Tag Archives: multinational companies

Multinationals accused of selling inferior food products to Hungarians

It cannot be a coincidence that Magyar Idők, the mouthpiece of the Orbán government, only now discovered a three-year-old study about the alleged poor quality of imported food from Western Europe. Just as it cannot be a coincidence that the following day János Lázár called the incident “the greatest scandal of the coming years.” Another battle against Brussels seems to be setting up. The charge is that allegedly identical products sold in East European countries are inferior to those sold in Western Europe. A few days ago the Slovak Ministry of Agriculture came out with this piece of news based on comparisons of products sold to Slovakia with products sold to Austria.

Upon inquiry, Magyar Idők learned that the Hungarian Ministry of Agriculture had done a similar test and that their findings were practically identical to the Slovak results. Since one must be extremely careful with Magyar Idők’s wording, let me quote the passage. It was in 2014 that “The Nemzeti Élelmiszerlánc-biztonsági Hivatal [Nébih] compared 24 identical or very similar products on the basis of their sensory qualities and their composition and description.” I don’t think a comparison can be scientific if the testers compared not only identical products but “very similar products” and if they relied on the products’ “sensory qualities.” But let’s go on. They found that all the chocolate tested was of equal quality, but in products with wafers the Austrian variety was crisper. Again, one doesn’t have to be an expert on the consistency of food products to know that age and atmospheric differences might make the wafer soggy. Nutella’s hazelnut cream, according to Nébih, was less soft than the one Austrians got. And although a certain chocolate bar filled with marzipan had exactly the same ingredients, the chocolate melted more slowly than the one in Austria did. The complaints went on and on. Even Hungarian Coke was found to be inferior to the Coke sold in Austria. Magyar Idők summed up the sad situation in Hungary with a caption under a picture of a woman looking intently at grocery store shelves: “Often in vain does a domestic shopper search, she can’t find Western quality on the shelves.”

Coca-Cola HBC promptly explained the difference in taste between the Coke sold in Austria and that sold in Hungary. In Hungary the company uses, just as it does in the United States, high fructose corn syrup, in this case made from Hungarian corn. In some other countries Coca-Cola uses sugar because of local regulations. The sugar Austria uses in its Coke may make an appreciable difference in taste. According to a Huffington Post article, 85% of people could tell the difference between regular American Coke and Mexican Coke, which still uses sugar. Moreover, 80% of them preferred the Mexican variety.

Company after company denied the existence of double standards. In the case of the Manner wafers, the company spokesman cited possible differences in transportation and storage. Some of Nestlé’s products were among the samples tested. Its spokesman pointed out that Nesquick OptiStart is actually made in Hungary and supplied from there to 17 countries, while two other Nestlé products are produced in Spain and in France. All from the same recipe. Knorr didn’t offer any explanation, but according to Zoltán Fekete, secretary general of the Magyar Márkaszövetség (Hungarian Brand Association), it is likely that Néhib was comparing apples and oranges because even the amounts of the products tested were different.

Regardless of the merits of this test, which sounds haphazard at best, the government finds it useful. There are few subjects that can arouse a Hungarian more than stories about the inferior quality of food grown and processed elsewhere. Farmers and their representatives in particular like to call all food coming from abroad “garbage.”

The claim that Hungarians are being fed Western “garbage” will turn the people against Brussels and multinational companies. Fidesz politicians add fuel to the fire when, for example, Lajos Kósa tells Hungarians: “I find this affair deeply humiliating, outrageous, and intolerable. This cannot be explained by differences in consumer taste. They bring their junk here because it is good enough for you.”

Perhaps the government is frustrated that after years of propaganda against the European Union Hungarians still overwhelmingly support Hungary’s EU membership. So now as a result of what some people call an urban legend, Agricultural Minister Sándor Fazekas, one of the least illustrious ministers in the Orbán government, ordered an all-encompassing test of 100 products. Testing has already begun. Even an opposition party, Együtt, fell for the “garbage” propaganda.

Instead of getting entrapped in all that hyperbole, let’s turn to an expert whose opinions I think we can rely on. György Raskó was a member of parliament (Magyar Demokrata Forum and later Magyar Demokrata Néppárt) between 1994 and 1998. He is an economist with a specialty in agro marketing and, together with his wife, runs a large modern farm. He is a real expert on anything to do with agriculture. I might add that he speaks English, French, German, and Spanish with such fluency that he can conduct high level negotiations in all four languages.

According to Raskó, different standards are applied to foodstuff in different countries, and the international companies have to be in compliance with these rules. In some places, for example, beet sugar must be used; in others only glucose-fructose syrup can be used. There are, of course, other considerations as well. Supermarket chains order products they can sell. It is a well-known fact that for Hungarians price is a prime consideration, given the low wages in the country. Therefore, the chains order cheaper products in the first place. The high-quality products are also available, but they don’t dominate the market because they are too expensive for most people.

One mustn’t forget that the Hungarian exporters are “biased” too. While Hungarians send their Tokaji Aszu 6 Puttonyos to Great Britain and the United States, the 4 or 5 Puttonyos go to Poland. As far as cold cuts are concerned, two-thirds of the kinds available in Hungary are not allowed to be marketed in Austria or Italy. Interestingly, the government which is so fussy about the quality of Hungarian food products allows certain ingredients in hot dogs and bologna that are not permitted in, let’s say, Austria.

I have no idea what will come of all this. It is possible that the Visegrád 4 will complain about their inferior food imports in Brussels. Since the government-inspired food scandal broke out in Hungary, the Czech government also discovered that the Germans and others are sending them “garbage” instead of food. The Hungarian media reported that the Visegrád 4 countries discussed the matter already at their last meeting.

One possibility, which an expert who was not ready to reveal his name suggested, is that the Hungarian government will try to exclude some western processed foods from the Hungarian market. Considering that domestic products are often more expensive than imported ones, such a move would only penalize the hard-up Hungarian consumers.

February 21, 2017

A new year: roll back the clock

László Kövér, president of the Hungarian Parliament, has a unique ability. Even if he utters only a couple of sentences he manages to squeeze several outrageous comments into them. Can you imagine when he has a whole hour to share his complaints about the modern world, which is rotten to the core and will be even more awful with each passing day? Unfortunately, on January 1, he did just that on Echo TV, a far right channel. Kövér’s interlocutor was the like-thinking Zsolt Bayer, who sighed at frequent intervals whenever he thought that the weight of the issues was close to unbearable.

During this hour an awful lot of nonsense was uttered by these two men, but the overwhelming impression they left us with is that they are very unhappy because Hungary is no longer what it was when they were growing up. Kövér was born in 1959 and was 31 years old at the time of the regime change. Bayer was born in 1963 and so was 27 years old in 1990. Their formative years were spent in the consolidated Kádár regime. It was, they recall, a time of simple pleasures, close family ties, often two generations sharing the same apartment or house because of the lack of available housing. Interestingly, the ideal woman in this conversation was not the mother who most likely worked in some office or factory by then but the grandmother who looked after her grandchildren. This grandmother worked all day long without complaint. She wasn’t frustrated; she wasn’t bitter; she wasn’t depressed. She gladly sacrificed her life for her brood. Or at least this is how Zsolt Bayer envisaged the life of his grandmother. Wouldn’t it be wonderful if this idyllic time could come back.

As for the future, it is bleak indeed. “Homo sapiens,” especially in the most developed parts of the world, seems to have lost its instinct for survival while in poorer regions, like Africa, more and more babies are being born. It looks as if “only the European white race is capable of committing suicide,” Kövér claimed. This downward spiral started with the introduction of old age benefits, which made children superfluous as providers in later life. This bemoaning of such intrinsic parts of the welfare state as old age benefits and perhaps even health insurance leads me to believe that these people feel utterly out of place in the 21st century. It is not a coincidence that the conversation about the past centered on Bayer’s grandmother who, judging from the time of her death, was born sometime around 1910. If it depended on these men, they would lead us back to the time of the Horthy regime, specifically into lower-middle class families in which the wife remained at home, looking after the children. These people would, if they could, simply get in a time machine and fly back a good hundred years, just as Bayer indicated, in one of his recent articles, he would gladly do.

In addition to this longing for an imagined past, they have a strong belief in Hungarian exceptionalism, which stems from the socialist era in which these two men grew up. Those fifty years, which Kövér simply calls Bolshevism, are the source of all of Hungary’s problems, which the last twenty some years of democracy couldn’t remedy. So, one would expect that he and Bayer would reject the whole period. But this is not the case. In their opinion, those years kept Hungarians as well as other countries of the Soviet bloc real Europeans. Old-fashioned Europeans who adhere to Christian, national values as opposed to the westerners who went astray: they became liberal, they are politically correct, they don’t believe in family values, they allow same-sex marriages, they don’t want to save Christianity from the Muslim migrants, and above all they are helping the United States and the multinational corporations destroy the nation states. Bayer goes so far as to claim that by now Hungary is the only truly European country. Kövér is a bit more generous: the Visegrád4 countries could be included in this small community of real Europeans.

Who is responsible for this state of affairs in Europe? The answer, in Kövér’s opinion, is simple: the multinational companies, whose interests dictate the destruction of families and nations. I would perhaps understand why multinational corporations would like to see fewer regulations that vary from state to state, but for the life of me I can’t fathom why they would want families to disappear. In any case, these multinationals want to weaken national governments because “they want to govern.” In this dirty work they receive help from “useful idiots and paid agents among the European political elite.” If you add to these two categories the “cowards,” they already hold a two-thirds majority in Brussels. These people are “the mercenaries of the United States; they are swindlers or at best unfit idiots who try to turn us out of office in the most dastardly, the most cunning, and the most boorish way.” Hungary is a besieged fortress attacked by the mercenaries of the United States. Or, less elegantly put by the boorish president of the Hungarian parliament, it is a country whose prime minister, like a pig on ice, must somehow stay on his feet while others try to trip him up.

If the Orbán regime shapes its domestic and foreign policies based on the muddled views expressed in this interview, they will be guaranteed failures. Time machines are figments of the imagination, and any attempt to turn back the wheel of time is a hopeless undertaking. The same failure is guaranteed if the Orbán regime bases its relations with the European Union on the mistaken notion that Western European political mercenaries in the service of the United States are intent on overthrowing the government in Budapest.

As for this relentless war against the multinationals, it will only result in decreasing foreign investment in the country. I know that this is no threat to Kövér, who has infinite trust in the ability of Hungarian entrepreneurs to replace the foreign companies currently in the country. But whether Kövér and Orbán like it or not, in today’s global economy they cannot be dispensed with, at least as long as Hungary is part of the European Union. To suggest otherwise is just idle talk.

What is behind the Sunday closing of Hungarian retail stores?

Since this coming Sunday will be the first time most larger retail stores will be closed by law, let’s return to one of the most politically foolish and economically harmful decisions of the Orbán government.

I already wrote two posts on the subject, both in late 2014 when the Christian Democratic Party (KDNP) once again floated the idea. Once again, because this was not the first time that KDNP pressured the Orbán government to curtail the liberal retail store hours that have existed in Hungary for the last twenty years. In 2011, when the idea was first proposed, Viktor Orbán wisely rejected it, saying that the Hungarian economy couldn’t afford the luxury.

But in early November 2014 the KDNP leadership returned to its favorite hobby-horse. This time, learning from the 2011 fiasco, they decided to turn in their bill in the form of a proposal by an individual member of parliament. In 2011 it was the government that vetoed the suggestion for economic reasons, citing the results of an unpublished impact analysis. When an individual member of parliament submits a bill, however, no impact study is necessary.

The initial reaction of government members, Fidesz leaders, and Fidesz MPs to the KDNP proposal was negative. Mihály Varga publicly voiced his opinion that “‘the move wouldn’t be wise.” Lajos Kósa, another heavyweight in the party, was also against the bill. So was Miklós Seszták, minister of national development. Initially, even Viktor Orbán was unenthusiastic about the idea. In one of his radio interviews he admitted that he himself shops on Sundays and added that he “is not planning to influence the behavior of the people, who can decide for themselves what to do on Sundays.” So, by mid-November most commentators believed that the KDNP proposal was dead in the water. If the government vetoed the KDNP proposal in 2011, how could Fidesz possibly agree to it “in such sensitive times, after the internet tax affair when there are demonstrators against [the government],” a member of the governing board of Fidesz asked.

Great was the surprise when less than two weeks later, on December 1, 2014, Népszabadság learned that the full Fidesz caucus and naturally the prime minister now enthusiastically endorsed the zany plan of KDNP. Viktor Orbán’s abrupt change of mind was especially strange because initially he wanted to see an impact study and no analysis was produced in the interim. Orbán within two weeks became such an enthusiastic supporter of the measure that he paid a visit to the Fidesz parliamentary delegation and twisted the arms of his troops in parliament. By early December the government parties gave their unanimous blessing to the measure. Since then they have been tinkering with it with scores of amendments which at times loosen, at other times tighten its grip on retail stores.

Fidesz brain / Closed on Sundays too

Fidesz brain / Closed on Sundays too

Although it was always pretty clear that the majority of Hungarians were against the Sunday closings, since March 13th we know how strongly people feel about KDNP’s idea. Ipsos conducted a poll which showed that 64% of the population want stores to be open and only 32% are for store closings. Ipsos broke down the data on the basis of sex, cities and towns versus villages, young versus old, and interestingly enough the differences were not substantial. In fact, there were some unexpected results. For example, people living in villages opted for keeping stores open on Sunday in higher numbers (70%) than people in Budapest (62%). Clearly, the measure is not popular. Just how unpopular it is we don’t yet know, despite the appearance of the poll, because last Sunday was a national holiday and the stores would have been closed anyway. But this coming Sunday, the people who missed the news will be greatly surprised when they travel to their closest supermarket and find it locked up. The song that is spreading like wildfire on YouTube expresses people’s sentiments about the Sunday closings. It was written to the tune of the internationally known song “Gloomy Sunday,” from the 1930s.

Opinions about why KDNP was so eager to change the law vary. Some people believe that since it is a religious party (and here and there even call the leaders bigots) it wants Hungarians to go to church instead of to the mall. Others interpret the move as an attack on multinationals in favor of the one large Hungarian chain that is made up of family-owned franchises, most of them small enough not to be affected by the new law. The latter theory might explain why Viktor Orbán eventually decided to support the KDNP proposal. After all, he wouldn’t at all mind if the foreign supermarkets and large chains simply abandoned their businesses in Hungary. Such an outcome would benefit his favorite oligarchs, who could purchase their stores on the cheap. These hypotheses may reflect KDNP reasoning, but I don’t think either fully explains why the prime minister changed his mind and decided to endorse the KDNP bill.

A few days ago another theory emerged, presented by a “senior researcher” of the political think tank Policy Agenda, which I found utterly unconvincing. There is nothing “sinister” or “complicated” behind this decision, he explained. After all, KDNP is a coalition partner. They have had many demands that were not satisfied by their larger partner. So, it was time to throw them a bone. First of all, it is not true that KDNP’s demands have been ignored in the past. Just think of the increased subsidies for parochial schools, the incredible number of gymnasiums that were passed into the hands of the Catholic Church, and the decision to make religious education part of the regular school curriculum. Second, this is not how political decisions are reached. Would Viktor Orbán for such a trifling reason assume substantial political risk? Unlikely.

My own theory is that the Christian Democrats, realizing Fidesz’s rapid loss of support and the decline in Viktor Orbán’s popularity, decided to put pressure on the prime minister, most likely accompanied by a threat. KDNP has 23 votes in parliament, which can be withheld at any time. I wouldn’t be at all surprised if the KDNP heavies told Viktor Orbán that it is either Sunday closings or no parliamentary support from the Christian Democrats on certain key issues.

As of this morning we know what was in the impact studies of 2011, which were leaked to Népszabadság. Pretty much the same negative results that trade unions and trade associations have predicted since the bill resurfaced last November. There will be a loss of 10,000 to 15,000 jobs. This can be translated into a 2.3 to 3.4 billion forint expenditure for the government in the form of unemployment insurance. About 26 to 27 billion forints would be lost annually in income taxes and social security payments. Expected lost sales for the companies would be 20.4 billion forints. VAT collections would drop by about 7.6 billion forints. All told, the Sunday closings would cost the Hungarian government 43.9-49 billion forints. That’s a steep price for Fidesz to pay to accommodate KDNP and a heavy burden for the Hungarian taxpayers to bear to keep the Fidesz-KDNP government in power.

Sunday shopping? The Christian Democrats against the multinational chains

It was only yesterday that Viktor Orbán had to retreat, even if only temporarily, on the issue of taxing internet usage. A hundred thousand people were out on the streets of Budapest and elsewhere in the country. Now the government may be preparing the way for a new debacle, although I personally can’t believe they will be so dim-witted.

The Orbán government on paper is a coalition government. Fidesz’s partner is the Christian Democratic People’s Party or KDNP whose chairman, Zsolt Semjén, is Viktor Orbán’s deputy. The funny thing about KDNP is that it is a non-party. It’s like a private club where the party leaders get together now and again, but for over a decade the party has been absent as a separate entity at national elections.

The Christian Democrats don’t disturb much water. Their parliamentary members dutifully vote alongside the Fidesz PMs. In fact, it seems almost random who sits with the KDNP caucus and who with Fidesz. The important thing is that KDNP’s caucus should be bigger than that of MSZP, Jobbik, or LMP. The Christian Democrats don’t contribute much to Fidesz and Orbán’s government. Their main purpose is to provide Christian trimmings to a Christian-national regime. Occasionally, thankfully only very rarely, they come out with ideas of their own. Three years ago they proposed that stores should be closed on Sundays. Good Christian families should attend church instead of shopping in department stores and malls. And the poor workers who are forced to work on Sundays must be protected from those awful foreign capitalists. At that time, the government–where of course the last word is that of Fidesz–refused to introduce the measure, which would have had disastrous consequences for the economy.

Source: Europress / AFP

Source: Europress / AFP

But these Christian Democrats are tenacious; they don’t give up easily. They came out with a new version of a bill which was leaked to Magyar NemzetThe proposed bill is an attack on supermarket chains and discount stores owned by international companies because the bill’s provisions would affect only shopping centers and stores larger than 400m². Tobacconists, pharmacies, gas stations, flower shops, newspaper stands, and bakeries would be able to remain open with some restrictions. For example, they could sell their wares only until noon. Restaurants, stores in airports and railway stations, and open-air markets could continue doing business as usual.

But restricting Sunday shopping is not enough for our Christian Democrats. They are upset over those foxy owners of chains who try to sidestep the controversial “plaza stop” law by establishing smaller stores and thus competing with those mom and pop stores the “plaza stop” legislation is designed to protect. They opened stores in buildings that are now deemed to be of historic significance or in world heritage sites. If the proposal is adopted, these intruders would have to vacate their current premises by January 2016.

If the KDNP’s bill on Sunday closings was a bad idea three years, it is doubly so today. The government has enough on its plate: corruption cases, strained relations with the United States, the internet tax, and the growing displeasure of Brussels over the Hungarian government’s flaunting of every rule in the book. This move is blatantly discriminatory against foreign companies.

A blogger who happens to be familiar with the retail trade brought up multiple arguments against the proposal. It is injurious not only to the financial well-being of the stores but also to the employees who receive a higher salary (+50%) for working on Sundays. Stores also often hire outsiders for the weekends. These people are happy to supplement their meager salaries with some extra work. In these chains Sunday is the third busiest day of the week, after Saturday and Friday.

How would people feel about this restriction? The Christian Democrats claim that they discussed the matter with employees and with families who have many children and that they were most enthusiastic about the plan. I doubt that the party is basing its estimates on scientifically conducted polls because I’m almost certain that the great majority of the population would be outraged at the very idea. I talked to people who went through the times during the Kádár regime when everything closed at 5 p.m. and who said how happy people were when stores were open on Thursday nights. Apparently everybody felt liberated when, after the change of regime, stores were open all day long, including Sundays. The Christian Democrats bring up the examples of Austria and Germany where stores are closed on Sundays. But it is one thing to have a long tradition of Sunday closings, to which people are accustomed, and another thing entirely when people who are used to stores being open seven days a week for  the last twenty-five years are now being told that, sorry Charlie, no more family shopping on Sundays.

A couple of online sites offer their readers the possibility to vote on the matter. I checked out both, and a sizable (although again unscientific) majority opposes the measure. On one site: 69%. Another blogger makes fun of the Christian Democrats, saying “nonexistence must be hard for a party.” They feel that they have to come up with something now and again, but they surely picked a very bad time to introduce this bill. I must agree with him. I can already see another 100,000 demonstrators on the streets all over the country if the government makes Sunday shopping impossible.