As a recent attendee of the World Economic Forum in Davos and an avid reader of both the Eurasia Group’s Top Risks 2025 and the WEF’s Global Risks Report 2025, one thing is clear from my discussions with Romanian and global CEOs: the turbulent realities of 2025 demand an updated “risk and reputation shield” for business leaders. After 2024—the largest electoral and democratic year in history—and with continued global upheavals, adapting to this environment is no longer optional.

The first step in constructing this shield is to understand the broader societal contexts in which businesses operate. For multinational companies, this is particularly critical. Populism, far from being a fleeting trend, has become entrenched in political and social systems, shaping leaders’ worldviews and societal expectations for years to come. The strategic risks stemming from this populist wave are numerous: heightened economic nationalism, a backlash against ESG (environmental, social, and governance) initiatives, and regulatory instability as mainstream parties attempt to counter populist agendas to maintain electoral viability. Businesses must recognize that these forces will continue to create market disruptions and instability in 2025 and beyond.

In addition to acknowledging the age of populist revolt, political and geopolitical risks must be integrated into business strategies. The manifestations of these risks are diverse—ranging from wars (including trade wars), sanctions, and great power competition to internal polarization and cultural conflicts within societies. Anti-globalization sentiments are also deepening, dividing the world into competing blocs. This fragmentation will disproportionately affect small and medium-sized countries that once thrived in a relatively open global system.

Reputational risks are another critical area that business leaders must address. In an era where inequality dominates public discourse and corporations are often seen as part of an elite that benefits at the expense of broader society. This perception makes businesses vulnerable to populist backlash. Additionally, cultural wars—such as those sparked by former President Trump’s rhetoric and actions on diversity and migration—are spilling over into the global corporate world, including in regions like Eastern Europe. While businesses must remain aligned with their strategic goals, they must also avoid being perceived as promoting radical agendas. Striking this balance requires a nuanced understanding of reputation management.

Economic and financial risks also loom large. Inflation and the cost-of-living crisis have placed enormous pressure on governments, many of which are struggling to respond effectively. High deficits and debt levels are causing market impatience (take Romania’s example as a starting point of a broader worrying trend). This, in turn, increases the likelihood of unpredictable fiscal policies and inefficient resource allocation that could harm economic growth and competitiveness. Adding to these challenges are technological and cybersecurity risks—exacerbated by the meteoric rise of AI and the increasing weaponization of cyberspace—alongside social issues like generational divides and debates over climate change. Together, these risks create a volatile landscape that business leaders cannot afford to ignore.

How can CEOs navigate a world on the brink of massive, and often negative, transformations? While there are no magical solutions, adopting the right mindset, coupled with relentless effort, can make all the difference. Successfully navigating 2025 begins with ambition and builds on the ability to anticipate and address challenges before they escalate. This requires blending global expertise with local knowledge and leveraging reputation as a critical asset. Operationally, a robust risk and reputation shield should include heightened attention to political and geopolitical risks, tools for economic and operational resilience, a focus on reputation management, and expertise in crisis response. Equally important are storytelling and narrative-building—core components of strategic communication and thought leadership.

While resilience remains a buzzword, preparedness is the key to achieving it. Preparedness, driven by action and determination, is the foundation for ensuring that businesses do not become victims of the ongoing anti-system wave. Whether you are bracing for another pivotal electoral year, grappling with the outcomes of 2024, or operating in an environment increasingly shaped by populism and cultural wars, it is essential to adopt more sophisticated and efficient risk management systems. Only by doing so can businesses thrive amid the complexities of 2025 and beyond.

The post Why CEOs Need an Updated Risk and Reputation Shield in 2025 appeared first on Forbes Romania.

Într-o lume în care securitatea energetică este indispensabilă pentru buna funcționare și dezvoltare a unui stat și menținerea unei economii durabile și competitive, investițiile în mari proiecte energetice sunt cruciale, în special în cele care contribuie direct la stabilitatea sistemului energetic. Proiectul Neptun Deep din România se conturează ca un astfel de proiect esențial, atât la nivel național, cât și la nivel regional și european. 

Acest proiect major promite să transforme România în cel mai mare producător de gaze naturale din Uniunea Europeană pe termen mediu lung, cale pe care țara noastră a pornit încă de anul acesta – România devenind deja în 2024 cel mai mare producător de gaze din UE, potrivit celor mai recente rapoarte ale Comisiei Europene. Pe termen lung, implicațiile acestui obiectiv al României, dar și proiectului în sine, la nivel macroeconomic și geopolitic sunt, de asemenea, semnificative.

Acest proiect energetic major va face România un exportator net de gaze naturale, contribuind astfel și la asigurarea securității energetice a țărilor vecine. Este important de avut în minte faptul că proiectele de investiții de amploarea Neptun Deep au un impact profund asupra economiei naționale, de la nivel local, la nivel național, regional și chiar european. Ele generează locuri de muncă, stimulează creșterea economică și contribuie la dezvoltarea infrastructurii. O producție mai mare de gaze naturale poate reduce, totodată, și dependența de importuri din afara spațiului european.

Astfel de investiții majore nu reprezintă doar proiecte de importanță națională, ci oportunități regionale și europene. Odată cu intrarea în producție, în 2027, acest proiect va contribui la diversificarea surselor de energie în toată Europa de Sud-Est, reducând dependența de gazele rusești și consolidând securitatea energetică a UE. Țări precum Republica Moldova, Bulgaria sau Ungaria vor putea beneficia de o sursă de gaz mai sigură și de încredere. În plus, gazele naturale produse vor juca un rol crucial și în tranziția energetică pe termen scurt și mediu, înlocuind cărbunele și contribuind la reducerea emisiilor de carbon. 

Dar pentru ca astfel de proiecte să fie realizate cu succes, este esențială existența unui cadru de reglementare stabil și predictibil – lucru cerut deja de mulți ani de către mediul privat. Investitorii au nevoie de garanții că politicile fiscale și de reglementare nu vor suferi modificări bruște, care ar putea afecta viabilitatea unui astfel de proiect de interes major. Stabilitatea politică și transparența în procesul de consultare cu sectorul energetic sunt cruciale pentru atragerea și menținerea investițiilor strategice. Ele pot consolida, totodată, și stabilitatea prețului energiei pe termen mai lung, ceea ce oferă încredere și predictibilitate pentru investitori.

Pentru a maximiza beneficiile acestor investiții, statul român trebuie să susțină activ proiectele strategice prin politici publice echilibrate și fiscalitate favorabilă. Acțiunile concrete ale guvernului în sprijinul Neptun Deep vor asigura nu doar succesul acestui proiect, ci și atragerea altor investiții majore în sectorul energetic. Din păcate, introducerea unor taxe noi cu aplicare aproape imediată tinde să aibă un efect contrar în raport cu piața și investitorii. Decidenții politici trebuie să conștientizeze că proiecte precum Neptun Deep reprezintă o oportunitate unică pentru România de a-și consolida poziția pe piața energetică europeană și de a contribui la securitatea energetică a regiunii. Printr-o abordare strategică și un cadru de reglementare stabil și predictibil, România poate deveni un jucător energetic veritabil. 

Ca recomandare pentru a maximiza această investiție pe termen lung, este esențială o consultare reală și transparentă cu sectorul energetic pentru a dezvolta politici publice echilibrate. De asemenea, decidenții politici trebuie să țină cont de faptul că implementarea unei fiscalități favorabile dezvoltării proiectelor energetice majore va stimula investițiile și va contribui la securitatea energetică. 

România trebuie să continue eforturile de diversificare a surselor de energie, inclusiv pentru a contribui la reducerea dependenței de importuri a UE, ca alegere economică și strategică pe termen lung. Nu în ultimul rând, țara trebuie să profite de resursele pe care le are, iar promovarea gazelor naturale ca soluție de tranziție, înlocuind cărbunele și contribuind la reducerea emisiilor de carbon, este la rândul său un semnal de stabilitate și viziune din partea României pe piața energetică europeană.

Fii la curent cu tot ce contează în business-ul din România și abonează-te la canalul nostru de Whatsapp Forbes Romania.

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In so far as Romania had a clearly identifiable national dream over the past 30 or so years, it involved converging with a concept of the West, roughly defined as high-living standards and a functional state in a more or less socially liberal environment. It sustained Romanians through the inflation of the 1990s, it gave people hope during the 2000s’ lost jobs and lost savings and it kept some from emigrating during the 2010s. 

Furthermore, the internalized hagiography of the misnomer of ‘Western’ economics and ‘Western’ culture gave what were often disparate, at times forced, reforms and economic planning a sense of almost Hegelian direction. From that sprang acceptance of what has been a high degree of incongruence in an otherwise almost effervescent parliamentary democracy. For example, the famous revolving door of the Romanian Education Ministry’s 24 ministers since 1989 has been only marginally less transitional than the United Kingdom’s own 22 Secretaries of Education in the same time frame, without what Walter Bagehot may have called ‘the cohesive sects of party’. In other words, these notions helped transport Romania forward with a sense of destination and finality without the turbulence of Latin America’s caudillos or some of South Asia’s kleptocratic saviors. 

There was however one major problem underlying it all: a sense of direction need not imply direction, or the right direction. 

Path Dependence

In fact, most of the time the Romanian economy and Romanian society simply went to the point of least resistance. That point of least resistance did involve market reforms, privatizations, joining NATO and European Union integration but they were performed with limited planning, sustainability or the tactical awareness to minimize costs and maximize benefits, in no small part because these were seen as marks on the road as opposed to what they really were: choices (even if the best ones for the country!), with pros, cons and best practices. 

Quite simply, incomes and economic growth are not path independent variables. 

In fact it matters a lot if those market reforms are coupled with foreign direct investment, technology transfers and value-add clusters: just to provide a recent example, China might have started in the processing trade but it is now one of the main global centers of R&D. It matters if rising incomes come from productivity-focused, job-creating intensive growth and are widely distributed or simply consumer spending focused on a urban, well-off minority: for example, the rich of Nigeria aren’t that much worse off financially than the rich of the South Korea but it hardly helps the country as a whole that much. It matters if integration into international structures is a launch pad to technology acquisition and growing international diplomatic relations or a box-ticking exercise from a political class that little else to show: Romania’s exports as a percentage of GDP stood at 25.6% upon WTO entry in 1995 and 22% in 2001 when China turned joining the WTO in an economy-transforming exercise.

The degree of path dependence is starting to show: growing incomes based on consumer spending also meant significant underinvestment in human capital and gross capital formation. As wage differentials with Western Europe dwindle, productivity doesn’t actually match what would be needed for further increases, leaving an ageing population with a propensity to consume of over 95%, a growing budget deficit, a limited technological know-how and few natural well-springs for growth.    

Out of Check

That leaves the Romanian economy in check. 

With government debt only marginally above junk level and a growing budget deficit, there is little room for maneuver while the long-term is  obvious enough in the context of an ageing population and underfunded pension liabilities, rising healthcare costs and continued emigration. 

It’s not too late to change direction and assume control of one’s own future. Specifically, the CEE region as a whole has the opportunity to capitalize on political factors such as trade tensions between the European Union and China as well as the conflict in Ukraine.

The first means that Chinese FDI in CEE might become a necessity, with the recent opening of BYD factory in Hungary just the beginning of a wider investment push from China in friendly CEE countries. This is an opportunity for Romania to capture some of the increased FDI across CEE, obviously by taking into account its strategic interests and in clear coordination with the US. 

The second has to do with West European industry’s growing defenestration when it comes to energy prices, decades of underinvestment in infrastructure and increasing regulation, with the possible closing of a VW factory in Germany being just the tip of the iceberg. CEE and Romania could offer a safe harbor to industry looking to relocate. Furthermore, when old production methods are ineffective, it is often cheaper to re-build than to upgrade. That means that a German CEO might be looking at similar costs between building new in CEE and upgrading German factories when it comes to things such as EV cars.

In other words, it’s time for the Romanian economy, business and society as a whole to admit that its sense of direction may not deliver the envisioned prosperity. As committed members of the EU and NATO, we have to think more about how to strengthen our economy and build a more robust economic profile. It is perhaps time to embrace multilateral economic internationalism, develop friendships with all available actors and actively seek out every opportunity for advancement, whether it means United States investment, Chinese investment, ASEAN markets or German restructuring.

The post Global Romania: business diversification options  appeared first on Forbes Romania.

In the current geopolitical and economic context, a change of mindset is needed among entrepreneurs in Romania, Moldova, and Ukraine to approach business strategy-making in a triangular manner. Despite the security challenges facing the region, a triangular focus is certain to open up new opportunities and strengthen ties between the business communities in the three countries.

Over the past two years, Romania has become an indispensable partner for Ukraine, providing a gateway for Ukrainian goods and an open economic environment for investments in various fields. Notable examples include energy company DTEK, manufacturer and distributor of household and hygiene products Biosphere, and the IT company N-iX, among others. Additionally, Constanța and Galați have become crucial logistics hubs, supported by industry giants such as Maersk and DP World.

The business dynamics between Romania and Ukraine can easily integrate Moldova, which has the potential to become a smart intermediary between the two, possessing know-how in both directions and benefiting from the presence of large transnational companies, such as Trans-Oil Group, operating in both Romania and Moldova. Furthermore, Moldova’s economy is stabilizing thanks to growing exports and foreign aid absorption, making it a resilient and reliable partner in the region.

For Moldova, Romania’s future economic growth is essential, not only in terms of joint development of the business and trade ecosystem. The current dynamics at the border between Romania and Hungary may be matched, if not surpassed, in terms of economic interactions, by those at the Romania-Moldova-Ukraine borders, especially in the context of the Ukrainian war economy and Ukrainian reconstruction.

In the wake of the Russian offensive and its major impact on cities such as Kharkov, Ukraine continues to rethink its economy, with Romania consolidating its role as a gateway for Ukrainian exports. Moldova is definitely playing an intermediary role in this process. Accelerated energy interconnection, supported by the European Union, the United States, and the United Kingdom, also highlights the potential for trilateral cooperation.

In addition to the obvious economic benefits, this trilateral cooperation holds the potential to transform the region into a fully-fledged regional hub and a major European player. For this to happen, the benefits and challenges of trilateral cooperation need to be well understood and addressed: we all need to be aware of the associated risks, starting from the security situation in the region and long-term perspectives. In this sense, the mobilization of Romanian and Moldovan entrepreneurs in regional projects and the attraction of new foreign investment hold the promise of building resilience.

It is high time for entrepreneurs in Romania, Moldova, and Ukraine to join forces and approach the future from a triangular perspective. At the same time, it is important that all three business communities recognize this triangular perspective as essential to their future. While we are witnessing door-opening approaches in terms of government-to-government dialogues and bilateral or trilateral cooperation, the vibrant entrepreneurial communities of the three countries should step up and shape these ties in a way that further interconnects the three economies in the future.

The post Moving entrepreneurial attention to the Romanian-Moldovan-Ukrainian triangle appeared first on Forbes Romania.

In recent years, Romania has emerged as a burgeoning hub for the Information Technology and Communication (IT&C) sector, showcasing remarkable growth and development. The question at the forefront now is whether Romania can leverage its robust IT ecosystem to establish itself as a distinguished player on the global stage and, in turn, become the country’s defining brand.

The Romanian IT Services market has undergone significant evolution, marked by notable trends that underscore the industry’s dynamism. Cloud computing adoption and the utilization of big data analytics have become pervasive, as businesses strive to enhance efficiency and gain insights into market dynamics. Romania’s IT sector stands out globally due to a highly skilled workforce, with an impressive number of certified IT specialists (e.g., more tech specialists per 1,000 residents than in the United States), ranking the highest in Europe and sixth worldwide.

The country’s IT landscape is complemented by a favorable economic environment. Romania’s steady economic growth and relatively low taxes have attracted foreign investments, fostering an ecosystem conducive to the flourishing IT industry. The average salary in the ICT sector is double the national average and has increased by 54,5% in 2023. However, this is still 20% to 50% lower than in the Western European or American markets. This makes Romania an attractive and cost-effective option for businesses seeking quality expertise.

Education plays a pivotal role in sustaining this growth. With numerous universities, including top-ranking institutions like Babes-Bolyai University, Polytechnic University of Bucharest, and the University of Bucharest, Romania produces a pool of skilled IT professionals. For instance, in 2021, there were 40,063 students and 9,308 graduates, an almost 20% and 65% increase, respectively, compared to 2015. This significant rise in ICT students and graduates signals a promising future for the sector, and the country’s start-up scene is thriving with ambitious tech innovators.

Romanian startups, particularly in fintech, software, data, and sales, have garnered attention globally. The increasing investments in software development, reaching a record-breaking $270 million in 2022, showcase the growing interest in Romania’s tech landscape. Connectivity and IT infrastructure further bolster Romania’s appeal, with fast internet connectivity, robust telecom networks, and the introduction of 5G services. Importantly, Romania’s IT infrastructure can support projects of any magnitude. With access to the fourth-best fixed broadband speed worldwide (214.3 Mbps), developers can swiftly build, test, and refine software products, resulting in accelerated time-to-market for their solutions.

To solidify Romania’s position as an IT&C hub and elevate it to a national brand, strategic actions must be taken. Investment attraction, fostering more academic collaboration, nurturing a vibrant start-up ecosystem, and providing tailored legislation are critical steps. Creating an environment that supports scaling-up mechanisms, such as venture capital and mergers and acquisitions, will also propel the industry forward.

Education and research and development (R&D) initiatives should be intensified, with a focus on attracting international institutions and establishing digital innovation hubs. Policies should be crafted to ensure a friendly environment for both students and businesses, while infrastructure development should align with future technologies like 5G and 6G.

Learning from a non-trivial number of success stories, both public and private sectors should collaborate to replicate and scale up achievements in the IT&C sector. Experts should be engaged to develop a compelling brand strategy, positioning Romania as the number one destination for IT&C excellence.

All in all, Romania’s IT&C sector has the potential to become the country’s defining brand. With a skilled workforce, favorable economic conditions, and a thriving start-up ecosystem, Romania can capitalize on its strengths to create a lasting impact on the global IT stage. Strategic planning, continuous investment, and a proactive approach will be key in realizing this vision and positioning Romania as a beacon of IT&C excellence.

The post Can the IT&C Become Romania’s Country Brand? appeared first on Forbes Romania.

România a “evoluat” în câteva luni de la stabilitate la apocalipsă fiscală. În acest context, se tot vorbește despre miliardele de euro de la Uniunea Europeană. Mai mult, ministrul de finanțe amenință că, dacă nu reducem deficitul, pierdem acești bani. În acest moment, pare că PNRR-ul este singurul nostru plan de țară, singura noastră ambiție națională.

Vine un ciclu electoral, în care este, din perspectiva mea, o capcană pentru partidele de guvernare să vorbească doar despre PNRR, părând că nu au niciun fel de viziune (sau putinta / dorință) despre ce trebuie făcut cu România. România Globală poate fi un proiect de urmat. Acesta nu este doar un proiect pentru alegerile prezidențiale, dar și pentru partidele politice, cu scopul regândirii modelului economic românesc, de la o economie de consum la o economie de export, la echilibrarea balanței comerciale și la o gândire autonomă și ambițioasă de dezvoltare.

Vreau să explic în detaliu această propunere care poate suna contra-intuitiv. Până la urmă, că vorbim de PNRR, noi avem până la sfârșit de 2026 să atragem circa 27 miliarde Euro. Gândirea noastră trebuie să fie una mai largă, evident fără a ignora fondurile europene. Ceea ce mi-aș dori eu este să trecem de la un focus al unei economii “asistate” doar din fonduri europene (cel puțin ca percepție) la un buget național mult mai robust, chiar excedentar, pentru a plăti din datoria consistentă pe care am acumulat-o în ultimii ani. 

Tot acest discurs public și politic despre cum Bruxelles-ul ne cere și noi executăm (sau nu) ne poziționează drept o țară fără plan. Recent, într-un platou TV, un coleg de emisiune a dat un exemplu foarte bun: România cumpără armament, în timp ce Polonia face înarmare, dovadă că planul și industria fac diferența. Noi trebuie să ne punem problema cum creăm și consolidăm industrii, cum construim pe baza avantajelor noastre competitive și cum mergem mai departe, dincolo de finanțări punctuale.

Trebuie să ieșim dintr-o zonă pasivă, de condiționalitate (așa cum este și PNRR) și să ne asumăm o agendă pro-activă de dezvoltare, de promovare a exporturilor, de promovare a excelenței românești în business. Este nevoie de Energie si Entuziasm, Excelență și Exporturi, ca să sintetizez cele 4E-uri folositoare pentru economia noastră.

Avem nevoie de o energie nouă în societate, de un nou entuziasm/ elan, altfel vom fi dominați de o agendă profund negativă și resentimentară în alegerile din 2024. Avem nevoie să scoatem în evidență ceea ce face bine business-ul românesc, ceea ce s-a dezvoltat prin muncă și inovație, nu prin contracte cu statul facilitate de baroni locali recompensați cu portbagajul. Avem nevoie să depășim mizele locale și să ne deschidem către lume prin exporturi (în special în nișele unde ne-am dezvoltat un renume internațional), pentru că putem fi competitivi și avem capacitatea de a genera cerere pentru produsele și serviciile românești.

Așa obținem acel patriotism economic sănătos, așa Made in Romania este un proiect pozitiv și productiv, nu doar expresia unor frustrări și oportunități politice locale. Pentru ca toate acestea să se întâmple, avem evident nevoie de leadership politic, de Voință, Valori și Viziune. Ne trebuie o viziune despre România, un plan simplu despre unde vrem să ajungem, ancorat în valorile noastre euro-atlantic, dar și o capacitate crescută de a duce lucrurile la bun sfârșit. Sunt anumite semnale în acest sens din partea premierului Ciolacu, care pare să adopte un discurs mai degrabă prezidențiabil, dar este nevoie de mai mult din partea coaliției, în plan extrem de concret. Până la urmă, nu poți rezolva totul cu comunicarea strategică, care pare saptamanile astea mult prea tactica.

În perioada următoare, așteptăm cu toții decizii pe bandă rulantă. Singura decizie care ar putea, cât de cât, calma sectorul privat și societatea este lansarea unei veritabile dezbateri naționale în ceea ce privește modelul nostru de dezvoltare, dincolo de PNRR. Țara nu poate fi dezvoltată și adusă împreună doar cu sperietoarea că pierdem banii europeni. Altfel va crește euroscepticismul, va crește și nemulțumirea socială și vom ajunge la momentul unor întrebări legitime despre situația bugetară și la competența celor care administrează România. Aceste întrebări vor pune sub semnul întrebării și viabilitatea acestei mari coaliții, care trebuie să livreze mai mult decât narativul sau anterior, acum necredibil, stabilitate.

Pentru a fi mai clar, România în momentul de față este un avion care zboară pe un cer cu turbulențe. Rolul celor doi copiloți din coaliție este de a da sentimentul, prin mesaje și prin ceea ce fac, că vom ajunge cu bine la destinație. Trebuie să ne spună ce să facem noi împreună, sa ne putem centurile si cum (măcar în plan aspirațional, pentru că în rest ne descurcăm noi), ce fac ei pentru a ne fi nouă bine și periodic să producă niște “updates”, ca victorii de etapă. În acest fel, populația va rămâne solidară cu guvernarea și se va consolida încrederea în ciuda crizelor pe care le traversăm. Altfel, vom schimba piloții din mers, în ciuda perioadei turbulente, prin nori negri dar cautand o epoca de aur.

The post România Globală: de la economie “asistată” la una productivă appeared first on Forbes Romania.

As a share of GDP, Romanian exports are a both relatively recent phenomenon and below the regional average. At 40.8%, the level is similar to Ukraine and a fair bit away from Hungary’s 81%, Poland’s 57%, and Germany’s 47%.

Furthermore, having spent most of the 1990s and 2000s at about 23%, it was only after 2009 and Romania’s joining the European Union that figures started converging with the regional average, which includes countries that are not yet EU members.

In other words, Romanian exports don’t show a significant correlation with the Third Wave of Globalization that enabled so much of the world to achieve prosperity by pro-actively integrating into global supply chains – China’s GDP per capita in 1990 was USD 310, 6% of the global average at the point – but the acceptance of expanding West European supply chains. In other words, for Romanian business internationalization often equals (and we should always acknowledge the economic and strategic importance of such a step) only Europeanisation. 

It could have been worse. For much of the 1990s and early 2000s, not only was Romanian GDP per capita actually stagnant but this reflected a grim reality that Total Factor Productivity (TFP) across the economy had been declining for 22 years since the early 1980s, with the end of Communism being almost unnoticeable from a statistical point of view. Quite simply, the Romanian business world of the 1990s was as productive as late Communist-era management and Ukraine offers a reminder of what could have happened without that external anchor: while GDP per capita in PPP terms was higher in Ukraine than in Romania in 1989, it has actually declined both in absolute terms and in relative terms to just 42% of Romanian levels in 2021.

The prospect of EU membership and EU integration did seem to help end this mire and per capita GDP began a sustained increase, particularly after 2008.  

The downside

Unfortunately, the underlying domestic dynamic remained the same: domestic. Final consumption as a proportion of GDPhovers near 80%, near Bulgaria’s 77%, but ultimately closer to Ukraine’s 87% than Germany’s 71%.  

This isn’t unique to Romania: the McKinsey Global Institute estimates that about 80% of CEE growth in the 2000s was consumption-driven. However, that still leaves the problem of too much economic growth being driven by a domestic population’s consumption while domestic businesses only rarely attempt to innovate, develop, research, and compete in global markets. That population is rapidly aging, has significantly underfunded healthcare and pension liabilities, and may not be able to sustain the same level of growth in expenditure in the future. 

Meanwhile, the main market of Romanian exports, the European Union, is facing the same underlying factors and may be seen as one of the most saturated in the world. So, it may not be the case that German pensioners get converted to the benefits of Dacia in large enough numbers to offset any decline in domestic expenditures.

A Really Global, Big Time, Internationalisation

None of this is new. What West European businesses have been doing, quite successfully, is to internationalize globally and away from the European market – VW has more sales in China rather than Europe, for example. While that also means many of the usual suspects when it comes to emerging markets have long since been saturated as far as European exports go,  there are others: Indonesia is a rising giant in consumer spending; Pakistan’s population might double by 2050; ASEAN as a whole might be as important an export market as Western Europe one day. This is not an argument for the Romanian businesses to ignore the European market, but rather to build on their European lessons and expand to Asia, to benefit from what will likely be an “Asian century”.

Romanian businesses can still seize these opportunities, switching from the 30-year track record of passive accommodation to pro-active expansion and using the former reforming boost from EU integration to reach competitiveness on international markets and offset natural declines in the domestic market.  The alternative is fairly bleak but we need not focus on that: 8 billion potential customers are waiting. Time to go global and go big: Romanian entrepreneurs need a really strong push for internationalization to thrive in the next decade and beyond.

The post A Case for Big Time, Really Global, Internationalisation appeared first on Forbes Romania.

While respecting tradition and continuity, most family businesses have undergone significant change over the past 30 years alongside most of the economy. The propitious expansion of trade and global value chains during the Third Wave of Globalisation, roughly between the early 1990s and the late 2010s, means that many family businesses could often seek better suppliers, enter new markets, optimize funding, develop new products and establish a legacy of international success which new generations can build on.

What many found during the various exogenous shocks of the late 2010s and early 2020s was that it also left many family businesses perhaps less than customarily exposed to aspects of business previous generations might not have tackled: geopolitical risk, regionalization, and friend-shoring or supply-chain operational risk, all in the context of a continuous public relations environment where any mistake is eminently shareable to consumers and investors alike.

Give or take the annual GDP of the Ivory Coast, it suffices to say that a tremendous amount of funds will be heading toward Ukraine, creating tremendous opportunities for growth, as well as regional competition for attention and additional investments. After a turbulent period in the 1990s, Eastern Europe has once again become a topic of interest. When the ongoing conflict in Ukraine ends, regional superclans – ambitious regional family business- will have an opportunity to capitalize on a favorable investment and expansion climate.

This leaves the next generation of family business leaders in the difficult situation of having not only to learn from the previous generation but also acquire a whole new host of skills that may not have been fully formalized by the traditional purveyors of management advice and business wisdom. The current business landscape demands a new generation of family business leaders who can navigate uncharted territories with confidence. These leaders must possess diverse skills, including managing global communications and assessing political risks, as well as the insight to manage marketing and corporate communications in the context of new (geo)political realities.

As the world becomes more fragmented and harder and harder to understand, the next generation of superclan leaders must be equipped to navigate a rapidly changing business environment. Emerging economies, in particular, require leaders who can adapt quickly to new challenges and opportunities. To succeed in this context, these leaders need access to training and advice that is tailored to the realities of the modern era.

To build the necessary expertise for the new era, emerging superclan leaders should focus on three key areas. The first is business expansion through internationalization, which involves understanding the complexities of global trade and investment. The second area of expertise is global strategic communications, which is essential for building brand recognition and managing a company’s reputation in an era of instant global communication. Finally, leaders must have a deep understanding of risk management in the context of great power competition. This requires an ability to assess and respond to geopolitical risks, including trade disputes, sanctions, and other forms of economic coercion. By developing these areas of expertise, the next generation of family business leaders can succeed in the rapidly evolving business landscape.

We know it very well: jumping in the deep end of the pool from the start rarely ends well. That is where professional training comes in. It does not replace intelligence or character, nor does it suffice in the absence of previous generations’ advice and guidance. It does however allow for new generations of family business leaders to confront the new business environment armed with the skill set needed to traverse it and turn change into opportunity with the same success as those who used the Third Wave of Globalization to take a family business and turn it into a thriving international family business.

The post Family business: the case for (nextgen) leadership training appeared first on Forbes Romania.

A Short Look at the Interactions Between Old Money and New Money in Romania 

The Issue  

The often-colourful admixture of three historical regions, the country that has come to be called Romania has traditionally had one of the most dynamic and at times eyebrow-raising relationships between the historic upper-class, the medieval ‘those who fight’, and the newly emergent bourgeoisie of the early Age of Capital, ‘those who trade’. That relationship between these two classes is coming back and that may very well prove to be one of the most pivotal moments for Romania.    

To put things into their historical perspective, we passed a ‘red washing’ of feudal structures into communist structures and about 40 years of state building which, to paraphrase Eugen Weber, was not always successful in its aim of turning ‘Peasants into Romanians’. To this day, unfortunately, close to a majority of pupils are classed as functionally illiterate, 46% of people live in the rural area, only 65% of the population have bank accounts, 36% are at risk of poverty and one of the few rankings where Romania comes on top is the proportion of  adolescent pregnancies. Despite these figures that could seem discouraging to some, there are reasons for hope that we should keep on our radar. I will expand on this in the second half of the article.

The Rise of Old Money  

In the context of a weak state with little social cohesion, high political instability and little in terms of national strategy, what emerged after the collapse of communism has primarily been dominated by where scarce capital and scarce trust could be found:   

• the family unit and 
• former nomenklatura/intelligence structures that used the networks built during communism. 

From these arose various private, often family-owned, conglomerates which still tend to dominate the business landscape. Lacking a particularly cohesive national strategy for export competitiveness and, as time went by, competitive advantages, the vast majority are domestically focused. This, in effect, is what has become the Romanian ‘old money’.   

The Rise of New Money  

In the previous decade, a new breed of entrepreneur has also emerged. Quite simply, following the early 2000s, incomes have begun rising at the national level and places such as Transylvania have begun adopting new, often export-led industries. Notable successes include Cluj’s emergence as an IT hub as well as national success stories such as UiPath. While successful, most of the ‘New Money’ seem fully cognizant that success is partially a matter of tolerance from ‘Old Money’ – as new wealth is created, it does not necessarily come into competition with old wealth, and, like Vkontakte, Yandex or Wildberries in Russia (unfortunately, sometimes these comparisons are more than meaningful), it is partially kept protected by the public relations narrative they provide.   

A Coming Alliance  

Realistically, most companies which emerged in the second wave cannot expand much beyond their current position without causing friction with ‘Old Money’. Few have any second thoughts as to who would emerge as the winner. Cognizant of that, many are expected to diverge into those entering formal alliances with ‘Old Money’ and attempt to gain the long-lasting bonds and protections that come with it, while some will either stay as regional success stories or internationalise away, such as UiPath. This coming alliance may provide a solution to Romania’s economic ills. While growing at close to 7%, much of that growth is domestic, based on a rapidly ageing market that has left pension and healthcare liabilities worryingly unattended and whose supply-side has been deteriorating for close to 30 years.     

The natural solution to that is export-competitiveness, something that cannot be realistically achieved without joint-operations from both the public sector and the private sector. An alliance between New Money and Old Money that allows this to happen might achieve more than 30 years of elections.    

Every push to create this alliance so far was generated from a European Union policy creation level, and technology was at the forefront of the motive behind the implementation of such a regulation. Romania’s implementation of these policies helped bring New Money and Old Money closer to the same goals.   

Old Money might see technology as a threat in a few cases, but the smartest Old Money representatives actually do see the potential in the adoption of new technology and innovation in the businesses. Their survival or expansion ambitions surely depend on this adoption in the long term even if they don’t see it yet. Little actions like allowing payments by crypto for example could generate massive extra income streams.  

But it is also the job of the New Money representatives to get closer to the Old Money representatives, to understand their needs and present them with the solutions, explanations, and examples of the benefits of the adoption of new technologies.  

At the same time, the government must try to be the bridge between these companies/sources of capital when implementation policies come into question, simplifying (and not complicating) these collaborations. 

The post Old Money and New Money in Romania   appeared first on Forbes Romania.

One of the characteristics of the Romanian business community is a focus on debt capital at the expense of equity capital. This may be seen as primarily an after-effect of the post-communist context where capital was scarce, foreign investors cognisant of political instability and companies primarily focused on the domestic market. With less incentive to go public and fewer expansion plans in need of financing, the stock exchange drew fewer companies, which lowered incentives further and so forth. As that context subsided, the era of quantitative easing began and debt capital gained relative prominence for many companies, Romanian and otherwise.  

Consequently, equity markets remained quite underdeveloped relative to the country’s economy, perhaps most starkly shown by UiPath’s straight jump to the NYSE but seen quite generally. For example, the market capitalisation for Romanian companies as a percentage of GDP stood at 10.1% in 2020, while comparative figures for Poland and the United Kingdom were 29.8% and 115%. France, hardly a model of expansive, equity-driven Darwinian capitalism, stood at 84%. Much of that may reflect a domestic focus, but it would be well within bounds to suggest that the Romanian capital market has room to grow.  

That may be coming: the benefits of a wider and more diversified pool of capital are self-evident to most established Romanian businesses, many Romanian companies have fairly healthy growth rates, and foreign capital has little incentive to avoid a growth market which is relatively stable by current standards.   

The Romanian IPO Potential 

Many Romanian companies would have valuable equity to offer and potentially profitable uses for financial capital. Getting there, however, first implies going through the IPO process. It can be a process of daunting complexity, but many companies might not find it as difficult as some might think.  

Mostly, these are well established companies, with clear track-records, with accounting departments which already run things close to public company standards even without disclosures, well-staffed legal departments, and a pool of capital – financial, relational, social – which your typical IPO does not have. In other words, the genuinely structural hurdles have often been overcome already. 

Communication, Strategic and Otherwise 

What remains besides the voluminous but fairly standard paperwork is communicating all of this to market participants. That, in turn, is less a matter of ticking boxes, but requires the entirety of management coming together to make it a success.  

Roughly, we may split communication strategies, as management itself, into three levels: 1) operational; 2) tactical; and 3) strategic.

Operational communication deals with the critical details, potentially problematic for upstarts, but not necessarily for the companies we have in mind.  

Tactically, we can split the communications effort quite simply into the preparatory phase before the initial filing, what is often called the road-show whereby the company and the shares themselves are placed with institutional market participants, the quiet period before the actual IPO and the post-IPO stabilization. 

Strategy, which is to say actually charting a course through all of this process successfully, is where management truly pays for itself. First, once the IPO decision is made, many aspects of the company will have a spotlight placed on them. Primarily, this is regarded as a matter of regulatory oversight since retail investors need to be protected. But it also covers aspects which may not have drawn much attention beforehand and be well within the law, such as environmental standards or social impact. Building a track record on all these points is very much required before media attention turns to speculation.  

Likewise, relations with market participants need to extend well beyond bank managers and a few brokers. As a public company, one is not only selling goods and services but also shares. These are the buyers and sellers of that product and having the weight of pension fund managers or mutual funds managers in one’s corner can anchor stock prices from many quarterly noises. As such, investor relations is not something a strategically minded company would take lightly. Most of the companies we have in mind already have a department in place, but this will likely need to be expanded, have increased funding, and be helped build a wider pool of both direct relations as well as capacity to respond to crises.     

Once these are in place, the road to the big day is fairly clear. Once retail investors are in sight, the company needs to remember the pre-IPO quiet period, during which non-public information needs to be severely limited. The rules on this are actually interpretable and there is some leeway but at this point all the previous groundwork should suffice as to not require much risky drumbeating. 

Finally, post-IPO price stabilization will need both previous relations with institutional investors as well as making sure communication with retail investors sticks to the plan. The work should pay off, enabling the company to access more funding from more sources while allowing retail investors to share in its success. 

Not a bad outcome for what would be, for many well-established Romanian companies, mostly a communications effort. 

The post Developing Integrated Communication Strategies for IPOs  appeared first on Forbes Romania.