In our previous analyses we have already examined in detail the impact of large foreign companies expanding in Hungary on the Hungarian economy. Today, more than 700,000 workers are employed by a foreign-owned company in Hungary, which also means that more than 23% of the total Hungarian employee base is indirectly employed by foreigners. The highest turnover continues to be generated by the road vehicle manufacturing sector, with foreign companies operating in this sector generating more than HUF 13 trillion in turnover in 2023. In preparing this summary, we worked with the methodology and definitions used by the HCSO.
In 2023, foreign-owned subsidiaries operating in Hungary accounted for 52.2% of the production value of all enterprises operating in the country. In terms of value added, this share was also significant, at 40.6% in 2023. It is clear from all these data that the role of foreign-owned enterprises in the Hungarian economy is inescapable. Among the EU member states, the Hungarian figures are also outstanding, with the role of foreign-owned firms in the economy being the strongest among the 27 member states.
The perception of large companies varies across economies. There are many arguments in favour of them, such as increased employment opportunities, technology transfer and improvements in corporate governance. In some cases, large companies can also have an impact on wage levels, which can benefit both society and the economy in the long run. Negative effects include the emergence of dual economies, the impact of isolated companies and displacement effects. However, it would be difficult to imagine economies today without large companies, which have many benefits, notwithstanding both their negative and positive effects.
According to the latest data released by the HCSO in 2022, there were 15,008 foreign-owned subsidiaries operating in Hungary, accounting for 1.5% of all enterprises in the country. Most foreign companies operate in the sectors of trade and repair of motor vehicles (4,677), real estate activities (2,457), manufacturing (1,992) and professional, scientific and technical activities (1,544). In terms of production value shares, the top three sectors according to data from 2023 were manufacturing (72.6%), mining and quarrying (67.8%) and electricity, gas, steam supply and air conditioning (50.6%).
In terms of the top ten foreign affiliates by sector, the manufacture of road vehicles had the highest turnover in 2023. The total turnover of foreign companies operating in this sector in Hungary amounted to more than HUF 13 trillion, which represents 16.2% of the total turnover of the Hungarian sector. The second ranked wholesale trade has fallen from its previous first place in recent years, but companies operating in this sector still have a significant share in terms of turnover too. After the first two sectors, there is a huge break, as the turnover of the other seven sectors did not reach HUF 10 trillion each in 2023.
The last decade has also seen the start of a rearrangement based on the production value position of foreign subsidiaries by country of ownership. While until 2016 the share of EU countries in the production value share of foreign affiliates in Hungary was stable at 60% or above, from 2017 onwards this share started to decrease steadily, leaving more and more room for non-EU countries. In 2023, this share was 56.4% for EU countries and 43.6% for non-EU countries. There are several reasons behind this change: the numerous crises have not left the production possibilities of foreign-owned subsidiaries in Hungary untouched, and more and more non-EU companies, such as Chinese and Korean ones, have decided to enter the Hungarian market and thus start production. In terms of turnover, the top three countries in 2023 were Germany, the United States and South Korea, while in 2020 Austria was still in third place. However, Austria’s Hungarian subsidiaries remain in third place in terms of value added and employment. All this shows that, although concentration with traditionally Western countries is still high, more and more Asian players are also tapping into the opportunities offered by the Hungarian market, which is thus becoming sufficiently diversified.
A common objection to large foreign companies is that they do not employ Hungarian workers, but bring in foreign, often cheaper, guest workers. In the case of foreign-owned subsidiaries operating in Hungary, this practice has not yet become generalised, as the domestic skilled labour force meets all the needs that employers may have.
Between 2008 and 2023, foreign-owned subsidiaries employed an average of 682,478 people per year, accounting for 24.6% of total Hungarian employment. The number of employees is steadily increasing, with 776,891 people employed by such companies in 2023. However, the employment rate started to decrease between 2017 and 2022: in 2017, foreign companies accounted for 26.1% of total Hungarian employment, while in 2022 only 22.7% were employed by foreign companies. There are several reasons for the contradictory figures (number of employees increasing, share of employees decreasing), one of which is that although total employment in Hungary as a whole, including in large companies, has increased, the proportions have changed. Compared to the previous figures, over the last 7-8 years, foreign-owned large companies have had proportionally fewer Hungarian employees, but this is not reflected this way in the total number of employees. In addition, the use of guest workers is an important factor which may also affect the change in domestic employment rates in large enterprises. Some of the incoming foreign workers came to Hungary from neighbouring countries such as Ukraine, while others came from Asian countries (Vietnam, China). The largest numbers of employees are found in manufacturing (398,726 people), trade and repair of motor vehicles (133,355), information and communication (52,300) and professional, scientific and technical activities (52,300).
In the case of foreign-owned large corporations, it is also worth briefly reviewing the geographical location of their Hungarian subsidiaries. Almost all counties have at least one company of this type, but the distribution of sectors is different in the eastern and western parts of the country. The eastern part of Hungary is dominated by the manufacture of chemical products, wholesale and retail trade and, to a lesser extent, the manufacture of computer and electronic optical products. In the western counties, the most dominant sector is the manufacture of road vehicles (which is the most dominant sector in four counties), while wholesale trade and the manufacture of electronic optical products are also present to a smaller extent. In the central part of Hungary, i.e. in the capital, Pest and Bács-Kiskun counties, only two sectors are involved in regard to foreign-owned affiliates: the manufacture of road vehicles and wholesale trade. The high concentration is dominant in the sectors of road vehicle manufacturing as well as retail trade and wholesale trade: in 2023, wholesale trade generated 16% of total turnover at national level, followed by retail trade (9.1%) and road vehicle manufacturing (7.8%). There is only one county with a high share of machinery manufacturing, and that is Nógrád. Borsod-Abaúj-Zemplén is also unique in terms of the chemical industry.
The largest foreign companies in terms of turnover are AUDI Hungaria, Robert Bosch, BorsodChem, Magyar Suzuki, SPAR Magyarország, Samsung Electronics, Mercedes-Benz, Continental Automotive Hungary, Schaeffler Savaria and Flextronics. Turnover concentration was highest in the counties of Heves (Robert Bosch), Győr-Moson-Sopron (AUDI Hungaria) and Borsod-Abaúj-Zemplén (BorsodChem), where the five largest companies accounted for more than 40% of the counties’ total turnover in 2023.
