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Friday, 29 November, 2002, 17:55 GMT
High hopes for hi-tech
Hungarian computer engineers
Hungary has no shortage of highly skilled technicians

The EU will soon formally invite 10 countries to join - a move that for many marks the climax of the transition from communism. BBC News Online is touring Eastern Europe to find out if its economies are up to speed.
If you think doing business in post-communist Eastern Europe is tricky, you should have tried communist Eastern Europe.

When Gabor Bojar wanted to launch his software firm in 1980s Hungary, he had to pawn his wife's jewellery to raise seed capital, and smuggle four precious Apple Macintosh computers through the Iron Curtain.

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From such picturesquely rickety beginnings, Mr Bojar's firm, Graphisoft, now has close to 300 employees, 10 offices around the world and distributors in 80 countries. And more than 100,000 people worldwide use its main product.

In the process, the firm has led a technological revolution in the unlikely surroundings of Hungary, a boom that policy makers hope will eventually transform the country's economy.

But does Hungary have what it takes to succeed in the hi-tech business?

Competitive advantage

For Mr Bojar, communist Hungary had its advantages as a hotbed of software development.

Telecoms and IT spending
"Because exports to communist countries were restricted, Hungarian programmers were used to working on very tiny, unsophisticated computers," he says.

"That meant they had experience of producing relatively complicated software that could run on relatively simple hardware."

This sort of skill was in great demand during the 1970s and 1980s, and Hungarian programmers were keenly sought after by Western firms such as Germany's Siemens.

Good timing

At the beginning of the 1980s, Hungary became the first country in Eastern Europe to toy with free-market reforms, allowing and even encouraging the foundation of small private companies.

Graphisoft design
Graphisoft helps architects visualise their design
Mr Bojar, a trained physicist, saw that Hungarian programming skills were ideally suited to the limitations of the personal computer, which was just coming onto the market in 1982.

His experience in computer-aided design, and especially in three-dimensional modelling, convinced him that the architectural market was a potential goldmine.

"If we could just get a 3D design program to work on PCs, then that should be a nice little business: architects need sophisticated systems and, importantly, they don't have much money."

Building a business

And so it proved.

Gabor Bojar
Mr Bojar says tech firms don't need state help
Graphisoft, helped out by US computer maker Apple before the fall of the Berlin Wall, quickly built up a dominant market share for architectural software on Macs.

In the far bigger Windows market, it is way behind market leader Autodesk, but still claims around 10% of the global market for architectural systems.

With almost all sales coming from outside Hungary, Graphisoft has been careful to present a blandly multinational face to the world.

"It's not that we make any secret of being Hungarian," Mr Bojar says.

"But our nationality is simply not relevant. That's the essence of the information age - no one cares about the origin of the product, just how well it works.

"In the US market, indeed, our disadvantage was not being Hungarian, but being European."

Too much talent

Being Hungarian is no longer so shameful.

Hungary has no problem tempting talent to stay
The country is building up a formidable reputation for technological innovation.

That is mainly the result of its supreme educational standards, which have produced a string of Nobel Prize winners and what some say is the highest ratio of useful inventions per head in the world - including the biro pen, the Rubik's cube and, very distantly, the computer.

"We have always had an abundance of mathematicians, engineers, physicists and other highly-qualified people," says Mr Bojar.

"The problem is that in the past there were too few Hungarian firms to keep all these creative people busy, and now there is still not enough management expertise in the country."

Creative minds

In the global competition for hi-tech cash, Hungary has a few aces up its sleeve.

Although costs are low, Mr Bojar says Hungary need not fear a price war with programmers in India and other bargain basement markets.

Graphisoft head office
Graphisoft is coy about its Hungarian origins
"Indian programmers are fine when the product is specified down to the last details, but we thrive when there is a demand for creativity."

And while its competitors - notably Russia and some Asian countries - have suffered an accelerating brain-drain in recent years, Hungary has had no problem in holding onto its home-loving talent.

This is already starting to pay off: almost half of foreign direct investment into Hungary - $23bn (14.8bn) so far and counting - is related to the IT sector.

And while IT firms account for only 5% of Hungarian employment, they already make up almost one-quarter of its exports.

The state steps in

Everything should be just fine, Mr Bojar says, as long as the government is not tempted to meddle.

For some years, the Hungarian Government has been promoting a vast and unwieldy plan - named after Szechenyi, a 19th-century nation builder - to bring the country's economy up to date.

The Szechenyi Plan intends, among many other objectives, to make Hungary into a hi-tech paradise in double-quick time - what one Budapest analyst calls "a laptop for every peasant on the puszta".

The government plainly takes technology extremely seriously, hence the national bout of hand-wringing in October, when IBM announced the closure of its hard-disk factory near Budapest.

Going it alone

Mr Bojar, meanwhile, regards any government help with a shudder.

"I do not like direct support; I don't expect the government to give me money," he says.

"They should focus on giving me a reliable framework in which to do business, and most of all, should put money into the education system, so we get the best people out of the universities."

"But please, don't just throw taxpayers' money at it. I'm a taxpayer myself and don't appreciate it."

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See also:

01 Nov 02 | Hardtalk
22 Oct 02 | Business
27 May 02 | Europe
27 Nov 02 | Country profiles
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