1. Comparative Analysis of Added Value with Special Focus on Furniture Manufacturing SMEs 4th September 2015. Balázs Barta

2. Convergence or Divergence in EU? 268 900 000 000 Euro in 2007-2013 for Convergence and Cohesion Sources: European SME Annual report 2013-2014; 2008 vs 2013; http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/publications/guide2007_en.pdf http://ec.europa.eu/regional_policy/sources/docoffic/official/regulation/pdf/2007/publications/guide2007_en.pdf

3. Source: Recovery on Horizon? Annual report on European SMEs, European Commission Consistent Performers versus ‚Catching up Group’

4. Problem: train is not just slow, but goes in the wrong direction…

5. International and National Economic Policy Focal Point: boost innovation value and export performance of the SMEs Quotation: Hungarian Economic Policy 2004-2006; 2007-2013; 2014-2020 and assumingly 2021-2028 onward ….

6. How does the economic landscape look like? Who are the SMEs? How do they perform? Who are the managers? What goes wrong?

7. Performance of Foreign Owned Enterprises in Hungary Source: own calculation based on Hungarian Tax Office data

8. Industrial distribution of Foreign Owned Enterprises Source: Hungarian Statistical Office report

9. Challenges: Foreign Owned Enterprises are concentrated on high added value sectors When supporting e.g. supply industries to automotive, it is 87% FOE

10. Geographic concentration of SMEs’ added value Source: own calculation based on Hungarian Tax Office data

11. Geographic concentration of SMEs’ added value Source: own calculation based on Hungarian Tax Office data

12. Challenge Limited resources of SMEs in the countryside to re-invest Non-existent ICT out of Budapest, no SME research organization

13. Forestry and logging Wood retailSawmill Furniture Production WholesalerRetailer 34%5,5%6,7%6,1%3,7%3,6% Hungary Furniture price vs. inflation 23% 3,8%8,6%7,0%5,6% 9,4%9,0%9,7%7,3% 11,0%11,4%6,6%6,4% 10,6%5,4%4,4%4,3% 7,5%8,0%6,5%6,7% 4,8%9,9%4,8%5,2% Germany Austria Poland Bulgaria Slovenia EU average 6,8%6,6%7,6% Italy Hungarian Furniture Manufacturing Gross Operating Rate in Double Squeeze Source: own calculation based on EU Stat

14. 6,2%6,6%8,9%10,8%8,7% Hungary Food industry 8,8%11,3%10,2%9,0%12,0% 8,7%11,6%9,4% 5,9%8,0%8,8%6,2%10,2% 7,7%8,5%8,6%6,0%8,9% 7,5%6,7%13,6%9,8%7,3% Austria Poland Bulgaria Slovenia EU average 7,6%8,5%9,33,7%5,3% Italy Hungarian furniture production has lower GOP than other Hungarian industries 6,8% 9,9% 9,0% 11,4% 5,4% Textile industry Electronic manufacturing Machine production Agrarian machine manufacturing Furniture manuf. 6,1% 8,0% Foreign furniture production has not lower GOP than other foreign industries

15. Challenge: No direct generalization between country and industrial performance

16. Field research what human factors determine SME profitability other than capital and sector? 600 SMEs 8 countries

17. Key Conclusions

18. Challenge: Strong correlation between profitability and management performance Strategy, innovation, internalization

19. Contradictions in Allocation of Financial Resources for 2014-2020 in Hungary

20. 2015-2016 Subsidy Allocation Principles in Hungary 4 mio Euro (0,1%) for SME Management Competency 16 mio Euro (0,4%) for Internationalization of SMEs 13 mio Euro (0,3%) for SME language skills 26 mio Euro (0,6%) for Supplier development 500 mio Euro (18%) for ICT development, for ICT Companies 330 mio Euro (12%) for Public Universities Innovation 20 mio Euro (0,5%) for Social Enterprises 5 mio Euro (0,1%) for ICT Companies export sales support 2 600 mio Euro Available Subsidy for Business Development

21. Foreign Owned Enterprises are concentrated on high added value sectors Limited financial resources of SMEs in the countryside to innovate Strong correlation between profitability and management performance Key elements to be considered for convergence

22. Who wants change? Who wants to change?

23. Thank you.