GLOBAL RANKINGS 2000: CENTRAL EUROPE - Doors wide open. PR agencies find a burgeoning environment for business in Central and Eastern Europe. Robert Gray reports

Major cultural and economic differences between countries make it difficult to consider Central and Eastern Europe as a homogeneous whole.

Major cultural and economic differences between countries make it difficult to consider Central and Eastern Europe as a homogeneous whole.

But, broadly speaking, it makes sense to split the region into two categories: emergent and post-emergent countries. The former includes Russia and other former Soviet Union countries.

The post-emergent countries - Poland, Hungary, the Czech Republic and Slovenia fit most comfortably in this category - are those that have made tremendous economic and political strides in recent years. They made tough economic decisions, re-engineering themselves into nations whose business landscapes embrace many key elements of the West's leading economies.

Consequently they are also the four Eastern European countries most likely to join the European Union in its next wave of enlargement.

Markets growing stronger

Among this quartet, Poland is generally regarded as the most exciting market. 'Poland is the most powerful in terms of economic strength and population,' says Alan VanderMolen, Burson-Marsteller Central Europe managing director. 'It swallowed a lot of hard medicine early on but in the last few years has averaged economic growth of five per cent. We're seeing a lot of growth and demand from multinationals. So we are pretty bullish about Poland as a market.'

B-M demonstrated its commitment to Poland by keeping full ownership of its office there even after selling offices in the Czech Republic and Hungary to local management several years ago (although they remain as B-M affiliates.)

VanderMolen adds that there has been big demand for PR in areas such as change management and the pretty much obligatory field of e-business.

Clients in Poland include state telecommunications company Telekomunikacja Polska and France Telecom.

'I have great confidence in Poland; it is a big country in the right place,' says Hill & Knowlton European vice-president Terence Billing.

Last year H&K bought a 30 per cent stake in one of Poland's leading agencies, Feedback.

Poland has largely supplanted the Czech Republic as the region's economic hotspot. In the early 1990s it appeared as though Prague might emerge as the key commercial centre in the region, especially after the Czech Republic separated from its economically weaker sister, Slovakia.

But the country has endured a severe recession for the last few years, and it has lost lustre in the eyes of many multinational corporations.

Some PR firms, though, still see potential. British-based hi-tech, e-business and telecom specialist Herald Communications has chosen to base its Eastern European activities in Prague. Its clients in the Czech Republic include Compaq and recent win Motorola.

'For us the market is growing strongly - there are always clients that need good PR,' says Herald Prague managing director Sarka Klofacova. 'The competition for space in the media is more fierce. And it's very important that we invest a lot in training because there are only a limited number of high-calibre people available.'

In Hungary the economic situation is developing 'exceptionally well,' says Alistair McLeish, CEO of Mmd, a firm whose British founders have decided to concentrate on Eastern European markets. His one caveat is that nearly all the significant commercial activity in the country is concentrated in and around the capital, Budapest, with little going on elsewhere.

Mmd has seven offices in the region - Warsaw, Budapest, Prague, Moscow, Bratislava (Slovakia), Bucharest (Romania) and Istanbul - and has made its name working on multi-country business for clients such as Visa, Nokia and cable operator UPC, a huge Eastern European media owner.

Porter Novelli has taken a minority stake in Eklektic Porter Novelli, which has offices in Poland, Hungary, the Czech Republic and Slovakia.

Shandwick, by contrast, has preferred an affiliate structure, often led from the Vienna offices of Austria's top agency, Publico, although there are strong rumours that with owner IPG's backing Shandwick might be considering outright purchases.

'Slowly and steadily Eastern Europe is becoming more attractive as a market, especially for consumer goods and technology companies,' says Lutz Meyer, Shandwick Europe managing director. 'The media landscape now more or less mirrors the Western world. So brands need to be protected through classical issues management and consumer work.'

GCI's six-year-old Prague office, which has grown to a staff of 16, has doubled its commitment to the region over the last two years. In 1998 it opened GCI Warsaw, followed by GCI Kiev, GCI Budapest and GCI Zagreb (Croatia). It has long-term affiliation contracts with agencies in Slovakia and the Baltic States and is represented in Russia by its sister company, APCO. Currently GCI represents clients British Airways, IBM, and BAT in at least three Eastern European countries each.

'Even though PR was basically non-existent ten years ago, the market is developing incredibly fast and is quickly catching up with both the quality of service and the issues Western Europe is dealing with at the moment -- such as measurement and efficiency of PR campaigns, ethical issues and new technologies and industries,' says Katerina Wheeler, GCI Central and Eastern Europe regional director .

'One of the obstacles at the very beginning,' says Wheeler, 'was an inability to register your firm as providing PR, since the term itself was not known.' In some markets, she says, companies still don't understand how PR can help drive a business plan. In other places, Wheeler notes, PR isn't held in high regard. 'I believe it is up to the industry to educate the market,' she says. 'One of the best examples is perhaps APRA in the Czech Republic, which runs several education programmes and is well-respected by the local agencies, media and clients.'

Russian PR

As ever, the great national enigma in the region is Russia. Its 1998 economic crisis led many western corporations which had invested in the country to cut back on their marketing activities. Although recently there have been signs of economic improvement, Russia remains a land of haves and have-nots - with most of the population falling into the second category.

'Russia has 147 million people, and about 140 million are poor,' observes Billing.

McLeish says PR in Russia essentially means PR in and around Moscow. In either case, 'The country is a law unto itself.'

Local agencies usually handle communications work outside the Moscow area. Imageland, which was established in 1990, is one of the main local players, whose clients include BAT, Janssen-Cilag, the Moscow Municipal Government, Procter and Gamble, Unilever, Pirelli and Douwe Egberts.

'Our accounts vary from launch and promotion of new brands and new products, to research, to adaptation of certain segments of the Russian market for the large-size incoming international companies,' says Imageland president & CEO Veronica Moiseeva.

She says her firm has helped handle large PR projects in Moscow and other Russian cities including St. Petersburg, Kursk, Orel, Smolensk, Sochi, Novorossiysk, Tula, Nizniy and Novgorod.

Imageland has also developed a network to serve clients in all the now-independent former Soviet republics, particularly in Ukraine, Moldova, Byelorussia and Kazakhstan. It also has a presence in Bulgaria and Romania.

Slovenia -as minute as Russia is immense - plays a similar role as hub for communications campaigns in countries in its backyard -in this case the Adriatic states of Croatia, Bosnia and Herzegovina, Yugoslavia and Macedonia.

Last year the two leading Slovenian PR firms, SPEM and Pristop, established the London School of Public Relations in Slovenia and Croatia, the first (and so far only) school teaching PR theory and practice in the region. More than 150 students have earned diplomas.

'Media relations still dominates (in Slovenia),' says SPEM director Bozidar Novak, 'but lobbying, internal communication and e-communication are becoming more and more important.'

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