EPE – European CPO-Summit, 10.-11.5.2006

Prof.  Attila Chikán,
Former Minister of Economic Affairs of Hungary, Budapest (H)
10.5.2006, 19:00 Uhr

Abstract:

Sourcing in Central and Eastern Europe: How attractive is it still?

Trade relations between Central and Eastern Europe (CEE) and Western Europe (WE) look back to a tradition of hundreds of years. Even during the cold war they have not stopped and than gradually increased during the last decades.
The transition of the CEE countries have started a new era of business relations. Today the vast majority of exports and imports of the CEE countries go and come to and from WE and especially in some industries CEE plays important role in the supply of Western European markets.

The emergence of other Rapidly Developing Economies (RDEs), especially China and India has put question mark to some of the CEE – WE relations. This presentation aims to show that the CEE countries should still play a very significant role in the sourcing of WE companies.

Three major factors of sourcing decisions are to be considered. The most straightforward one is cost: this is obviously a key factor. It will be shown that, particularly in some well definable industries, considerable cost savings can be realized in CEE even in comparison with the Asian countries.

The second issue is connected to the non-cost characteristics of sourcing. Service quality, labour productivity, managerial and cultural issues will be discussed.
The third issue is the general business environments of the CEE countries: it will be shown that the EU-membership continue to play an important role in generating and maintaining an economic climate which tremendously decrease country and region specific risks.

Of course any single company should have a portfolio of suppliers. This presentation is not trying to paint a rosy picture. It only wants to show that CEE sourcing is a very serious option for many companies in WE, and overlooking it may be a major mistake leading to substantial losses in competitiveness.