This interview, with an introduction, was printed by the UKTI magazine Global Trader in 2014.
Recent headlines in the UK media have raised fears of an ‘invasion’ of people from Romania and Bulgaria, following the relaxation of EU immigration rules at the beginning of 2014. But what about the movement the other way –of British businesses seeking a foothold in the Romanian market? In 2005, Dr Mirela Meita opened a Romanian office for the London-based PR and public affairs firm Chelgate. Having worked as Director of the Office of the President of the Chamber of Deputies, she brought with her a rare insider’s perspective on the more intricate aspects of Romanian politics.
Now, with eight years’ experience as Director General of Chelgate Romania, she has also developed an understanding of commerce in Romania, and of the special nature of the marketplace in this once tightly-controlled communist nation. Here she speaks to Marcus Sowerby about the difficulties and idiosyncrasies of doing business in the rapidly-liberalising Romanian market.
Q Mirela, Romania has now been post- Soviet for over 20 years. Back then, there were radical differences between Romania and Western Europe. Does that still hold true today? Do you still notice Romanian idiosyncrasies as you move between London and Bucharest?
A Yes, I do, especially in my field, because Romanians’ understanding of PR is still so different. The notion of PR isn’t exactly alien, but it is definitely viewed as a management luxury. There are other differences. In rural Romania, almost everybody relies on cash. That has an unpredictable impact on consumption. And there are bureaucratic hazards: badly-connected outsiders may be outmanoeuvred by well-networked Romanians, whether in a planning application or in a tender. This is particularly true with government contracts.
Also, the state remains a far larger actor in the market than in most Western economies. Indeed, the European Commission has been an important client of mine since our office opened. We won that contract as an outsider, when we first started out – that’s rare, but we showed it’s possible.
Q In spite of these difficulties, and in spite of the recent immigration controversy, Romania is renowned as a very worthwhile commercial destination. Why?
A There are many answers to that question. At the close of 2013, The Economist wrote that “Romania is booming”, and reprinted an official figure from the National Statistics Institute putting Romanian GDP growth at 4.1% in 2013. That’s a very impressive figure, in its wider European context.
The country is also becoming more politically stable, while costs remain low. In that regard we can act as a foothold in Europe. Skilled graduates are abundant, including in IT. The country is also rich in opportunities for catching up: under-developed sectors can become chances for profit. The British firm Ukash has capitalised on that rural Romanian preference for cash, for example.
But the lesson of Debenhams’ experience in Romania is that you can’t simply grasp those opportunities without real forethought. Romania is not London. Probably the single most troubling problem for Westerners is corruption.
Q How serious is the corruption in Romania?
A It’s still there, even now. There have been contracts we have lost because we won’t play that game.
Even in media relations, it can occasionally be a problem. In many countries, it’s not unheard of for politicians – and sometimes businesspeople – to pay editors for favourable press. This isn’t common, however.
For us, operating cleanly, the challenge is to work without using these practices and to avoid the more common forms of corruption, like bribes. It can be done, of course, but, in Romania, if you don’t want to pay bribes, whatever business you are in, then life is easier if you have a Romanian partner who knows just how to keep you safe, and within the law. That’s a piece of advice given at the very front of the US Commercial Service’s 2012 introduction to Romania.
This is also important for British companies. Since 2010, the Bribery Act has made it a criminal offence for a British company to accept or pay bribes abroad, even if the practice has no impact on the British side of the business, and even if those bribes are paid by third-party contractors, like a PR firm. The sanctions can include imprisonment, fines and, obviously, enormous damage to corporate reputations. So it’s crucial that you find a firm, like us, that does business properly.
Q So is the Romanian media in good condition today? How does a new business go about generating press coverage?
A Well, the days of Ceausescu’s state-controlled media are gone, but that’s not absolutely good news. The communist media hired excellent journalists in its day – nowadays many professionals are leaving the business. There’s a rush for ratings and sales. Low-grade stories and tabloids are commonplace now. Political influence over newspapers hasn’t been exorcised entirely, either.
So if you have a newsworthy story, you can’t expect it to get coverage automatically. Again, it’s a matter of convincing the journalist that your story has merit, that your story deserves a place amongst the populist material that sells the newspaper. It’s seldom an easy sell.
Q So should companies worry about doing business in Romania? Debenhams recently cut its losses, as you mentioned, labelling Romania an “extremely difficult market”. Is relocating to Eastern Europe still too hazardous?
A I’ve been candid, but I don’t mean to be alarmist. In fact, Romania offers ample opportunities and, if you can, the best time to invest is before other people spot those opportunities. Property is cheap now. Labour is cheap now. Romania offers the growth rates of an emerging market in Africa without the political or security risks. The IMF and EU are strong-arming the government towards transparency while reducing it in size through privatisation. This has been controversial, but it’s good for business. Debenhams had trouble here, but Balfour Beatty is working on railway construction, and G4S is expanding in the Romanian security business.
Q What about government relations – how do firms handle that challenge, when they come from abroad?
A The key difference between Westminster and Bucharest lies in government structure, and also in social customs. It’s not actually corruption that provides the twist, because Westminster isn’t exactly the city of God. Neither is Washington.
Companies moving to Romania often need to conduct their political contacts at a very high level. But business-government relations are often informal here. That informality can be deceptive. There are still rules, some of them official, and you need to know them. But there are very few public affairs companies that understand how to influence the Romanian political system honestly in this country – and that includes the international firms. It’s very hard to translate public affairs experience in America, or even European countries, to Romania, and that’s especially true for companies handling complex issues.
At Chelgate we have some very experienced members of staff who have worked for years in their particular sectors, understanding the specific sectoral challenges. One of those challenges is the Bribery Act in the UK and the Foreign Corrupt Practices Act in the States, each meaning that you absolutely cannot leave it to a contact to “fix” things for you, as used to happen. That’s central to the way we operate – combining understanding of the Romanian marketplace with the ethics and professional standards that would be expected in London, or in New York.
Q So what do you think will be the main changes in the Romanian marketplace over the coming decade?
A In the last six months we’ve seen court sentences handed out to people who, two years ago, seemed untouchable, quite secure in their corruption. Formal tendering rounds are becoming more common. Personal friendships are counting for less. So I think the trend is an upward one, and Chelgate will increasingly deliver core PR and public affairs services to clients, giving less and less time to the roles we occupy today – that is, providing something like “PR+”, a combination of PR, public affairs, and helping clients to navigate their way safely through what you might call the venal or informal aspects or Romanian business and politics. We help clients address those peculiarities, without getting embroiled in corrupt or improper practices.
Obviously, this evolution will force change upon my sector, but the future belongs to the youth. We think that’s us!