Doing Business in Hungary
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Hungary occupies a strategic location at the heart of Europe. With an open and export-driven economy, the country is an attractive destination for international business. Expats doing business in Hungary will find themselves amongst a highly skilled and educated workforce, and amid a business culture that is quite Western in nature.
As with most countries in the former Eastern Bloc, Hungary moved from a socialist economy to a market economy in the early 1990s. It has been a member of the EU since 2004.
Hungary’s main industries include mining, construction materials, electronics, pharmaceuticals, textiles and motor vehicles. The capital, Budapest, is the commercial centre of Hungary, with many multinational companies having offices in the city, including IBM, Pfizer, Ericsson and Microsoft. The city is also a central hub of innovation and research as home to the headquarters of the European Institute of Innovation and Technology.
It is relatively easy to do business in Hungary, as demonstrated by its ranking in the World Bank’s Ease of Doing Business Survey for 2020. Hungary ranked 52nd out of 190 countries surveyed. It achieved the top spot for trading across borders and also did well in enforcing contracts (25th) and registering property (29th).
Business hours are usually between 9am and 5pm, Monday to Friday. It is not unusual for Hungarians to work overtime and not take a lunch break. Most Hungarians take holidays during the summer months of July and August, so it’s best to avoid scheduling important meetings during these months.
Hungarian is the official language. Although many of the younger generation have a good command of English and it is becoming increasingly popular in business circles, many of the older generation primarily speak Hungarian or German.
Hungarians take pride in their appearance and it’s important to dress appropriately. Formal business attire is the norm; men should wear a dark-coloured suit and tie, whereas a classic business suit is acceptable for women.
Gift giving is not necessary in Hungarian business circles; however, if invited to a Hungarian associate’s house for a meal, then a small gift of chocolates or flowers is appropriate, but roses and lilies should be avoided. Gifts are generally opened immediately.
Although there are equal opportunities for women, the majority of senior management positions are still occupied by men.
A firm handshake with direct eye contact is the acceptable greeting between Hungarian business associates. If greeting a woman, wait for her to extend her hand first. Otherwise, a nod of the head is acceptable. Hungarians address each other by their surnames first and then their first names, e.g. John Smith would be Smith John.
Business culture in Hungary
Hungary’s communist legacy means that bureaucracy still abounds in its business dealings. However, Western influences have become more prominent in business culture in Hungary in recent years, and expats should not struggle too much getting used to how things are done in this Central European country.
Hungary is a largely homogenous nation with close to 98 percent of the population being Hungarian. The official language is Hungarian, or Magyar as it is known locally, although English and German are also both widely spoken. English is becoming increasingly popular in business circles and is now the unofficial language of business in Hungary. Although expats would do well to learn a few key phrases in Hungarian, it is a notoriously difficult language to learn.
Hungarians are generally very friendly and generous hosts and socialising is an important part of business relationships; face-to-face meetings are key. In line with this, Hungarians prefer direct communication and vague and ambiguous language should be avoided. Meetings frequently start with small talk, as Hungarians prefer to get to know their business partners. Business relationships are vital and a lot of time is taken to build a solid foundation.
Business structures in Hungary are hierarchical and status is important. Decisions are made from the top down and senior managers don't consult their subordinates before making a decision. Decision-making can be a slow process, as Hungarians prefer to consider all aspects of a deal before taking any concrete action. Punctuality is incredibly important and cancelling meetings at the last minute is decidedly detrimental to any further business dealings with the company in question.
Dos and don’ts of business in Hungary
Do expect to socialise with Hungarian business associates. Hungarians enjoy getting to know business partners in a social setting before any business decisions are made in the boardroom.
Do address Hungarian business associates by their full title
Don't be late for meetings and avoid cancelling meetings at the last minute
Do show respect to senior managers and older associates as hierarchy and status are important in Hungarian business circles
Don't rush meetings and business negotiations. Hungarians prefer taking time to consider all aspects of a business deal before making an informed decision.