Hungary has become a popular destination for Chinese investors and companies after the China and Central and Eastern European Countries (CEEC) meeting deepened economic and trade cooperation between the two countries. Chen Yongping, general manager of the Hungarian branch of China’s leading new-energy carmaker BYD, suggests Hungary can provide an ideal environment for foreign companies to invest in.
“Our plant was built 12 years ago to mainly supply products for Nokia, but now we want to bring the business back to life. The overall environment for investment in Hungary is excellent. Local policies are favourable for bilateral investment. Besides Hungary was a major hub for bus manufacturing in 1980s, which left a supply chain and plenty of human resources in the sector. The local authority is also willing to help revive the industry. So we decided to make more investment here.”
BYD opened its first European electric bus factory in the northern Hungarian city of Komarom in April. The company expects to invest some 20 million euros (US$23m) in the project next year. Over 90 percent of BYD’s employees are local residents in Hungary. The company plans to employ around 300 people to assemble up to 400 electric buses a year, which will be exported to customers across continental Europe.
China is Hungary’s largest trading partner outside the European Union, and Hungary is the largest investment destination for China in Central and Eastern Europe.
It’s estimated that Chinese investments in the Eastern and Central Europe have exceeded US$5 billion, of which, over US$3 billion had been invested in Hungary as of the end of 2015.
Chen Xin is the deputy executive director of the China-CEE institute, a think tank based in Hungary’s capital, Budapest.
He suggests the China-proposed Belt and Road initiative and Hungary’s Eastern Opening policy have both brought tangible benefits for businesses in Hungary.
“The infrastructure construction could generate a series of spillover effects which would help development along the route. For example the construction of Hungary-Serbia railway will finally help form a passage that connects the Piraeus port in Greece and Budapest. Once completed it will largely reduce transit time and save delivery costs. Besides local government in Hungary is quite supportive for foreign companies and provide one-stop service to help facilitate investment.”
Chen Xin also attributes the increasing foreign investment in Hungary to the overall positive outlook for economic growth of the country.
Wang Xiaoli is a lawyer with Dentons Law firm which consults companies who have investments and acquisitions in Hungary. She says that one of the issues Chinese firms run into is a lack of knowledge of the local regulations, tax and fiscal policies, which often add to investment risks for Chinese companies.
“Before making any decision, investors should investigate first and get full understanding of the development trend of the industry and the local market not just in Hungary but also the European Union as a whole. Besides, in some cases involving merger and acquisition, companies are supposed to do a thorough legal and financial investigation into the object of merger as well as potential tax liabilities related to the acquired business. I often advise companies to seek help from professional institutions and consultants in order to minimize risks before making investment.”
Bilateral trade between China and Hungary expanded 9.8 percent year-on-year to US$6.5 billion in the first nine months of 2016.
Source: gbtimes.com
