The pandemic has called many established structures of companies operating on an international scale into question. Supply chains in particular are suffering. So, quite a few employers and research-based companies are taking a look around to fine new locations within Europe. Stephan Albrecht of Staufen AG and Sebastian Metz, executive board member of the Chamber of Commerce Abroad (AHK) Romania, explain in an interview why Romania could be a good choice.
The Foreign Chamber of Commerce drives economic relations between Germany and Romania. It is the main contact for any German company interested in Romania as a business location. Its services and platforms facilitate the urgently needed networking for a good business launch within the country’s economy. Moreover, AHK advocates in favor of German business interests vis-à-vis the Romanian authorities in an effort to improve the framework conditions longer term.
COVID-19 and Supply Chains
Many companies with main headquarters in Germany source components or raw materials from subsidiaries in other countries. They often also outsource part or all of their production there. The downside of this approach became increasingly apparent during the pandemic: the further away the country in question was, the more difficult it became to sustain the supply chains. Wide areas of air traffic came to a standstill, shipping traffic increased, and it became painfully apparent just how narrow the eye of the needle in the Suez Canal really is.
This is among the reasons why a large number of German companies began to look for alternatives within Europe. Romania has been moving more and more into the spotlight. Quite a few companies had already recognized the advantages of the country even before the pandemic. Due to the idea of nearshoring, however, their number has been growing considerably since 2020.
The Benefits of Romania as a Location for German Companies
Romania offers several exciting incentives for German businesses: Compared to Central European countries, costs of production here are extremely moderate. Working in this country is also fiscally appealing. In fact, Romania also offers a very high standard of living and working: In terms of efficiency and possibilities, production in Romania is in no way inferior to that in Germany.
Yet seeing Romanian locations merely as extensions of German workbenches is too short-sighted. Over the last few years, investments by international companies here have greatly increased, as Sebastian Metz explains:
“What I also see are growing research and development activities by German companies here in Romania.”
More and more German companies are recognizing the opportunities this brings. The transformation process of Romania as perceived by German business leaders was already in full swing before the pandemic and has only intensified due to COVID’s proximity.
Interesting for Many Industries
It is not just the pandemic that has made the going tough for many sectors in the German economy. The automotive industry is facing increased pressure. Many companies in this sector are turning their attention to the opportunities offered by the Romanian economic landscape. The same holds true for the metal processing industry as well as for rubber and plastics processing companies. AHK Romania is noticing a growing interest – and not just in terms of production, but also with respect to research and development. Sebastian Metz is also confident that more and more service companies will become aware of the country’s potential in the near future.
A Country on the Move
The country on the Black Sea is not only interesting for foreign investors: Especially in and around Bucharest, Cluj or Timişoara, there is a very lively, dynamic scene involving Romanian start-ups that fuel and drive the market forward. Of course, this region is also of interest to German companies looking for exciting and profitable business contacts. Depending on the industry, though, there are also quite a few other locations that are worth considering. AHK Romania will be happy to answer any questions you might have.
Much Remains to be Done in the Area of Image
Some companies in Germany have not heard much about Romania. They often ask how the country’s security is, which surprises Sebastian Metz:
“It’s a beautiful country, it’s safe, and it’s a wonderful place to live.”
However, he admits, the country has so far severely neglected cultivating its image: there is hardly any investment being made to improve Romania’s image to the outside world.
He himself thought it would be a good idea for Romania to do more to promote a positive external image in order to attract more international investors: If more companies from different sectors and with main locations in different countries settle here, the country’s economy will benefit from diversity and exchange. Accordingly, the AHK Romania board member also recommends that all German companies with a branch office here promote the country.
Catching up to do Where Digitalization is Concerned
Similar to many other European countries, Romania still has a lot of untapped potential when it comes to merging IT and business. Developments in the IT sector are fast-paced, and yet not enough potential synergies between IT and business companies are being exploited.
“Currently, I’m seeing more like two parallel roads with little or no interaction with one another,”
comments Sebastian Metz. However, the country will benefit from progress in this area in the future – and there are plenty of opportunities for joint activities between Romanian and foreign companies here.
Profiting from Economic Growth
Economic growth in Romania in 2020 was stronger than in any other EU country. The country can also be quite pleased with its economic situation in 2021. This is an additional incentive for German companies to establish a further foothold here. So overall, the economic situation in Romania is very positive, while at the same time holding a lot of development potential. Innovative businesspeople seeking to exchange ideas and cooperate with local economic giants can tap into opportunities that lead to exciting new developments here.
Romania: Medium-term a Good Option
German companies currently deciding to establish a location for their business in Romania can benefit greatly in the medium term. Right now, many opportunities are still being developed, and many structures are being established. The new structural orientation of international supply chains towards the intra-European market has just begun. Long-term planning is necessary to meet all needs, but the first steps have been taken. Sebastian Metz recommends that German companies tour the country with an open mind and without prejudice.
Stephan Albrecht, Marketing Manager,
Sebastian Metz, geschäftsführendes Vorstandsmitglied,