WHO'S WHO IN THE EAST In Eastern Europe, the people to know are both colorful and energetic. ! Want to meet the Clark Gable of finance ministers? A guy selling sausages to Saudis? Read on.
(FORTUNE Magazine) – Business is always personal, but especially so in Eastern Europe, where daunting bureaucracy and changing ground rules can spook even veteran investors from abroad. In such a climate, knowing the right people is crucial. Here are ten business leaders who can open doors in the three most promising economies.
A POLE ON A ROLL With a management style as distinctive as his Charlie Chaplin mustache, Aleksander Gawronik, 42, is helping transform Poznan, a gloomy industrial city midway between Warsaw and Berlin, into a bustling service capital. His rapidly expanding empire, with sales of $280 million a year, includes an insurance company, a bank, an armored-car agency, and a gasoline importing firm. Top managers speak fluent English and German, and earn the highest salaries in Polish business -- $13,000 to $15,000 a year. Says Gawronik: ''That's why they don't steal or cheat: They don't have to.'' Just in case, he confirms their honesty twice a year with lie detector tests. A onetime hospital clerk, prison warden, and mushroom farmer, with a law degree from the University of Poznan, Gawronik found his niche in 1980 when he opened a successful computer store. Last year he signed a deal with Esso of Germany and became his country's first private gasoline importer, just as the Soviet Union was sharply cutting shipments. This year he will supply about 6% of Poland's gasoline consumption. Says Gawronik, who unwinds by driving a horse-drawn buggy through the countryside with his wife and 9-year-old daughter: ''Poland must enter the European market, no matter what the price.''
SAMURAI BUREAUCRAT When Poland's state-owned trading companies lost their monopoly over exports last year, Dariusz Przywieczerski, 45, lobbied the government to include the trading company he runs in the first round of its privatization program. His outfit raised $25 million in early 1990 from foreign investors and 45,000 Poles. Now Przywieczerski is using this capital to move boldly into new businesses. His company, called Universal, has purchased controlling stakes in eight newly privatized factories, including plants that make copper wire, prefabricated houses, and condoms. And some Polish manufacturers, despite their new freedom, are sticking with Universal to hawk their wares abroad. Recently the company sold the Soviet Union $60 million worth of sewing ! machines; it's getting paid in hard currency. Wry and laconic, Przywieczerski relaxes by sailing 25-meter boats on lakes in northern Poland. ''I'm not rich like Americans,'' he jokes. ''I rent the boat.'' His model for the company he hopes to build is Japan's giant trading houses, which he believes act as aggressive shareholders, pressing businesses they invest in to cut costs and lift profits. If Przywieczerski succeeds, nothing could provide more of a tonic for Poland's next wave of privatizations.
FROM WARSAW TO RIYADH Born to a poor peasant family in a mountain hamlet 300 miles south of Warsaw, Kazimierz Pazgan, 43, honed his business skills as a teenager by hiring himself out as a trumpet player at weddings, which often lasted three days. ''I earned more on a weekend than most people made in a month,'' he recalls. After college and a brief stint as a low-paid teacher, he returned to his home region in 1982 and founded Konspol, a thriving meat processing company. His success rankled Communist officials, who tried to bully Pazgan into abandoning his startup to the state: ''Some days there were more government inspectors at the plant than employees.'' But the harassment produced an unexpected dividend. Because the Communists refused to sell him beef or pork -- raised exclusively on state-owned farms -- Pazgan was forced to buy only privately produced chicken. He soon perfected a technique for molding the dry, flaky meat into a sausage. This low- cholesterol product became a nationwide health-food hit, and Konspol became an $80-million-a-year company. Now Pazgan is raising his sights: ''I always wanted to prove that Poles can be worldclass businessmen.'' With foreigners clamoring to license his production technology, Pazgan has already picked a partner in Saudi Arabia. Chicken, he figures, could turn this former wasteland for sausage -- a result of the Moslem ban on pork -- into a boom market. To put the Arab VIPs flocking to sample his wares at ease, Pazgan has decked out his ultra-modern plant with Moslem prayer rugs.
INFLATION BUSTER Leszek Balcerowicz, 44, Poland's lantern-jawed finance minister, is leading Eastern Europe's boldest economic reform, a headlong charge from Communism to free markets. Starting last year, Balcerowicz freed prices and cut subsidies for most goods, while reining in wage increases. The shock treatment is yielding remarkable results. Inflation has dropped from nearly 80% a month early in 1990 to around 4% in May. Once barren stores are brimming with everything from pork chops to vacuum cleaners. And the price? A severe slump that has turned the bookish Balcerowicz into Poland's most embattled politician. Real income for the average family has fallen dramatically since last year. Though pressure to reflate is building, Balcerowicz is hewing to austerity, with strong support from newly elected President Lech Walesa. Walesa is counting on his finance minister's high standing in the West to attract the aid, investment, and write-offs of debt needed to spur Poland's economy. That's proving a shrewd bet: Western governments are so impressed with the Balcerowicz plan that they recently agreed, at U.S. urging, to cancel $16 billion in foreign debt. A former economics professor at the University of Warsaw, Balcerowicz converted to free markets in the early 1970s while earning an MBA at St. John's University in Queens, New York. He lives with his wife and two children in a drab concrete-block apartment building on the outskirts of Warsaw. ''Our task is much tougher than when we started,'' he admits ruefully, adjusting his trademark Barney Google glasses. His example has inspired a stoic tenacity that could yet produce big payoffs.
BUDAPEST'S VIDEO KING Long the region's leader in experimenting with free markets, Hungary has spawned a cadre of nimble entrepreneurs. Few have been more successful than Gabor Renyi, president of Novotrade. Born in a basement storeroom in 1983, Novotrade is now a thriving $50-million-a-year conglomerate that sells products ranging from calculators to fast food. In the mid-1980s the company won a wide audience in Western Europe by turning out a new genre of videogame -- the sweet, peaceful kind portraying fairy tales and chess puzzles. Renyi is also a pioneer in tapping capital markets: In the past three years he has sold $8 million in equity on the Vienna stock market. ''My job is selling Hungary's talent,'' says Renyi, who loves hobnobbing with his T-shirt-clad team of programmers. He also cherishes his role as corporate art patron: Novotrade is underwriting two painters and a sculptor.
HUNGARY'S STEVE JOBS? Tibor Hejj, 34, is helping build a Silicon Valley-style success in Budapest. Fed up with his government job, Hejj in 1981 joined entrepreneur Gabor Szeles to start a computer company in a tiny garage. They called it Muszertechnika (which means technical instruments). This mini-Apple East has since blossomed into one of Hungary's biggest private companies, with annual sales of $60 million. Today, Szeles spends much of his time as a government adviser and spokesman for Hungarian industry, leaving Hejj in charge of day-to-day management. At first, Muszertechnika was nearly smothered in its crib by the Communist bureaucracy. ''We had to pay cash for supplies, and foreign currency was scarce,'' Hejj recalls. As those restrictions disappeared, Hejj and Szeles created a fully integrated company that designs, manufactures, sells, and services its own equipment. Muszertechnika's staple product is its popular, easy-to-use personal computer. But Hejj has also been reaching out to foreign partners. Muszertechnika now distributes sophisticated PCs for Siemens of Germany, printers for Fujitsu of Japan, and minicomputers for IBM. Hejj scored a coup in January, when Hungary chose Muszertechnika and Ericsson of Sweden to build a nationwide telephone switching system. Boyish and lanky, Hejj speaks fluent English, German, and Russian. He splurges on annual vacations that have taken him from Singapore to San Francisco and recently decorated the new suburban house he shares with his wife and three children. A few years ago, Szeles took up tennis and most of the managers followed, including Hejj. The boss arranges free courts and instruction for employees. Hejj proved once again a fast learner. ''Szeles is a pretty good businessman,'' he says. ''The tennis court is about the only place you can beat him.''
STRUMMING A TOUGH TUNE He was a political novice last year when the ruling Hungarian Democratic Forum named Peter Akos Bod, 40, minister of industry and trade. ''I guess there wasn't much competition for the job,'' he says wryly. With reason. Falling exports to the Soviet Union and an escalating oil bill leave Bod little time for his hobby, playing folk songs on the guitar. He hopes to entice more foreign investment by building on Hungary's strength: a combination of strong, pro-market laws and a solid banking system. For example, Bod is pushing to install a modern electronic funds-transfer system to replace the current paper blizzard. The university-trained economist first tangled with bureaucracy in the late 1980s as a United Nations adviser in Ghana, where he offered guidance on all aspects of public policy. The vast scope of that job, he says, was superb training for his current post. How does this newcomer deal with the intense mental and physical strain of political life? ''It's the support from people in the street that gives me energy,'' he says. ''I can't let them down. I can't feel tired. We as a nation are doing something unprecedented.''
THIS CZECH WON'T BOUNCE Vaclav Klaus, 50, Czechoslovakia's minister of finance, is the Clark Gable of economics -- a handsome, mustachioed maverick who champions free markets. His careful preparation is helping Czechoslovakia's shift to capitalism proceed far more smoothly than Poland's, though the change is still painful. Early this year, Klaus freed prices for 85% of all goods. At first, prices rose at an annual rate of 35%. But Klaus kept credit tight and spurred competition by privatizing thousands of small businesses. Now inflation is at 20% and falling. In 1968 the Czech Ministry of Economics hired Klaus to attack non-Marxist economic policy. Reading the banned texts of Milton Friedman and F. A. Hayek for the first time, he instead became a convert -- and was fired. He then spent most of the next 19 years in unimportant posts at the Central Bank. He came to power in 1989 as the top economic adviser to Civic Forum, the political movement founded by Czechoslovakia's current President Vaclav Havel. No mere technocrat, Klaus forced a split in Civic Forum in April when he broke with its democratic socialist leaders and took charge of the group's conservative wing. Says he: ''We don't want a social market economy. We want a market economy without any adjectives.''
FRIEND TO THE LITTLE GUY Two years ago, Tomas Jezek, 51, was an obscure researcher, banned from teaching for his radical ideas and reduced to sifting data in a cubbyhole office. Today, as minister of privatization, he's orchestrating Eastern Europe's most ambitious sell-off of state-owned companies. When the dust settles in a couple of years, he aims to have shifted the bulk of Czech industry from government to private hands. To do that, Jezek wants to spread grass roots capitalism by making shareholders of millions of Czechs. Says he: ''I've dreamed of doing this for 20 years.'' Jezek launched his program in January by auctioning thousands of shops, gas stations, and other small businesses to buyers who crammed Prague's historic city hall and 250 other sites. To bolster big companies, Jezek is recruiting prestigious foreign investors such as consumer goods giant Procter & Gamble, which recently bought Czech ) detergent producer Rakona. But while foreigners are welcome, Jezek wants to sell most of Czech industry to the people. Under his plan, each adult will receive a free voucher. Czechs can then use the vouchers to bid for shares at a series of auctions slated for early next year. These auctions, Jezek hopes, will be the springboard for a thriving national stock market. A Ph.D. in economics, Jezek is a longtime friend and ideological soulmate of Vaclav Klaus. They first met in high school as stars of rival basketball teams. Jezek, who complains that Klaus constantly outgunned him on the basketball court, made a late, though futile, switch to tennis. ''On the tennis court,'' he confesses, ''I show no visible signs of success.''
TRUCKING TOWARD MERGER As a well-run company slated for quick privatization, Czech truck producer Tatra is attracting an array of prestigious suitors: Daimler-Benz of Germany, Renault of France, DAF of Holland, and Fiat of Italy. The marriage broker is Tatra general manager Hynek Hanak, 58, who's expecting a hefty dowry. And why not? To win automaker Skoda, Volkswagen agreed to invest $5.1 billion over the next ten years. Like Skoda, Tatra makes sturdy vehicles. Last year it produced 16,000 trucks, mostly for export to the U.S.S.R. Its air-cooled engines are highly resistant to extreme heat or cold. In Siberia, Tatra trucks rumble over the frozen terrain transporting coal. During the Gulf war they hauled supplies across the desert for the allied coalition. Still, Hanak reckons that Tatra badly needs an injection of Western money. Its last capital investment program ended in 1982.
Trim and elegantly tailored, Hanak is a father of three grown children. A 33-year veteran of Tatra, he says his job has never been more invigorating: ''We are living through an extraordinarily exciting period. Mainly, we must work hard.'' Just like a Tatra trudging across the tundra.