Hungary is an exciting market for foreign investors. On one hand, it holds dynamic growth potential, and on the other, it serves as a strategic gateway to the Central European region. At the same time, it also presents plenty of challenges.
In this article, we highlight the top 5 obstacles that often hinder foreign investment in Hungary. Of course, we also offer a clear way to successfully overcome these obstacles.
1. Finding a business model that works in the local market
We have experienced with several partners that, regardless of international experience or global success, a new country can present numerous unknown factors. It is no different when entering the Hungarian market.
Accordingly, it is advisable to rethink and fine-tune an already proven business model, among other things, along the following questions:
- Are the conditions and driving forces for the business model’s operation available in the new market?
- What exactly is the relevant demand for the product(s) or service(s), for what value proposition(s)?
- What pricing can work?
- How should the brand be repositioned to be clear and relevant?
- What are the milestones, the strategic steps to think about?
There are two possible paths as a foreign investor. Either you experiment, or you look for a “local guide”. At Pannova, we recommend the latter, as it is the more cost- and time-efficient route. Moreover, we have relevant experience in this area.
2. Choosing the optimal location
Industrial park or city centre office? In Budapest, Pécs, Debrecen or perhaps the area around Győr? Location is an indispensable factor for the success of an industrial investment. Moreover, the best location is not necessarily the one you first think of.
Not only do the square meters and their prices matter, but the following are just as important:
- the infrastructure,
- the availability of human resources,
- the presence and development of logistical connections,
- the favourable condition of the local economic ecosystem.
Choosing a location is an extremely complex decision, with significant stakes involved. That’s why we help our partners make well-informed choices through comprehensive analysis. Additionally, we have our own industrial property portfolio, allowing us to offer opportunities that don’t appear in standard market listings.
3. Licensing, regulation, bureaucracy
Every country has its own legal environment, and then there are the specific pitfalls as well. This is especially true when industrial investments, construction, or operating licenses are part of the plans.
In this area, we strongly advise against trying to navigate the process as a foreign investor without the support of a local partner. In Hungary, procedures are often complex, and different authorities may interpret the regulations differently.
With us, you benefit from decades of experience and a well-established network of contacts. We know
- where,
- with whom,
- in what order,
- and with what documentation it is best to initiate each procedure.
We are also happy to take over the burden of administration so that our clients can focus on their core activities.
4. Cultural differences, operational practices
The “invisible” factor. We’ve seen countless cases where even highly experienced foreign executives are surprised to find out why certain things simply “don’t work the same way” as they do back home. As a fitting Hungarian saying goes, “every house has its own customs”.
In Hungary, negotiations follow a unique dynamic, the logic of business decision-making is different, and processes like HR recruitment or project management also work differently. At Pannova Group, our role in such cases is to act as a mediator.
But not as interpreters, rather as business guides.
We understand and respect different ways of thinking, which is why we help build a bridge between domestic and international operations.We don’t just offer cultural advice, we also help
- connect you with the right professionals;
- gain access to the appropriate forums;
- and find points of contact with the relevant officials.
This is the comprehensive support that smooths the way for our partners’ seamless integration.
5. Finding reliable local partners
Whether it’s a contractor, supplier, consultant, or experts providing labour and payroll support, it can be difficult to clearly identify the right local players in an unfamiliar market. Information is often incomplete or distorted, yet a single wrong decision can result in significant costs.
Anyone can find names, service providers, or potential contractors. But only those with the necessary experience and network capital can provide reliable, proven options that meet the project’s requirements.
At Pannova Group, we don’t simply provide a “list” of partners; we offer personal recommendations backed by our reputation.
Conclusion
It’s possible to try your luck in a new market without a partner who has local knowledge, but it’s not advisable. At least, experience proves this. That’s why we believe that choosing the right partner is not a cost, but an investment.
Over the past decades, Pannova Group has supported numerous foreign investors entering Hungary from industrial, strategic, and consulting perspectives alike. If the goal is not just to find a local player but a true, long-term partner for growth, we are available at the following contact details.
