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Hungary warms up to ventures Fotex was built on the concept that we shouldnt try to reach the entire range of the hungarian population, varszegi said.From the very beginning, we limited our business activity to the top 10, 000, the high society.Obviously, its a small layer, 10 percent of the population but it has about 30 to 40 percent of the purchasing power. The fotex chain has carved out ray bans cheap about 15 percent of the market share in photo services in hungary from the state owned ofotert chain, which will soon be privatized and perhaps broken up. Varszegi says fotex is untouched by the inflation that affects other businesses in hungary because it deals with the inflation proof rich, as well as austrian tourists patronizing its stores in the western hungarian towns of sopron and gyor. He is unfazed by new competition moving into hungary, including foreign based franchise chains such as the canadian sooters photo stores.His chain still has exclusive rights to market designer optical wear for ray ban, yves saint laurent and cartier.Even if only 30 fotex stores are competing with 150 sooters in five years, he says, fotex will still bring in the greater profit. Schwinn cannot be so certain.The volume of retail sales goes up and down, up and down, richard schwinn said.Bikes arent like toilet paper and light bulbs, with consistent demand. Schwinn owns 51 percent of the venture, while the hungarian state owned csepel works and energetics institute own the rest.The company was founded with $2.1 million in capital investment to modernize the plant. Its annual domestic sales in hungary have ranged from 1 billion to 2 billion forints, or $13 million to $26 million.The company hopes to double its sales within five years;Presently, it produces about a quarter million bicycles for the hungarian market and others. While they are not luxury items, the schwinn bicycles are expensive by hungarian standards, costing about twice as much as the average monthly salary.Since schwinns arrival in hungary in 1989, when domestic demand for the bicycles was insatiable, prices, and rents in particular, have been freed up.As a result, disposable income has shrunk, and the demand for the popular bicycles has fluctuated. Schwinns innovation in hungary was to introduce the concept of a product line, with coordinated colors and graphics.As in the united states, it considers quality service as important as manufacturing and sales.Schwinn csepel bicycles are sold through 60 exclusive outlets in hungary, which also offer parts and repairs. Some changes resulting from hungarys ongoing economic reforms have caught schwinn csepel by surprise.When it signed the agreement, schwinn thought that banking would remain entirely in the governments hands.The privatization of banks will be regulated by a law to be passed in the fall, which is complicating financial transactions, richard schwinn said. Other changes were to the companys advantage.At first, schwinn expected that the biggest obstacle to doing business in hungary would be working with a soft currency.Now the forint is practically convertible.