IBM’s Model in East Bloc Is Hungary’s Operation

BUDAPEST â€”  IBM Hungary is the giant computer company’s window on the East.

The subsidiary was one of the few Western companies to weather more than four decades of communism in Hungary. Now it is serving as IBM’s model for expansion in the rest of Eastern Europe.

Perhaps the reason communist authorities allowed a little bit of capitalism to survive all those years is that it filled a vital need: It serviced IBM machines that were used to perform the census and other record-keeping, said Eugen K. Hahn, managing director of Eastern European operations for International Business Machines Corp.

“We took care of the equipment, so we protected the investment the government made,� he said in an interview at IBM’s modernistic headquarters building in a residential neighborhood.

IBM Hungary employs nearly 100 people, all Hungarians, to sell and service the company’s products.

Zsuzsa Branyik, who resigned as general manager of IBM Hungary in April after about 20 years, recalled how the subsidiary managed to survive during the communist years even though it was limited largely to servicing equipment, not selling new machines.

At one point in the 1960s, even the service operation was shut down and the engineers transferred to the state. But in the early 1970s, the company was given back its employees and began to flourish.

“It would be wonderful for me to work today--so many things are much, much easier,� said Branyik, the only female head of a country organization IBM has ever had.

IBM has sales and service representatives throughout the former East bloc, but it wants to establish a greater presence in these nations along the lines of IBM Hungary, Hahn said.

To increase its presence, IBM has donated computers to universities in several Eastern European nations as part of what it calls its academic initiative. In exchange, the universities are expected to develop software and ties to local industry.

IBM also plans to tie these universities together in a computer network, and then link that network to the West--one of the first such computer connections in the former East bloc, Hahn said.