The path to competitiveness: Strategies for investment in Central Europe

The author, who has consulted widely on investing in Central Europe over the past 10 years, is upbeat on the prospects for investors in the region, provided they bear in mind several caveats. The most important requirement, he contends, is to find strong local support and partners for any enterprise. In this article, the author takes a close look at two post-privatization companies and finds that some of Central Europe's industries are more adaptive to the market environment than others. The privatized Borsodi brewery in Bôcs, Hungary has grown profitable as the beneficiary of Western marketing savvy since its acquisition by the Belgian Interbrew, S.A., the world's fourth largest brewer. But the Polish Star truck company has failed to adapt its trucks to wider markets since private investors took an equity position in the company. The author finds that the main failures were due to poor partner selection. Weak foreign leadership, failure to create a strong collaborative climate with local target companies and lack of training have also plagued many investments in the region. The success of foreign investors, he argues, also lies in granting the proper respect to the nationalism that is prevalent in Central Europe.