BizPoland Magazine_November 2009

Fast 50: 9 Polish ďŹ rms win Technology awards Globe Forum stirs up GdaĹ„sk

November 2009 nr 5(5)

The Business of Death in Poland

Real Estate: Grey market bazaars squeezed by authorities News: Canada welcomes new Ambassador

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November 2009 Table of Contents Cover Story_ 4

The Business of Death in Poland

News_ 6

Globe Forum held for first time outside Sweden – in Gdańsk

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Nine Polish fast-growing technology firms awarded in Technology Fast 50 contest

10

Canada welcomes new Ambassador

Real Estate_ 12

Grey-market bazaars squeezed by authorities and new discount retailers

Events_ 12

Meeting Point in Barcelona disappoints

13

Reinhold Center opens

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Magda Gessler opens Bellini in Warsaw’s Old Town Square

13

Hi5 CEO emphasizes exponential versus linear growth

14

BMW Inchcape

14

GOYELLO receives “Young Entrepreneur Award”

15

BizPoland VIP Cocktails

Cover Story

The Business of Death Poland’s growing funerary services industry – over 379,000 deaths registered in 2008 – is relatively recessionproof, yet the fragmented sector might be ready for consolidation

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There are approximately 11,000 cemeteries in Poland, about 3,000 of which are “communal,” or public or state-owned. The rest are controlled by the church, which charges fees for 20-year cemetery plot leases and fees for conducting funeral services, although such fees often depend on a family’s income. Plots in default are dug up, the remains disposed of, and replaced with a new “tenant”.

If a priest is aware that a family planning a funeral is in a tight economic spot, he often lowers the fee significantly. Burial plot fees depend on location. Warsaw’s prestigious Powazki Cemetery charges around PLN 30,000 for a spot of eternal rest.

Over 2,500 funerary firms operate in Poland, most of which are private. Some are “There’s really no good reason why cemete- municipal, such as Warsaw’s Miejskie Przedries should be non-profit,” said Robert Fells, siebiorstwo Uslug Komunalnych (MPUK), General Counsel of the Cemetery, Crema- basically making them state-owned. MPUK tion and Funeral Association in the United States, as quoted in the Wall Street Transcript. “This restriction handicaps cemeteries’ ability to function fully.”

The business of death services in Poland is very much a private affair, with most funeral parlors functioning as private familyrun operations and many producers of accessories entering the market. But in a country where most cemeteries are owned by the church and the remainder sitting on municipal land, reforms would be necessary before opportunities open up for investors.

As most countries go, Poland is not a bad place to die. The national insurance office ZUS reimburses families a proportionally large lump sum for funeral costs incurred, usually about 200% of the deceased’s monthly salary - one of the few countries in the world to give such a generous payout.

Once you go, there is no shortage of local firms vying for the business. And the recent national holiday devoted to paying respect to the dead assures the deceased plenty of attention after the final farewell.

It is a business that includes funeral plan- is owned by the City of Warsaw, offers a full ning, refrigeration, cremation, casket sales, range of funeral services at 11 locations aroand the ubiquitous funeral candles that und the city, and controls 18% of the capiPoles light in cemeteries, national monu- tal’s market. ments, or wherever a loved one has met his “This is a specific business, and it is diffeor her demise. rent in that not only the expertise of wor-

kers has meaning, but also the necessity to show a specific amount of emotional empathy toward clients,” said MPUK director Magdalena Rogozińska. “Patience and sympathy combined with calmness and professionalism are called for.”

MPUK is Poland’s largest funerary services provider. Its history reaches back to 1945, when the rubble-strewn Warsaw cityscape held an improbable number of corpses hurriedly buried all over the city. MPUK was charged with organizing the reburial of these hastily buried unfortunates.

The services offered by MPUK and other such firms on the market are diverse, and they are getting increasingly better at offering services catering to a wide variety of budgets and tastes.

Cremation, once considered taboo in Poland, was legalized in 1993. Now there are 11 cremation facilities in the country. Cremation in Poland runs approximately PLN

1,500 and the ashes of the deceased are sometimes placed in urns resembling soccer balls, luxury cars, or beer bottles.

Poland’s cremation rate is just seven percent. By way of comparison, 72 percent of Britons are cremated. In the United States,

November 2009

Cover Story

in Poland about 35 percent of deaths are followed by cremation.

For traditional burials, caskets run anywhere from PLN 20 to over PLN 1,000 for better models, or tailor-made caskets can be made for those with extravagant tastes.

Poland’s largest producer, run by the Lindner family, produces over 130,000 caskets annually, with many being exported to other European Union countries. The company was founded in the 1940s and has expanded to the position of industry leader in Poland.

Lindner produced over 11,000 coffins per month in 2008.

Lindner is a good example of a Polish firm which is family-owned, successful, and innovative. Many of the firm’s coffins are regularly shipped to Germany. The excess wood shavings which remain as a result of the coffin production process are compressed into wood-chip briquettes, a product which is then resold as stove fuel.

Another popular product that the Lindner firm pushes is a racy calendar which features different scantily clad models and coffins every month. Although the calendars reportedly sell like hot cakes, not everyone is amused at this controversial

November 2009

and unconventional sales and marketing tactic.

Hearses, funeral attire, and decorations such as flowers add to the variety of business opportunity. The list of suppliers is almost endless, with Chinese players trying to enter the market with products such as plastic and silk flowers, the kind which cope well in Poland’s cold climate.

Among the many new innovations on the funerary services market are gravestones which feature plasma screens for the viewing pleasure of the bereaved.

Trade fairs are organized regularly in Poland, giving producers and service providers the opportunity to show off their wares.

In the city of Kielce, the NecroExpo is one of Poland’s largest venues for showing off the funerary business opportunities which were unheard of in Poland a generation ago.

Foreign dealers join Polish firms in highlighting their products and services.

Warsaw will host the MEMENTO trade fair in November 2010 at Warsaw’s Expo Centre, and will draw the usual range of funerary service providers (the last event was held in November 2008).

Of the 2,500 or more funeral parlors operating in Poland, only 300 belong to the national funeral parlor association, PSKACIPP. The rest are more informal family-run affairs or fly-by-night cowboy outfits.

The industry has suffered a setback to its already dark reputation following a well-publicized Cash-for-Corpses scandal, which involved ambulance drivers in the city of Lodz finishing off emergency room patients on their way to the hospital. The ambulance drivers, only recently convicted of murder charges, had been bribed by local funeral homes.

Overcoming the stigma tied to these grim past events are one of the many challenges facing the industry in Poland. Although private firms are doing well, a fact highlighted by recent trade fairs, privatization has yet to reach the levels seen in other countries.

Private cemeteries may be common in the United States, but in Poland popular opinion may not easily embrace such developments.

In the US, there are approximately 10,000 cemeteries that are private and profit-oriented.

With 2.4 million people dying in the US in 2008, the business potential is obvious.

Service Corporation International, the largest funerary services company in the country, owns 485 cemeteries. Carriage

Funeral Costs in Poland Coffin: PLN 1,100–3,000 (average) Transport from funeral home to cemetery: PLN 200 Gravestone: PLN 2,000–10,000 Plot rental at church cemetery, 20 years: PLN 173 Grave site excavation: up to PLN 380 Chapel fee: PLN 70 Cremation: PLN 700

Services, the smallest of the publicly traded firms, operates 151 funeral homes and 31 cemeteries.

In addition to taxes, the only other sure thing in life is death. People will keep dying and the deceased will have to be buried somewhere, or cremated. Poland’s demographic indicators point to an increase in deaths as the population ages (making geriatric care an associated business opportunity).

Funeral parlors should therefore continue to do well, for the cycle of life and death does not care whether markets are bearish or bullish. But private cemeteries? In a country where the privatization of hospitals and medical care has met with skepticism among a large share of the population (particularly the elderly), it may prove to be too much to swallow.

The church will likely prove to be another opponent, as the majority of Poland’s cemeteries are church-owned. The church has been a formidable opponent to reforms before, and it will surely balk at the idea of privatizing Poland’s cemeteries.

But funeral parlors and other associated businesses are ripe for consolidation. There is no reason why they should not be. Many businesses are passed from generation to generation, but in situations where a family member may choose to go into a different line of work, private buyers would offer a n welcome exit strategy.

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Globe Forum held for first time Johan Gorecki brought his Globe Forum roadshow to Gdańsk, drawing a mostly impressive list of international speakers addressing the issue of business innovation.

The conference series was launched in 2003 in Sweden and has so far only been held in Sweden – its inclusion of Gdansk further reinforces Gdańsk’s emerging economic significance as a key Baltic city.

Unlike many other standard conferences in Poland, the Globe Forum - with more than 1000 participants - had a distinctive Scandinavian flavor, and attracted top politicians such as Latvian Prime Minister Valdis Dombrovskis and insightful speakers such as Mark Lee of Air Protection Techno-

Innovation - How do you actually create it?

Innovation might seem random at times, and the truth is that usually one crazy idea connects to another crazy idea but how do you create this process?

During this session the speakers Kaj Mickos (Mälardalen University), Colin Carlile (ESS Scandinavia Secretariat at Lund University), Hans-Jacob Bonnier (Bonnier Business Press CEE) and Johan Gorecki (CEO of the Globe Forum) pointed out a couple of musthave’s for the innovation process.

1. DEFINE: Don’t start out with coming up with the medicine before you know what to cure. The process should start out with defining the problem and then starts the trial-and-error period.

2. OPEN: Tap into not only a couple different networks but lots of networks the times of the lone “renaissance genius” are over.

3. COMMUNICATE: Listen to the young ones - today 3 year olds know how to spell google, teenagers only e-mail when they have to write very old people, are you old? Communicate with the crowd: when you have a crowd working on your clearly-defined problem it becomes your source of innovation.

logies. Workshops and sessions addressed issues such as sustainability in business, innovation, the energy market, investing in Poland, the “Baltic Sea Strategy” and the “Swedish model” of energy sustainability for cities and regions.

The two-day conference included an “Onstage Innovators’ Contest”, in which new, innovative companies gave “one-minute pitches”, vying to win the audience’s vote of confidence in their business model. With the disciplined timing of the Hanseactic tradition, the one-minute rule was vigorously enforced. Companies that presented included: • Visimind, Krzysztof Gajdamowicz • Mabion, Maciej Wieczorek • Promar, Bartosz Marciniak • Molport, Janis Oslejs • Siepomaga.pl, Patryk Urban • Optiguard, Bartosz Pilitowski • EnergoPlasma, Daniel Bandachowicz • SIGarden And the winner was Ewa Blazejewska of Aton-HT, which has developed a microwave technology that burns household waste and converts it into energy that can be used to power the home, or sold on the open market.

During the forum two Globe Forum awards were given within the categories sustainable cities and sustainable innovation to Stargard Szczeciński, and Danone Poland,

Polish Sustainability Champions The Globe Forum Gala Dinner at the Sheraton in Sopot recognized two actors for their efforts in sustainability in Poland. The Responsible Business Forum in Poland (FOB) together with the international sustainability award Globe Award - did a national search for great sustainability cases in Poland.

The two winners were: Danone Poland was recognised for their innovative project “carbon footprint”. The jury chair Mirella Panek Owsianska said: “The project is comprehensive due to the fact that the actions taken allow monitoring and reduction of carbon emission throughout the production process. In this context, the improvement of cooperation in the supply chain should be particularly appreciated.”

The Polish city of Stargard Szczeciński was recognised for pursuing the city’s development strategy consistently and diligently. The city has overcome substantial obstacles in revitalizing the area, and the jury also appreciated that the city’s authorities deliberately planned social integration into the realized projects.

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November 2009

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outside Sweden – in Gdańsk Jerzy Buzek’s comments to the Globe Forum:

“We chose Poland to be the host country because it was the most interesting country in the heart of Europe with positive GDP and 38 million citizens, and Gdansk because it was here that Lech Wałęsa started the fight against communism” Johan Gorecki, Founder and President, Globe Forum

November 2009

(top) David Kay, GE Money Bank, and Alan Aleksandrowicz, Gdansk Economic Development Agency (bottom left) Mark Lee, Air Protection Technologies and Rafael Sandra, IPC Petroleum Consultants (bottom right) Marek Sokołowski, LOTOS, and Roman Szyszko, Energa

respectively. The winners are now candidates for the International Globe Award, the annual awards event held in Stockholm.

The Energy Markets session, featuring lead speakers Marek Sokołowski, Deputy CEO of LOTOS S.A. and Roman Szyszko, Deputy CEO of Energa, and moderated by Monika Richardson, concluded that Poland has huge losses in the distribution of energy, as a result of an inefficient and outdated grid, and that the country should open up further its “closed” energy system.

Sokołowski said that the country needs a more robust energy trading market, and complained about the collapse of profits in the refinery business, which have dropped

Demographic problems, the current economic crisis and climate changes are our main challenges, according to the President of the EU Parliament, Mr. Buzek. Due to their complexity solving these issues requires worldwide cooperation. “Europe on its own won’t manage.”

Mr. Buzek said we should no longer discuss whether humans are responsible for the climate change. We should just do something about it. In Copenhagen (the December United Nations COP 15 meetings) an agreement should lead to dramatic reduction of emissions.

This cannot be achieved without innovation. The demand for energy will increase in the long term. But we should increase our energy efficiency, because that is the most efficient and politicallyeasiest solution.

The current crisis means less shortterm energy demand but doesn’t negate the need for research and innovation to change the climate. Buzek said that the transfer of knowledge between universities and businesses must be improved, and said that Europe can learn a lot from the US in this matter.

Buzek said that the Globe Forum meetings are a useful contribution toward boosting innovation and the development of new technologies. He emphasized that “a country can emerge from a crisis only if it is better than others in creativity, productivity and its services are reasonably priced”.

from $12 in mid-2008 to a recent level of just $2. Mark Lee, GM of Air Protection Technologies, said „there is no single bandaid fix for solving our energy needs. We must pursue multiple solutions and balance our energy mix by using regional energy resources, like coal, as well as more dispersed sources such as wind”.

Gdańsk’s Alan Aleksandrowicz, MD of the Gdansk Economic Development Agency, was keen to promote the city’s development priorities, such as the „Young City” project (a massive and long-term project to redevelop parts of the Gdansk Shipyard), the Baltic Arena, and a new hi-tech start-up incuban tion project.

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Nine Polish fast-growing awarded in Technology Deloitte’s 10th annual Fast 50 CEE contest - part of the firm’s larger Fast 500 competition aimed at distinguishing fast-growing technology companies awarded 9 prizes to Polish companies.

But the formula needs to be changed to reward not only those who build companies but also those that build value - efficiently and with a judicious use of capital - for shareholders.

Full list of winners – Deloitte Technology Fast 50 CEE Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Country

Sector

Netmedia Polska Internet TeamNet International Rumunia Programming Kompan.pl Polska Internet Sunrise System Polska Internet Telerik Corp.

Bułgaria Programming Investor.BG Bułgaria Internet Agito Polska Internet AROBS Transilvania Software Rumunia Programming AITIA Int’l Informatics, Inc. Węgry Programming EXECOM Serbia Programming ESET Słowacja Programming SOITRON Słowacja Telecoms Grupa Pracuj Polska Internet Semilab Semiconduktor Physics Laboratory Co. Ltd. Węgry Electronics INSIA Czechy Internet Arkon Węgry Internet CROZ Chorwacja Programming INVIA.CZ Czechy Internet Millennium 000 Słowacja Programming Universal K Ltd. Bułgaria Telecoms ExterNet Nyrt.

Węgry Telecoms StringData Czechy Programming Tau on-line Chorwacja Internet Carnation Węgry Internet eo Networks Polska Programming

Growth

7210% 3317% 2411% 2364% 2327% 2130% 1744% 1663% 1399% 1127% 951% 880% 864% 837% 789% 727% 691% 686% 670% 664% 659% 653% 622% 601% 596%

Company

26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42

Country

Sector

BalaBit IT Security Węgry Net Mäil Węgry Webmedia Group Estonia Lasting Software Rumunia M2 Net Polska Infomatix Węgry Trask solutions Czechy Kancellaar.hu Węgry Interconsult Bulgaria Bułgaria The Red Point Rumunia XAPT Hungary Węgry Datasys Czechy Advatech Polska MadNet Serbia Klising Chorwacja MadNet Słowacja Mobiliju telefonu techninis centras UAB Litwa 43 Algotech Serbia 44 LMC Czechy 45 Advantage Software Factory Rumunia 46 HaziPatika.com Węgry 47 Romanian Soft Company Rumunia 48 Cygni Software Czechy 49 home.pl Polska 50 WDF - Web Design Factory Czechy

Growth

Programming 562% Internet 538% Programming 507% Programming 487% Programming 480% Programming 469% Programming 457% Programming 456% Programming 447% Programming 430% Programming 389% Programming 389% Comp’s/peripherals 388% Telecoms 383% Programming 370% Internet 361% Telecoms Telecoms Internet Programming Internet Programming Programming Internet Internet

356% 352% 352% 350% 323% 312% 302% 300% 298%

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technology firms Fast 50 contest

The Deloitte Technology Fast 500 Awards are run and moderated by Deloitte, and they recognize the 500 fastestgrowing technology companies in regions around the world. Winners cover all areas of technology - from Internet to life sciences, from computers to semiconductors - and include both public and private companies.

The awards were created in 1997 during the dotcom boom to illustrate the success of growing U.S. technology companies.

Today, the Fast 500 has expanded beyond the United States and covers North America; Asia Pacific; and Europe, the Middle East and Africa.

The Fast 500 examines companies on their relative growth in revenue over a fiveyear period. The Fast 500 seeks to reward companies that have demonstrated cutting edge business strategies, vision and solid management. Deloitte’s Fast 50 awards distinguish companies from central and eastern Europe.

Jacek Bochenek and Ewa Rzeczkowska of Deloitte

NetMedia S.A. took the top prize in central and eastern Europe, with revenue growth of 7210% over the five-year period.

Other Polish companies that were distinguished included Kompan.pl, Sunrise Systems, Agito, Pracuj.pl, eoNetworks, M2 Net, advaTech, and Home.pl.

While NetMedia won the contest - designed to highlight innovative and rapidly-growing technology firms - the company could easily have won in another category of innovation: creating a capital structure so complicated that it would make Wall Street’s wizards proud.

Its Class A, B and C shares - four more classes of shares exist with different rights were listed on the Warsaw Stock Exchange in November 2006 at a price of 9 pln, and have since lost 36% of their value. For a company that posted 4,7 million pln profit

November 2009

in 2008, the complexity clouds an otherwise interesting company. Since June 2007, NetMedia has had three secondary offerings of shares, raising about 25 million pln of additional capital.

On the basis of Deloitte’s rigid ranking of revenue growth, NetMedia surely deserved the accolades and attention from the awards event. But shareholders in the publicly-traded shares are not sipping champagne while the WIG has bounced back nearly 30% over the last six months, shares in Netmedia have lagged significantly, up just 10%.

It’s time for Deloitte to change the formula for the awards.

We suggest that the revenue crieria remain in place - as it shows a rapid acceptance of the firm’s services in the marketplace and supplement it with an objective capitalefficiency criterion and a subjective criterion

that places a premium on financial transparency.

Given that the roots of the financial crisis are generally agreed to be a result of misunderstood risks and opaque financial structures, a „corporate awards” contest should incorporate recent lessons learned - and encourage companies that grow efficiently.

Some arbitrary ideas about capital-efficiency might include that the company has generated more profit in the last five years than external capital raised. If publicly-traded, it should have outperformed its peer group or the general stock-exchange index.

If the firm is underperforming its peer group at the expense of rapid revenue growth, it might suggest that the firm is actually destroying value, or that many shareholders have serious doubts about n their strategy.

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Canada welcomes new Daniel Costello has replaced David Preston as the new Canadian Ambassador to Poland, as of July 2009.

Costello, a philosopher by education, is taking over the top job at a time when economic and diplomatic relations between Poland and Canada are building momentum, with trade of C$ 1.2 billion in the last year, heavily in favor of Polish exports to Canada.

Just 18 months ago, Canada lifted visa restrictions for Poles, and the result has been a substantial increase in business and tourism travel between the countries.

In an exclusive interview with BizPoland, Costello outlined some of the steps Canada is taking to strengthen relations with Poland. „Just last week I visited the Canadian Executive MBA program at the Warsaw School of Economics, and it’s just great to see its deAmbassador Daniel Costello

Investing in Poland?

velopment”, said Costello, who is 47 years old and moved to Warsaw with his French wife and two young daughters. „We’re working on a couple of bilateral agreements, such as „youth mobility”, which is bringing in 500 people (aged 18 to 35 years) with pre-approved „work authorization”.

We’ve got six Canadian studies centres in Poland. And Ottawa is in negotiations with Brussels on a broad deal that we hope to sign within two years”, said Costello, with a breat-

Key events between Canada and Poland:

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1) Economic Forum: The Corporation de développement économique BoisFrancs in cooperation with Wielkepolska Marshal’s Office is organising an Economic Forum, November 22-29.

2) Globe 2010, a bi-annual international event held in Vancouver focusing on the environment (www.globe.ca).

A number of Polish representatives from the public and private sector went in the past years.

3) 2010 Vancouver Winter Olympics. A large delegation of Polish athletes is expected to represent Poland.

November 2009

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Ambassador

Roger Belanger, Senior Trade Commissioner

hlessness that reflects the energy he brings to the position. „We have also reached an agreement on pension benefits between the countries, which is important since there are more than 1 million Canadians of Polish origin.

Costello lauded the recent deal between LOTOS Kolej, a private freight railway operator, and Bombardier Transportation of Canada. The contract is valued at approximately 18.6 million euros ($27.4 million US) for the delivery of six diesel-electric TRAXX locomotives. Delivery will start in mid 2011. The agreement includes an option for four additional locomotives In addition to strong aerospace and transportation business potential, Canadian businesses see opportunities in Poland in infrastructure development and agricultural.

Canadian potato giant, McCain, for example, has an increasing presence in Poland.

“And of couse our famous Canadian maple n syrup”, said Costello, smiling broadly.

Ambassador Daniel Costello • Honours B.A. [Political Science], McGill University, 1984; M.A. [Philosophy], University of Massachusetts-Amherst, 1991; Ph.D [Philosophy], University of Massachusetts-Amherst, 1995) taught for several years at the University of Massachusetts-Amherst and l’Université François-Rabelais de Tours (France ).

• Returned to Canada to serve as Policy Adviser and Executive Assistant (Chief of Staff) to the Director of Policy and Research in the Office of the Prime Minister (1996-1999), Executive Assistant (Chief of Staff) to the Minister of Citizenship and Immigration (19992002), and Chief of Staff to the Minister of Foreign Affairs (2002-2004).

• He then returned to teaching at the University of Ottawa (fall 2004) prior to joining the Ministry of Foreign Affairs in early 2005. At the Ministry in Ottawa he has served as Director General for Intergovernmental Relations and Domestic Outreach (2005-2006), and more recently in the Bilateral Relations Branch as Director General for the European Union, North and West Europe (2006-2008).

• He was appointed Ambassador to the Republic of Poland in July 2009.

• He and his wife, Nathalie Zaquine, have two daughters, Clara and Mariane.

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Grey-market bazaars squeezed by authorities and new discount retailers Warsaw city authorities have been challenging the legality of open-air markets and bazaars in an effort to shore up development and clean up the city, often to the chagrin of budget-conscious shoppers.

Meanwhile, budget retailers are scouting locations all over Poland in a search for appropriate retail locations

“The city has been pursuing the informal sector including illegal street vendors and local bazaars, which traditionally have been cheap places for locals to shop,” said Tadeusz Markiewicz, a Warsaw-based commercial real estate advisor. “But now is a good time for low-cost retailers to come in and fill some of the void.”

The doors of Warsaw’s budget markets and grey-market shopping centers have been closing in recent weeks, often forcefully as local merchants refuse to leave their premises.

In August 2009, 35 persons were hospitalized when authorities forcefully executed the closing of Warsaw’s KDT, a popular centrally-located budget market selling clothing and cosmetics. KDT’s merchants, conducting operations next to the Palace of Culture, continued to occupy their spaces despite a city order commanding them to vacate one of the capital’s most strategic locations. In an opaque deal with the city, KDT merchants will lease space at Millenium Plaza, owned by Atlas Estates.

And in September, street brawls broke out between authorities and the sidewalk tra-

ders near Sadyba Best Mall. Since then, the traders have disappeared.

Yet another initiative on the part of Warsaw city authorities to close down open-air bazaars is the Okęcie transit loop near Warsaw’s airport. The city says most of these operations are illegal.

“The merchants were illegally occupying a section of a city thoroughfare,” said City Roads Authority spokesman Adam Sobieraj, as quoted by Times Polska. The merchants disagree and counter that they had been paying rent for the space occupied.

However, the most recent high-profile closure is Warsaw’s Galeria Centrum, a centrally located retail center featuring over 11,000 square meters of leaseable space. The last remains of floor displays and unsold merchandise have been cleaned out, and preparations are underway to welcome new tenants.

“When the new tenant list is filled we will release it,” said Centrum Development & Investments’ Anna Kniaginin.

Speculations abound whether one of the new tenants will be TK MAXX, a successful budget retailer operating in the United Kingdom, Ireland and Germany. TK MAXX has

been a mainstay on the US budget retail market for years under the name TJ MAXX. Currently the retailer is planning up to five retail locations across Poland, although the retailer has yet to announce its entry onto the Warsaw market. TK MAXX has opened their first shop in the Silesian city of Czeladź, with locations in Olsztyn, Wrocław, and Bielsko-Biała to follow. According to TK MAXX officials, early results are exceeding their projections. Cushman & Wakefield is handling TK MAXX’s expansion across Poland.

Now is a good moment for off-price retailers to enter the market. Jones Lang LaSalle analysts stated in a recent report that “discount brands will gain in importance” in the near future, while King Sturge analysts stated that “What for most are difficult times may create opportunities for some, such as budget brands TK MAXX, Takko, and Charles Voegele.”

As thrift-conscious shoppers in Warsaw lose some of their mainstay shopping locations, opportunities for low-budget retailers will surely grow. Warsaw authorities have been eager lately to rid the city of informal markets and bazaars. Although the bazaars offer locals the opportunity to bargain shop, they are often seen as a blight on the cityscape.

Of course, as long as Warsaw city authorities turn a blind eye toward the informal sector, tolerating one bazaar while forcing another one across the city to close, the game of cat and mouse will continue.

Regardless of the outcome, off-price retailers have a void to fill, and in the opinion of most analysts, now is a good time as any to n enter the Polish market.

Meeting Point in Barcelona disappoints Barcelona's Meeting Point investment fair was mostly irrelevant for Poland, as the number of Polish exhibitors dropped from last year's 6 to just one this year - the City of Czestochowa. Nevertheless, Dr. Jarosław Ferenc of Częstochowa's Economic Development department said the fair was worth it, and that Częstochowa may have direct investment results from participation in the fair.

Barcelona Meeting Point attracted more than 8,000 attendees, and a large number of exhibitors from Latin America - as well as n the City of Moscow.

November 2009

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Reinhold Center opens

Swedish developer Reinhold celebrated the nearly-open Class A office building in Katowice. The Reinhold Center will have 8635 square meters of space and will be ready for occupancy in December 2009. The biggest tenant signed so far is Edelmed. The development, backed by financing from Straumur-Burdaras Investment Bank. Michał Borowski, former chief architect for the City of Warsaw, has joined Reinhold as COO. Reinhold’s top management team from Stockholm, including Andre Rosberg, Vicepresident, and Michel Fatechnia attended the Katowice event, which featured musical entertainment by JOY, and acrobatic stunts by Fly Cube.

Reinhold is a Stockholm-based developer and in Poland other projects - residential and office - include Karpacka-Wrocław, TerenowaWrocław, Reinhold Lipinski-Warszawa, Jerozolimskie 21-Warszawa, Reinhold PulaskiegoKatowice, Reinhold Center-Katowice, and n Reinhold Plaza-Krakow.

Magda Gessler opens Bellini in Warsaw’s Old Town Square

The paparazzi swarmed around Magda Gessler and her friends at last week’s opening of the newest “Magda Gessler-branded” restaurant Bellini. This Italian-style restaurant is the next in a long line of exclusive restaurants owned by the firm Food Zone, which also operates Ale Gloria, Gar, and Polka. Bellini brings an Italian flair to the typically bland restaurant scene in Warsaw’s Old Town. The restaurant will cater to businesss executives on an expense-account and highend tourists – as well as up-scale events, such as wedding parties and corporate events. Aleksandra Furmankiewicz managed the development and opening of the resn taurant.

Hi5 CEO emphasizes exponential versus linear growth The Internet Advertising Bureau held its annual conference focusing on innovation and marketing in the Internet space. Top speakers included Ramu Yalamanchi, CEO of Hi5 Networks and Norm Johnston of Mindshare Worldwide.

Yalamanchi, who founded Hi5 and has built it into the 11th largest website in the world with 48 million visitors per month said that business builders and marketers should focus on three things: leveraging data; getting permission from

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your users; and viral marketing – by expanding the number of new prospects and „tuning virality” to increased the conversion rate per prospect.

He said that Hi5 spends virtually nothing on marketing but instead relies on its users to share applications and experiences with their friends and networks. He also said that Web 2.0 was about Collaboration, but that the new Web 3.0 is about Platforms and Sharing data.

Winning new technology and start-up Internet firms will find „brand ambassadors” inside social networks, which will drive viral marketing and exponential growth. n

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Events

BMW Inchcape BMW InchcapeBMW Inchcape has shuttered its first location in Warsaw at ul. Prosta, and relocated to a sparkling new showroom in Wola at al. Prymasa Tysiąclecia. The opening party was held in late October. According to the auto industry research firm Samar, BMW sales in Poland for the first 9 months of 2009 were 3312, up 12,2 % from the comparable period in 2008. This result exceeds the overall new-car sales sector result, which increased 1,5 % for the 9-month period ended 2009. BMW Inchcape belongs to the Inchcape group, which has been listed on the London Stock Exchange since 1958, is headquartered in London, employs over n 15,000 people.

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GOYELLO receives “Young Entrepreneur Award”

The Polish ambassador in the Netherlands, Mr. Janusz Stańczyk, awarded the ‘Young Entrepreneur Award” to GOYELLO IT Services, one of the nominees for the Dutch-Polish Trade Award.

The “Young Entrepreneur Award” is a new category within the Dutch Polish Trade Award competition. The category was especially created in order to honor relatively young companies yet actively operating in the Polish market and committed to promoting Polish-Dutch economic relations.

GOYELLO was founded by Peter Horsten and Arie de Bruin in November 2006, when two offices were set up in Gdansk and the Netherlands. Within 3 years of business activity GOYELLO has grown up to almost 50 employees and opened another office- in Gliwice. GOYELLO mainly supports Dutch companies in realizing their undertakings and offers consulting servi-

ces in the IT area. The company specializes in providing tailor-made business applications, websites, and portals. However, before starting the implementation process it assists the clients by providing creative business counseling.

Their main development operation is in Poland and the commercial operation and sales are close to their clients in the Netherlands. Polish office mainly consists of professional software developers, graphic designers and business consultants. Undoubtedly, GOYELLO promotes the Tricity region as an attractive location for IT outsourcing mainly through organizing study trips for Dutch students and hosting clients.

The DPTA is a joint initiative of the Netherlands Polish Council for Trade Promotion (NPCH) and the Netherlands Polish Chamn ber of Commerce in Warsaw.

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Events

BizPoland VIP Cocktails BizPoland held its October VIP cocktails on the top, 40th floor of the Marriott Hotel, with a special focus on the petroleum sector.

The event continues a new tradition of quarterly business mixers, focused on specific industry sectors. The next event will be held in January – exclusively for subscribers to BizPoland Magazine (subscribe@bizpoland.pl) and industry-specific executives. Marriott also recently celebrated its 20th year in open ration in Warsaw.

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