Vol. 2 No.10  

Only the strong and competitive survive

What opportunities will EU accession bring to Romanian-owned companies?

     The most obvious advantage is the enlarged common market that will be open for Romanian products and services. Further, there will be a significant inflow of EU-originating investment, especially from SMEs, that will benefit from the fall of all legal entry barriers to Romania and that will bring many opportunities. Finally, being able to market its products and services on the world market as being of EU origin may as well give a boost to Romanian companies.
     What threats will EU accession bring for Romanian-owned companies?
     There will be no legal barriers to EU based businesses to offer their products and services in Romania. Foreign insurance firms and banks will be able to offer their - often cheaper and more sophisticated - products on the Romanian market, so will leasing companies and consultants. Many Romanian businesses may not be up to meeting the fierce competition of companies that have worked in competitive markets for a long time. To put it short: only the strong and competitive will survive.
     From the experience of companies indigineous to other EU accession states from 2004, what can help these companies survive and grow in the new economic framework?
     In first place, the EU has a number of programs in place to foster business in regions in which the economic development is lagging behind (for which apparently the entire territory of Romania will qualify) such as the Structural Funds and the Cohesion Fund. All these programs require, however, a great deal of commitment of the private sector as well. In the end, the key to success in the new economic framework will be innovative thinking, excellent service, and finding the right niche in a market of almost 500 million people.
     What are the opportunities open for accessing finance for such companies?
     Besides the funding possibilities from the EU, I expect that bank loans will become more easily accessible and interest rates will further adjust to the levels in Western Europe. In Poland, for example, Euro denominated bank loans are a little more expensive than in neighbouring Germany. Also the associated costs to bank lending will come down and foreign banks will become more active in Romania, even without having a branch or subsidiary in Romania.
     What, in your mind, are the most dynamic Romanian-owned companies and why?
     This is difficult to appreciate as companies with high pre-accession growth rates may have artificially inflated sales that are not sustainable in the more competitive EU market. There are some excellent local players that have performed very well over the past, but may have failed to have prepared for the post-accession world. As I do not want to read the crystal ball, let’s have a look at Romanian-owned companies at the end of 2009 (if they will still be Romanian owned by then).

Markus Piuk
Schoenherr and Associates