Hi-Tech Industry Looks Abroad

HUNGARY

GABOR BOJAR started a computer software company in 1980 with $1,000, two employees, and high hopes. Today Mr. Bojar's company, Graphisoft, is one of Hungary's most successful private computer technology firms. It employs 40 people and sells the sophisticated ArchiCAD software for making technical drawings and blueprints to Western Europe and the United States.

But employees work in a cramped headquarters with only two telephone lines. To send a fax to the US, they often route it through West Germany because of Hungary's poor phone system.

Graphisoft's problems typify those awaiting US hi-tech firms interested in greater trade and investment in Eastern Europe.

``Hungary is not Western Europe or the US,'' says Bojar. ``Our telecommunications are poor and there's not enough hard currency to finance imports.''

But if US hi-tech companies look for cooperation rather than quick profit, Bojar and other experts advise, both US and Hungarian businesses will greatly benefit. US companies should make use of Hungary's resources.

``Hungary's greatest asset is brain power,'' Bojar says.

He explains that Graphisoft and other companies draw on Hungary's long tradition of educational excellence. Almost all of Bojar's staff, for example, hold an MA or PhD. This allows Hungarian software developers more freedom than their US counterparts, he says.

Janos Kalman, an attorney specializing in business law, says there are hundreds of small Hungarian development companies like Graphisoft.

``There is tremendous potential for cooperation with foreign investors,'' he says.

Cooperation may mean increased trade, joint ventures, or outright purchase. West German, Austrian, and Japanese companies are already considering purchasing shares in or setting up joint ventures with Hungary's top computer and electronics firms.

The huge state-owned Computer Research and Innovation Center, for example, is now in the process of breaking into six independent companies and has sold some shares to Italy's Olivetti.

Mr. Kalman says that compared to Western Europe, Hungary can offer investors skilled labor at cheap wages. A production worker at a joint venture, he says, earns about $350 to 400 a month. Highly trained technicians earn $500. In addition, real estate outside Budapest is cheap.

Gabor Demszky, a national leader of the Alliance of Free Democrats which contested the parliamentary runoff elections, says the newly elected government ``is anxious for hi-tech investment.'' In order to help eliminate the country's $21 billion foreign debt, his party advocates the rapid privatization of state-owned computer and electronics firms.

Mr. Demszky advocates lifting of COCOM (Coordinating Committee on Multilateral Export Controls) restrictions against Hungary. COCOM rules were initially designed to keep hi-tech goods with potential military applications out of East bloc countries. At a February meeting, COCOM indicated it would liberalize some rules by June.

Roadblocks exist in Hungary as well. Kalman points out that Hungarian managers and employees are unfamiliar with Western production techniques and rapid work pace.

Nevertheless Kalman and Hungarian businessmen are optimistic about the prospects for hi-tech cooperation.

``Hungary is on the verge of a new era,'' he says. ``There is tremendous potential for venture capital here. I hope people in the US will take up the challenge.''

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