Hungary - Budapest Business Journal : Ericsson Hungary head Staffan Pehrson on the importance of research, the urgency of starting 3G, and why the local firm will not fall victim to a global downsizing

Staffan Pehrson finds Hungary’s telecom market almost as exciting as Japan’s.
“Hungary has high mobile penetration with low internet penetration and high mobile data usage,” the Swedish managing director of Ericsson Hungary Kft asserts.
However, while Japan now has seven million users of 3G services, Hungary is holding back on launching 3G, he notes. That means local companies are missing out on the lucrative contracts related to 3G technological developments, Pehrson argues.
Having invested more than Ft 1 billion (š4.1 million) in each year of its 13-year presence in Hungary and built up the necessary competence, Ericsson is highly unlikely to follow the trend of pulling out in favor of a cheaper destination, according to Pehrson. While Ericsson has globally downsized on a massive scale, its Hungarian operations, including an R&D center, continue to play a major role in the multinational’s product portfolio.
Pehrson, 34, has been at the helm of the Hungarian company since May 2001, following a period spent in the parent company’s development division.
He spoke with reporter Robert Smyth at Ericsson Hungary’s headquarters on Laborc utca, District 3, earlier in April. The following is an edited transcription of their conversation.

Q: How would you characterize the main profile of Ericsson Hungary and its role within Ericsson globally?
A: We have a research center and a product development center here. That doesn’t necessarily make us unique, but not many [Ericsson subsidiaries] have this.
On top of this, we have a service center, meaning that in certain advanced services, Hungary serves customers worldwide. We also have certain regional functions, and we are responsible for sales in Hungary and Macedonia.
Sometimes, we develop and research things that we bring to the customer in Hungary at an early stage. Not things that directly affect the end users, but things that are good for the operators.
All areas are important, but from Hungarians’ point of view, the existence of a research, development and service side might be seen as more significant than a sales operation.
MMS was not researched in Hungary, but was brought to Hungarian people first. The reasons are that it’s a good market for testing things like this and there are very innovative operators who want to go ahead. It’s always beneficial if the operator pushes you and wants to do new things.

Q: How many of Ericsson’s products are researched or developed here?
A: That’s very difficult to answer, but Ericsson employs 60,000 people today and there are over 600 in Hungary. Roughly 350 are involved in research.
If you take the R&D investment, around $2.5 billion has been spent here for research for Ericsson worldwide.

Q: How do rising labor costs in Hungary effect Ericsson? Do you expect to push some elements of R&D to nearby countries with cheaper wage demands?
A: It comes down to the question “Why are we here in Hungary?” The first issue is that we have the competence in Hungary, and there are several important elements when it comes to competence. You need to have the best people and you don’t just take them off the street. You have to train them and make them productive, and that takes time. We have been here for a long time, built a very strong research center, and we continue building it.
One of the other reasons [for being here] is cost. Do you really expect that when we enter the EU, prices and salaries will go up overnight? I don’t expect any dramatic changes, not at all. That is one of the key competitive advantages we have, but it’s only one of them.

Source : Budapest Business Journal