Hungary offered generous subsidies for factories
The EU parliament has passed new regulations with the aim to make batteries more durable, more sustainable, and better performing.
EU Batteries and Waste Batteries Regulation covers the whole lifespans of batteries, from raw material to distribution with specific goals in the collection of used batteries and raw materials.
For South Korean battery companies, this means more oversight, and the Korea Trade-Investment Promotion Agency and experts have advised thorough preparedness for this strengthened regulation.
Out of all European countries, Hungary houses the most number of South Korean companies. Samsung SDI, SK On, EcoPro, Dongwha Electrolyte, WCP, and SungEel HiTech are among them. Combined, these companies have announced billions of dollars worth of investment.
In an interview with TheElec, Kamilla Szandrocha, Owner and Managing Partner at Central European Investment Services (CEIS), a European consultancy, advised that South Korean companies’ awareness of local labor laws was a must and prioritize integrating with local governments and citizens through communication. Szandrocha was previously the director of ITD Hungary, the former entity of what is now the Hungary Investment Promotion Agency. She is the founder of CEIS, which offers consulting services to countries in Central Europe such as Hungary, Poland, Serbia, and Slovenia.
While electric vehicle and battery was a worldwide trend, the industry was material and resource intensive, meaning environmental and labor concerns were bound to occur, Szandrocha explained.
South Korean companies have a propensity to immediately begin operating their factories but if they are not properly prepared they could face setbacks, she said.
A prime example of this is China’s CATL. The company’s plan to build a factory in Debrecen, Hungary, is facing setbacks from the opposition of the local populace. A public hearing on the matter led to physical clashes between those for and against the factory. The ruling and opposition parties have also entered the discussion, putting CATL’s US$7.8 billion factory plan up in the air.
There is also an acute labor shortage in Hungary and most workers are coming from Ukraine, Slovenia, and nearby countries. The labor shortage was one of the biggest problems, Szandrocha noted, and the Hungarian government was in the process of changing laws so workers from Asia could be more easily brought in. For example, Samsung SDI’s Hungary business collaborated with the Philippine Overseas Employment Administration to bring in workers from the Southeast Asian country.
The CEIS Owner, however, also noted that despite inflation, Hungary offered a more attractive investment environment compared to other European countries. Hungary only gave out subsidies for factories being built in underdeveloped areas in the past but now also gives subsidies for those being near the capital Budapest.
For research and development as well as advanced industries, Poland was the most attractive, while for simple factories Serbia could be a more attractive place, she also noted. Serbia had low labor costs and was close to Hungary so the government there was actively attempting to bring in companies, she added.