LeadershipManagement Incorporated, LMI Roma-n i a ’s target this year is to expand its net-work through the franchise system.“This year is a difficult one. Our targ e t sare to develop the business in Romaniaand to provide better service to ourclients. We are looking to expand ourservices in all major cites in the coun-t r y,” said Gabriel Visan, master licenseeat LMI Romania. Franchise costs reachEUR 15,000 and the company guaran-tees that the investment will be recov-ered in approximately one year.

According to him, LMI Romania iscurrently working with more than 100companies on the local market, 70 per-cent of which are Romanian businesses.In the company portfolio are firms suchas Tu b o rg, Henkel, McDonalds andC i t i b a n k .

“ We are interested in working withRomanian and multinational companieswith operations on the local market. Ourreal gold is the SMEs, the local business-es,” said Merlyn Beeman, vice-presidentat Leadership Management Incorporat-e d .

Dana Ciuraru

LMI to expandthrough franchises

Jan Derck van Karnebeek, GM of Heineken

BRIEFSAGRICOVER PARTNERSDANISH FIRM ONAGROADVICE STARTUPé Local Agricover group has part-nered the Danish AgriculturalAdvisory Service (DAAS) in creatingAgroAdvice, a company that willprovide technical and financial con-sultancy services to farmers. The newcompany plans to invest around EUR500,000 this year. Agricover was setup in 2000, when local firmsComcereal Buzau and Ulvex Buzaumerged. The main shareholder of thegroup is Iranian-born Kanani Jabbar,who owns 89 percent of the shares.

BANK OF CYPRUS RECORDSEUR 5 MLN NET PROFIT IN H1é The Romanian subsidiary of Bankof Cyprus made a EUR 5 million netprofit in the first half of this year,over 3.8 times its profit in the sameperiod of last year, the bank hasannounced. The second quarter ofthis year brought a higher profit thanthe first, EUR 3 million, up 50 percenton the results of the first quarter.

Heineken Romania toasts a 12percent hike in turnover in H1

N E W S


Mobile operators Vodafone andTelemobil (Zapp) each launched lastweek an HSPA+ network which mainlyaddresses business clients who needhigh connection speeds. The timing wasstrangely similar since the announce-ments came only a day apart. For bothcompanies, this technology will first beavailable in Bucharest, tripling the previ-ously available download speeds of 7.2Mbps.

Zapp, which was formally takenover by Cosmote Romania in June, an-nounced the launch of HSPA+ technolo-gy which allows it to offer mobile inter-net services at speeds of up to 21.6 Mbps

for download and 5.8 Mbps for upload.The first phase will cover Bucharest.

Vodafone also launched last weekH S PA+ technology which facilitates athreefold increase in download and up-load speeds for mobile data. At the mo-ment, Vo d a f o n e ’s HSPA+ technology isonly available in Bucharest where it cov-ers the main business centers, residentialareas as well as outside spaces in thecapital.

According to Vodafone, this tech-nology was launched as a result of in-creased demand from business cus-tomers for high-speed mobile internet.

Otilia Haraga

Vodafone and Telemobil increase mobile internet speeds threefold

The recently opened Pepsi A m e r i c a sfactory in Dragomiresti, close toBucharest, which will become theg r o u p ’s biggest European factory in2 0 11, will serve only the Romanian mar-ket.

The first phase of the project, whichrequired an investment of EUR 85 mil-lion, has already been carried out andproduction has started.

The factory has only one productionline, which produces Lipton Ice Tea. In

2 0 11, in the second phase of the project,the capacity will be four times greater.This is the company’s first greenfield in-vestment in Romania, where it enteredthrough the acquisition of Quadrant A m-roq Beverages (QAB). The investmentin the factory requires a total of $150million, making it the biggest Pepsi fac-tory in Europe. It covers 30,000 sqm, outof an 80,000 sqm plot.

The current phase will be comple-mented by further additions in 2010 and

2 0 11. The existing QAB factory inBucharest, on Viilor Street, will be shutdown and employees transferred to thenew unit. The bottler has another pro-duction unit in Covasna.

In 2006 Pepsi Americas took overQAB, which used to bottle PepsiCodrinks locally. Last year, the companyposted EUR 202 million in sales, up 14percent on the previous year. At the endlast year, it employed 1,250 staff.

Corina Saceanu

Pepsi's production in Dragomiresti to target local market

Chris Bataillard, CEO of Zapp in Romania

CEZ Romania has erected sevenof the 139 turbines at the wind farmpark in Fantanele, near Constanta. Ac-cording to Martin Pacovsky, the com-pany’s chief operating officer, Fan-tanele wind farm is set to start opera-tions next spring.

The EUR 1.1 billion project usesstate-of-the-art technologies, say rep-resentatives. The wind turbines pro-vided by General Electric are fully au-tomated and set to produce energ yfrom a wind speed of 3m/second up to25m/second. Pacovsky said that some30 percent of the total investment inthe largest wind farm in South-EastEurope is going to Romanian compa-nies involved in the project, such asE n e rgoBit.

“Our expectations are that whenboth Fantanele and Cogealac windfarms are up and running, CEZ Roma-nia will have a 10 percent marketshare on the renewable energy mar-ket,” said Pacovsky.

Dana Ciuraru

CEZ Romania buildsfirst turbines inFantanele


C A L E N D A R / W H O ’ S N E W S

W H O ’ S N E W SAD I N A VI Z O L I has joined NNDKP tax ad-

visory services as atax manager. Shehas six years of ex-perience in localand internationaltax consultancy and

is specialized in VAT aspects. Shehas expertise in domestic and inter-national VAT, tax reviews and duediligence as well as compliance as-signments for clients in various in-dustries. Vizoli graduated from theMarketing Faculty at the BucharestAcademy of Economic Studies.

PE T R O N E L A CE R N A T has joined NNDKP’sdispute resolutiondepartment as asenior associate.She provides legaladvice on variouslitigation matters

such as administrative, civil andcommercial law. She graduated from

the University of Bucharest LawSchool and holds an LLM in Euro-pean Union Law from the Universityof Bucharest Law School. She is cur-rently completing her Ph.D. studiesat the same university. Cernat is alsoan assistant professor at the Facultyof Business and Administration, Uni-versity of Bucharest.

MI H A I AN G H E L has joined NNDKP’slabour and employ-ment practice groupas a senior associ-ate. He provides le-gal advice on vari-ous labor matters

concerning the contractual relation-ship between employers and em-ployees such as individual and col-lective labor contracts, internal regu-lations, collective and individual dis-missals, transfer of undertakings.Anghel graduated from the Universi-ty of Bucharest Law School.

Business Review welcomes information for Who’s News from readers.Feel free to contact us on 210 77 34, by fax at 210 77 30 or e-mail: [email protected]

EVENTS, BUSINESS AND POLITICAL AGENDASEPTEMBER 8é 10.30 – Intel organizes product launch event at The Silver Church Club.

é 19.30 – Volksbank organizes summer party for its customers and part-

ners. Event takes place at Turabo Society Club.

SEPTEMBER 23é Business Review organizes German Business Forum at Intercontinental

Hotel.

SEPTEMBER 30é Business Review organizes Italian Business Forum at Intercontinental

Hotel.

OCTOBER 7é Business Review organizes Austrian Business Forum at Intercontinental

Hotel.

OCTOBER 28é Business Review organizes French Business Forum at Intercontinental

Hotel.


A N A L Y S I S

Two months since its launch, the First House program has produced fewresults. The N a t i o n a l Credit Guarantee F u n d for SMEs, the authorityimplementing the program, announced that it had registered 1,820applications, worth EUR 78.5 million, by the end of last month, out of theEUR 1 billion available, with just 11 of the 19 banks involved makingprogress. While would-be house buyers blame bureaucracy for the poorshowing, real estate developers say the program should cover only newhouses in order to boost the construction sector. By Dana Ciuraru

The much praised governmentprogram First House has so far wonfew friends among banks, beneficiar-ies and real estate developers alike.The program, intended to help individ-uals buy an apartment or house of upto EUR 60,000 with bank support andusing state warranties, is suff e r i n gfrom banks’ reluctance to support the

purchase of old homes despite the in-creased demand and intense lobbyingfrom real estate developers to directthe program funds towards newly builtproperties.

BA N K S I N C H F O R W A R DAlthough EUR 1 billion has been

allocated to the program, just half ofthe approved banks are showing anyresults. “On August 25, GarantiBankapproved the first loan under the First

The First House program, intended to help first-time buyers, has suffered some teething problems

Slow start for theFirst House program

Home program,” Cornel Fratica, man-ager of retail for individual banking &bancassurance at the local branch ofGarantiBank International NV, toldBusiness Review. According to theN a t i o n a l Credit Guarantee F u n d f o rSMEs (FNGCIMM), the state man-agement authority, collaborationagreements with 19 banks with opera-tions on the local market have beeninked.

“ T h e N a t i o n a l Credit GuaranteeF u n d had received files for the FirstHouse program from 11 banks by A u-gust 31: Alpha Bank, Banca Comer-ciala Romana, BRD, Banca Tr a n s i l v a-nia, Bank Leumi Romania, CECBank, Volksbank Romania, PiraeusBank, Intesa Sanpaolo Bank, AT EBank, Millennium Bank,” StelaAlexandru, fund marketing counselor,told BR.

She added: “We had received1,820 applications, worth EUR 78.5million, by August 31. Just 21 percentof the total requests relate to housesbuilt after 2008, and most come fromBucharest, Cluj and Constanta coun-ties.” Next to the total amount of mon-ey made available, the EUR 78.5 mil-lion is just a drop in the ocean.

But the program wheels are start-ing to move, at least for some banksinvolved. Alina Neagu, analysis & net-work supervising director at BRD-Groupe Societe Generale, told BR thatthe bank has plans to approve creditlines for the entire sum it was allocat-ed for the program. “Currently, we areanalyzing about 10,000 files under theFirst House Program. The sum allocat-ed to BRD is EUR 171 million,” saidNeagu.

Meanwhile, Alpha Bank Romaniareports that it has had requests worthEUR 35 million, while its limit is EUR69.39 million. But there is a big diff e r-ence between receiving a request forfinancing under the First House pro-gram and actually dispensing the mon-e y.

BU Y E R S B A T T L E B U R E A U C R A C YA major challenge in accessing the

First Home program is the size of thefile a buyer has to submit. NationalCredit Guarantee F u n d for SMEs of-ficials admit that currently the bureau-cracy is a great impediment to imple-menting the program.

“After the first stage of the pro-gram we saw that we have to be moree fficient in resolving the warranty re-quests. Yet, in order to protect the ben-e f i c i a r i e s ’ interest, we recommend tothose interested that they negotiate anextended 60-day deadline in complet-ing the sale contracts,” said Alexandru.

One more problem for those inter-ested in signing up for the program isthat the majority of the banks have de-cided to issue the loans only in the Eu-ropean currency, bringing additionalrisk for the buyer. “By granting a loanin a foreign currency, a local bank cre-ates a short position on that currencyand exerts downward pressure on thenational currency,” said Ciprian Das-calu, dealer in the treasury departmentat Millennium Bank.

Another uncertainty a buyer mustface when approaching banks in-volved in the First House program isthat every financial institution has itsown take on the deadline. MillenniumBank representatives told BR that theEUR 20.5 million funds allocated to the bank will be available until theend of the year, adding that they ex-pect to have demand for EUR 30 mil-lion.

“The number of loan requests forFirst House represent 30 percent of thetotal applications we have received formortgages. Millennium Banklaunched the program at the beginningof August,” said bank representatives.Stela Alexandru also told BR that theEUR 1 billion is available until everycent is spent, without a deadline.

Banks are using this uncertainty toattract new clients, by cutting somecosts. “CEC Bank is cutting the war-ranty evaluation commission and alsocovering the cost of house insurance inthe first year for all files registered bythe end of the year,” said RoxanaFoias, communication direction man-ager at CEC Bank.

PR O G R A M T O I M P A C T O N R E A LE S T A T E M A R K E T?

Real estate developers expect theprices of new houses to stagnate, andthose of older homes to rise. “We ex-pect an increase of 10 to 15 percent inthe price of old houses, first inBucharest and afterwards in the majorcities in Romania. Also, as a result, weexpect the construction market to reactin less than six months, leading to aslight increase in the furniture andhouse appliances market,” said DanIoan Popp, Impact D&C president. Hebelieves that if the government doesnot effectively stimulate the purchaseof new homes, it will generate infla-tion.

Given this, the General Confeder-ation of the Romanian Industrial Em-ployers (UGIR-1903) has requestedthe government that 75 percent of thehouses acquired through the FirstHouse program be new-builds in orderto fuel the construction sector.

d a n a . c i u r a ru @ b u s i n e s s - re v i e w. ro


F E A T U R E

Companies have started to replace internal training with offeringbusiness books to their employees, due to their lower prices. With thefinancial meltdown spurring increasing interest in reading such books,publishing houses are among the few firms which can report evendoubling sales. New launches are planned by year-end, from bothinternationally recognized authors and even local names.

By Corina Saceanu

The financial turbulence hasprompted Romanian readers to takean interest in business books, andsince their needs are being cateredfor by several firms publishing thesekinds of texts, the segment is one ofthe few to enjoy increases during

the downturn. Until last fall, theniche segment of business bookpublishing was getting some atten-tion from the Romanian public, butever since the economic financialmeltdown spread across the world,the companies that edit and producesuch books have started to see moredemand.

Business books used to be an ad-

Bogdan Ungureanu, publisher of Publica, puts the business book publishing market at around EUR3-4 million

Business booksgo down a storm

dition to internal training programs,but the crisis has actually turnedbusiness books into competition fortraining, which has spelt good newsfor publishers.

“Companies have reduced train-ing budgets and many of them havestarted buying business books andoffering them to employees to re-place training. At the same time,during periods like this, the need forreading and personal developmentincreases,” Bogdan Ungureanu,publisher at Publica, tells BusinessReview.

A business book publishinghouse set up in 2007, Publica sawits sales double in the first half ofthis year, after initially expecting amere 20 percent increase. But it iskeeping a conservative view and byyear-end the growth should be inline with the 20 percent forecast,Ungureanu says. Last year, the firmmade around EUR 300,000 inturnover.

Such positive market movementhas increased the confidence of thefew players which publish businessbooks, but also attracted newnames. In May this year, the founderof RTC Holding, Octavian Radu,and a shareholder in Banca Transil-vania, Horia Ciorcila, set up the In-Joy Books publishing house. How-ever, its representatives say the evo-lution of this market did not influ-ence their decision to set up thebusiness, but rather shaped the edi-torial plan for 2009. “We have de-cided to decrease the number of ti-tles and of print runs,” InJoy booksrepresentatives tell BR.

Competition on the market is al-ways good, says Publica, but itshould been seen from both a con-tent and packaging perspective.

Ungureanu estimates the bookpublishing market in Romaniastands at EUR 80 million, out ofwhich business books cover justEUR 3-4 million. InJoy Books how-ever places the threshold lower, atEUR 1.5 million for business booksin 2009, and expects it to grow by10 percent next year.

Publica's sales are equally dis-tributed between traditional chan-nels, namely the bookshops, and di-rect sales channels – the online shopand direct sales to corporate cus-tomers. The latter have been ex-panding, which was Publica's strate-gy too.

“We have a project which en-courages companies to set up a busi-ness bookshop within their head-quarters for all their employees.

Companies which buy the entireportfolio have a 30 percent discounton the shelf book price for all ourportfolio, which is RON 2,000,”says Bogdan Ungureanu. T h ebiggest budget allotted by a compa-ny so far was EUR 30,000.

Bookshops, online sales and di-rect sales to companies are not theonly sales channels for Publica – ithas recently started a partnershipwith InMedio and will sell its booksthrough the InMedio news standoutlets throughout Romania.

So far, Publica has 37 books inits portfolio and for this fall it plansto launch some more titles, some ofwhich will be linked to a Thinkers50 gala in October. CK Prahalad,Gary Hamel, Philip Kotler and Mal-com Gladwell will be among the au-thors Publica will publish by the endof this year.

Whilst not looking at bringingEnglish-language business books toRomania but rather launching trans-lated titles, Publica is also planningto add Romanian authors to its port-folio. “This fall we will publish sev-eral Romanian authors. This wasour idea from the beginning, butthere are very few who fit into ourvision. But we have found at leasttwo of them,” says Ungureanu,without mentioning their names.

Expansion is planned by theshareholders of Publica, a group ofindividuals some of whom are alsoshareholders in La Strada group, asthey are thinking of entering anoth-er book publishing segment under ad i fferent brand, Ungureanu tellsBR.

So far, the best sold titles in Pub-lica's portfolio have been FunkyBusiness, by Kjell Nordstrom andJonas Ridderstræle, which sold15,000 copies, Our Iceberg is Melt-ing, by John Kotter, A l a nGreenspan's The Age of Turbulenceand Richard Branson's Screw It,Let's Do It.

For InJoy Books, the best soldbooks so far have been Janet Lowe'sWarren Buffet Speaks and KenFisher's The Only Three T h i n g sThat Count. InJoy Books expects toexceed EUR 400,000 in turnovernext year, according to its represen-tatives.

Apart from specialized businessbook publishing houses such asPublica, InJoy Books and Brand-builders, other firms are active onthis market: All, Meteorpress,Polirom, Uranus, Rentrop & Stra-ton, as well as Editura Economica.

c o r i n a . s a c e a n u @ b u s i n e s s - re v i e w. ro

SEPTEMBER 7 - 13, 2009 / VOLUME 14, NUMBER 31

BUSINESS REVIEW FORUM Manage your business environment !

Estates&ConstructionM A R K E T

GTC re-thinks residential concept,retail delivery timetable

Real estate developer GTC hashad to adapt to the real estate down-turn by changing its delivery dates forretail projects, while on the residen-tial side it has adjusted paymentmethods and even started re-design-ing Garden of Eden, a project whichhas not yet entered the constructionphase. The firm has continued build-ing the projects which have postedbetter sales, “slowing down otherswith less successful marketing resultsand postponing projects that need re-design due to different market de-mand,” Shimon Galon, CEO of GTCRomania, tells Business Review.

“Buyers are having difficulty ingetting financing for assets for whichthey have already paid 20 percent ormore of their value,” says the CEO.The developer has come up with spe-cial payment methods for such cases,he added.

For its two other residential proj-ects, the developer is proceeding withboth construction and sales. At RoseGarden, a 908-apartment project inthe Colentina area of Bucharest, thefirm has sold 700 apartments already,and delivered 290. “With this projectwe are selling three to five flats permonth,” says Galon.

F e l i c i t y, which has 112 apart-ments in a first phase, had seen 107 ofthem sold, with delivery of units hav-ing recently started. A second phasewill feature 212 apartments, of which150 have been sold. The firm says it isselling two or three apartments fromthis project each month.

GTC opened last week its Galleriashopping center in Piatra Neamt, thethird shopping mall under the Galleriabrand in Romania, after others inBuzau and Suceava. The developerwill continue with similar projects inArad and Bistrita next year.

continued on page 12

Shimon Galon, CEO of GTC in Romania, has re-thought delivery dates for some retail projects and come up with alternative payments for residential property


E S T A T E S & C O N S T R U C T I O N M A R K E T

Belgian Domo Group, throughits subsidiary Alinso, has partneredlocal firm Piritex in building an in-dustrial park in Ploiesti whose valueis expected to reach EUR 750 mil-lion. Ploiesti West Park is set to takesix to seven years to complete, saysIvan Lokere, CEO of Alinso Group.The park, to be located in AricestiiRahtivani, close to Ploiesti, has al-ready attracted investors and banksinterested in co-investing in theproject, according to Lokere. Thepartners haven't yet signed any con-tracts, but are negotiating with sev-eral players.

“Also, some spontaneous inter-

est has already come from semi-in-dustrial as well as industrial candi-dates keen to move into PloiestiWest Park as they want to upgradetheir premises,” says Lokere.

Alinso is looking at keeping theinvestment for letting purposes, butis open to selling plots to end-userstoo. The project will be built on 220hectares of land. It will be made upof a business park for logistics ac-tivities and light production, offices,restaurants, hotels and a retail area.The first building, on 40 hectares,will be ready at the end of Octoberthis year.

Corina Saceanu

Alinso and Piritex build EUR 750million Ploiesti business park

Austrian real estate investor CAImmo international will finish onlythe first stage of its retail project inSibiu and has put the other stages onhold. In total, the project would haverequired EUR 100 million of invest-ment.

The firm will complete works onthis stage next year, having alreadyrented it to German do-it-yourselfchain Obi. It will cover 9,800 sqm,and the investor has already receivedthe construction permits.

The Sibiu project is not the onlyone CA Immo has put on hold in Ro-mania. Another retail project in A r a d ,a EUR 15 million development, hass u ffered the same fate. The firm hadpreviously said it would howeverstart works on the Arad project onceit reached a 60 percent preleasethreshold. The Arad retail develop-ment is a project in partnership withAustrian Lengger Group and was setto cover 14,000 sqm.

Corina Saceanu

CA Immo puts Sibiu retail projecton hold after first stage

Starting with 1st September 2009, theresidential project Vitan Platinum Towersdeveloped by Platinum Group launched analternative financing program which in-volves the “First House” Program and Ban-ca Romaneasca. The offer is realized sothat any client can move in a two-roomapartment for only 19.900 EUR with a dis-count of 15.000 EUR from the developerfor the “First House” program beneficiar-

i e s .Therefore, “those who want good

quality apartments at affordable prices canmove now in Vitan Platinum Towers payingonly 19.900 EUR. This payment modalitywas created by Vitan Platinum Towers spe-cialists for a two-room apartment whichvalues 91.900 EUR, together with BancaRomaneasca. Hereby, keeping the FirstHouse Program limit, a middle incomefamily, can obtain a 57.000 EUR bankingloan and could have saved until now19.900 EUR. For every apartment boughttrough the “First House” Program the cus-tomer will have a huge discount granted bythe developer – 15.000 EUR said PlatinumGroup Vice-president, Valentin Tanase.

Vitan Platinum Towers it is being builtin Vitan area of Bucharest, on Penes Cur-canul Street no. 14, at two minutes fromMihai Bravu subway station and there arefinalized already 75 apartments. “The NewVitan” comprises four blocks of 13, 15 and17 floors with a total of 313 apartmentsand 300 parking places.

Birou de vanzari: Str. Penes CurcanulNr. 8 - 14, Sector 3, Bucuresti

Telefon: 021 346 1000

Vitan Platinum Towers & “First House”Program: move now with 19.900

continued from C o v e rThe shopping center in Piatra

Neamt was opened seven monthsafter the initially announced date,after the main anchor at the time,Trident Supermarket, “decided towithdraw from the project andcaused us damage,” according to Galon. The supermarket was replaced by Penny Market, which opened in May and which is now the major anchor in the proj-ect.

“Because fashion retailers preferto open in the fall rather than spring-summer, we decided to make thegrand opening in the first week ofSeptember,” Galon explained.

The shopping center openedwith a 70 percent occupancy rate,and should reach 85 percent by theend of September, when more

brands will be added to the mix.House of Art, Takko Fashion, PennyMarket, Orsay and Mado are amongthe retailers which opened units lastweek. Tina R, Deichman Tekzen,Leonardo and Tom Tailor are amongthose which will join them later onin the month.

Not only retailers, but also thecompanies which GTC targets withits office developments have beenaffected by the financial crisis andmade more reluctant to assume longterm obligations.

“In order to overcome this trend, GTC is willing to sign shortperiod contracts, two or three yearsinstead of five, to help tenants withtheir initial investment in the spaces they are renting,” Galon con-cludes.

Corina Saceanu


F E A T U R E

Many of the existing shopping centers in Romania, some of which have been opened in the last couple of years, are experiencing highvacancy rates, as retailers have reconsidered their expansion plans or are just focusing on survival. Landlords have several possibilities athand some of which are being deployed in Romania too. By Corina Saceanu

Opening a project on schedule isturning out to be a challenge for devel-opers nowadays, and opening it at fullc a p a c i t y, even more so. Even for proj-ects that started up before the real estatedownturn had fully smashed into the Ro-manian market, it's tough to reach a bal-ance between keeping occupancy ratesup and keeping tenants happy. Shoppinggallerias are among the worst hit by re-tailers' decreasing sales.

What can a developer do when bat-tered retailers decide to withdraw fromits project? “The correct attitude is flex-i b i l i t y,” Shimon Galon, CEO of devel-oper GTC in Romania, tells BusinessR e v i e w. GTC opened three Galleriaprojects last year and this year, the latestof which had a leasing level of 70 per-cent upon opening. By the end of themonth, the firm’s project in PiatraNeamt should reach an 85 percent occu-pancy rate.

This is an optimum occupancy rate,say pundits. “In the current climate it isproving very difficult for schemes toopen at 100 percent occupancy. It is verymuch a case by case basis in determin-

ing minimum level of occupancy, but 80percent is the minimum level which willbe viable for landlords,” Ben Binns, as-sociate with King Sturge in Romania,tells Business Review.

Softer openings, even phased ones,are more common these days. “A ‘ s o f t-e r’ or phased opening helps to undosome of the negative aspect of a fullopening with lots of empty units whichcreates a difficult impression to turnaround for retailers and customersalike,” says Binns.

Having a shopping galleria withempty spaces may not be that bad if de-velopers keep a stable flow of incomeand as long as at least the anchors are inplace. Losing an anchor, however, spellstrouble. For example, GTC had to delayits Piatra Neamt shopping mall openingfrom spring to autumn this year becausethe anchor, Trident Supermarket, decid-ed to withdraw from the project.

Among the measures a developercan take to ensure a stable source of in-come from its soon-to-open or evennewly-opened retail project are a reduc-tion in rent, covering furnishing costs,and in some cases even a lengthy rent-free period. GTC's Galon says the firmtries to surpass temporary problems by

adapting contractual terms to the situa-tion on the market.

Lower rents decrease the level of in-come the developer gets, but they couldalso attract a strong international brandwho can ‘lift’ the scheme and generatefootfall because of its customer draw,Binns explains.

Changing the mix of tenants issomething which each shopping malldeveloper should master, even though insome cases it will be done only to re-freshen the look and not as a last resortin difficult times. Anchor Group, whichhas been running two shopping malls inRomania for some years, has done itseveral times. Among the last changes itmade to the mix of tenants was adding aZara store to its Bucuresti Mall shoppingc e n t e r.

But for some retailers and even de-velopers, there's a bright side in havingvacancies. “Although the security of in-come is compromised, the vacancies dohowever create opportunities for someof the newer retailer entrants to securespace in existing schemes which havehistorically always had vacancy levelsclose to zero,” says Binns.

Even if a tenant signs up for space ina shopping mall, they may still faceproblems after the opening and decide tow i t h d r a w. In theory, the leasing contractincludes penalties for retailers in thiscase, but if the retailer is already facingi n s o l v e n c y, it has nothing more to lose.“It is, therefore, preferable to addressand discuss means of help in the shortterm through regular and meaningful di-alogue. But there are situations where,even if retailers trade well in the center,developer are being asked for rent con-cession in exchange for not leaving thef a c i l i t y,” says the King Sturge associate.

Around 14 shopping centers openedacross the country last year and this year.One of them has already been shutdown. Developer RED recently decidedto close the Armonia Braila retail proj-ect, which opened in November lasty e a r. The developer has decided to repo-sition it in six to nine months and includeit in a discount shopping center in thearea. It was the first such drastic measuretaken by a developer in Romania, ayoung real estate market which hadn'texperienced a real estate downturn be-fore.

The remainder of those shoppingmalls are now trying to replace the re-tailers which have left with either dis-counters, which manage to thrive even attimes like this, or with smaller retailunits. Bucharest-based shopping centersstand a better chance of attracting newtenants, while regional centers, whichused to count on demand from regionalRomanian retail chains, may have beenharder hit as those smaller players havedownsized.

c o r i n a . s a c e a n u @ b u s i n e s s - re v i e w. ro

Developers struggle to keep vacancy rates down

Landlords go for flexibility in shoppingcenter vacancy management

P roject D e v e l o p e r Opening dateBaneasa Shopping City Bucharest Baneasa April 2008Promenada Braila BelRom May 2008Armonia Arad RED June 2008Promenada Focsani BelRom September 2008Galleria Buzau GTC September 2008Era Shopping Park Iasi Omilos September 2008Promenada Bacau BelRom October 2008Liberty Center Bucharest Mivan October 2008Armonia Braila RED November 2008*Iulius Mall Suceava Iulius Group November 2008Aurora Shopping mall Buzau Cometex November 2008Galleria Suceava GTC March 2009Era Shopping Park Oradea Omilos March 2009Galleria Piatra Neamt GTC September 2009

Retail developments opened on market downturn

* RED has closed down the shopping mall to reposition it, re-opening scheduled in six to ninem o n t h s

P roject D e v e l o p e r Scheduled openingCotroceni Park AFI September 2009Tiago Oradea Mivan September 2009Sun Plaza Sparkassen, EMCT Spring 2010

Retail projects to be opened


F I L M / E V E N T S

A new multiplex cinema was opened on Sep-tember 4 by Cinema City in Ploiesti. The center,the first of its kind in the town, is inside the Eu-romall Pitesti. It has a full capacity of 1,264 seatsand six screens, including a movie theater fordigital films in 3D format as well as Dolby Digi-tal surround sound. Until September 10, the Cin-ema City screens will show avant-premiere filmssuch as the romantic comedy The Ugly Truth,Quentin Tarantino’s new movie Inglorious Bas-terds as well as the Disney production G-Forcein 3G format. Cinema City International willopen its first megaplex in Romania, a 21-screenfacility, in AFI Cotroceni Pallace Mall inBucharest.

The Orient Express visited Romania last week.

The legendary luxury train serves the Paris-Is-

tanbul route, passing through Zurich, Vienna,

Budapest, Sinaia, Bucharest and Venice. The full

journey takes six days and costs well over EUR

7,500, the price reflecting passengers’ unique

opportunity to travel on a train that once trans-

ported royals and aristocrats. Today’s passen-

gers are also drawn from the wealthier echelons

of society, including affluent businesspeople and

VIPs from England, France, Italy, Germany,

South America, the United States and Australia.

Passengers must respect a dress code: their at-

tire has to be in the style of the 1920-1930s.

American bigots, watch out! Bo-rat is back, and this time he’s camperthan a row of tents. To be accurate,i t ’s actually guerrilla comedianSacha Baron Cohen who is back,rather than his fictional Kazakh buf-foon Borat, but the latest mocku-mentary is so similar to the last oneit doesn’t really make much diff e r-ence. To refresh your memory, inBorat: Cultural Learnings of A m e r i-ca for Make Benefit Glorious Nationof Kazakhstan, the eponymous jour-nalist toured the United States trick-ing hapless Americans into revealingtheir prejudices or generally makingfools of themselves. In Bruno the ex-act same thing happens, only thistime with a flamboyant gay fashionreporter in the title role.

Bruno starts out by announcinghis intention to become the “biggestAustrian superstar since Hitler” –and things become steadily lesstasteful from there, so anyone withdelicate sensibilities should proba-bly give this one a miss. A l m o s tevery convention of political cor-rectness and decency is flouted: thisi s n ’t a film you’d want to see withyour parents. The pilot of Bruno’scelebrity television show is particu-larly graphic, making Borat’s nakedtussle with his producer in a hotelconvention seem like Disney.

Much of the charm – I use theword in the widest possible sense –of Borat is gone. Despite that char-a c t e r’s odiousness, as an innocentabroad some of his outrages weref o rgivable, which is not the casewith the more knowing Europeanfashionista. The plot is also weaker,just a series of – admittedly very hu-morous – set pieces linked looselytogether as Bruno attempts to be-come world famous.

But the main reason that the filmfalls short of its predecessor is thatBaron Cohen has become a victim ofhis own success: thanks to the hugesplash made by Borat, he is now amore recognisable face and cannotfool as many people. Whereas it

might be conceivable that US Con-gressman Ron Paul (amusingly con-fused by Bruno with drag artist Ru-Paul) could be caught unawares,other scenes involving media-savvyHollywood players were clearlystaged, and, while still funny, lackthe shock factor of Borat’s authenticstings.

But though his job has becomeh a r d e r, Baron Cohen remains one ofthe most courageous comedians outthere. From parading round an Or-thodox part of Jerusalem in hotpants(ending in his being chased by agroup of Hasidic Jews) and meetingan Islamic terrorist leader in thehope of achieving fame through be-ing kidnapped, to making out withhis male assistant in a boxing ringbefore a crowd of braying rednecks(occasioning a near riot), the come-dian and his crew truly suffer fortheir art, and the result is brave, bril-liant comedy.

The satire, too, remains sharp.Baron Cohen’s brand of humour hasalways been at its most satisfyingnot when mocking the freak-showmeatheads, but skewering those whoshould know better. Two vacuous“charity PR consultants” who mis-pronounce – and then fail to locate –Darfur are the perfect material forthe comedian’s ego-puncturing ge-nius. T h e r e ’s also enough old-schoolphysical comedy (such as Bruno’sVelcro suit causing chaos at MilanFashion Week) and malapropisms(the confusion of Hamas and hum-mus during the fashion reporter’s at-tempt to solve the “Middle Earth”crisis) to entertain the popcorn-munching classes.

Although shows like JerrySpringer prove that there is no short-age of small-town numskulls willingto humiliate themselves in front of atelevision camera, it seems unlikelythat Baron Cohen can get away withmaking a third prank-based movie.L e t ’s hope his spot-on satire andedgy humour can find another out-l e t .

Debbie Stowe

Debbie Stowe’s biography ofSacha Baron Cohen, Who is Borat?,is available from A m a z o n .

Director: Larry CharlesStarring: Sacha Baron Cohen,Gustaf HammarstenOn at: : Starplex

“The biggest Austrian superstar since Hitler”

F I L MR E V I E W: B r u n o

The George Enescu festival, thel a rgest international classical music fes-tival in Romania, which runs until Sep-tember 26, is getting media attentionfrom abroad. An article on the websitew w w.telegraph.co.uk entitled “HowMusic Can Restore a Nation’s Pride”comments: “the scale and lavishness ofw h a t ’s in store is astonishing.” Indeed,the line-up of this musical event wouldcapture the attention of even the mostdemanding classical music lovers: SaintMartin in the Fields, conducted by Mur-ray Perahia; the Royal Philharmonic Or-chestra London conducted by CharlesDutoit; Orchestre de Chambre de Lau-sanne conducted by Christian Zacharias;and the Philarmonia Orchestra conduct-ed by Vladimir Ashkenazy are just a fewof the highlights. “It’s the kind of pro-

gram you’d expect at one of those glitzymiddle-European festivals such asS a l z b u rg or Lucerne. In fact this paradeof musical talent is taking place inBucharest,” says the article, which ex-plains the pains taken to organize thefestival as, “Enescu is an especially po-tent symbol now, as the country strug-gles to find a new identity after the longinterregnum of communism.”

The overall budget of the festivalwas EUR 7 million. Its appearance inimportant international media has madethe public eager to discover what is ono ff e r. The foreign channels that are part-ner to this event are CNN, Euronews,Mezzo, Rfi and Deutsche Welle. More-o v e r, the festival is being attended by 85foreign journalists. “Promotion had animportant contribution since, for exam-ple, the spot on CNN was broadcastwhen Barack Obama was interviewed,”said the director of the festival. Special-ist music channel Mezzo will alsobroadcast seven shows from the festival.

“There is no profit from the festival– only for the country’s image,” say or-ganizers. A total of 150,000 people areexpected to show up in total, includingthe satellite-performances outsideBucharest.

The Telegraph praises the “scale and lavishness”

George Enescu Fest attracts internationalmedia attraction

business review issue 31, sept 7-13, 2009

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