We are very proud that ITOCHU could actively contribute to the increase of Japanese direct investments in Hungary by promoting the investments of more than a dozen of large and medium size Japanese companies. The biggest achievement of ITOCHU is Magyar Suzuki project initiated by ITOCHU under my personal involvement and control – said to NAPI Gazdaság Rijozo Tohjin, the CEO of ITOCHU Hungary.
It is true that the Central Eastern European region is still attractive for FDIs and within that Hungary has been keeping its position among the top three countries for years. Many large and medium size foreign capital companies have opened new production plants but consequently the possibilities of huge greenfield investments became limited – especially in Hungary – by now.
We have to acknowledge that this chapter is to be closed in the history of Japanese FDI in Hungary and from now on we should consider what kind of FDI re-structuring could be expected or even planned in order to maintain the increasing tendency of Japanese capital inflow to Hungary.
The multinational plants in Hungary have been importing most of the parts and components as they could not source it from Hungary due to the inadequate technical and financial level of the local SMEs – although I believe many of them would like to be nominated as supplier.
On the other hand about ninety-nine percent of the enterprises in Japan are less than medium size, very risk-averse companies with no investment experience abroad.
Most of the home suppliers of multinational companies are of this size and they possess respectful production technology, know-how.
We admitted that although such small size companies would like to follow their multinational customer to Hungary the major concerns to go international is the lack of knowledge about the target country, the uncertainty about the operation environment especially financing.
In the recognition of this ITOCHU can always be a bridge between Japan and Hungary in order to facilitate the transfer of the know-how from Japanese companies and improve the Hungarian supplier network of the multinationals in Hungary.
For the sake of this my idea is to offer a convenient Hungarian „cradle” for such small Japanese companies by providing facilities and professional administrative support in order to minimise the risk concern of the Japanese investors and let them concentrate on production and best utilisation of their know-how in Hungary in order to achieve the best service to their customer(s) in Hungary and worldwide.
With more than twenty years of relevant business experience in Hungary I'm sure that we can find the best match and joint venture partners for Japanese SMEs willing to start production in Hungary. ITOCHU is ready to provide Japanese capital enterprises with necessary land, buildings; recruiting skilled manpower and at last but not at least to provide wide range of business administration services from the establishment of the new company to the outbound logistics.
In order to materialise this scheme the support of the host country is indispensable.
Hungary explicitly expressed its aim to support the development of the Hungarian supplier industry. It is also well known that as a member of the European Union Hungary has to comply with the investment incentive related regulation of EU and thus the direct governmental incentives became really limited.
If Hungary – similarly to the example practiced in Japan – could provide low interest rate loans through a bank designated to serve the financing demands of foreign capital SMEs, the financial risk related concerns of the Japanese investors could be also significantly reduced.
If a financial institution established exclusively with the purpose to support SMEs can provide financial support continuously the mature Japanese capital companies (or joint ventures) will be able to generate further FDIs for the development of these Japanese SMEs in Hungary.
I deem this new chapter of Japanese direct investment could become a success story for Hungary.
