Forbes Romania:What do you consider to be Romania’s strong points, now and in the future?
Philippe Gustin: Romania’s strong points are the same now and in the future, but they need assistance. I always give the same examples, it would be useful to develop infrastructure. It is obvious that French companies were attracted here in the past by two things: first, a competitive market (due to cost, terrain, workforce), and then a domestic market that was not mature, where there was room for development. To give you an example, telecommunications : 23 years ago, there was practically nothing and today everyone has two mobile phones or more. These two elements made Romania interesting. But all this is limited now and companies here must be offered something in compensation for the rising cost of the workforce, plus infrastructure. Especially when we talk about industry and companies operating exports, they must be able to move fast, they must have highways and airports. You must also invest in a certain type of education, because the generation that had technical expertise is about to retire and unfortunately there hasn’t been any commitment, but rather an indifference (of both authorities and people) towards technical education. Recently I was discussing with a company and they admitted having difficulties in finding technicians in certain industrial and geographical fields.
So there are many advantages, I could talk about them for hours, in agriculture as well, a field that interests me a lot, but the state must make good investments, so that the advantages don’t disappear.
Forbes Romania:You were saying that there is not enough educated workforce in certain professional and geographical fields –could you be more specific?
Philippe Gustin: For example, it is difficult to find information technology or communication specialists in Cluj area or if there are, the work force is expensive, almost as expensive as in western Europe. Also, there are a lot of people working in agriculture, 29% of inhabitants, but these 29% are often old people, while tomorrow’s agriculture needs certain technical skills and Romania does not train this kind of specialists today. The French supermarket chains here have a lot of trouble finding bakers, butchers and other such specialists. As a result, many companies are thinking about creating the necessary schools themselves and not only inside their company. In Făgăraș, there is such a school that opened last September. Făgăraş is a small town, but as it happens there are five French companies there, many of which in the automotive industry, but also in textiles. They all told me the same thing, as I went there: “it is difficult to find people to hire”, as Sibiu and Braşov take all the workforce. We have also worked with the Ministry of Education in order to create a structure that allows alternating school classes and practice in companies.
Forbes Romania:What about agriculture, how interested are the French investors in Romanian agriculture?
Philippe Gustin: It is not the main field of interest for French companies coming to Romania, I think France ranks fifteenth in terms of land ownership. But it is the third in the food-processing industry, this is a strong interest from France here. We have very large companies like Danone, Lactalis, Tereos, Sofiproteol and many come here for food processing. As for proper agriculture, there is little interest, because we have a lot of land in France, but there are some nice exceptions in Alexandria –Giurgiu, and also some vineyards, there are a few French wine-growers that have come here.
Forbes Romania:Then what is the area that has attracted most French investors?
Philippe Gustin: Automotive. Dacia represents 3% of Romania’s GDP and 8% of export, which is huge, with 15,000 people working for Dacia including the subcontracting. By developing here in Romania, Dacia-Renault has attracted a lot of subcontractors, such as Valeo in Timişoara. But there are also other areas where France has the second or first place – banking (BRD), telecommunications (Orange), pharmaceuticals (Sanofi) and energy (GDF Suez).
Forbes Romania:Talking about Dacia, how do you see its future here, knowing that there are other countries like Morocco, which might represent competition to Romania?
Philippe Gustin: This is a vision that disregards the economic laws. Dacia is now a French-Romanian brand, with an entire production chain, from design to after-sales services. Who would have thought 15 years ago that Dacia, which was practically dead, would have growing market shares in export? Unfortunately the brand does not sell enough in Romania, as Romanians prefer buying foreign second-hand cars, which I believe is a mistake in terms of ecology and patriotism. But this is a brand that is developing and, such as other brands, it is getting closer to the target markets. So Dacia in Morroco is responding to a need, it is not about competition. The automobile field is very expensive, transporting the cars is particularly expensive, so they must adapt. You must forget about this idea of competition.
It is true that growth does not come from Romania and the number of cars produced in Mioveni and sold in Romania is diminishing, but it is due to the fact that Romanian people prefer foreign cars. One must ask oneself why do they do that? So as the brand needs to export, it needs to do it easily. One can only rejoice that Dacia has growing market shares in Western Europe. But it is true that proper infrastructure must be developed.
Forbes Romania:What would be the problems companies encounter here, besides infrastructure?
Philippe Gustin: Besides education and infrastructure, another problem would be the legislative uncertainty. Investors hate uncertainty in taxes and in the social area. The rules must be defined on a medium and, if possible, on a long term, as it is very damaging to a country’s image to change the rules often. Romania has a rather favourable tax system for investors, but one must not make it unfavourable by changing the rules. I would like to add something that is rather important to SMEs, which are the main investors in Romania now that the big companies are already here. SMEs don’t necessarily know how to adapt to expatriation and they need to be helped when facing bureaucracy. Chairmen of Chambers of Commerce always ask what to do in order to attract investors and I always say that they must find one person, one counter that deals with the investor. Only one, not several. Certain „județe” (counties) already have that, but I know some SMEs that were discouraged and left. There is the advantage of our cultures being close and of not feeling like strangers here, but making an investment is taking a risk and investors must be reassured and accompanied. This is one element that needs to be well managed, because the investors have a choice between several countries.
Forbes Romania:How many French companies have managed to overcome these obstacles and come to Romania?
Philippe Gustin: The Trade Registry has enlisted 7,000 companies with French capital. We estimate half of them are active companies. They are spread in many sectors and this is a good thing, I am often surprised in my journeys in Romania to meet investors doing amazing things. For instance, there is a company in Timişoara producing billions of little wooden teaspoons for coffee and ice cream sticks, made of a special wood in Maramureş. They export these teaspoons all over Europe and even beyond. They have skilled workforce and I think the best gift that nature gave Romania is its people. They are very flexible, speak many foreign languages and adjust well to expectations. Of course, there is also Romania’s geographical position as an advantage, and the size of its market – 20 million people – with sectors still offering a place to develop business – health is another example. The areas where we find French investors are almost like a mirror of Romania’s diverse potential.
Forbes Romania: If you were to compare Romania’s economy to a previous era of French economy, what would this era be?
Philippe Gustin : I think one cannot compare the two, because Romania’s economy had to evolve in a Copernicus-like leap in only 20 years. There is this paradox – the weakest cultivation average, but the biggest cultivation area in Europe. Then the fact that Romanians eat better at home than in restaurants shows that they have a taste that was not altered by industrial food. If you add to this the rich land that was not polluted by chemicals like in other countries and the skills, Romania could provide ecological food for its entire population. This is an asset, as consumers are more and more demanding. Supermarket chains could also show more interest for this. Plus there is the biggest growth in Europe. All the ingredients are there to produce the greatest results.