There is going to be a second wave of the crisis due to even stricter lending behaviour from banks side

21 Decembrie 2011

ANDREI HARET

ANDREI HARET

General Manager
DREHER BREWERIES

Following a period full of economic upheavals, 2011 has been awaited with great expectations; however all the hopes regarding a stronger recovery in the world economies fell like domino pieces in the second part of the year, when everybody started to prepare for a second wave of the crisis. The global economy has entered a new stage of the economic and financial crisis that began in 2007-2008, as one of the Business Digest contributors notes, after the initial state intervention intensified the sovereign debt problem for countries that were already highly indebted.

The slowdown in the global macroeconomic environment and the deepening of the sovereign debt crisis in Europe - with the increased chances of a default in the case of Greece but also with difficult financial position for countries like Ireland, Portugal, Italy or Spain – are issues that, if not quickly provided with solutions, could trigger a new financial turmoil with negative consequences on each and every country in the world.

As far as Eastern Europe is concerned, previous expectations that the region would be resilient to troubles in the Euro zone are proving misplaced, another of our contributors points out. Currencies and stock markets across the region have suffered sharp falls in recent months, the business and consumer sentiment is very fragile, and currency and bond markets are vulnerable to contagion from troubles in the Euro zone and heightened risk aversion. The negative consequences of a Greek sovereign default would hit the region even harder as the Greek banks are most active here and the economic recovery is still very fragile.

In this "puzzle", Romania is just a small "piece" that will be caught in the middle of global turbulence and, as the contagion risks from abroad have dramatically increased, has little chance of avoiding a negative impact. In this general context, the Digest wanted to explore, from "inside out" the economic developments taking place in other European and international markets, the ways the authorities and companies "there" are preparing for the challenges 2012 poses, and also trends that will most likely translate on the Romanian market. Therefore, we asked some of the Romanian managers who now lead operations in other countries of the world to share their opinions and views.

Q: WHAT ARE THE BIGGEST CHALLENGES YOU THINK 2012 WILL BRING FOR THE HUNGARIAN ECONOMY?

ANDREI HARET: The level of optimism the regular consumer will adopt in 2012, which will determine the decline, stagnation or increase in internal consumption. The sovereign debts will impact the global economy many years from now and this is not something that will be resolved and/or assimilated easily in the future.

Q: DO YOU THINK THERE WILL BE A "SECOND WAVE OF THE CRISIS"? IF SO, WHICH ARE THE BIGGEST CHALLENGES THIS WILL POSE TO THE BUSINESS ENVIRONMENT?

ANDREI HARET: There is going to be a second wave due to even stricter lending behaviour from banks side, as a result of sovereign debts. That will inhibit the internal consumption to rebound.

Q: WHAT ARE THE CONCRETE MEASURES TAKEN AT THIS TIME BY THE COMPANY YOU WORK FOR – BOTH LOCALLY AND INTERNATIONALLY – MEANT TO PREPARE THE COMPANY FOR THE SECOND WAVE OF THE CRISIS?

ANDREI HARET: A very prudent and lean fix cost management coupled with marketing campaigns for our brands focusing on stimulating consumption; brand thematic campaigns are not enough anymore; they must be combined with brand activities that drive consumption of that particular brand.

Q: WHAT WOULD YOU ADVISE ROMANIAN MANAGERS THROUGH THE EXPERIENCE THAT YOU HAVE NOW?

ANDREI HARET: Romanian business environment will become increasingly competitive from pricing perspective, as a result of Romanian consumer becoming more and more price conscious and volume/profit pressure on producers. In this context Romanian managers must develop step changed capabilities on revenue management and understanding of occasion based price management. Also the classical ‘image driven’ brand campaigns must be
complemented with a new dimension: generating transactions and consumptions for the brand.

Q: WHAT DO YOU THINK ROMANIA SHOULD DO TO SHELTER FROM THE NEXT CRISIS?

ANDREI HARET: Romania cannot be sheltered completely but it can mitigate its effect through government policy of stimulating internal consumptions, even with the risk of inflation.