27 October 1997

Editor's Notepad (The Wall Street Journal Europe)

Business opportunities can come in strange guises. Gelu Tofan, casting around for a fresh start after 1990, was determined to leave Romania, but the U.S., Canada and South Africa all turned him down for visas.

So the former factory foreman stayed home and stuck to what he knew best, tires. Living out of his car and office, he went after the weakest link in Romania's

tire industry: distribution. Starting in the country's farthest-flung regions and working back toward Bucharest, he quickly built a humming business by delivering directly to factories and helping them to cut out the state middleman.

Six years later, Tofan Grup is a $300 million business, with Nomura on board as a financial investor, and tentative plans to tap the markets by the end of next year. We tell Tofan Grup's story, and those of six other post-1990 start-ups, beginning on page 21.

Start-up businesses have a way of falling through the cracks. Banks in the region, focused on retail business and blue-chip corporates, don't tend to lend to them. Business journalists, equally focused on the same big, listed companies, don't tend to write about them.

But as any fund manager will tell you, new-company initial public offers -- and pre-IPO investments -- have been among the hottest plays in Central Europe. And the start-up sector, skewed heavily toward information technology and other services, promises to throw up the kind of companies that will lead the region beyond traditional heavy industry.

Our roster is anything but comprehensive, and it's risky business trying to say which company will be the next to rival Poland's ComputerLand, and which a flash in the pan. Indeed, new businesses typically reach a critical point a few years into the business, when entrepreneurs must become responsible managers -- or hand the job over to someone else.

The challenges are evident at Tofan, where Mr. Tofan told me that his growing company has had to focus more attention on areas like human resources, and invest in upgrading his products for the kind of quality he'll need to fend off competitors.

We wish him, and the other businessmen we profile, the best of luck.


As overrated ideas go, it's hard to beat the "German menace".

When the Berlin Wall came down, plenty of commentators in (and outside) the region raised loud -- and, given history, perfectly valid -- fears of German domination. In fact, a handful of big investments aside, the Germans have been conspicuous mostly for their absence.

No longer. As we report in our country focus, Germany's politicians and captains of industry are finally focusing their attention, and their money, on the East. German investments in Poland of more than $1 million have more than doubled since 1995, and Germany trades more with the region than it does with the U.S.

Forget the old stereotypes of domination by force, too. While older folk nurse historical wounds and begin reconciliation, Central Europe's club kids are dancing to German techno music, and Germany is seen as a model of economic success throughout the region.

Reed John. "Editor's Notepad." The Wall Street Journal Europe 27 October 1997: 3.

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