The automotive sector is one of Hungary’s core industries and generates almost 21% of total exports. More than 600 companies employing a total of 100,000 people are active in the sector. Four large automotive Original Equipment Manufacturers (“OEMs”) have production facilities in the country: Suzuki, Audi, Opel, and Daimler. Serial production of Mercedes-Benz cars began in March 2012 in Kecskemét. Audi has been expanding since 2008 to establish the world’s second biggest engine plant in Győr, and an R&D centre, in addition to car assembly. The large scale investments by OEMs attracted numerous equipment manufacturers and other suppliers. Small- and medium-sized local automotive companies have also become stable and strategic partners of both locally based and Western European car manufacturers and Tier 1 suppliers.
Cooperation between the representatives of the automotive sector and educational and academic institutions is strong and focuses on R&D. Numerous multinationals have set up R&D centres in Hungary, including Audi, Bosch, Knorr-Bremse, Thyssen-Krupp, Arvin Meritor, Denso, Continental, Visteon, WET, Draxlmaier, Edag, Temic Telefunken, and ZF.
The electronics industry is one of the largest industrial sectors in Hungary, accounting for 22% of total Hungarian manufacturing production. The country is the largest electronics producer in the CEE region, providing 26% of total regional production. Around 112,000 people are employed in the sector. In addition to several prestigious OEMs, six out of the top 10 Electronic Manufacturing Services (“EMS”) providers in Europe are present in Hungary (Jabil, Flextronics, Foxconn, Sanmina, Zollner and Videoton). Some of the companies, such as National Instruments and Jabil, also conduct R&D activities.
Pharmaceuticals & Medical Technology
Hungary’s pharmaceutical industry with its century-long tradition is one of the most efficient and successful sectors of the Hungarian economy. With the most developed pharmaceutical and biotechnology sectors in Central and Eastern Europe, Hungary provides an ideal base for life science companies planning further expansion in this region, or towards the Balkan states, and the more distant markets in Eastern Europe and Asia. Pharmaceutical exports reached USD 3.93 billion in 2011. The sector directly employs approximately 15,000 people. The majority of the companies are located around four life-sciences clusters: Budapest, Debrecen, Szeged and Pécs.
The ICT sector accounts for 10% of total Hungarian GDP and it employs more than 100,000 people. Covering telecommunications, IT outsourcing, IT services, and software and hardware production, the Hungarian ICT market has grown fast in the last couple of years and leads the region in computer assembly and communications equipment manufacturing.
Hardware production is strong in central Transdanubia, including NOKIA in Komárom, and central Hungary (IBM in Vác). The majority of large software companies are located in Budapest. Several IT companies operate technology service centres and many of them have relocated their R&D activities to Hungary.
ICT related R&D drives more than a quarter of total R&D expenditure. Hungary has become a regional incubator for software development, including process control software, game programs and geographical information technology, focusing on navigation systems. Hungarian software developers have achieved international success in several fields, such as virus protection, bioinformatics, and IT security. The presence and successful operation of companies such as Ericsson, Oracle and Gameloft show further evidence of the high quality of IT in Hungary.
Although its share in the output of Hungarian industry has decreased over the past decade, the food processing industry still remains one of the most important sub-sectors of the economy. The food industry employed 124,000 in 2011. Its export revenues are vital to Hungary’s overall trade balance. Hungary is the only net exporter of agricultural and food products in the CEE region. The industry generates 6% of the country’s exports. Most food industry companies (more than 85%) are micro-enterprises that employ fewer than 10 people. The share of foreign capital in the industry is 47%. The processing of meat, coffee and tea, and the manufacturing of soft drinks are the sectors with the highest share of FDI in the Hungarian food industry.
Multinational companies involved in vegetable oil processing, and confectionary and snacks, for example, dominate the sector. There are about 200 large food producers altogether, two-thirds of which are owned by foreign investors. Large producers primarily use Hungarian raw materials. Recent data demonstrates the increasing share of FDI in the production of vegetable oils, which was the recipient of nearly half of the inflows of foreign capital into the food industry in 2011. The processing and preserving of fruits and vegetables and the manufacture of pet food have also been popular targets. Major foreign investors include Bonduelle, Bunge, Givaudan, Globus, Mars, Nestlé, POPZ, and Unilever.