POLAND TODAY magazine #15

PRICE: 25 PLN / 7 EUR

illustration: Arthimedes

How is Poland’s reputation abroad? We ask Professor Timothy Garton Ash. page 28

Poland's startup community has great potential. But it still has a long way to go. pages 40-46

An escape from communist Poland led Stash Pruszyński to Radio Free Europe in Munich. page 68

Poland's Diaspora Understanding it is the first step to harnessing its potential pages 30-39

Magazine • Portal • Conferences • find out more at www.poland-today.pl

H2 2017 issue no. 15

photo: Business Run

We run so others can walk!

Over 20,000 took to Poland’s streets on 3 September to raise money for prostheses for people with mobility disabilities Over 1.6m zł was raised by

Poland’s Business Run’s annual charity run, held simultaneously in eight cities across the country, with teams from 1,363 companies and more than 1,100 volunteers helping to keep everything working smoothly. With a total of 77 km covered, the Run was a huge success, raising enough money to buy prostheses and fund rehabilitation for at least 66 people. Four thousand more people ran and an additional half a million złoty was raised, compared to last year. Thanks to this, the Foundation’s youngsters will really be able to stand up and maybe even run with us next year! “It’s really enjoyable and you can do a lot for other people by taking part. You run, you help!” said Joanna Plaisant, Manager of RICS in Poland, supporting partner of the event.

Join us for the next Business Run in September 2018!

10

table of contents

EDITORIAL

12

IN FOCUS

14-21

POLITICS & ECONOMY

22

Emerging from the shadow

Poland’s upcoming political season will be defined by conflicts in the ruling party, changes in the judiciary and upcoming elections. Polityka Insight’s Łukasz Lipiński discusses the impact of cabinet reshuffles, who will be in and who will be out, as well as how President Duda’s relationship with the rest of his party will change.

24

A boom in construction

LEADER

30-39

Poland's diaspora

Understanding Poland’s diaspora is the first step towards harnessing its potential.

To do this, we need to know the history of Polish migration that created its expansive and diverse diaspora. To put a face to the masses, we’ve highlighted a selection of Poland’s more famous sons and daughters and, to understand how best to utilise the economic soft power that the diaspora can provide, we’ve talked to some experts on the matter.

BUSINESS

40-45

Startup spirit

To the uninitiated, getting to grips with Poland’s startup community can be a little overwhelming. As part of Poland Today’s support for the country’s startup community, Liam Frahm offers a comprehensive overview of the issues facing Polish startups now and what to expect going forward.

Polish GDP is growing at a solid pace of around 4%. Polityka Insight’s Adam Czerniak shows that consumption is the main driver, accounting for three quarters of the increase and growing at a rate not seen since the global financial crisis.

Hidden champions

Mid-sized firms are the real success story in global exporting reach. These hidden champions are in the top three of their market worldwide or top in their continent, but are mid-sized, highly-specialised and little known to the wider public. So what is the future for Poland’s hidden champions?

48

Building bridges

Investments between CEE and China are on the rise. To ensure deals aren’t lost in translation, Darren Chong, Director of the China Business Group at PwC Poland & CEE, helps Polish and Chinese businesses work together.

50

Successful companies abroad

Over the last decade, more and more Polish companies have begun investing abroad, transforming gradually into multinational corporations with a strong regional presence. We offer a selection of Poland’s successful exporters.

URBAN ISSUES

53-66

Expo Real 2017

Global forces are always at play in real estate, but the dynamics are changing now more than ever - both for better and for worse.

Asian funds are coming in, but negative demographics are never out of sight or mind.

26

More investment required

CULTURE & HISTORY

Mateusz Szczurek, Lead Regional Economist for the EBRD, sits down with Richard Stephens to discuss Poland’s economic future, the impact of the July budget surplus, what investment needs to be made and EBRD’s role in that.

Table of contents

46

68

Eyewitness: Radio Free Europe Stash Pruszyński recalls his time working as a consultant at the historic station and his daring escape from communist Poland in 1955 which set him on a very different course in life.

28

Reverting to stereotype

Timothy Garton Ash, Professor of European Studies at the University of Oxford, says that while Poland remains one of the biggest postcommunist success stories, its perception on the international stage is suffering.

Building bridges. page 48

How is Poland’s reputation abroad? We ask Professor Timothy Garton Ash. page 28

A boom in construction. page 24

11

70

It happened in... January

table of contents

20 January 1977: Following his successful presidential election, US President Jimmy Carter appointed Zbigniew Brzezinski as his National Security Advisor. Following his death earlier this year, tributes flooded in from around the world.

72

A sister’s gift of hope

Ola is a 14-year-old with a dysfunctional father and an absent mother. She takes on the responsibility of preparing her autistic brother Nikodem for the ceremonial First Holy Communion. Poland Today gets the inside scoop with director Anna Zamecka about her debut feature-length documentary, Communion.

Zbigniew Brzeziński. page 70 EVENT REVIEW

74-88

From MIPIM in Cannes to the Economic Forum in Krynica Zdrój via th ABSL conference in Łódź, Poland Today continues to organize and partner major events that cover important sectors and topics.

FOREIGN IMPRESSIONS

90

Hold the surówka

Monica Zielinski sits down with Ling Ding, a Chinese analyst in Warsaw, to ask her about living in Poland. A linguistics student who studied Polish on a whim, she gives us her take on preconceptions, neighbours, and coleslaw.

Successful companies abroad. page 50

Poland’s startup community. page 40

12

editorial

Poland Today Sp. z o. o.

ul. Złota 61 lok. 100, 00–819 Warsaw, Poland www.poland-today.pl

The sons and daughters of this country are spread across the globe and would make a potent resource for their original homeland if their potential can be harnessed.

Richard Stephens

Editor’s Note

Founder & Editor, Poland Today

As Poland looks to its economic future, there are two new phenomena that could and should prove beneficial to the long-term development of the country, especially in light of the looming EU-funding cliff. The first is one that everyone can get excited about: startups, specifically of the tech variety. As has been the case before, Poland may have got off the blocks behind other countries in the field, but it’s catching up fast and – I can say with confidence – will overtake most others in the near future. Poland has the requisites to make this happen: a dynamic business environment and a young, highly-driven skilled workforce, combined with a strong work ethic. It now needs discipline and firm guidance from experienced hands to fulfil its promise. The other one lies curiously dormant and underutilised: Poland’s diaspora. The sons and daughters of this country are spread across the globe and would make a potent resource for their original homeland if their potential can be harnessed. Although most countries don’t make use of their diasporas either, there’s no reason why Poland can’t. Many emigrants and their offspring don’t realise the transformation that has taken place back home, so to speak, over the last 25 years or so - present political disturbances notwithstanding. If they did, they would surely be more willing to contribute. It would take coordination between the various stakeholders – the government, the business community, science and academia, the arts – but if it can be done, the results would, I believe, be significant.

Poland Today will continue to support these two causes (see the articles in this issue), and others which will benefit the country. They include: improving Poland’s image abroad, supporting Polish companies operating and expanding globally, encouraging Poland’s education system – particularly tertiary education – to be more open and dynamic, and promoting the country’s business opportunities internationally.

If you would like to discuss how you can help us do that, we would like to hear from you. Enjoy the read!

Founder & Editor Creative Director

Richard Stephens Bartosz Stefaniak

Financial Director Business Development Director New Business Consultant International Client Director Business Strategist

Arkadiusz Jamski James Anderson-Hanney Tomasz Andryszczyk Toby Hancock Ana Hermoso

Online Editor Editorial Coordinator

Monica Zielinski Liam Frahm

Contributors

Monica Zielinski Liam Frahm Łukasz Lipiński Adam Czerwiak Mateusz Nowak Janusz Dzianachowski Monika Lerka

Photographs

Polska Agencja Fotografów Forum, Oleh Diakon

Photo output

Printing house

ArtDruk Zakład Poligraficzny ul. Napoleona 4, 05-230 Kobyłka Poland Today Magazine is printed on Munken Print Cream ecological paper © 2017 Poland Today Magazine reproduction without permission is prohibited

Magazine layout

Bartosz Stefaniak www.madeinPolska.eu

13

nazwa działu

14

in focus

compiled

by Liam Frahm

Europe

Americas

Deutsche Welle (Germany) EU threatens legal action over deforestation

Bleacher Report (USA) Aleksander Doba crosses Atlantic for third time aged 70

Environmentalists have sounded the alarm over deforestation in Poland, following a new law enabling private landowners to fell trees on their property without first applying for permission. In response, Jan Szyszko, Poland's environment minister, argued the new law strengthens the rights of private land owners and reduces bureaucracy. Meanwhile, logging in the ancient Białowieża forest, a UNESCO World Heritage Site, sparked international outrage. Szyszko allowed the trees to be logged, citing an infestation of the European spruce bark beetle, but the EU have argued this breaches European nature conservationregulations.

Daily Mail (UK) Poland’s first nuclear power plant by 2029?

Global news review

At September’s Krynica Economic Forum, Energy Minister Krzysztof Tchórzewski said "We would like to build three units (of the nuclear power plant) in 5-year intervals, with the first one in 2029." He added, "our initial estimates show that one unit will cost 23-25 bn zł." The project was initially announced in 2009, but suffered delays due to falling power prices and a lack of public support following Japan’s Fukushima nuclear accident in 2011. Only two locations are currently being considered: Lubiatowo-Kopalino and Żarnowiec, both in northern Poland, according to Tchórzewski.

In September, Aleksander Doba from Poland landed in Le Conquet, France after more than 100 days in open sea, in only a muscle-powered kayak, bringing his voyage from New Jersey to a close. Seven years ago, Aleksander Doba became the first person ever to cross the Atlantic Ocean in a kayak when he travelled from Senegal to Brazil, following it up in 2013 when he voyaged from Lisbon to Florida.

Mateusz Morawiecki, Poland’s deputy prime minister, said that JP Morgan plans to open a global operations centre in Warsaw following several months of talks. “The world’s largest bank, one of the most dynamic, will actually set up a base in Poland,” Morawiecki said in a radio interview. “It makes me very happy because these are well-paid jobs. It’s really a huge success, it’s like a little Mercedes in the services sector.”

The Mirror (UK) Legia Warsaw fans respond to banner fine

Supporters unfurled a giant banner of a pig during the club’s Europa League qualification tie against FC Sheriff of Moldova, in response to being slapped with a €35,000 fine by football governing body UEFA for an earlier banner.

At Legia’s Champions League qualification tie against Astana of Kazakhstan, supporters unveiled a large banner of a Nazi soldier holding a gun to a child's head with the text, "During the Warsaw Uprising Germans killed 160,000 people. Thousands of them were children."

In October this year, Poland will play host for the first ever Indian Film Festival in Poland. Shared between Warsaw and Kraków, the festival aims to promote Indian art and culture as well as celebrate the link between the two countries. RC Dalal, Co-Founder and Curator of Indian Film Festival Worldwide said, “We look forward to introducing this beautiful country, which has largely remained unexplored until now, to the ever-growing Indian film industry.”

TIME (USA) Playwright Janusz Glowacki dead at 78

The renowned Polish-US playwright and screenwriter, famed for his bitter, ironic analysis of the difficult lives of immigrants, died while vacationing in Egypt in August aged 78.

In 1987, his drama "Hunting Cockroaches" won the Hollywood Drama League Critics Award.

"Antigone in New York" was awarded the Le Balladine Award in Paris for the best play of 1997, and "The Fourth Sister" won the main Grand Prize at the International Theatre Festival in Dubrovnik in 2001.

Asia

South China Morning Post (China) Polish climbers aim to conquer K2 in winter

Only 375 people have conquered K2 since it was first climbed in 1954 by an Italian expedition, and 86 people have died trying - a 23% death rate, compared to Everest’s four percent.

The feared Himalayan mountain is the last 8,000 metre peak not climbed in winter, and now a Polish expedition will attempt to ascend K2’s perilous slopes this winter. Winter mountaineering could be considered a national obsession, with ten of the 14 peaks over 8,000 metres in the world first being conquered in winter by Polish teams.

Financial Times (UK) JP Morgan plans 2,500 new jobs in Poland

Business Line India (India) Poland to host Indian Film Festival

Georgia Today (Georgia) President Duda promotes visa-free Kazakhstan link

At a Polish-Kazakh business forum in September, Poland’s President Duda voiced his support of Kazakh President Nazarbayev’s proposal of a mutual visa-free policy between the countries.

"Polish companies have been present on the Kazakh market for several years now,” President Duda stated. “The abolition of the visa regime for Polish citizens for up to 30 days would facilitate not only business contacts, but also tourist visits, as does the launch of a direct air service already in place between Warsaw and Astana.”

China Daily (China) Belt and Road Initiative is crucial for China-CEE relations

According to Xu Jian, Chinese ambassador to Poland, the programme is essential to relations between the countries. Speaking at the first China-CEE development forum, Xu said, "Chinese enterprises have invested more than $8 billion in the CEE region and expanded the investment areas." Jiang Jianqing, chairman of the SINO-CEE Fund, emphasized the role of CEE countries as "a crucial hub connecting East and West, located between the vital markets of the EU, Russia and the Middle East.

Africa

Business Live (South Africa) Shoprite sees Eastern Europe as potential market

Newly appointed Shoprite CEO Pieter Engelbrecht, in the job for just over seven months, said in August that the next phase of growth for the retailer-owned cooperative group may be in acquisitions of small businesses in Eastern Europe. After recently visiting Poland to meet with property developers, he said that the country was just one of many Eastern European countries that Shoprite would consider expanding into.

EBC (Ethiopia) Poland and Ethiopia agree to foster bilateral cooperation.

In May, President Duda met with Ethiopian Prime Minister Hailemariam Desalegn to discuss ways of enhancing economic ties between the countries. The leaders agreed to improve cooperation in agriculture, infrastructure, information technology and education, according to Krzysztof Szczerski, Polish Secretary of State. President Duda said Poland recognises Ethiopia's diplomatic importance in the region and expressed his desire to use Ethiopia as a gateway to building relations with the rest of Africa.

15

nazwa działu

16

in focus

The Duke and Duchess of Cambridge,

with their children Prince George and Princess Charlotte, at Chopin Airport in Warsaw on 19 July 2017. The royal couple toured Poland, beginning their trip in Warsaw with an official welcome

by President Duda, before meeting veterans of the 1944 Warsaw Uprising and visiting The Heart Warsaw at Warsaw Spire, a centre for European startup collaboration.

The couple also met survivors of the Stutthof concentration camp before travelling to Gdańsk, where they visited the European Solidarity Centre with former president Lech Wałesa, laying roses at the Monument to the Fallen Shipyard Workers of 1970.

photo

Snapshot

by Mateusz Włodarczyk (Forum)

photos: Zbyszek Kaczmarek (Gazeta Polska / Forum), Mikhail Klimentyev, NBP

Crisis in the courts

Russian ‘Zapad’ 2017 Military Exercises

Poland's diaspora

is extensive and diverse, reaching all across the globe.

Understanding its history could be the key to fully harnessing Poland's business, intellectual and economic potential. To this end, our leader offers an outline of Polish migrations and the historical events that influenced them. see pages 32-33

Russian military exercises dubbed “Zapad” commenced in late September in western Russia, Belarus, the Baltic Sea and the Russian exclave of Kaliningrad.

Land, sea and air units took part in war games in what Western powers said was Russia’s largest military exercise since the Cold War. Zapad 2017 was largely considered to be a revival of the Soviet-era train- Poland’s public budget sees ing manoeuvres that once included the unusually high surplus Warsaw Pact military alliance. The exercises were held in the midst of tension The Polish budget noted a 2.4 bn zł surin the Baltic region, including Poland. plus in July, with Deputy Prime Minister In previous months, Russia had claimed Mateusz Morawiecki reporting the bigit was conducting similar exercises gest surplus in 28 years.

The surplus resulted mostly from the further east, when in fact it was moving hundreds of thousands of mili- fact that Poland “successfully tightened tary personnel in what experts said the tax collection system”, Morawiecki was a readiness for battle. said, adding that the streamlined tax “While Russia's armed forces' lead- collection system relates to both VAT ership remain very interested in mili- and CIT. The latter “has been growing tary theory, they test and rehearse new quicker, thanks to our increasing anaapproaches to warfare in strategic exer- lytical skills, working with taxpayers and cises,” said one of the leading Western creating new institutions, including the analysts of Russian military develop- National Tax Authorities.” Morawiecki ments, Roger McDermott. added that the results didn’t stem from Moscow had claimed that less than savings on expenditure, and expenses 13,000 soldiers would take part in the constituted about 53% of the annual exercises, meaning observer teams plan. A more effective tax-collection from other European nations would system was among the policies promnot be required according to the Vienna ised by PiS ahead of the 2015 election.

Document of 2011. However, NATO It has been one of the most successful members and Western military experts drives by the government. believe that as many as 100,000 troops In research published in early took part in the drills, September, Moody’s rating agency preDespite NATO’s vigilant surveil- dicted the positive economic momenlance, bordering countries feel uneasy. tum in Poland will continue for the rest Poland’s Defence Minister Antoni of the year. “Higher economic growth Macierewicz voiced his concern about and strong budget execution signifiZapad. “The drill is a threat to us, no mat- cantly increase the chance that Poland’s ter what Russia says,” he stated. “It is far 2017 fiscal deficit will be well below the from being defensive - it is aggressive, three percent Maastricht-threshold for a third consecutive year,” they said. and this is dangerous.”

The Polish government has come under fire by European authorities after passing a law that is widely considered as violating the bloc’s non-discrimination rules, among other issues. To protect judicial independence, the European Commission told Polish authorities to make changes or face a possible lawsuit at the EU court in Luxembourg.

In July 2017, President Andrzej Duda signed a law that gives the country’s justice minister sweeping power to dismiss and appoint head judges. The law also introduced a retirement age for female and male judges at 60 and 65 respectively. In August the Polish government responded to the commission’s request by labelling it “blackmail”, but the commission announced in September that the new Polish law is ncompatible with EU law.

Brussels has repeatedly expressed concerns about democratic standards in Poland under the ruling Law and Justice (Prawo i Sprawiedliwość - PiS) party since the 2015 general election.

The commission raised “legal concerns” that by giving the justice minister discretionary power to prolong the mandate of judges who have reached retirement age, as well as to dismiss and appoint judiciary heads, “the independence of Polish courts will be undermined”, the commission said in a statement.

If a compromise is not reached, the EU could impose article seven of the European Treaty, and limit Poland’s voting rights within the block.

The unprecedented move would drive a further wedge between Brussels and Warsaw. “I am devastated by the thought that the EU could order sanctions,” Jerzy Stępień, a former constitutional court judge, recently said.

However, such a move might never materialise, as Hungarian Prime Minister Viktor Orbán is an ally of the Polish government headed by Polish premier Beata Szydło. During a recent trip to Warsaw, Orbán called Brussels' treatment of the Polish government “a political inquisition”, adding that he would “defend” any country being disrespected by the EU.

by Monica Zielinski

19 in focus

photos: Tomasz Hamrat (Gazeta Polska / Forum), Scubaphone

Record-breaking fifth place for Poland in FIFA rankings

Silesian mine awarded UNESCO World Heritage status

Poland's startup scene can be difficult

to get to grips with for the uninitiated.

As part of our support for the community, we give you the lowdown on the issues facing by Poland's startups. see pages 40-45

The historic Tarnowskie Góry mining complex was inscribed at the 41st session of the World Heritage Committee, held in Kraków in July. The only Polish candidate at the session, the Silesian silver, lead and zinc mine is Poland’s sixteenth cultural monument to be added to the World Heritage Site list. The site includes the entire underground mine, Powerful storms decimate Polish countryside including shafts, water management system and tunnels, most notably the In early August, northwest Poland was Black Trout Adit - the longest underbattered by storms that left six peo- ground tourist route in Poland by boat. ple dead, tens of thousands of trees Mining ceased in 1912 after centuries of felled and thousands of homes dam- activity, leaving behind 150 km of walkaged. Among those killed were two ways and over 20,000 shafts - includGirl Guides, who died when the storm ing waterways and drainage tunnels, smashed into their campsite in the the site extends over 35 km. In addinorthern village of Suszek. An esti- tion to Tarnowskie Góry, the World mated 45,000 hectares of forest were Heritage Committee inscribed a further brought down while more than 23,000 20 sites, bringing the total number of hectares were destroyed in Toruń alone. sites to 1,073, including first ever entries Half a million homes and businesses for Angola and Eritrea. lost power while roofs were ripped from houses all across the country.

According to Poland’s forestry authority (Lasy Państwowe), it will take up to two years to clear the debris, decades for the local habitats to recover and up to 100 years for the forests to return to their original state.

by Liam Frahm

Poland’s national football team achieved its highest ever ranking, moving up one position to fifth best in the world. The country, joint hosts of UEFA Euro 2012 with Ukraine, achieved their best international position since FIFA’s rankings began in 1992. Much of this success is due to Poland’s recent performances in the qualifiers for the 2018 World Cup in Russia. The team is currently top of its qualification group, ahead of upcoming games in October, while star forward Robert Lewandowski is second top scorer in Europe, after Portugal’s Cristiano Ronaldo, having scored 12 goals in eight games. Poland will be hoping to improve on their recent World Cup performances, having failed to qualify since 2006 and to progress beyond the group stages since 1986’s competition in Mexico. With talents like Lewandowski, defending midfielder Grzegorz Krychowiak, goalkeeper Wojciech Szczęsny and Napoli’s exciting Arkadiusz Milik, Poland can hope to do very well in Russia next year.

Coming top of their qualification group should be the priority for the side, as doing so would mean Poland would seed highly in the draw for the World Cup’s group stage, potentially improving their chances of reaching the knockout stages. This comes at a good time for Polish sport, with Poland’s athletes showing an impressive performance at the Athletic World Championships in London, coming eighth in the overall medal table. Notable individual performances include gold medals in the hammer throw for two-time Olympic champion Anita Włodarczyk and Paweł Fajdek, and silver medals for 800m runner Adam Kszczot and pole vaulter Piotr Lisek.

22 EMERGING FROM Politics & economy

THE SHADOW

Conflicts in the ruling party, changes in the judiciary, upcoming elections - these will be the main topics of the political season.

Poland is

photo: Tomasz Adamowicz (Forum)

Łukasz Lipiński is director for analysis at Polityka Insight.

He oversees the work of analysts, responsible for the planning and editing of Polityka Insight’s analysis and publications. He is an expert in European affairs, member of the InEuropa think-tank Programme Board, Marshall Memorial fellow (2004) and former member of the PAP programme board. Previously in Gazeta Wyborcza daily,where he headed the national desk (2008-2012), foreign desk (20062008) and economic desk (deputy head in 2001-2006).

at a crossroads. This may sound like a cliché but important questions about the future of the political ruling camp have arisen as the government approaches its mid-term review.

This year, Polish political life did not break for the summer. Quite the opposite; in July President Andrzej Duda made the most important decision of his career. Vetoing the National Council of Judiciary and Supreme Court bills meant entering into a serious dispute with Law and Justice (Prawo iSprawiedliwość - PiS) and its leader Jarosław Kaczyński. This was preceded by mass protests against the bills on the streets of Warsaw and other cities.

The president chose to veto the drafts presented by PiS for three reasons. Firstly, they were subject to serious legal defects – some laws were outright contradictions and widely criticised in legal circles, even by those sympathetic to the government. Secondly, the laws were passed through parliament at lightning speed, without due consultation. Thirdly and most importantly, in the middle of his term in office, Duda decided to break with his image as a meek notary of the ruling party, blindly signing all laws put in front of him. The president's attempts to create an independent political position can also be seen in his changes to his inner circle – Duda recently appointed people far from the PiS mainstream, and even some in conflict with the party, like his new spokesman, former MP Krzysztof Łapiński.

Although both sides have attempted to calm the dispute, some things cannot be reversed. A fissure has appeared in the previously united ruling camp and this may gradually widen. People dissatisfied with Kaczyński's policies will begin to gather around the president and a new power centre will be built

President Andrzej Duda's rejection of the

controversial National Council of Judiciary and Supreme Court bills proposals has led to split in the ruling camp. Pictured here are Jarosław Kaczyński on the left and President Duda on the right.

in the ruling party. Jarosław Kaczyński, who has made most key decisions up to now, will have to acknowledge it.

The political calendar will be key Further political developments will be imposed by the calendar. First, we will learn how the ruling party will deal with the presidential proposals on judiciary changes. The next step could be a cabinet reshuffle, timed perhaps at the end of October. If this happens, it will answer some questions surrounding certain positions in the government. It remains to be seen whether the ministers criticised by the president – particularly Foreign Minister Witold Waszczykowski, Health Minister Konstanty Radziwiłł, and above all Defence Minister Antoni Macierewicz Defence – will survive. In the autumn, PM Beata Szydło’s political future will also be decided as she may be replaced by Mateusz Morawiecki.

Or even Kaczyński himself.

Later, Poland’s political calendar will be dominated by the upcoming rounds of elections, held at roughly sixmonth intervals. Each has its own individual characteristics. Election season begins with local government elections in autumn 2018, which favour large, experienced parties with an apparatus and a network in the regions, cities and municipalities. The European elections in spring 2019 will test the parties’ abilities to campaign nationwide. Next come the most important elections, in autumn 2019 – the parliamentary elections that will effectively decide who will rule Poland for the following four years. Finally, the presidential elections in spring 2020 will either be an opportunity to strengthen the position of the winning party from the parliamentary elections or to check its power.

Hard-line revolution or soft-line election mode The ruling party enters this election season in good shape, despite the dispute between the president and the party.

Many Poles appreciate the government's social programmes, including minimum wage increases and the socalled 500+ programme, which gives monthly payments to parents with more than one child. The economy is in excellent shape: GDP growth remains at 4% and unemployment has fallen to its lowest level since 1989. All of this allows PiS to maintain high support in the polls, well above the 37.5% reached in the 2015 election.

PiS is also bolstered by the weakness of the opposition parties. The liberal centre is divided between Civic Platform (Platforma Obywatelska - PO) and Nowoczesna (Modern), while the left is spread between several smaller parties. Opposition parties have few ideas for shaping the public debate, tending only to react to the government’s moves. It is hard to find popular leaders in the opposition. Mass protests against the changes in the judiciary simply did not translate into increased support for the opposition.

However, there are also challenges for the ruling camp, aside from the dispute between Kaczyński and the president. The realities of power over

‘Poland’s political calendar will be dominated by the upcoming rounds of elections’

time naturally cause parties to lose steam. It is not known what effect the implementation of education and health reforms will bring about – they may result in significant organisational and logistical problems in these areas.

Proposals for judicial changes or media deconcentration may trigger further protests on the streets.

The Polish government is in deep conflict with its European partners, both with the European Commission and the EU capitals. The disputes concern the rule of law in Poland, the judiciary, but also ecology and climate policy.

The isolation of Poland in the European Union is deepening, which will worsen Warsaw’s position in the debate on the next financial perspective after 2020.

Poland's political autumn and the next two years will be turbulent. The key issue is whether PiS will continue its hard-line conservative revolution in the country or will switch to a soft-line election mode. The forthcoming elections results remain an open question.

Things to watch in politics this autumn For PiS, the most important events of the autumn will be the completion of changes to the judiciary, the development of the relationship between the president and the party leader, and the possible cabinet reshuffle. The members of PO will select their party candidates at all levels and launch a local government campaign. Nowoczesna will also choose its candidates as the party prepares for its first convention since its foundation. Kukiz '15 is already preparing its candidates for local elections while the Polish People's Party (PSL) will fight to maintain unity in the lower house of parliament – if it loses a single seat, it will no longer be part of the club. by Łukasz Lipiński

23

politics & economy

Current polls

as on 11 Sep, 2017: – PiS: 42.2% * – PO: 22.4% * – Nowoczesna: 9.6% * – Kukiz ’15: 9.3% * – PSL: 5.3% * – SLD: 5.2% – Razem: 3.3% (* denotes parties which hold seats in parliament) Average results from six separate polls (Monte Carlo methodology).

Source: Polityka Insight

24

politics & economy

Date:

GDP:

Private Consumption:

Public Consumption:

Export:

Import:

2015 March 2015 June 2015 September 2015 December 2016 March 2016 June 2016 September 2016 December 2017 March 2017 June

+ 3,8% + 3,3% + 3,6% + 4,6% + 2,9% + 3,0% + 2,4% + 2,5% + 4,0% + 3,9%

+ 3,0% + 3,1% + 3,2% + 2,9% + 3,4% + 3,4% + 4,1% + 4,5% + 4,7% + 4,9%

+ 1,4% 0,0% - 0,1% + 7,2% + 4,5% + 4,2% + 3,8% - 0,2% + 1,0% + 2,4%

+ 9,2% + 6,1% + 6,5% + 9,1% + 7,1% + 11,8% + 7,8% + 9,3% + 8,3% + 2,8%

+ 7,4% + 5,4% + 5,3% + 8,4% + 8,7% + 10,1% + 8,7% + 8,2% + 8,7% + 6,1%

Forecast: 2017 September 2017 December 2018 March 2018 June 2018 September 2018 December

+ 4,1% + 3,7% + 3,8% + 3,9% + 4,1% + 3,9%

+ 4,7% + 4,5% + 4,0% + 3,6% + 3,3% + 3,2%

+ 8,1% + 7,0% + 7,1% + 10,6% + 8,2% + 6,1%

+ 7,0% + 5,8% + 5,7% + 5,9% + 7,7% + 8,6%

+ 8,1% + 8,5% + 6,2% + 5,6% + 7,3% + 7,7%

A boom in construction will drive the economy throughout 2018 Polish GDP is growing at a very solid pace of around 4%. The main driver is consumption, accounting for three quarters of the increase and growing at a rate not seen since the global financial crisis.

Aside from consumption, only an increase in companies’ inventories is fuelling economic growth. In Q2 2017, firms increased their stock of goods and materials by 23bn zł, the highest figure on record and almost twice as high as the next highest reading. This is caused as companies prepare for a switch in GDP growth engines in the forthcoming quarters.

Government’s infrastructure projects

Adam Czerniak,

Chief economist at Polityka Insight, where he heads the macroeconomic desk and conducts tailored research on wealth, consumers and the housing market.

Czerniak is also assistant professor at the Warsaw School of Economics (SGH).

According to Polityka Insight’s forecasts, economic conditions in Poland will remain favorable and the GDP growth rate will fluctuate at around 4% until the end of 2018, with a peak at almost 4.5% in Q1 2018. However, there will be a large change from consumption-led to investment-led growth as household spending gradually slows down due to the fading impact of the 500+ child-benefit programme, which boosted disposable income growth and stimulated consumption from the second half of 2016. However, consumption growth won’t vanish altogether due to wage growth, which will further accelerate. Together with very good consumer sentiment, this will support an increase in household spending.

Most important for economic growth in the coming quarters will be the start of the government’s infrastructure projects, such as construction of new roads, railway maintenance or construction of municipal buildings. In Q2 2017, a lot of new projects came into the construction phase while numerous new contracts with construction companies were signed.

According to government declarations this year, infrastructure investment outlays should amount to a similar level as in 2016 but the majority of them will be concentrated in the second part of the year, boosting growth dynamics in Q3

and Q4. This is indicated by the pattern of how EU funding contracts were signed: according to EU data, there was an increase in the volume of contracts in the middle of 2016 and an acceleration towards the end of the year.

Taking into account the 15 month lag between signing an EU funding contract and the disbursement of funds to the real economy, one can expect public investment to surge on the verge of 2018. This effect may be slightly delayed if the government experiences trouble in disbursing EU funds because of increased red tape or more scrutiny inside public infrastructure agencies.

EU funds are also important for large private companies; however, they are still awaiting the start of tenders for EU funded projects with ready-to-implement investment strategies. Most likely, many submissions will be made in the autumn and will translate into an increase in private investment throughout 2018.

Large investment projects are on the table in the IT and energy sector – electricity producers are planning new power plants and an extension of their energy grid, while, at the same time, refineries are willing to increase their petrol production capacity.

‘In Q2 2017, a lot of new projects came into the construction phase’

Companies are not increasing investment The forthcoming increase in private investment would be bigger, if not for the lack of interest from many manufacturing enterprises in increasing their production capacity.

According to data from July, the capacity utilisation in the industrial sector exceeded 80% and stood at its highest level to date, even though output growth was much slower than during the 2006-2007 boom period. The reluctance of firms

Investment:

Industry:

Construction:

Services:

Retail:

+ 12,7% + 6,4% + 4,3% + 4,5% - 9,8% - 4,5% - 6,7% - 9,8% - 0,4% + 0,8%

+ 2,7% + 3,1% + 2,8% + 5,8% + 3,2% + 5,0% + 3,6% + 2,7% + 7,2% + 3,9%

+ 5,7% + 5,3% + 6,4% + 7,6% - 12,7% - 9,6% - 16,7% - 9,6% + 4,6% + 9,8%

+ 4,8% + 6,0% + 4,4% + 4,7% + 5,5% + 2,4% + 3,0% + 1,6% + 0,2% + 2,0%

+ 1,0% + 1,2% + 1,7% + 4,2% + 3,7% + 6,1% + 6,0% + 6,5% + 7,5% + 6,1%

+ 7,1% + 9,5% + 12,1% + 10,6% + 11,6% + 10,9%

+ 3,9% + 3,8% + 4,1% + 5,2% + 5,7% + %5,9

+ 11,0% + 11,9% + 14,4% + 9,7% + 8,7% + 4,9%

+ 1,5% + 2,2% + 2,9% + 2,8% + 2,7% + 2,7%

+ 4,2% + 3,1% + 2,0% + 2,6% + 3,1% + 3,1%

The way up for

Poland's economy is through the expected rise in construction.

Predicted to be the fastest growing sector of the economy, construction will peak early next year after running double-digit growth this winter.

to increase their investment can be attributed to several factors, of which two are most noteworthy. Firstly, a lot of companies are afraid of changes in government economic policy, especially with regards to increasing the efficacy of tax collection. They fear more frequent administrative controls, a higher tax burden and more red tape obligations which will alter the cost-benefit analysis of investment projects and require a higher savings cushion in case of temporary losses.

Secondly, employers are experiencing increasing problems with labour shortages. These will eventually lead to an increase in salaries and pose a second risk to infrastructure projects, which may become unprofitable as increased production capacity cannot be provided without an increase in employment. The economic growth will also be boosted by housing investment as households are increasingly taking mortgages to buy new properties. The growth in new residential projects is at its highest levels ever, even surpassing the boom years of 2007 to 2009. Moreover, a large slice of the inventories increase observed in Q2 2017 can be attributed to residential developments under construction, which will be finished and sold on the primary market in late autumn or early spring. Some of those forthcoming housing investments will be financed by cash, as falling interest rates provide incentives for savers to withdraw money from their deposits and search for alternative investment opportunities.

All of these factors will boost the value added by the construction sector, which will be the fastest growing section of the whole economy. Already in Q3 2017, it will reach a double-digit growth rate and peak at the beginning of 2018. Moreover, such favourable business conditions will cause a multiplier effect as many construction companies will increase their spending both on intermediate and capital goods, which in turn will support a solid growth of manufacturing firms and further improve Poland's labour market conditions. by Adam Czerniak

All figures here

are year-to-year comparisons - Q1 2015 to Q1 2014, for example.

All past data from the Central Statistical Office of Poland.

All forecasts by Polityka Insight.

25

politics & economy

26 POLitics & economy

More Investment Required Mateusz Szczurek, Lead Regional Economist for the EBRD, Member of the European Fiscal Board, and former Polish finance minister sat down with Richard Stephens to discuss Poland’s economic future.

Deputy Prime Minister Mateusz Morawiecki recently announced the biggest July budget surplus for 28 years. How do you perceive this?

Mateusz Szczurek

is EBRD's Lead Regional Economist in the Central Europe and Balkan regions.

He is also a member of the European Fiscal Board and an adjunct assistant professor at the University of Warsaw, teaching public finance and international economics.

He served as Poland's Finance Minister between 2013 and 2015.

Commenting on mid-year budget results is always tricky. First, there is a strong seasonality in investment spending, particularly in local governments. Secondly, we know there has been substantial reshuffling in VAT returns between 2016 and 2017. There’s a very large deficit related to that in the previous year, which helps a lot in 2017. That said, there has been some improvement in tax collection, which is a very positive thing.

On top of this, we are going through the peak of the business cycle, with very large consumption growth which helps both VAT intake and income taxes. So, cyclically, it is time for such results – you could read the budget situation as a symptom of the cyclical position of the Polish economy. One question mark is whether or not the overall level of budget deficit is low enough, given the fact that, from a demand perspective, things will not get much better across the cycle.

In a nutshell, where is Poland economically speaking?

Cyclically, we are in a very positive situation. Unemployment is at a record low, consumption growth is very fast and wage growth is picking up, which I think will continue, given the pressures in the labour market. At the same time, investments are very disappointing, given the shape of the rest of the economy. However, part of that is linked with the seasonality of public investment, part of that the EU and part of that local governments linked with the political cycle. Nevertheless, stagnant investment is somewhat disconcerting.

EBRD in Poland

What type of investment are you referring to?

– 387 projects in Poland to date – €8.6 billion of cumulative EBRD investment – 90% private sector share of portfolio – €2.9 billion in current portfolio of projects

Public investment declined in 2016 and, if you look at the 12-month average, investment in GDP has declined to the lowest point since the 1990s.

Concerning Foreign Direct Investment (FDI), I would argue that, at this stage of the country’s development, it matters less here. Poland has grown up, so I’m worried about investments overall, not just about foreign investments. Building

at a glance:

on that, one of the important areas of EBRD activity in the country is promoting and supporting international expansion of Polish firms abroad, so when we talk about FDI these days, more often than not, we’re talking about investments "from" rather than "to" Poland.

What would you like to see the government invest more in?

You can either talk about outright government investment, be it infrastructure or defence investments, or the investment of the state-controlled enterprises. If you have widespread change in management of these enterprises – as was the case in 2016 – you end up with the investment process being halted in the transition period as the new management gains experience. Clearly both government and state-controlled enterprise investmentis needed.

In what ways can the private sector contribute more fully to the health of the Polish economy?

Further development of non-bank financing, something the EBRD is very active in, would help Polish firms to expand internationally, allow startups to develop more easily and grant access for small- and medium-sized enterprises (SME) to financing. There’s also diversifying the energy mix, which is not only just a problem of carbon emissions and global warming, but also air quality, health and resilience of the economic model, because it is a source of innovation and growth.

What type of project is EBRD looking to finance in the future?

Anything to promote the innovation of Polish companies and their integration with the rest of the world as well as the expansion of firms that are pushing the economy upwards. Another

‘To put things in perspective, in our EBRD universe, Poland is very advanced and rich’

area we support is non-banking methods of financing capital markets in general, both for aiding the resilience of the banking system and for improving financial access to a wider range of companies and individuals. Equity is another very important area where we see additionality as high.

By additionality, I mean that we don’t do something if someone else can do it as well as us or better - together with sound banking, it is one of three pillars guiding how EBRD does business. If a firm can’t find the financing they require and it is a viable business move, then it’s a case for us. If you have a private equity environment which requires EBRD’s presence in a fund in order for it to take off the ground, then we are there. Not to crowd out other investors, but to make sure the whole initiative has a chance to start. This is additionality. In Poland, the list of areas where we can help is far shorter than a country like Egypt or Lebanon.

What sort of practical help can you give to Polish companies wanting to expand abroad?

Funding is one area. Global expansion is inherently risky, and sometimes not well catered for in the local banking sector, so this is one thing EBRD can offer, especially if the investment leads into greater integration with the region.

We’re particularly keen on firms looking into buying or expanding into countries of EBRD coverage, be it Central and Eastern Europe, Central Asia, the Mediterranean or Western Balkans.

Global expansion brings benefits to the country or company investing because of new management practices, new types of business and products that a firm may acquire by buying a company in that country. The overall competitiveness of the Polish economy is enhanced by such an expansion because firms can gain critical mass, allowing them to compete globally.

Can you give a Polish example where it’s been important for EBRD to come in to help?

It’s not enough to have a sound business proposal - you also need transition impact, our third pillar. You need to be pushing the process of transition in the economy forward, along with the six transition qualities that we now use. A successful market economy must be inclusive, integrated, green. And the gaps are still rather large in Poland here – resilient, wellgoverned. In the corporate world as well as public. And finally competitive. But to put things in perspective, in our EBRD universe, Poland is very advanced and rich compared to many of the other countries that we work in.

interview by Richard Stephens

28 Reverting to politics & EConomy

stereotype

While the country remains one of the biggest post-communist success stories, the perception of Poland on the international stage is suffering, says Timothy Garton Ash, Professor at Oxford University. We sat down with him on one of his recent trips to Warsaw and asked him for his opinions on modern Poland.

Timothy garton ash Arguably the foremost expert on modern Poland, Garton Ash is Professor of European Studies at the University of Oxford and a Senior Fellow at the Hoover Institution, Stanford University. He has written several books on Poland and the CEE region, including The Polish Revolution: Solidarity (1983); The Uses of Adversity: Essays on the Fate of Central Europe (1989); We the People: The Revolution of ’89 witnessed in Warsaw, Budapest, Berlin and Prague (1990; US Edition: The Magic Lantern), which was translated into fifteen languages; In Europe’s Name: Germany and the Divided Continent (1993), named Political Book of the Year in Germany; The File: A Personal History (1997), which has so far appeared in sixteen languages; History of the Present: Essays, Sketches and Despatches from Europe in the 1990s (2000); Free World (2004); and Facts are Subversive: Political Writing from a Decade without a Name (2009).

His latest book, Free Speech: Ten Principles for a Connected World was published mid-May 2017 and will appear in Polish in 2018.

How do you see Poland’s place in Europe now and in the future, in light of the government’s relativelyhostile attitude toward the EU? As someone who has followed Poland for 40 years, I have deep sympathy for the country. I was so delighted to see the very strong position Poland was achieving inside the European Union in the last five to ten years, since about 2007. People were beginning to talk, almost as a matter of fact, of Poland as one of the big six inside the European Union – Germany, France, Britain; then Italy, Spain and Poland.

And, in the longer historical perspective, it’s an amazing achievement to be seen as right in heart of Europe – one of the big powers of Europe. I’ve been equally dismayed at how quickly that position has been lost. I’m talking about attitudes: how people see Poland.

Obviously, there are realities underneath that don’t change so quickly.

There’s the economy and so forth; it’s still a big and important country but it’s the perception. Many Western Europeans have reverted to the old stereotypes, which go back all the way to the Enlightenment, about Eastern Europe as a whole – including Poland – as being this almost chronically backward, undemocratic, anti-liberal and rather chaotic place. The other part of it is that now we have the prospect of President Macron in a new partnership with the freshly re-elected Chancellor Merkel. That core Europe will be strengthened and it will be a Europe that doesn’t contain Poland rather than a Europe that does – I think that should be a major worry for everyone in Poland, whatever their politics.

How do you assess the performance and goals of the Polish government?

Well, I think it’s extremely worrying.

Let me say first of all that it’s a good thing to have a change of government because that’s democracy. Law and Justice (Prawo i Sprawiedliwość – PiS) was the major opposition party – it has a perfect right to govern. What is worrying is that, at a remarkable speed, in a quite ruthless fashion, it is pushing through what I call ‘Orbanisation à la Polonaise’; that is to say, following the example of Viktor Orbán in a kind of salami tactic of slicing away, slice by slice, the essential elements of a liberal democracy. So, I think the constitutional court has been a victim of that, and subsequently the supreme court.

Now the independence of other courts is under threat. Alas, the civil service was never really neutral, but it is now even less neutral than it was.

Of course, the security services are totally under PiS control and public service media have become the so-called

national media. Public service media are very important to a liberal democracy. Through ownership, various other aspects of independent media and civil society are being sliced away and I think that those of us who care about Poland have to speak up. I mean, the real friend is not the person who lets you go on drinking too much and falling apart, but a good friend is someone who says, ‘hey, watch out, you’re on a dangerous course!’ And I think we’re right to speak up about that.

Is Jarosław Kaczyński going to listen?

‘I think we talk far too little about the amazing phenomenon of Polish migration’ Why put all of that at risk? Well, part of the answer is because there are a lot of people who felt left out, marginalised, and left behind by the changes. I think that in a broader sense, as a liberal European, one has to acknowledge the inequality. Yet, actually the Gini coefficient in Poland is relatively low among Western democracies and is not getting much larger. Economically, if there is an inequality, it’s a more subtle inequality – an inequality of status, attention and respect. I think the vote for PiS was as much about the more subtle kinds of inequality, voters were saying ‘we exist too – we’re still here, listen to us, pay attention to us’, as it was about the simply economic inequality.

First of all, it really is an extraordinary position in the history of politics that someone who isn’t a minister, let alone a prime minister or president, is effectively running the country. Everyone knows that the crucial decisions are made by Jarosław Kaczyński, including the extraordinary debacle about proposing Jacek Saryusz-Wolski instead of Donald Tusk for president of the European Council. I’m not sure the audience is necessarily Jarosław Kaczyński or even the core electorate in PiS, which is quite solid and quite stable. The audience is Polish public opinion and in particular those swing voters who actually gave PiS this great victory in the presi- Do you see further infringement dential and parliamentary elections, but of press freedom in Poland? are clearly pro-European.

I do. My latest book is on free speech They are very concerned. They are and so I’ve been thinking about this patriots who are concerned about a lot. Compare the reaction to Donald Poland’s reputation in the world, in busi- Trump in the United States where the ness, what’s happening to the economy fourth estate – the media – have been and what’s happening to civil society, absolutely central to the pushback, and what’s going to happen to edu- the checks and balances. The foundcation. We need to say to them ‘hang ing fathers knew what they were doing on, your voices are needed to moder- when they wrote the first amendate these politics’. It’s interesting that ment. Compare and contrast the relaafter the reappointment of Donald Tusk, tively weak response from the media PiS came down in the opinion polls. as a whole in Poland. I say ‘relatively’, So I think that’s a way to think about it. because there has been a pushback.

Needless to say, I don’t belong to, One major threat is obviously the takeor support, any particular political party over of the public service media which in Poland, but in terms of the addressee is very worrying because, in the internet of what one has to say, I think it’s par- age, you have this fragmentation of the media where people are often in their ticularly that part of the Polish public. own echo chamber.

How do you see Poland’s Public service media that maintain performance politically, the public square, like the BBC, are economically, and socially important. We have watched TVP (the since the fall of communism? public Telewizja Polska) from home If you look back at the early 1990s, in Oxford until we can’t stand it any what people forget is that no one had more and turn over to (private) TVN. any idea how you could transform The way in which, almost overnight, a planned economy in a communist all the faces changed, the language state into something like a free market changed, the tone changed, was spececonomy and a liberal democracy. The tacular. But there’s also something joke at the time was: ‘We know you can which is relatively novel. And this has turn an aquarium into fish soup, but to do with a capitalist economy which how do you turn fish soup back into an is that populists control the media as aquarium?’ And the fact is, if you look much by commercial economic presat Poland over the last quarter century sure on the owners of media, by withplus, it’s made a pretty good stab turn- drawing state advertising, than by ing fish soup into an aquarium. So, it’s direct – as it were – ‘political pressure’ been a spectacular success – it’s one from the state. One sees that attempt of the success stories of our time. being made in Poland.

The third element is this: in the first amendment tradition of the United States, the reporter – not just the commentator – the reporter, is a really important and honoured figure. They are often graduates of the best universities, who even in late middleage, say with pride ‘I am a reporter.’

The journalist is a hero. You think of Woodward and Bernstein. In Poland there isn’t that tradition. Professors are respected – historians, writers, poets, artists, composers are respected – but the journalist as a hero is not a typical Polish figure. So the commercial pressure, mixed with the cultural context, makes one worry about the strength of the fourth estate in Poland.

29

politics & Economy

How do you see the position of Poles in the UK, in light of Brexit?

I think we talk far too little about the amazing phenomenon of Polish migration, especially to Britain. This is the biggest social fact between Britain and Poland in our history. Bigger than Yalta. and fighting together in World War II. It’s a huge social fact that something like close to one million Poles now live in Britain, many of them for the longrun. And it’s by no means only the Polish builder – it’s the Polish engineer, the Polish company director, the Polish banker. I have brilliant Polish students at Oxford who then go off and have great jobs, and I really think it’s a shame that neither country knows what to make of this major social fact.

In essence, the Polish government would like to say ‘come back here’ – in fact, they say that explicitly. And in Britain, if your goal is to reduce net migration, and Poland and Eastern European countries are a big part of the immigration, then they're not inclined to celebrate it. So, neither side is ready to make something of it. It’s a lasting, permanent feature of our shared history and I really think we should think about it positively. What can we make of it? We are fellow Europeans. Whether Britain leaves the EU or not, we’re still in Europe and we will still have these fellow Polish residents. And many are citizens now or soon will be. We should make something positive of it.

Post-Brexit, there’s been some concern about rising xenophobia, including towards Poles and other Eastern Europeans. Given that in total it is something in the order of 2.2m Eastern Europeans who have come to Britain since 2004 – that’s an amazing number, even for a country of 60m.

And given the difficult times we’re in, the integration has been fantastic.

That’s an achievement of the Poles, who are hardworking, courteous, polite, and well-behaved. But one has to say it’s also an achievement of British society.

interview by Richard Stephens

The Polish Revolution: Solidarity

(1983) is one of Garton Ash's most notable works. Offering a gripping recollection of the emergence of Lech Wałęsa and the ensuing tumult that culminated in martial law, the book has been critically praised internationally for its illuminating and definitive account of events.

30

10,000 11,000 30,000 30,000 34,000 46,000 47,000 60,000 85,000 85,000 110,000 110,000 120,000 120,000 120,000 150,000 150,000 170,000 200,000 200,000 295,000 300,000 800,000 800,000 1,000,000 1,500,000 1,500,000 9,660,000

Poland

Greece: Iceland: South Africa: Switzerland: Kazakhstan: Latvia: Russia: Denmark: Austria: Spain: Norway: Sweden: Argentina: Belgium: Czech Republic: Ireland: Italy: Australia: Netherlands: Lithuania: Belarus: Ukraine: France: United Kingdom: Canada: Brazil: Germany: United States:

ad o r b ga

liv ing in

Polish Diaspora:

% of Pole s li vin

A Nation of Emigrants

leader

%

s e l o of P

source of data:

Polish Ministry of Foreign Affairs.

31 leader

The total number of people with Polish nationality or descent around the world is estimated at between 55Â to 60 million, with up to 30Â percent of that number living outside Poland. This makes the Polish diaspora one of the largest in the world. Reasons for this displacement vary from border shifts, forced expulsions and resettlement that have taken place through centuries, to the more recent political and economic emigration.

32 illustration: Arthimedes

leader

The Diaspora Dilemma Understanding the history of the Polish diaspora is the key to harnessing Poland's full business, intellectual and economic potential

Mateusz Nowak is

a Partner at Mazovia Capital and is focused on bringing the experiences of Poland’s diaspora back home.

Previously, he worked as an advisor at PwC, where he also served as initiator and leader of PwC Startup Collider, a corporate FinTech accelerator run across five countries in CEE. In 2015, he co-founded Technology Entrepreneurship Foundation, licensed to run MIT Enterprise Forum Poland.

Migration can be a confusing subject,

so here’s a handy guide to set you straight: An emigrant has left their current homeland, but an immigrant moved to a new country.

For example, Tadeusz Kościuszko emigrated from Poland and immigrated to the United States. Migration simply refers to movement between countries. It’s just about perspective.

To understand the country that Poland has become, it is essential to understand its past. Poland’s character is deeply embedded in its people, and the waves of migration by Poles have created a diaspora across the globe. However, Poland has not utilised the resources of its significant diaspora as effectively as other nations. The key to unlocking the potential that Poles abroad possess, we believe, may lie in understanding how the diaspora came to be. To this end, our section begins with an outline of the Polish migrations and the historical events that influenced them.

Late 18th century - The Partitioning of Poland

The trigger for the first prominent emigration of Poles can be traced back to the late 18th century, to two uprisings – 1772’s Bar Confederation and the Kościuszko Uprising in 1794 – and the partitioning of Poland. Three agreements between Russia, Prussia and Austria – in 1772, 1793 and 1795 – carved Poland up, with the final 1795 partition, a response to the Kościuszko Uprising, wiping the country off the globalmap for over a century.

During this turbulent time, the Polish peasantry had no political or economic power as they were not liberated from serfdom until the second half of the next century. Emigration in the late 1700s was Economic migration Poland’s political history has been sigalmost entirely from the nobility who nificantly influenced by uprisings, so here’s 1871-1913 (without had been engaged in Poland’s politia little more information on the revolts menseasonal migration) cal struggle for survival. Although the tioned in the text: numbers were small compared to later – Estimated Population waves of migration, the intellectual and – The Bar Confederation, which took place beof Poland: 30.3m tween 1768 and 1772, was a civil war between social capital lost was significant. an association of Polish nobles - szlachta – Migration Many notable Poles migrated durand King Stanisław II Augustus over growing Total: 3.5m ing this period, including Tadeusz Russian influence and attempts to limit Kościuszko, who famously fought in the power of Poland’s wealthy magnates.

– Overseas Emigration: 2.3m the American Revolution; Jan Henryk – The 1794 Kościuszko Uprising, led by TadeDąbrowski, a general in Napoleon’s usz Kościuszko, began in Kraków and was a – Continental army; and Hugo Kołłątaj and Ignacy failed attempt to liberate the Polish-LithuaEmigration: 1.3m Potocki, both influential politicians. nian Commonwealth from foreign influence following the second partition of Poland.

Aided by the tightly-knit family networks of the nobility, most settled in – As revolution swept through Europe Europe – France, Italy, Switzerland in 1830, the November Uprising began in Warsaw, against Russia, and spread to large and Turkey in particular – while a small swathes of Poland, Lithuania, Belarus and minority, like Kościuszko, forged west to Ukraine. It lasted almost a year, before being the United States. crushed by Tsar Nicholas I’s forces.

The impact of this first wave can be clearly seen in the romanticising of the – Similarly, the January Uprising began in 1863, against Russian influence, and lasted a year Polish nation by those who followed before being put down by Russian forces.

– the national anthem, for example, has its roots in the patriotic song written by Józef Wybicki during the creation of Dąbrowski Legions in Italy in 1797. These writers did not experience the Poland of their time because they were in exile, and so focused on past events. The literature they produced helped create an ideal of the Polish nation at a time when the state did not exist.

Even in communism, which selectively censored periods of Polish history, this vision remained and does so to this day.

Mid 19th century – The Great Emigration Poland’s most famous wave of migration – the Great Emigration – was kickstarted by the failure of the November

Uprising in 1831 and continued during 1864’s January Uprising (see our info box for more info). Many notable Poles fled during this period, including Adam Jerzy Czartoryski, Polish President during the November Uprising; Antoni Patek, founder of Patek Philippe watches; and the poet Cyprian Kamil Norwid. Paris was a popular destination for famous Polish émigrés, with pianist Frédéric Chopin and Poland’s Three Bards – Adam Mickiewicz, Juliusz Słowacki and Zygmunt Krasiński – all plying their trade there for many years.

Those who left Poland during the Great Emigration were members of the aristocracy and high society, the prominent curators of the arts at the time. As such, these uprisings had a crucial impact on Poland’s cultural heritage and national identity. For example, Chopin and the Three Bards are considered national treasures and their works remain a significant foundation in Polish education and culture today.

Late 19th century - Economic Emigration

World War II and Communism Following World War II, Polish territory was greatly affected by the reorganisation of Europe’s boundaries, which were drawn up by the USA, USSR and UK at the Yalta and Potsdam conferences in 1945. These changes led to a significant movement of people both in and out of Poland. On one hand, there was significant political emigration away, which lasted until the 1950s. On the other, Poland saw many of its citizens return after the war, to find a country under the control of the USSR. By the 1970s, the trigger for migration shifted from political to economic, although movement during this period was limited by controls imposed by the communist government.

Migration during the 1980s was motivated by both political and economic factors. While economic conditions in communist Poland are well known, in fact political factors became the main triggers for emigration. Social unrest, caused by declining civil liberties and economic deterioration under the communist government, climaxed in the introduction of martial law in 1981. During this two-year period, half a million Poles emigrated. Many, however, were forced toreturn because of they failed to assimilate or obtain political migrant status.

Following the end of martial law in 1983, Poland’s communist regime applied less stringent migration control, which allowed economic and political emigration to continue.

The liberation of the peasantry in the 1800s led to a massive outflow of Poles who simply could not have moved beforehand. Around ten percent of Poland’s pre-World War I population migrated, largely for economic – rather than political – reasons, and the vast majority were either peasants or lowincome working class. This boom was also enabled by the increasing speed of overseas travel, which allowed greater movement to the Americas, and the Fall of Communism political relationship with the partiand a new republic tioning countries. During this period, Russia, Austria and Germany increasFollowing the end of communism, Poland experienced massive in- and ingly treated their share of Polish terriout-flows of migration, movements tory as their own, leading to a relaxation of migration restrictions. of population which became the cenDuring World War I, international tre of political and social debate in migration changed significantly.

Poland and across EU countries which Poland’s neighbours discarded free received Polish migrants. During this period there were two major waves movement and began recruiting, especially from groups most likely to emiof emigration: in the 1990s and in the grate. At the time, many Poles were later 2000s. The former was caused forcefully transferred to inner-Rusby the opening of borders following sia or employed in German industry. the fall of communism in Europe and For those who could travel, the most all over the world, while the latter came prominent destinations were France, after Poland’s accession to the EU. Belgium, Canada, Brazil, Argentina The main destinations for this migraand the United States. However, Polish tion were and remain to this day the UK, Ireland, Germany and Austria, as migration to the USA fell significantly after the war following the introduction well as theUSA and Canada. of tighter immigration restrictions there.

So Poland's complex relationship with migration dates back well over Additionally, after more than a cen200 years. Due to the successive tury of foreign rule, Poland regained its independence thanks to the 1919 Versailles peace nego- waves of migration, Poland has established an impressive tiations. A number of border conflicts marked the newly diaspora of Poles, reaching all over the globe. Many nations independent Poland, including the Polish-Soviet War have been able to use global population movements across between 1919 and 1921 – notable for the Miracle on the history to their advantage, but Poland has so far failed to Vistula in late 1920, where the Poles decisively repulsed do so effectively, both in building a vibrant community the Soviet forces near Warsaw. Following these skirmishes, abroad and in attracting emigrants - and economic capital Poland settled into short-lived independence, which only - home. The potential intellectual, economic and soft power lasted until 1939 and the invasions by Nazi Germany and of these migrants is immense but sleeping, and Poland would Soviet forces at the beginning of World War II. do well to wake it up. by Mateusz Nowak and Liam Frahm.

‘The potential intellectual and economic power of these migrants is immense but sleeping, and Poland would do well to wake it up.’

Poland’s descendants have touched the lives of people all over the world.

To put a recognisable face to our mass, sprawling diaspora, we have collated a selection of several of Poland’s more important and famous emigrants.

compiled

by Liam Frahm

As there are far too many influential Polish emigrants to fit onto this spread, here are a few more!

– Frédéric Chopin, pianist (1810-1849), – Max Factor Sr., cosmetics (1872-1938), – Isaac Bashevis Singer, writer (1902-1991), – Billy Wilder, director (1906-2002), – Reuben Mattus, founder of Haagen-Dazs ice cream brand (1912-1994), – Jan Karski, resistance fighter and Holocaust campaigner (1914-2000), – Shimon Peres, Israel PM and President (1923-2016), – Henri Strzelecki, founder of Henri Lloyd clothing label, (1925-2012), – Zbigniew Brzezinski, politician (1928-2017)

Kazimierz Pułaski

(1745-1779) One of only eight people to be awarded honorary US citizenship, Pulaski made his name in the American Revolutionary War following his exile from Poland after the failed 1772 Bar Confederation. Founder of the Pulaski Cavalry Legion, his famous charge at the Battle of Brandywine in 1777 saved George Washington’s life and the US army from defeat. He was slain after a brave charge at the 1779 Battle of Savannah.

Tadeusz Kościuszko

Józef Bem

Antoni Patek

Pola Negri

Tamara Łempicka

Krystyna Skarbek (1908-1952)

(1746-1817) National hero Kościuszko found fame fighting for the fledgling American army in the War of Independence where, as an accomplished architect, he designed cutting-edge military fortifications. He returned to Poland in 1784 and, following the second partition in 1793, led the failed Kościuszko Uprising in 1794. Following the death of Catherine the Great, Tsar Paul I, her successor, pardoned Kościuszko, who emigrated to the USA.

(1794-1850) An engineer and general, Bem was born in Tarnów, then owned

by Austria as a result of the First Partition, and fought for Napoleon in his 1812 invasion of Russia.

Following defeat in the 1830 November Uprising, he fled to Paris before fighting for Hungarian independence in 1848.

After the revolution collapsed, Bem fled to the Ottoman Empire, where he adopted Islam and became Governor of Aleppo.

(1811-1877) Watchmaking pioneer and Patek Philippe founder, Patek was born near Lublin, before emigrating after the 1828 November Uprising, in which he fought and was wounded twice. He settled in Switzerland in the 1830s where he joined forces with the French watchmaker Adrien Philippe.

Despite naturalising as a Swiss citizen, he supported Polish independence all his life, including helping refugees of the 1863 January Uprising.

Poland’s diaspora includes also the descendants of Polish emigrants.

Here are just a few you may recognize: – Sam Goldwyn, film producer – Liberace, musician – Paul Newman, actor – Stanley Kubrick, director – Larry King, television host – Ray Manzarek, musician – Bernie Sanders, politician – Martha Stewart, businesswoman – Michael Bloomberg, businessman – Frank Oz, puppeteer – David Duchovny, actor – Nicolas Cage, actor – Rita Cosby, journalist – Lana and Lilly Wachowski, film directors – Ben Stiller, actor – Paul Gilbert, musician – Mika Brzezinski, journalist – Susan Wojcicki, YouTube CEO – Gwyneth Paltrow, actress – Steve Wozniak, Apple co-founder – Scarlett Johansson, actress – Jon Bon Jovi, musician

Józef Retinger

(1888-1960) Born in Kraków to the son of Count Władysław Zamoyski’s legal counsel, Retinger was taken into the Zamoyski household when his father died.

During World War II, he parachuted into occupied Poland at the age of 56, before being exiled by the communist government. After the war, he helped found the Council of Europe and the Bilderberg group, where he served as secretary until his death.

(1897-1987) Known around the globe, Pola Negri was born in Lipno and moved to Berlin in 1917. Renowned for her varied career, including work in silent film, theatre, vaudeville, ballet and as a recording artist and writer, she was one of the first European film stars to establish themselves in Holly-wood.

In her later years, she lived in Texas, naturalising as an American in 1951.

(1898-1980) Famed for her art-deco and nude portraits, Łempicka was an active participant in the artistic scene in 1920s Paris. Known as the ‘Baroness with a Brush’ because of her relationship and ensuing marriage to artcollector Baron Raoul Kuffner, she moved to the United States following the outbreak of World War II. She died in Mexico, where her ashes were scattered over the Popocatepetl volcano.

During World War II, Warsaw-born Skarbek served as an agent for the British Special Operations Executive (SOE).

Known by her nom de guerre Christine Granville, she operated in Hungary, Poland – where she was almost recognised by an acquaintance Cairo and France.

After the war, she naturalised as a British subject before her death in 1952, when she was murdered by a stalker.

Joseph Conrad

(1857-1924) Born Józef Konrad Korzen-iowski, novelist Conrad joined the British Merchant Navy in 1878, before being granted British nationality in 1886. Settling in England, many of his stories feature a nautical setting, and his best-known works include Heart of Darkness (1899), Lord Jim (1900), and Nostromo (1904).

A highly-influential writer, his works inspired countless later authors, including F. Scott Fitzgerald, Ernest Hemingway, Graham Greene and John le Carré.

Ryszard Kukliński (1930-

2004) Renowned for his efforts as a NATO spy during the cold war, Kukliński passed 35,000 pages of secret documents, regarding matters including nuclear weapons, armour schematics and spy satellites, to the CIA between 1972 and 1981. Shortly before the imposition of martial law in 1981, Kukliński was extracted by the US, where he lived until his death.

Ignacy Jan Paderewski

(1860-1941) An international concert pianist and composer by trade, Paderewski was born in Kuryłówka village in south-east Poland in 1860. While serving as prime minister in 1919, and representing Poland at the Paris Peace Conference that year, Paderewski helped to secure Polish self-determination with US President Woodrow Wilson. Following his political retirement, Paderewski lived in the US and Switzerland.

Roman Polański

(1933- ) The only exception to our ‘born in Poland’ rule, Polański was born in Paris before moving to Poland in 1937.

An award winning filmmaker, he has been nominated for six Academy Awards with 2003’s The Pianist, based on the memoirs of Polish-Jewish pianist Władysław Szpilman, taking home three Oscars.

Other notable works include Tess (1979) which also won three Oscars and Chinatown (1974), which was nominated for 11 Academy Awards.

Marie Skłodowska Curie (1867-1934)

Born in Warsaw, she moved to Paris in 1891 to study – there, she developed the theory of radioactivity, isolation of radioactive isotopes and discovered two elements – polonium and radium. For her contributions, she won two Nobel prizes – Physics in 1903, shared with her husband; and Chemistry in 1911 – becoming the first woman to do so and the first to win twice.

Urszula Dudziak

(1943- ) Hailing from Straconka, BielskoBiała, Dudziak first turned to jazz in the 1950s after discovering Ella Fitzgerald records, before taking her show worldwide during the 1960s. The experimental vocalist settled in New York in the 1970s and has showcased her talent with leading contemporary performers including Archie Shepp, Sting, Gil Evans, Krzysztof Komeda, Lester Bowie and ex-husband Michał Urbaniak.

Kazimierz Żegleń

(1869-1910) A monk of the Resurrectionist Order, Żegleń moved from Lviv to Chicago in 1890 where, after the assassination of mayor Carter Harrison Sr., he invented the first commercial bulletproof vest. With Jan Szczepanik, he invented armour plating for vehicles, which saved the life of King Alfonso XIII of Spain in 1906 when a bomb exploded next to his wedding carriage.

Daniel Libeskind

(1946- ) Originating from Łódź, Libeskind is one of the world’s most renowned architects. A virtuoso accordion player as a child, his exceptional architectural portfolio includes the reconstructed One World Trade Centre site, Berlin’s Jewish Museum, Manchester’s Imperial War Museum North and San Francisco’s Contemporary Jewish Museum.

Since emigrating in 1959, Libeskind has lived all over the globe and is both a US and Israeli citizen.

Helena Rubinstein

(1872-1965) Addressed as ‘Madame’ by her employees, Rubinstein founded the globally recognised Helena Rubinstein Cosmetics. Born in Kraków, Rubinstein emigrated to Australia in 1902, where she began to produce beauty cream. In New York, where she settled after World War I, she married a self-styled Georgian prince and adopted the moniker ‘Helena Princess Gourielli’.

Agnieszka Holland (1948- )

One of Poland’s highest regarded filmmakers, Holland is best known for her 1991 historical war drama Europa Europa and 2011 Academy Award-nominated In Darkness, based on true events during the Nazi occupation of Poland. Born in post-war Warsaw, the prolific director and screenwriter emigrated to France in 1981, shortly before the introduction of martial law.

Kazimierz Funk

(1884-1967) A biochemist by trade, Funk was one of the first to discover vitamins, after isolating a substance in brown rice after it was shown to make people more resistant to beri-beri (a vitamin deficiency). Based in Switzerland, he continued his work, discovering four ‘vital amines’ (B1, B2, C and D2) which helped tackle diseases like scurvy and rickets.

Aleksander Wolszczan (1946- )

With an interest in astronomy inspired by the myths surrounding stellar constellations, Wolszczan, from Szczecinek, is a shining light in the field today. In 1992, with colleague Dale Frail, he discovered the first planets outside of the Solar System – as of last year, there were over 3,000 confirmed extra-solar planets.

Bronisław Malinowski

(1884-1942) One of the world’s most important anthropologists, Malinowski originated from Kraków and first travelled to New Guinea in 1914, where he studied the local culture on the Trobriand Islands for several years. Returning to England in 1922, he published his seminal work Argonauts of the Western Pacific, an ethnography closely focused on the Kula ring.

He later moved to Yale, where he stayed for the rest of his life.

Marta Krupińska

(1988- ) Born in 1980s Poland, Krupińska is the general manager and co-founder of Azimo, the digital money transfer service, and a passionate champion of diversity in the fintech industry.

She found inspiration for Azimo at 18 when forced to fly back home from Dublin to give her mum €3,000, because plane tickets were much cheaper than bank transfer or Western Union.

Since 2012, Azimo has gained over a million customers and Krupińska herself was recognised as Forbes 30 Under 30 for her work.

Do you think that Poland engages with this diaspora to any degree, on an official and unofficial level, and if so, to what extent?

Ireland is a good example of a

country able to utilise its diaspora more effectively than Poland.

The Global Irish Network comprises around 350 highly influential individuals from around the world and plays an important role in facilitating investment into Ireland, promoting the country’s reputation abroad and recognising the Irish community as a source of soft power.

The Global Irish Economic Forum holds conferences, bringing together internationally-renowned Irish from business, while the government’s Emigrant Support Programme focuses on cultural and heritage projects.

Do you think that Poland has a significant and definitive diaspora?

Cezary Wojcik, Founder and Academic Director at Leadership Academy for Poland: There are nearly 20m Poles living outside Poland, half of the total population at home. Almost two million emigrated recently, among them many young and well-educated people. This represents tremendous potential. The Polish diaspora has been active in the transformation process since the beginning of 1990s in terms of providing advisors, and often ministers, in recent governments.

Currently, the greatest potential is in connecting Polish scientists around the world to raise academic standards in Poland.

Christopher Hartwell, President of CASE (Centre for Social and Economic Research): Without a doubt. In fact, Poland has always been defined by its diaspora, but it’s important to note, though, that the idea of “diaspora” is usually tied to a specific event in the homeland, something that forces people away instead of regular emigration.

For Poland, there have been waves of mass immigration caused by several such events, including the partitions, invasions in the World War II, the communist takeover, and martial law in the 1980s. In that sense, you may have a diaspora but it’s different across countries and by generations.

The people living in Brooklyn who identify as Polish mainly left during the 1970s and 1980s and would consider Poland unrecognisable today.

The Poles in the UK, for the most part, came after accession to the EU and have a very different set of ideals and expectations. I would say that, over the past 25 years, the diaspora may have become more Europe-focused, due to the opportunities available closer to home. But, it seems there are sizeable Polish minorities everywhere and businesses and government, should it consider engagement, will need to understand these various waves in order to successfully engage.

Christopher Hartwell: Poland, governmentally, does not really engage with the diaspora, but this is not unusual, even for countries that rely on remittances like Armenia or Tajikistan. There is definitely potential for business to engage with the diaspora. We’ve worked with a number of wire transfer companies who know how lucrative the remittance business can be. Business has recognized the opportunities of catering to Polish expats, and have acted accordingly - look at the proliferation of Polish skleps in the UK and the USA. The only engagement that the Polish government has really had was touting the return of Poles in the immediate aftermath of the global financial crisis, but not much has been done since then. Something needs to be done to understand what effect Brexit might have on the Polish labour market which, while better off today than in years past, still faces a chronic undergeneration of jobs. Brexit may mean that some engagement from the government is necessary.

A Polish management consultant living in Riyadh and working in Dubai, who wishes to remain anonymous: Politicians certainly engage with the US diaspora ahead of elections since they believe, wrongly in my opinion, that the US votes can swing fortunes their way. We also have a relationship with our historical diaspora in Lithuania, Belarus, Ukraine and Kazakhstan the unfortunate Poles that never left Poland but Poland left them. The Senate, which in the Polish system is responsible for the country’s relations with the diaspora, engages with them. They get support for schooling and their children are invited to Poland to spend time during the summer.

I’ve been working in Saudi Arabia for quite some time now - I live in Dubai but no Polish embassy or consulate official has reached out to me. I am also unaware of any initiatives undertaken by them in the Middle East. I've attended the 3 May Constitution Day celebrations (Polish national holiday) at the Polish embassy in Riyadh, a lovely garden party at the ambassador's residence. But, I’m not sure that other EU embassies engage each and every citizen quite that often either.

Does Poland interact with its diaspora to further the country’s business and economic agenda? We talked to three experts in the international arena to find out their opinions.

Do you think that there is economic, business and political potential for Poland in engaging more with the Polish diaspora?

Anonymous Consultant: Yes, Poland could use the knowledge that the diaspora has about local customs and political dynamics, as well as the local business environment. The Polish government could be a powerful lobbying force. The issue is always resources. The costs of such activities are very tangible but the benefits are far less so. Perhaps, at this stage, Poland simply can’t afford to meaningfully engage with its diaspora.

Cezary Wojcik: Yes, especially in science which needs deep restructuring and an influx of the best minds. There is very little strategic thinking on an institutional level and weak public sector governance. This is changing, but very slowly - too slowly compared with the challenges that lie ahead. It is important to offer official programmes, targeting specialised groups, like scientists, engineers and artists.

38

Albania

12%

Belarus

Bosnia & Hercegovina

Leader

8%

4%

1990

Stock of emigrants by skill level

(share of total population in 1990): – tertiary education

1995

2000

2005

2010

1990

1995

2000

2005

Bulgaria

12%

2010

1990

1995

2000

Croatia

2005

2010

Czech Republic

8%

4%

– secondary education –p rimary education Source: A 2016 ‘Staff Discussion Note’ by IMF employees entitled ‘Emigration and Its Economic Impact on Eastern Europe’

1990

1995

2000

2005

2010

1990

1995

2000

Estonia

12%

2005

2010

1990

1995

2000

2005

Hungary

2010

Latvia

8%

4%

1990

The Brain Drain from Central & Eastern Europe Education levels of emigrants from Eastern Europe after the fall of the Iron Curtain have tended to be higher than their home country averages. As of 2010, the share of emigrants from Poland, the Czech Republic, Hungary and Latvia with tertiary education was well above the equivalent ratio in the general population. For Croatia and Romania, which have already low shares of people with tertiary education in the population, the brain drain from emigration may have had particularly important implications for productivity. The prevalence of bettereducated and working-age people among emigrants leaving CESEE countries has significantly reduced the supply of skilled labour.

1995

2000

2005

2010

1990

1995

2000

Lithuania

12%

2005

2010

1990

1995

2000

Macedonia

2005

2010

Moldova

8%

4%

1990

1995

2000

2005

2010

1990

1995

2000

Poland

12%

2005

2010

1990

1995

2000

2005

Romania

2010

Russia

8%

4%

1990

1995

2000

2005

2010

1990

1995

2000

Serbia & Montenegro

12%

2005

2010

1990

1995

2000

2005

Slovenia

2010

Ukraine

8%

4%

1990

1995

2000

2005

2010

1990

1995

2000

2005

2010

1990

1995

2000

2005

2010

40 STARTUP SPIRIT BUSINESS

As part of Poland Today’s support for the country’s entrepreneurial community, here’s an overview of the issues facing the country’s startups now and what to expect going forward

To the uninitiated, getting to grips with the startup com-

Liam Frahm is Poland Today’s editorial co-ordinator and is based in the United Kingdom. He currently studies politics, philosophy and economics at Oxford University and is interested in current and international affairs.

munity is a little like drinking from a firehose at full pressure.

And in Poland, it’s no exception. This difficulty is precisely what this piece is attempting to remedy, offering a comprehensive overview of Poland’s startup scene. It will address what infrastructure – especially funding – is currently available, what challenges face startups in Poland now, and what lies ahead for the community, focusing in particular on the trend of wealthy Poles investing in the market. Also, by its very nature, it will contain specific technical language – but don’t worry, there’s a handy guide for all the terminology.

First, let’s set the scene with a quick summary ofthe community as it is today.

If you talk to someone in Poland’s startup community, the first thing they are likely to tell you is how quickly the scene has developed over the last several years. Marta Krupińska, co-founder and General Manager of money transferring-service Azimo, said, “The scene has developed massively since 2007 when I began my first startup. Even the word 'startup' sounded quite mysterious back then, not to mention terms like 'angel investors', 'accelerators' or 'VCs'.”

Aureliusz Górski, Managing Director of entrepreneur-focused, real estate service provider Cambridge Innovation Centre Warsaw, recalled how, “four years back, journalists explicitly asked us not use words such as ‘startup’ or ‘incubation’ on television, as they feared they would not be understood.”

The community has come far, but is still maturing quickly. According to Beata Tylman, PwC Poland’s Director for Innovation and R&D, “most startups are not even two years old, making Poland the third youngest European nation for enterprises, behind Romania and Italy. But, we have definitely caught up in numbers – there are around 3,000 new startups in Poland right now.”

However, numbers may not be the only improvement in the community. Paweł Bochniarz, Chairman of MIT Enterprise Forum Poland, said, “their 'quality' is rising as well, although this is a more subjective judgement derived from my interactions with them.

Their pitches are simply much more polished, the awareness of what investors are looking for is improving year on year.

The investment community is also becoming more robust which creates a positive impact on the whole ecosystem.

I see a lot of experienced entrepreneurs and executives getting involved with startups in one way or another.”

Changes at home haven’t gone unnoticed abroad and Poland’s startup stock appears to have increased internationally. According to PwC’s Tylman, foreign companies “view us as a developing power, a community with

great potential, large internal market and a good connection to both Western and Eastern Europe.” She pointed to Google’s Campus Warsaw as an example of “big, international companies treating our market as a training ground”.

Improvements, however, can certainly be made. For example, 500 Startups, the globally-renowned early-stage VC fund and seed accelerator, currently has no investments in Poland.

This highlights an important point. A lot of hype surrounds Poland’s startup scene and it can be difficult to see the reality.

There certainly seem to be many things to feel encouraged about, but there are definitely areas that need improving for Poland’s community to fulfil the potential that it possesses.

‘If you talk to someone in Poland’s startup community, the first thing they are likely to tell you is how quickly the scene has developed over the last several years.’

The backbone: infrastructure and funding

Understanding the infrastructure in place in Poland’s startup community is essential to understanding the community itself. This can take the form of physical coworking spaces, such as Campus Warsaw, Business Link, which has sites across the country, or Warsaw’s HubHub, Brain Embassy, Mindspace and so on. While these physical sites certainly seem popular – Hargreaves Lansdown recently announced, for example, a technology centre in the Warsaw Spire, home already to corporate-startup collaboration centre The Heart – not everyone is convinced. Startup Poland Co-Founder Anna Walkowska said, “nowadays, we have so many coworking spaces purely just for the sake of having them. They’re not affordable for startups – they’re targeting scaleups, and we’re just not there yet. It’s a misunderstanding of the market. What is missing is a startup centre, focused on better sponsoring and investment rather than earning good revenue for property developers.”

Poland’s universities are another site of positive infrastructure for the startup community. According to Tomasz Rudolf, Founder of collaboration centre The Heart, “there has been a lot of investment at universities into cutting edge technology for research. The frustrating issue is that the funding is sometimes underutilised because there aren’t enough business mindsets in academia. They just lack the business experience.” However, it is useful to distinguish between the impact of research and development at universities and their ability to churn out quality workers.

Szymon Niemczura, CEO of the internationally-recognised beacon firm Kontakt.io, has extensive firsthand experience with Poland’s tech graduates. He said, “Kraków is a student city, full of young and ambitious people, many of them with technical degrees, adding to the engineering talent pool.”

Startup Type:

Academics

Starting Point: – Patent Source of Funding: – Grants Source of Employee: – Ph.D. students

Hustlers

Bootstrappers

Revolving Doors

– Idea or concept – Investors – Business schools

– Code – Bootstrapping – Technical schools

– Business Know-How – Previous Clients – Corporate world

41

business

Terminology The startup community is rife with technical language, most of which does not have a straight technical definition. To help you square away your CVC’s from your VC’s and your incubators from your accelerators, here is a rough guide to the essentials:

– Startup: An entrepreneurial venture,

Startup - Origins The term ‘startup’ is applied to a vast

selection of companies, in fields as different as financial cybersecurity and everyday social media. To help you get get things straight, Mazovia Capital’s Mateusz Nowak has devised the table above, separating startups into four broad groups: Academics, usually Ph.D. students, start with a patent which they try to monetise, using grants to fund their business.

Hustlers, trained at institutions like SGH Warsaw School of Economics, will think of an idea that they believe to be missing from the market. Then, they’ll raise capital by pitching to investors, usually VC funds.

Bootstrappers, trained at colleges like Kraków’s University of Technology, develop a code which they try to market. Because they need only minimal capital, usually just a laptop, and don’t require office space - they can work in coffee shops - they pay for their business by bootstrapping.

The last group are called ‘revolving doors’, which refers to when employees leave the corporate world - out of the metaphorical door - because they see a gap in the market. They already have clients to sell to - their previous employers - and return to the corporate world, back through the revolving door, when they have filled the gap.

typically a newly emerged, fast-growing business aiming to meet a marketplace need by developing a viable business model around an innovative product, service, process or platform.

– Scaleup: A company, starting with at

least ten employees, that has an average annualised return of at least 20% in the past 3 years. It has already validated its product in a market and is looking to expand, often globally.

– Innovation: Roughly, thinking

differently. Invention that sells - the process of translating an idea into a good or service which creates value or for which customers will pay.

– Business Angel: Affluent individuals

who invest their personal capital in startups (typically early-stage) in return for an equity stake. Think ‘Dragons’ Den’.

– VC: Investment funds that manage

the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential. These investments are generally characterised as high-risk/ high-return opportunities.

– CVC: A subset of, rather than a synonym for, VC’s, CVC’s invest corporate funds directly in external startup companies. A large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise, usually in order to gain a specific competitive advantage.

– Accelerator: These are fixed-term,

cohort-based programmes, which include mentorship and educational components and culminate in a public pitch event or demo day. Can be publicly or privately funded and focus on a wide range of industries.

– Incubator: A facility established to nurture young startups during their early months or years. They usually provide space, shared offices and services, hands-on management training, marketing support, and often access to some form of financing.

– Coworking space: A location to create

a shared working environment. Unlike a typical office, those coworking often aren’t employed by the same organisation and therefore work independently, although they tend to share values. Solves the issue of isolation that freelancers experience, while fostering cooperation.

– Bootstrapping: Entrepreneurs are said to

be bootstrapping when they fund a company with capital from their personal finances or from operating revenues of the new firm.

– Unicorn: A startup valued at more than a billion dollars.

– Blockchain: A digitised, decentralised,

public ledger of all cryptocurrency transactions. It constantly grows as ‘completed’ blocks - most recent transactions - are recorded and added in chronological order. It allows market participants to keep track of digital currency transactions without central recordkeeping.

– FinTech: Financial technology, covering technological innovation in the financial sector like cryptocurrency.

– Beacon: Small devices that enable more

accurate location within a narrow range than GPS, cell tower triangulation and Wi-Fi proximity. Beacon technology transmits small amounts of data via Bluetooth Low Energy (BLE).

– SaaS: Software as a service - a software

licensing and delivery model where software is licensed on a subscription basis and centrally hosted.

– B2B: Business to Business - the business model of firms selling to other firms.

– B2C: Business to Consumer - the business

model of firms selling directly to consumers, the end-users of the product.

FinTech Poland's

"Fintech in Poland.

Barriers and Opportunities” highlights the trends in Poland's FinTech ecosystem. The main consumers of Polish FinTech are banks, taking 56% of custom while other financial institutions take 31%.

In financing, 56% get funding from private investors, while 38% have no investors.

42 BUSINESS

Monica Zielinski is Poland Today’s online editor and manages its social media platforms. She is a PolishAmerican journalist who also works on international projects headed under Rzeczpospolita. After earning a journalism degree from Southern Connecticut State University in the US, she moved to Warsaw to reconnect with her Polish roots and work in her field.

An essential part of the startup infrastructure is of course funding. However, this can be difficult to narrow down specifically. Ahmad Piraiee, CEO of IT media firm ITKeyMedia, noted that, “globalisation has made it hard to pin down exactly where startups get their funding. For example, Polish firms raise money from home and abroad and foreign firms come to Poland for financing.” We can, instead, narrow down the most popular routes to funding for Polish startups.

According to Grzegorz Pawlicki, Director of Innovation and Customer Experience at PKO Bank Polski, “The most popular source of external funding is venture capital, both domestic and foreign. Second place is EU funding grants, while the Polish Agency for Enterprise Development (Polska Agencja Rozwoju Przedsiębiorczości - PARP) and the National Centre for Research and Development (Narodowe Centrum Badań i Rozwoju - NCBR) also help startups raise money. In Poland, business angels are very popular as well and some startups are benefiting from acceleration programmes, quickly growing in number in Poland.”

Despite the presence of multiple funding avenues, questions still linger about their accessibility and effectiveness.

Julia Szopa, Startup Poland CEO, said, “62% of startups have not received any funding. This makes one suspect that there hasn't been enough funding. Valuations and rounds are pretty small and only nine percent of those who have raised capital have raised more than $2.5m.”

Such doubts were echoed by several of the startup founders that I spoke to. One, who wished to remain anonymous, described the frustrating experience of being unable to obtain funding: "Investors strive to create an attractive atmosphere to encourage startups to show up. But this doesn’t correlate with the reality of closer negotiations, in which this attractive shell suddenly dies, in favour of quite sharp, often superficial, husk.”

Challenges: lacking business experience?

does seem to be something to this. Just because more and more startup founders have previous experience, either in startups or in the corporate, does not necessarily mean they possess the skills required to make their venture successful.

Indeed, a greater focus should be placed on “creating a culture of mentorship, of fostering grey-hair mentors to guide the fledglings,” according to Mateusz Nowak, Partner at corporate and real estate investment private equity firm Mazovia Capital. One such mentor is Ralph Talmont, TEDxWarsaw Curator and Partner at digital consultancy firm Elevater.Agency, who said: “The one key skill which I see really lacking is communication. Technical skills are never a problem – we have excellent engineers, be it hardware or software – but hardly anybody is able to describe their project in terms that are easily understood by people from the outside. A couple of years ago, I co-organised a series of pitch-offs with TechCrunch where we had local startups present their ideas to bodies of jurors. The quality of some of the projects was outstanding – in fact a couple of them have gone on to get funded and are hitting traction – but all of them struggled to communicate what the essence of the project was, who it was for, and why. By the end, the judges just wanted to know what the product was.”

Another weakness is in marketing. According to Sam Cook, Founder of digital marketing agency James Cook Media, “there is a lack of appreciation for business development and sales. There are great products built here that don’t see the light of day because investors don’t see a credible business development plan and therefore don’t put money in.” This echoes the experiences of Kontakt.io’s Niemczura, who recalled “the biggest challenge is still the business side. It’s really hard to find talent for building sales or marketing teams or high level management. These are specialisations that are definitely lower in availability than engineers. This is simply because the demand for these workers has been moving faster than supply.”

‘There is almost unanimous praise for the hardworking ethic and application of Polish workers, but an obvious area of improvement is in business leadership and management’

Having established what the scene looks like today and what infrastructure is in place, let’s look now at the challenges that the community is currently grappling with. There is almost unanimous praise for the hardworking ethic and application of Polish workers, but an obvious area of improvement is in business leadership and management experience. According to CIC’s Górski, “there is a lack of qualified employees and experienced managers. Many people want to develop startups right after they finish their studies, and they often lack experience. As a result, there is a large group of people who are unable to develop their ideas, however interesting they might be, because they’re unfamiliar with how the market works – due to lack of working experience – and don’t know how to change the market.

This stems from their inability to influence their sector.”

This may not be as pressing an issue as it may initially sound. According to Startup Poland’s Szopa, “there are more and more serial entrepreneurs among startup founders, as well as people with former corporate experience. The stereotype of college dorm-founded startup seems to be no longer valid: just 25% of startup founders in Poland are firsttimers in their 20s or younger. The rest are pretty much seasoned entrepreneurs, aged 30 and older.” However, there

Challenges: lack of trust and the bigger picture

Weakness in marketing may also have a bigger, knock-on impact on the community. An inability to market may only be part of a vicious cycle caused by a lack of trust between financiers and startups. According to James Cook Media’s Cook, “because money isn’t put in, startups don’t fund business development and this creates the cycle.

Startups just don’t trust themselves to develop a business plan.” This trust is essential for the community to flourish and meet its potential. “Without this trust, we cannot really talk about any real bond between people, which is crucial in business, especially when this business is intended to create something extraordinary,” according to PwC’s Tylman. However, trust issues may not just be limited to the relationship between financiers and startups - it may cause issues between startups as well. According to Azimo’s Krupińska, “Polish entrepreneurs need to learn to trust one another. I've met many people with brilliant ideas that they wouldn't share because they were worried it would be stolen. A lack of trust here is detrimental for collaboration, and only through knowledge sharing can success truly develop.”

43 BUSINESS

IC Solutions IC Solutions develops wireless technologies, its flagship product being the IC Pen. Researchers Rafał Witkowski and Krzysztof Krzywdziński of Adam Mickiewicz University created the accessible tool to create digital copies of documents automatically. When a user writes on paper with the Anoto Digital Pen, the built-in ARM9 processing unit analyses what is written using a CCD camera and saves it to a flash memory card. With a focus on unobtrusive Invisible Computing (IC), the startup’s mission is to develop devices that change the world of analogue to digital in a secure way. Currently, IC Solution helps the OSCE’s Office for Democratic Institutions and Human Rights oversee democratic elections in member states to ensure credibility and improve the processing of election results.

SEEDiA In an electronic device-dependent world, the race to find an outlet begins when the ‘low battery’ notification dings. SEEDiA creates solar-powered smart city benches with wifi to recharge and relax even outside. Piotr Hołubowicz joined forces with Artur Racicki, founder of Social WiFi, to design solar benches for both indoor and outdoor use as well as stands to charge mobile devices. The models are equipped with a solar panel, a USB port and a wifi module to create hotspots. SEEDiA’s benches and charging stations can be found in public spaces, shopping centers, airports and hotels. One of SEEDiA’s clients, Innogy, already purchased various models of solar benches and the startup plans to expand to foreign markets.

Institutions such

as banks, hospitals and businesses benefit from immediate data digitalisation by eliminating scanning, re-typing and archiving paper copies of statements, records and other important and confidential documents.

Explain Everything is available

Poland Today presents a selection of

as a subscription.

After a free 30 day trial, the subscription costs $24.99 per year for a single license, $49.99 for a business license and $4.99 for educational licenses.

some of the country’s most dynamic startup companies:

Explain Everything While working in the business world, Dr. Bartosz Gonczarek and Piotr Śliwiński, Wrocław University of Science and Technology graduates, made funny and often absurd audio podcasts. Their hobby drove them to create their first app, PhotoPuppet, to visualize their wild ideas of space aliens, explosions and monsters destroying cities. After teaming up with New Yorker Dr. Reshan Richards, they created Explain Everything, an international business and educational tool. The subscription-based application gives users a multitude of possibilities such as drawing and annotating, and creating dynamic animations with voiceovers. Real-time collaboration and projects are shared via links. Explain Everything started as a boot-strap operation and was profit-earning within its first six months before then receiving further funding.

compiled

by Liam Frahm, Monica Zielinski and Richard Stephens

44 BUSINESS

Startup Poland's

‘Polish Startups Report 2016’ shows that only half of Poland’s fledgling companies obtained external funding, while the other half bootstrapped. Also, in sourcing capital, the report shows that 79% used own funding, 24% used EU subsidies, 22% used VC and 17% used business angels.

For more comments from

members of the startup community in Poland go to poland-today.pl

Taking a step back to analyse the bigger picture, a common concern is that the size of Poland’s internal market acts as a trap for startup founders. According to Richard Lucas, Cambridge University-based entrepreneur networking group Cambentrepreneurs Founder, “Poland’s local market is big enough to mean that some startups don’t think globally. But the local market just isn’t as big as they think.” Indeed, this sentiment is echoed by CIC’s Górski: “Poland lacks global connections and a strong local ecosystem. It’s big enough to develop a company based on an internal market alone, which can continue for a couple of years. It’s a trap which our neighbours, such as the Czech Republic and Slovakia, can overcome much better because they have to think globally due to their smaller size.”

However, a lot of Polish startups appear to be avoiding this internal market trap and are doing business globally.

Eliza Kruczkowska, Chief Innovation Officer at the Polish Development Fund (Polski Fundusz Rozwoju - PFR), said, “researching the Polish startup community has revealed the general rule that to function effectively in the digital economy, you have to act on a global scale. It's reassuring not only to see that almost half of the surveyed Polish startups do business abroad, but above all, that a significant portion of them go after foreign customers almost from the beginning, and that those customers generate more than half of their revenue. For the most ambitious Polish startup founders, such a strategy ensures that the planned dynamic development of the company won't hit a barrier in the future due to the limited capacity of the domestic market.” While the internal market trap does appear to pose a serious threat to the longevity and competitiveness of Poland’s startups, it is encouraging to see them going global.

Looking forward: what does the future hold?

matter which backgrounds or cultures, so long as they are different.” Internationalisation, while dragging Polish startups out of a regional trap, may also serve to make them more competitive globally.

Looking forward: wealthy Poles and beating the hype A further area of interest looking forward is the growing trend of wealthy Poles investing in the startup community.

According to PwC’s Tylman, “we can definitely see such a trend nowadays, but I must admit that it is quite new in Poland. Most wealthy people and celebrities are more conservative in investing than their American colleagues, which is why the dominant asset in their investment portfolios are still real estate and catering. However, it is changing, and we can spot more and more courageous investments in innovative and less risk-free products and services. A great example is Sebastian and Dominika Kulczyk, who are known for investing in startups. Sebastian is part of a special VC fund for Polish startups called inCredibles, together with Startup Poland and Campus Warsaw. Other Polish celebrities are also starting to invest. (Footballer) Robert Lewandowski, for example, is investing in various startups, like Wedding.pl and Kekemeke, through VC Protos Venture Capital, in which he is a partner.”

One possible explanation for this sudden trend is generational change.

As The Heart’s Rudolf suggested, “the sons and daughters are taking over in wealthy families. They aren’t enjoying the same type of business that their parents, who made their money in traditional industries like manufacturing rather than global tech, did years ago - so they’re being forced to spread out to VC funds and startups.” His comments echo those of Mazovia Capital’s Nowak: “we are observing a generational change for the first time in the history of the Polish economy after the fall of communism. Some freshly minted leaders of old family fortunes are willing to take a bet on new stuff: startups.

Most likely, they are in their early thirties, have had a taste of the corporate world but have also been raised by entrepreneurs, the self-made-millionaires of the post-communist era.”

There definitely seems to be a lot to be excited about in Poland’s startup community. Polish employees seem well-suited to the community and, with a little help to point them in the right direction in terms of management and business experience, they could well go on to fulfil their full potential.

But it is important to be wary about the hype. The very nature of the community means that lots of startups will fail. Not every company is going to be a unicorn. As MIT’s Bochniarz said, “there is a small but growing group of Polish startups with very high growth potential in several areas, such as blockchain, hardware, SaaS (software-as-a-service) and biotech. Maybe we won't see a Polish unicorn in a year or two, but I certainly expect several Polish startups reaching $100m plus valuations.” This seems to sum up the community’s prospects well. It’s good to be excited, just don’t get carried away. There are concerns that have to be addressed but the Polish have always been fighters.

If these issues are dealt with, Poland’s community stands a good chance at flourishing. by Liam Frahm

‘But it is important to be wary about the hype. The very nature of the community means that lots of startups will fail. Not every company is going to be a unicorn.’

Having outlined some of the challenges faced by Poland’s startups, we can look forward to what lies ahead for the community. The gap in leadership and experience may explain why numerous accelerator programmes are setting up in Poland and CEE. Their mentorship may help to train up Polish business acumen. Joanna Misiewicz, Project Manager at CEE-based acceleration programme Bridge to Masschallenge Warsaw, said “there is a clear space for accelerators to step in, to teach a structured way of starting a business and to walk startups through this journey. It remains valid for the seed accelerators to do the important work at the very beginning of the journey, but also for accelerators to support startups in scaling up. Having an accelerator with a global network, knowledge of the local market and regulatory restraints is a definite asset for a company with expansion plans.”

The emphasis on the global network is important.

Going global may have additional benefits. According to TEDxWarsaw’s Talmont, “I am in the ideas business, and the best ideas come from diverse teams. In terms of diversity we are far behind Berlin, Paris, Stockholm and Lisbon, not to mention London, of course. In order to thrive as a regional hub we have to be more open to people from backgrounds and cultures other than ours, and it doesn't really

EGZOTech Without replacing physiotherapists, EGZOTech has developed a way to transform healthcare by using robots. Founded by biomedical and robotics engineer from the Silesian University of Technology, Michał Mikulski, the SME enterprise, backed by European Union grants, created a rehabilitation robot for orthopedic and neurological patients.

With Luna EMG, patients can perform exercises, play rehabilitation video games and run diagnostic tests. The robot can also change resistance levels during training, automatically perform motion and force tests, and apply functional extensions to exercise multiple joints. Luna allows physiotherapists to quickly set a whole training programme for a patient and monitor performance from the device dashboard, and the robot’s intuitive technology can be used for therapy related to various conditions, diseases and injuries to improve abilities.

Poland Today presents a selection of

some of the country’s most dynamic startup companies:

Prking™ is a smart city solution for locating and paying for parking spaces. Using radio-frequency identification (RFID), CEO Alan Pilarz created technology that improves everyday life by giving drivers access to real-time information, saving them time and money. Users simply place a Prking™ sticker on their vehicle and download the mobile application to find open spots in their area as well as the number of available spaces, prices and directions. Formed less than a year ago, the startup is currently creating a pilot implementation with real estate clients and multi-family properties. In addition to reducing traffic jams and ticket queues, the team hopes to eliminate the use of remote controls for gates by creating an automatic opening process with the Prking™ sticker.

BUSINESS

Luna EMG's versa-

tility allows therapists to set programmes for patients with various needs such as isolated extensions for single joint training or functional extensions for multi-joint movement.

Scubaphone

Prking

45

Below the surface, divers have solely relied on hand signals to communicate - until now.

Scubaphone Underwater Research and Technologies has developed an underwater voice communicator for divers that allows them to speak freely and is compatible with all standard diving equipment. Łukasz Nowak spent ten years studying the sound-producing mechanisms that marine mammals, especially seals, use underwater. Based on his findings and combined with his colleague Michał Penkowski’s expertise on hydroacoustics, the two engineers and experienced scuba divers joined forces to develop the Scubaphone. The sound produced by the speaker is transmitted directly through the water and is heard clearly by other divers. It has no depth limits, doesn’t require a power source, and at $100, it’s more affordable than electronic based devices.

46 Business

Hidden Champions Mid-sized firms are the real success story in global exporting reach

In recent years, there has been a lot

Hermann Simon is

chairman and founder of Simon-Kucher & Partners Strategy & Marketing Consultants. He is an expert in strategy, marketing and pricing and has an extensive global range of clients. Aside from management consulting, Simon was a professor of business administration and marketing at the Universities of Mainz and Bielefeld and a visiting professor in the USA, UK and Japan.

of talk about the lack of world-class, globally-known brands from Poland.

However, Professor Hermann Simon, founder and chairman of Simon-Kucher & Partners, says Poland’s focus should be elsewhere – on what he calls ‘Hidden Champions’. These are companies in the top three of their market worldwide or top in their continent, but are mid-sized, highly-specialised and little known to the wider public. Simon points to Germany: of the 3,000 global hidden champions he has identified, 1,300 are based there. The country exports more in absolute terms than France and the UK combined due to the strengths of these mid-sized hidden champions, Simon argues. So why are these unknown global leaders so successful in their fields and what can Polish companies learn from them?

Becoming a champion starts with ambition, Simon states. These firms devote themselves to dominating their market internationally. For example, the mission statement of Chemetall, the world leader in special metals like lithium, is “worldwide technology and market leadership”. Nothing can replace entrepreneurial energy and ambitious goals, so the key for Poland’s young, inspired entrepreneurs is to set bigger goals for themselves and strive for European and global market leadership, he believes. The key to developing this international leadership, he continues, is focus and depth. Hidden champions focus almost exclusively on a single field. This makes the target audience small, so to compensate, these firms market and sell their product everywhere in the world. Simon’s advice for Polish entrepreneurs is to avoid the temptation of trying to excel in multiple fields and instead focus on moving beyond Poland, where the demanding global markets offer invaluable lessons to be learned.

Hidden champions are extremely effective innovators: they tend to spend twice as much on research and development as a standard firm and, as a result, have five times more patents per employee than larger corporations. Global leadership, Simon argues, can only be founded on this innovation, not imitation. The greatest driver of this development stems from the

relationship between firm and consumer: 38% of employees have regular customer contact, compared to 8% at larger companies. This feeds into a better relationship between producer and consumer, allowing the hidden champions to price 10-15% higher than the market average yet remain market leaders. Cultivating this close relationship, Simon suggests, is a priority for Polish firms because a close bond with the customer enables them to better understand their requirements.

Developing a close relationship leads to competitive advantages. Champion firms are often superior in product quality, service, advice, system integration and reliability due to the quality of their research, development and interaction with consumers.

Poland's champions need innovation and innovators Having the right kind of staff is essential for the development of a champion, Simon argues. These firms have high performance cultures, highly qualified employees and are often slightly understaffed, which drives productivity.

Additionally, staff turnover is extremely low, at 2.7% annually, and they spend double on vocational training compared to an average firm. Poland has a well-educated, young generation that it can be proud of, he says, meaning that firms can concentrate on application and internationalisation. They need grit, stamina and a long-term viewpoint.

A quick initial public offering (IPO), he continues, is not the way to become a champion. Simon recommends that Poland builds its economic future on these mid-sized companies; contrary to the current focus, Poland is unlikely to create many global Fortune 500 companies but, he argues, has a very good chance to succeed in the midsized sector. by Liam Frahm

‘These firms devote themselves to dominating their market internationally’

Poland's Champions By their very nature, hidden champions

aren’t easy to spot in everyday life – but Poland does have its share! Here are a handful of some of the country’s more well known champions:

HTL-Strefa is a world-leading manufacturer of safety and personal lancets and pen needles for insulin injection. Active in more than 80 countries around the world, the firm has two production facilities in the Łódź Special Economic Zone and ships nearly ten million products every day.

Selena FM is one of the world’s larg-

est manufacturers of polyurethane foam.

Founded in 1992, the company is headquartered in Wrocław and produces chemical products for over 70 countries worldwide.

Nowy Styl is a leading European chair sup-

plier. Since its establishment in 1992, the firm has exported to more than 60 countries around the world and manufactures over eight million chairs and pieces of furniture every year.

48 Business

Building Bridges Investments between CEE and China are on the rise. To ensure deals aren’t lost in translation, Darren Chong, Director of the China Business Group at PwC Poland & CEE, helps Polish and Chinese businesses work together.

framework is complicated. My Ph.D. research shows that understanding the law and regulations of the CEE country is the first thing Chinese investors need to overcome.

Are there any challenges with language barriers?

To communicate effectively with Polish business counterparts, colleagues and employees, Chinese people realise it’s not necessary for them to learn Polish. If they can speak Polish it’s a plus, but a lot of business professionals speak English. One of the challenges, however, is understanding how we convey messages in direct and indirect ways.

How is Chinese business etiquette different?

The formal business protocol stems from five thousand years of civilisation and Confucian values. For example, you are expected to stand to welcome a high-ranking leader when they enter the room and, when meeting a Chinese person, you probably need to hand them your business card with two hands. In Poland, you can hand it any way you like. So, when I first came here, I thought Polish people were rude. However, Chinese businesspeople are becoming internationalised and exposed to other business practices.

Darren Chong

is the Director and Head of the China Business Group at PwC Poland & CEE, with a network of 29 countries across the region. He obtained his Bachelor’s Degree in Malaysia, MBA in India, and MSc from the Lancaster University in the UK. Chong has a Ph.D. in Economics and HR Management from the SGH Warsaw School of Economics and has worked and lived in China, India, Malaysia, Philippines and UK.

In the business sector, every-one’s talking about China. You must be very busy.

What are key things to remember before going into a meeting with a Chinese company?

Definitely. A lot of Polish companies now want to be in China. On their side there’s an interest in CEE where there are a lot of infrastructure, engineering and construction investments, and the Chinese can run these projects. In this part of the world, we’re improving our infrastructure and the funding is coming in.

Be prepared for the meeting – know about the company’s background, what they’re offering, why they’re here and be patient. Patience is key. Don’t be in a rush to sign a contract. Take your time to build a personal relationship. Take your time to understand your Chinese business counterpart.

What is the number-one difficulty the Chinese run into when conducting business in Poland?

‘During the initial meeting, you might not talk too much about business’

Understanding the rules and regulations of the law in Poland in business.

The legal system is different, so people need to understand business law. Very simple things like setting up a company, having member meetings or acquiring Polish entities, and all the legal

What’s the best way to approach Chinese people in a networking setting?

Start with small talk like the weather or Chinese tea, pretty much the same way you would approach non-Chinese people. The meeting will be much more effective if you’re being introduced by a Chinese person. During the initial meeting, you might not talk too much about business – you should get to know each other first. If needed, bring along your interpreter to ease the communication.

How has globalisation changed the modern business world?

It’s making my job more difficult because a lot of business professionals tend to forget the small details. A lot of people think that with globalisation everything is the same and they can copy and paste the same model, whether in America, Poland and China – but it’s not like that. You can go global, but you also need to localise. That’s why cultural sensitivity plays an important role. Some consultants work well with German or American clients – they’re more direct, talk about facts and figures and close the business deal; however, Asian clients tend to spend time to build a personal relationship first before talking about business. That’s why we have a China Business Group within the PwC network.

Our group is dedicated to serving our Chinese clients in order to bridge the cultural gap. We understand their business needs and we want to make sure we can gain their trust because that’s what business is all about.

In line with One Belt, One Road initiative, China and Poland are looking for a win-win partnership. Is it possible?

It depends on how you define winwin. A real win-win between China and Poland would mean we’re doing business together. It would mean that we are growing together, that we are supporting each other and that we are creating opportunities for each other. This, I think, is the definition of win-win here. Of course, if you look at trade volumes, it’s not a win-win because Poland imports more goods from China than it exports, but I think the win-win here should be in equality and support, not just trade.

interview by Monica Zielinski

50 business

Successful Companies Abroad As Polish firms continue expanding we offer a selection of interesting exporters

Over the last decade,

more and more Polish companies have begun investing abroad, transforming gradually into multinational corporations with a strong regional presence. The International Financial Corporation (IFC), part of the World Bank Group, has more than 25 years of experience working with Poland’s private companies and we see strong opportunities for Polish businesses to expand

into new markets. Polish companies actively innovate in many sectors and have significant experience and technical know-how to offer their potential counterparts. These companies are also becoming increasingly visible globally, thanks to trade and foreign direct investments. The annual value of direct investments that Polish companies make abroad has increased notably since Poland’s accession to the EU and

Amica

Kross

For six decades, Polish homes have

In his 20s, Zbigniew Sosnowski was a car mechanic until he decided to open a small bike shop in Przasnysz, Poland. Today, his company Kross is a leading manufacturer of bicycles for recreational use and cycling medalists – Maja Włoszczowska rode the Level B+ bike during the 2016 Olympics in Rio de Janeiro. With its own R&D centre, Kross continues to release models of various types of bikes with better designs and materials to compete on the international market, including its first electric bicycles – the Trans Hybrid series. The company owns three brands: Kross, LeGrand and the recently-acquired Dutch e-bike producer, Multicycle. Bicycles are exported to more than 40 countries and the owners plan to continue global expansion.

selection

of companies by Monica Zielinski

housed Amica appliances. In 1957, the company produced its first gas-coal stove in Wronki, Poland. Today, it’s the largest manufacturer of household appliances in Poland and produces a wide range of products from ovens to juicers. Chairman of the Board Jacek Rutkowski has been with the company since it was privatised by Amica Holding Group in the mid-1990s. New products are trusted by customers in 50 countries worldwide and are characterised by quality and energy efficiency, as well as their ability to simplify daily household tasks, such as ovens controlled by mobile devices. In addition to strong brand recognition, smart technology and modern designs have earned Amica Red Dot Awards and iF Design Awards.

is likely to exceed €4bn in 2016, compared to €300m in 2003. However, this trend has fluctuated due to the financial crisis and individual transactions.

Although over 70% of existing Polish foreign direct investments have been made in the EU countries, there is also growing interest by many to expand to non-EU markets. However, this has been constrained by a lack of business expertise and inability to mitigate risk.

Many companies simply do not have the know-how and financial resources to risk investing in unfamiliar markets, such as Eastern Europe or Asia.

To be more specific, we see significant potential in agribusiness in Ukraine and Kazakhstan. Transport and social infrastructure are other big growth areas: the Balkans, Caucasus, and Central Asia all offer opportunities, especially in roads, airports, healthcare.

KORONA Candles

WB Electronics

Poland is home to one of the biggest scent-

WB Electronics offers communication,

ed candle manufacturers in Europe: KORONA Candles produces private label collections for many of the largest companies worldwide. In the 1990s, founder Krzysztof Jabłoński used an empty production facility in Wieluń to make candles with paraffin wax. Today, with its automated processes and logistics centre, the company’s production volume in reaches nine million candles per day. The own-brand supplier produces tea lights, votive candles, and candles in various containers. To expand production and global reach, the manufacturer opened a second production plant in Virginia, USA. KORONA Candles also received funding from the European Regional Development Fund for implementing energy efficient candle manufacturing technology and producing candles using renewable raw materials.

command and control systems for the Polish army and defence sector. Three engineers, Piotr Wojciechowski, Adam Bartosiewicz and Krzysztof Wysocki, started the company 20 years ago, leading Poland’s armed forces into a new era of defence technology. The team’s big break came after designing and implementing an automated fire control system for ground artillery (ZZKO TOPAZ) for the Defence Ministry. Operating in the field of military systems, WB Electronics produces original products that are used in dozens of countries – including the USA – to improve national security and combat international threats. In addition to devising communication systems, WB Electronics initiated the BS9 Consortium and the Polish Aeronautical Technology Platform for Unmanned Aerial Systems.

Delphia Yachts Combining navigational experience and modern technology, Delphia Yachts produces a range of boats in Olecko, Poland. The company was founded by brothers Piotrand Wojciech Kot, who had an early passion for sailing on Czos Lake in the Mazury lake district. They have built up one of the largest boatyards in CEE and have manufactured over 25,000 vessels, with dealers on five continents. One of its largest yachts is the Delphia 46 Deck Saloon, first presented at the 2016 Boot Exhibition in Dusseldorf.

In addition, Delphia Yachts’ newest motor yacht model, BluEscape 1200, was unveiled at the Wind and Water Boat Show in Gdynia where it won the Gdynia Yacht Design 2017 for ‘Most Beautiful Motor Yacht’.

‘We see strong opportunities for Polish businesses to expand into new markets’

We also see potential for private investors in manufacturing, retail, consumer services, renewable energy, and other green technologies across the Eastern Europe and Central Asia region. We are open to working with Polish companies in the emerging economies of Africa and South America, where IFC has a strong local presence and many years of experience. by Tomasz Telma,

International Finance Corporation

51

business

Urban Issues EXPO REAL 2017

53

URBAN ISSUES

Global forces

are always at play in real estate, but the dynamics are changing now more than ever - both for better and for worse. Asian funds are coming in, but negative demographics are never out of sight or mind.

Consolidating Poland’s retail market pages 54-55

Offices for startups page 56

Orange Real Estate Second Life of Buildings Conference page 58

Global trends affecting CEE pages 60-61

How to tax transfers these days? pages 62-63

Other lives pages 64-66

54

URBAN ISSUES

Galeria Młociny,

recently acquired

by EPP and Echo Investment, is an 81,900 sqm mixed use development in north Warsaw, due to open in 2019.

Consolidating Poland’s retail market Hadley Dean, CEO of Echo Polska Properties (EPP), talks about the company’s plans to dominate the country’s retail market, and reveals his view of other Warsaw developers as partners in building a better city, not as rivals.

How has the first year at EPP been?

It’s been a very active period for us.

We’ve just completed our H1 results: we’ve made 11 acquisitions since listing in 2016, within seven retail locations.

We’ve added €500m worth of assets in value, we’ve delivered on our promises and our dividends and it looks like the rest of the year will be the same.

We’ve also changed our company strategy and we are going to focus on consolidating the retail market in Poland.

We want to own shopping centres in Poland’s dominant catchment areas; this makes them defensible and therefore sustainable. We believe that the strongest growth in Poland is in retail.

We’ve looked at a huge amount of data before deciding and, as a result, we’re now selling our office buildings over the next three years, in a gradual phase to help fuel our growth. That doesn’t mean to say that our office buildings aren’t performing well - we have very low vacancy in our projects - but we’re doing it because we can’t keep going back to our investors to raise another €250m in equity.

Why do you have such faith in retail when the sector seems to be under siege, especially in the USA? That is the million-dollar question.

The US retail market is very different than in Europe, mainly because they are three times oversupplied in retail.

It’s amazing how much retail was built there in the past. I think there has been a lot of noise in recent years about e-commerce and how fast it’s growing - and clearly it is - but people are making a mistake if they think the two can’t co-exist. Retail has always changed.

When you look at what’s working, you can see three things. One, food is the new fashion. People are using shopping centres much more now as community areas. Two, the retailers doing best are luxury brands and fast-fashion like Zara.

Third, the other retailers doing well are discounters like Pepco or TKMaxx.

Everyone loves a bargain. Now, in the States, it’s all about creating an amazing experience: more staff and more space.

How does that translate into revenue?

It’s click and collect. We’re seeing retailers figuring out that e-commerce allows them to really control the brand

55

URBAN ISSUES

How is cooperation between EPP, Echo Investment and Griffin Real Estate?

In a sense, we’re very fortunate because all three focus on different areas. We focus on retail, Griffin Real Estate on office and Echo Investment on development. There is around a billion euros of development going on and the reason why we’re here in the same office as Echo Investment is because our futures are absolutely linked.

Everyone is very interested in the Towarowa 22 retail project. How do you see traffic concerns playing out there, with all the new offices being built in the area?

It’s directly connected to the metro, which we’re heavily pushing people to use. Look at London: no one drives

‘The beauty of Poland is that we have time to figure out what’s happening’

Echo Polska Properties Echo Polska Properties is a Dutch dual

listed real estate investment company that follows the REIT formula, investing in retail and office properties located in 18 cities throughout Poland. Their stated goal is to create Poland’s leading, cash-generating platform of well-performing office and retail assets that will deliver consistently high returns to our shareholders.

to work in the centre anymore, while very few people drive to work in Paris.

As Warsaw develops, getting around by car will become increasingly problematic and that’s where the commuter belt will come into play. People will come by train from Podkowa Leśna because you can get into the city in 30 minutes. It’s not just going to be an amazing retail centre - it has to be an urban environment. No one wants to see a dirty gray box - we have 6.5 ha land. We’re talking about having skiing events on the roof, we want to have a high street and a big square for major events.

It has to be for the city.

Who will be your architect?

We’ve had a local architect on it so far. We want to create a place where people will live, work and be entertained. We want people to come here as part of their visit to Warsaw. This will be the most exciting project in any European capital city in the next five years. It is the jewel in our crown. We want to work closely with the city to make this as fabulous a project as possible. We know what the city wants and they know what we want.

Do you see projects such as Koneser, EC Powiśle and others as competition?

Absolutely not. This is about giving something back to Warsaw. We’re rebuilding something. Of course all developers want to make money, but this is about making Warsaw into something quite extraordinary. Powiśle and Koneser and Browary Warszawskie – it’s about a city building its own identity again. By 2025, Warsaw will be the highest city in Europe in terms of floors in office buildings – excluding London of course. Frankfurt, for example, only has about eight or nine high towers.

Isn’t there a concern about too much office space?

Yes, but the economy is growing by 4% a year so the organic growth in the city is already at massive levels. Plus, Credit Suisse have come in and created 2,000 new jobs and JP Morgan is coming in and making jobs. Warsaw never used to be a destination for backoffice jobs but now it’s becoming a real hub for highly-skilled jobs. I don’t know what will happen to the Warsaw office market, but I do know that the city will develop in the next few years and will be unrecognisable in ten years time.

We see retail as having the biggest growth. From a macroeconomic perspective, we have a burgeoning middle class who are paying off their mortgage, having dinner out once a month and going abroad for their holiday.

And now, they are dipping into consumerism. There is a blooming middle class now and it’s so exciting, but people don’t realise this. It’s happening in the big cities and also in the small cities. The reality is that the 500+ benefit programme is the biggest redistribution of wealth in Poland since World War II. And it’s working. The government has done a good job in decoupling the economy from the politics.

Poland is just getting going and we think retail is going to be a big part of this. If we can consolidate the retail market in Poland, then we can drop our operating costs significantly. This will be passed on to the retailers, who can then pass it on to the customer.

Is the South African perspective on real estate investment different to that of a European or a US perspective?

When you look at big real estate markets in the world – the US, the UK, the Netherlands - there’s one thing they have in common: they understand that you build wealth through property. That’s not the case in Germany, and that’s why the German commercial real estate market is a long way behind the UK. South Africans have the British-Dutch mentality – it’s around the eighth biggest commercial real estate market in the world. They love property, they understand property, and they love Poland because they can relate to a developing economy.

Hadley Dean is CEO of Echo Polska Properties (EPP)

Urban Issues EXPO REAL 2017

and observe the customer reactions in the store. No-one has the definitive answer about how things will evolve but all the data that we’re seeing shows that the e-commerce and retail. Something like 50% of those who click and collect will buy something else in store.

Shopping centres are usually in convenient places, so retailers are encouraging people to come in and collect by offering discounts. It’s cheaper and typically people like to go to a shopping centre every two weeks or so. The beauty of Poland is that we have time to figure out what’s happening. Poles do not like giving their financial data online, Poland has one of the lowest credit card penetrations in Europe and, in Poland, people underestimate the impact the climate has on shopping habits. A lot of people also underestimate the retail therapy of physically going to place and buying in person. People really enjoy it, especially in Poland, and a lot of analysts just don’t get it.

56

URBAN ISSUES

Office space fit for generation y Millenials busy creating startups need

offices to match their lifestyle and expectations, and Poland’s developers are responding. A spate of co-working office spaces have sprung up around Warsaw like mushrooms after the rain. We bring you five of them.

The Brain Embassy, close

to the Blue City shopping centre in Warsaw, claims to be the first co-working space in Poland.

Brainchild of developer Adgar Poland, they plan to open a 2nd such office in Mokotów shortly.

Business Link has

Urban Issues EXPO REAL 2017

been invested in by Skanska. Together they plan to create approximately 12 new locations in CEE.

Mindspace from Israel is soon to open its co-working contribution to Warsaw’s startup community in Griffin Real Estate’s Hala Koszyki.

Cityspace is part

of the Echo Investment family, with premises in cities across Poland and more to open soon.

Hub Hub,

HB Reavis’s co-sharing initiative, recently opened over 2000 sqm in Mokotów, Warsaw, its second in Europe after HubHub Bratislava.

The company will also shortly open in Prague, Budapest and London.

58

URBAN ISSUES

Orange Real Estate ‘Second Life of Buildings’ Conference Redevelopment and modernisation is the talk of the town

Left: Maciej Klukowski, Orange Polska Real Estate Trade Director, presented Orange telecommunication buildings that were given a second life.

Above: Repurposed facilities can re-

main integral parts of cities, said Piotr Muszyński, Orange Polska Vice President of Strategy and Transformation.

Below: Paweł Buchman, Director of Orange Polska Real Estate, recognises the growing revitalisation trend in Poland.

Urban Issues EXPO REAL 2017

Groundbreaking

ceremonies are taking place throughout Poland, but not all old structures are being demolished to make room for shiny skyscrapers. Orange Polska Real Estate held a “Second Life of Buildings” conference in September at the Bristol Hotel in Warsaw. Over 200 real estate professional as well as lawyers, local government officials and financial representatives attended the oneday event. Partners of the conference included Deloitte, Cushman & Wakefield, Cresa, RD Bud, Interbiuro, and the city of Łódź.

Panels focused on the redevelopment and modernisation market in Poland and Europe – from investment to architecture. There was a discussion on the profitability of modernising multifunctional facilities in city centres and how developers are increasingly interested in redevelopment projects. Panelists also discussed legal regulations related to redevelopment of historical buildings and conservation requirements in addition to how it will affect the investment schedule and financing issues.

Piotr Muszyński, Orange Polska VP of Strategy and Transformation, described how the nature of technology in telecommunications is changing dynamically and how devices needed to carry out services occupy

less space today. Therefore, the company sells these facilities to be repurposed to serve the people and remain an important part of the city.

As attractive plots in city centres become less available and housing continues to age,revitalisation and modernisation of properties is becoming more popular in Poland and other countries with increasingly mature real estate segments. In line with this grow-

ing trend, Director of Orange Polska Real Estate, Paweł Buchman, said, “Looking at the interest of investors and trying to understand their intentions, we came to the conclusion that it is worth proposing a conference in which all parties, ie investors, real estate agents, city authorities, architects and conservators, will have the opportunity to exchange their views.”

During the conference, Maciej Klukowski, Orange Polska Real Estate Trade Director, presented examples of transformations of Orange telecommunication buildings, which now operate as schools, lofts and shopping centres.

Various neighbourhood transformation projects and large completed mixed-use facilities were presented to the audience during the conference.

“It’s crucial in the revitalisation process to have an area approach, rather than a local one, emphasised Radoslaw Kubaś, partner at Deloitte. “When such complex modernisations are carried out with the revitalisation of an area, real estate also brings many benefits to the local community.”

As a result of the conference, all panelists signed the Declaration of Model Revitalisation which will be submitted to the Warsaw City Hall to ensure efficient cooperation between investors and local governments around the country.

60

URBAN ISSUES

Now a truly global market Two leading international real estate consultants from the UK shed light on the worldwide dynamics impacting the CEE region, and how demographic changes and new sources of investment are shaking up the industry.

Rolling Stones or One Direction?

Yolande Barnes

Urban Issues EXPO REAL 2017

is Drector of World Research at Savills

Whether you’re more familiar with rock legends The Rolling Stones or the latest pop boy band sensation One Direction can have a significant bearing on the real estate market, argued the Director of World Research at Savills, Yolande Barnes, speaking at Poland Today and PropertyEU’s CEE Summit in Warsaw.

Here are some of the highlights: “The world population is divided into the boomers and the millennials. Those who recognize the Rolling Stones are the boomers, and those who identify with One Direction are the millennials. The boomers are now pensioners and the millennials are the workforce.

The boomers have changed finance because they’ve had six decades of saving, which has had a big impact on the built environment and real estate.

There’s a different – indebted – generation now, which is changing the investment world and the demand for workspace, living space, and cities.

By 2025, Millennials will form over half the world population and 75% of its workforce. They really are the future.

However, there are a lot of countries, particularly European ones, that have seen their workforces shrink, for example France’s by nearly five percent since 1986 and Japan’s by over 12% since 1992. Therefore, the search is on for human capital - for talent – and it’s global. We now have to pay a lot more attention to Millennials – also known as Generation Y - and what they want.

We are noticing that it’s the HR departments that are often coming to us with real estate requirements. They are not asking the question “what offices are available?” but “which city should I be in?” It’s not the cost of offices that is going to dictate the future of the work-

space, but this search for global talent. is the ability to access financial capiThe important thing about Generation tal. Now this digital age starts to look Y is that in their back pockets they have more like the first age because what a handheld device which gives them matters again is proximity to other peoaccess to everything, everywhere. And ple. So, it’s the access to human capibecause these digital-native, tech- tal, not financial capital, that is starting savvy generation can do anything any- to matter more. where, you really need to attract them A big indicator of how well a city to your city and have them be in your is going to do in the ‘new technology’ company. So we’ve become interested sector - and the creative sector - has a in where they hang out, and what they lot to do with what we call ‘city buzz’, do when they’re there. Well, they pre- basically how much is going on in the fer an old-fashioned street scene with city culturally and socially, combined coffee shops, because in a world where with well-being and wellness. That comyou can access everything, the only bination seems to give a pretty good thing you can’t access is a face to face indication of which cities are going to meeting with a human being. This is attract those talented millennial workwhat these sorts of environments facil- ers. So, what are the prospects for itate. So, tech cities are remarkably low Europe and European cities? We’re tech. All over the world we’re seeing going to become increasingly focused that younger generations want to be in on the rent cycle - where cities are in a town or city centre, and this is really terms of their rental growth prospects.

These are increasingly attached to the changing demand in cities.

It’s led us to think about the evolution fundamentals of the city and Europe of cities over the centuries, and suggest does still look good value for occupithat we’re entering the fifth age of cities ers. However, on a global stage, there - the digital age. In the pre-industrial age, are cities with that ‘city buzz’ which what mattered about a city was the look cheap compared to the European ability to meet other people. In the early cities. What will increasingly come into industrial city it was all about proxim- focus is residential property affordability to raw materials. Then we moved on ity. That is a major driver influencing to a Mercantile phase where trade and people’s decisions. And again, some of proximity to markets mattered. In the the European cities actually look welllate 20th century, we’ve gone through placed in that respect. Underpinning it the age of capital, where what matters all is the demographic strength of the city: how the workforce is forecast to grow; the ability of cities to attract the workforce of the future; the Millennialto-boomer ratio (how many aging people the Millennials have to support, which in turn is a strong indicator of the kind of pressures that might be on social and health services). These questions will separate the cities that are going to do well, and those that will struggle. In short, cities need to boost their appeal to younger generations.”

‘The boomers are now pensioners and millennials are the workforce.’

To see Yolande’s and Richard’s full presentations,

search ‘CEE Summit’, Warsaw, 2017’ on YouTube.

61

URBAN ISSUES

A changing of the investment guard

Then there are the private equity because they have a lot of what I call funds. They are completely different. ‘separate accounts’ - or non-discretionTheir cost of capital is higher, their hold ary mandates. They can get new money At the same event - the CEE Summit periods are a lot shorter, they’re looking into the CEE markets because they in Warsaw - Richard Divall, Colliers for value-added, like distressed assets have the local expertise, they underInternational’s London-based Head of which they can reposition, asset man- stand the buying processes, and they Cross Border Capital Markets for the age, and turn around. The trouble some understand the market dynamics.

EMEA region, gave a whistle-stop crash of them have had entering the CEE marNow onto how these groups act, and course in global real estate investment kets is there hasn’t been as much dis- how the CEE market can come into play. and how the CEE markets fit in. Here tress here as there has been in Western Firstly, Asian capital tends to have very are some excerpts: Europe. Investors at this mature part small teams, which basically means “I’m often on planes to Asia, and to of the cycle are moving away from risk they can’t go and learn new markets.

North America, and now South Africa, and wanting to go into more core plus You can tell them that they should be so I have a good insight into what inter- strategies. The fourth type of capital is buying offices in Budapest, for examnational investors are thinking. They are family offices, the new name for private ple, but they won’t do it because they all very different so the easiest way is investors. There are a lot of them and don’t understand the market. They’re to categorise them into types of inves- they’re not making money in the bank looking at the gateway cities with direct tor. There are really six types: the sover- in this low interest rate environment, flights, which puts a city on a map. eign wealth funds, the global insurance therefore many are going into real Three years ago, Manchester in the UK companies and pension funds, the pri- estate. There’s also a lot of family office decided to do direct flights to Beijing. vate equity funds, the family offices, the money from the Middle East that’s tar- Within two months one of the big REITs, and then finally the big invest- geting the whole region as well.

Beijing state-owned enterprises came The fifth type is what I call the cash over and invested hundreds of millions ment managers. What are they thinking, and what are they doing? We’ll start with rich developers and the global REITs. into a business park by Manchester the Sovereign Wealth Funds. They have The global REITs are being driven to Airport. Another point is that one of safe, core strategies because of who diversify because there’s not enough the first questions the global private they are. They often invest indirectly, scale in their markets or the pricing is equity funds ask is “are the local banks and tend to favour co-investments with too hot. The last group is what I call the lending?”. They want to see liquidlarge investment managers. The Middle global investment managers and they ity and they want to see an exit. They East funds have been around for ages. are very important for the CEE region feel a lot more comfortable if there They like scale and – as opposed to a is local institutional money or local REITS. It’s encouraging that Hungary lot of Asian capital - often have local has quite a few local institutions, the teams in Europe, which means they can access new markets. Once a big soverCzech Republic as well. If Poland goes eign wealth fund goes into a new mardown this route it will comfort the funds ket or buys into a sector, then the rest because they won’t feel they have to of the country’s wealth – the insurance rely only on international capital to buy companies, the family offices, the REITs their product. Touching on the invest– generally follow, which is encouraging ment volumes, Poland might hit €5bn for the CEE region. The next types of this year, which is fantastic. But it really investor are the global insurance comis a changing of the guard. In the past panies and pension funds. They generit’s been German institutional money, ally come from North America and Asia.

UK money and US money. Now we are Chinese state-owned enterprises are in seeing more money from the Middle this as well. They are here in Warsaw but East, from South Africa, and of course you may not have heard this because Asia is growing. Real estate is now a they’re not doing it directly. truly global field.”

‘Touching on the investment volumes, Poland might hit 5bn euro this year.’

Richard Divall is Head of Cross Border Capital Markets for the EMEA region at Colliers International

62

URBAN ISSUES

Navigating the new tax-transfer rules Janusz Dzianachowski and Monika Lerka from Linklaters law firm explain how to tax transfers these days

Until very recently,

Janusz Dzianachowski is a Partner

Urban Issues EXPO REAL 2017

at Linklaters Warsaw Real Estate Practice with many years of experience in advising international and domestic corporations, investors and developers on major real estate transactions in Poland and the CEE region. He has particular knowledge of the logistical, retail and office space sectors.

the VAT tax treatment of commercial real estate sale transactions in Poland was a common and stable practice, confirmed by an almost uniform approach by the tax authorities. Those who bought commercial real estate paid the 23% VAT on top of the purchase price, and the VAT was subsequently refundable – subject of course to specific conditions.

In mid-2016, after around ten years of uniformity, the tax authorities started questioning the VAT treatment of commercial real estate sales and claimed that such transactions should be subject to a fixed 2% non-refundable transfer tax, rather than 23% refundable VAT (sometimes in contradiction to individual tax rulings issued for a given transaction in order to legally protect the purchaser).

moved from asset acquisitions to so called “enterprise deals”. The number of share deals also increased significantly.

The alternatives

Share deals are nothing new, but have become increasingly popular in real estate, and are fairly standard if the property is held by a special purpose vehicle (SPV). Obviously, things can always get more complicated if the holding company has a long history or conducted activities other than just holding the property. In such a case, a comprehensive due diligence is required, including on tax matters. This means extra cost and time. Although such acquisition of real estate does not benefit from certain statutory extraprotection, which is available in the case of asset deals, it seems that professional legal due-diligence is valued The change highly enough and both purchasers It would be too simple to say that it’s and financiers accept this. Additionally, all about money, but it is difficult to a full scope title insurance is offered ignore that the main driver behind the on the market by a few global brands, change was the need to fill a gap in the often seen as an additional layer of prostate budget. The problem is that a real tection. Tax treatment of share deals estate transaction volume and related could be considered a “safer” option, VAT is not even close in terms of num- not only because of clear and stable bers to what is really needed. The Polish tax legislation in that respect, but most government decided to act against importantly because of the actual tax VAT-related fraud and carousels based the investor needs to pay: 1% of the net on forged VAT invoices - apparently asset value in the case of a share deal, a ruse common in the oil and gas sec- against 2% of the value in the case of an tor, where it is difficult to measure the asset or enterprise deal. quantity of the product. Commercial Enterprise acquisitions have also real estate seems to have fallen into the become among the most popular same basket, but for no good reason. structures and are, to a large extent, The Polish property market is, and has designed to manage the expectations always been, transparent and profes- of the tax authorities. In enterprise sional. Unlike the oil industry, real estate acquisitions, the investors are acquiris perfectly measurable. It is simply not ing the entire operating business of possible to cheat on tax. the seller, or relevant organised parts, which covers not only the properties The response but also the contracts, rights attached When some investors started facing to the assets, receivables, know-how, problems with reclaiming their VAT trademarks and licenses as well. The from the tax authorities, the rest of purchaser will remain jointly and sevthe property industry slowed down erally liable with the seller for the selltheir projects and looked carefully at er’s undisclosed business liabilities. how acquisitions could be structured The good thing is that the liability for to avoid risk. Neither lawyers nor tax seller’s tax can be excluded by obtainadvisors were keen to advise pursuing ing so-called “tax certificates” from asset acquisitions subject to VAT any the authorities before the transaction longer. That meant a new approach had closes. The downside is the 2% nonto be found in order to maintain investor refundable transfer tax payable by the interest in the market. The reaction was purchaser on top of the price. This is very quick, and transaction structuring still one of the lowest real estate trans-

fer tax rates, compared to those applicable in other EU member states!

Manage the risk Although the trust vested with the individual tax rulings were questioned when the VAT deals became challenged, it should not be forgotten that this is still a powerful instrument and offers protection guaranteed by law.

It is very important that the application for the individual tax rulings clearly corresponds to the way the underlying transactions are structured. This is because the tax ruling would only allow protection if there are no material deviations from what was stated in the application and what was eventually acquired.

Another solution which investors use, applied in both asset and enterprise deals, is to economically split risk related to potential challenges of the transaction. The parties often agree to share the costs of penalty interest, VATrelated penalty payment and even the amount of the transfer tax, despite the fact that some of these by law should be payable by the purchaser only.

It seems that the execution of additional contractual “rules of conduct” in such cases has become a new standard in real estate transactions.

Completing transactions We have also encountered tax risk insurance, which is a new product available to investors. It is designed to secure the risk of challenging the transaction after the closing. There are several options available, offering cover for the entire VAT amount or the VAT amount together with penalty interest and VAT additional or any mixture thereof. It is still not very popular, but this will surely change. Increasing popularity may also bring some more flexibility with pricing which remains high.

Despite the asset deals-related risks, the market has designed and offered alternative ways for completing transactions. There is no one-size-fits-all solution and each transaction should be examined individually to find a structure that match investors’ expectations and guarantees the necessary protection. But with just a little effort, this can all be achieved in time. by Janusz

Dzianachowski and Monika Lerka

63

URBAN ISSUES

Monika Lerka is

photo: www.tajcher.com

senior associate in the Linklaters Warsaw Real Estate Practice, with over six years’ experience in advising foreign and domestic investors in real estate transactions including sales and acquisitions of office buildings, shopping centres and logistics parks as well as property development and leasing.

64

Other lives

URBAN ISSUES

Away from their day jobs, some of our real estate colleagues have some seriously cool passions

‘Swimming for 12 hours is possible if you practice, but training your willpower is harder’ Bogusław Woźniak

Open water swimming competitions

Owner of real estate consultancy firm Terra Investments and open water swimmer

photos: Viviana Perez Figueroa, Marek Kaszkowiak

Urban Issues EXPO REAL 2017

have basic rules: you’re not allowed to use neoprene or any device that can aid swimming, like fins or a snorkel. You’re allowed one swimming cap and pair of goggles and your swimsuit must be above the knees.

Katarzyna Pyś-Fabianczyk

Head of Industrial & Logistics CEE, BNP Paribas and hardcore punk concert organiser

With some friends, my husband and I organise concerts for Polish and foreign hardcore punk bands. All of the bands have their own style - it’s definitely alternative music but, contrary to what some people might think, the music promotes a very positive mental attitude. It’s fast and heavy and really for the connoisseurs. We act as promoters, book shows during their European tours and often become friends with them. Usually, we arrange shows at our friends’ clubs in Warsaw and try to involve the local community.

They aren’t huge shows, but they give us a lot of satisfaction, especially when they are unknown artists and we meet them later at bigger festivals when they’ve become really popular. My husband got me in to it when we saw that bands playing in the UK, Netherlands and Germany were not coming to Poland, and we really wanted to change that. We’ve made so many great memories and met so many interesting people. One Brazilian guy we met recently turned out to be a lawyer of big international football players back home. Now he’s organising a music tour in Brazil for Polish bands that he met over here.

It all started a few years ago, when a friend of mine told me that he was training for the 5.2 km Balaton Lake cross swim in Hungary. That seemed a very long distance – the most I had swum was about 1.5 km in my local swimming pool - and I thought, “Why not?” In competitions, you’re not allowed to swim behind the guide boat because of the draft and you have to finish your swim on dry land without any assistance. Plus, you have to get used to the temperature. For example, the warmest the English Channel will be is around 17-18 degrees in August, but to be able to sustain that temperature for 12 to 14 hours, you need to train in 14-15 degrees. Before you are allowed to swim the Channel, you have to prove to the licensing agency that you have done a six-hour swim below 16 degrees.

Over the last few years I’ve done several swims, including the 14.4 km Straits of Gibraltar, the 22.3 km Illes Formigues – Illes Medes in Catalonia, the 26 km Rapperswil in Zurich, and the 33.5 km English Channel. I’ve recently launched the Terra Investments Swim Programme with the aim of promoting the sport and supporting young swimmers in open water swimming. It’s given me the power and perspective to overcome the small ups-and-downs of everyday life. When I was swimming in Zurich, for example, after passing 14 km, I tired a lot and wondered if I hadn’t trained enough. But it passed and I enjoyed the rest of the swim.

It teaches you to never let go and that the challenge is in your head. Swimming for 12 hours is possible if you practice, but training your willpower is harder.

Urban Issues EXPO REAL 2017

URBAN ISSUES

photo: Mateusz Sikora

66

Leszek Sikora

Managing Director at ECE Projektmanagement Polska and beekeeper My interest in beekeeping started with my father. Early in his academic career, he decided that he needed an independent living in order not to have to deal with communist institutions. Over the years, he became one of the biggest individual producers and breeders in the country and is still active today, running it with my brother and his team. What was his passion seemed like a curse to me as a child, since most of the work needed to be done in the summer holidays. Instead of going to the seaside, I had to work! Today, my involvement is more sentimental and to unwind, plus it gives me a chance to introduce my children to a little rural living away from virtual reality and the hassles of urban life. I’m not formally educated as a beekeeper, my entire experience comes from a childhood spent in this breeding.

Where the beehives are located depends on the time of year. During winter, all of the hives are kept in several fixed locations whereas, in warmer periods, the bees wander from one spot to another, depending on what kind of nectar-producing plants are blossoming. We move them all across the country in search of large plantations of linden trees or buck-wheat. All-night transportation of hundreds of hives is part of the fun and adventure. We currently have around 800 families prepared for winter - normally, we have 20,000 bees in a healthy hive in winter and 60,000 bees per hive in summer, so our total summer population will be around 50m bees. Beekeeping produces multiple products: all sorts of honey, pollen, queen-jelly and other substances for nutrition and pharmaceutical industry. But, forget the honey – bees are indispensable for agriculture.

Should they become extinct, the entire pollination process would collapse in a year, with no other species able to replace them in this task.

People often ask if I’ve ever been stung - being stung is part of the fun!

My record of 30 stings in one day brought my immune system close to its limit. My brother almost died when he was aged two or three - only a quick adrenaline injection saved him. There are some aggressive breeds of bees, even in Europe, but there are also mild ones, where you don’t need any special protection when opening up a hive. Bees are fascinating organisms.

Watching them communicate, organise and divide tasks and adapt is really interesting. At the same time, they can be very vulnerable to negative changes in the natural environment.

68 culture & History

Eyewitness: Radio Free Europe Stash Pruszyński recalls his time at the historic station and the daring escape that led him to Munich

Radio Free Europe

is a US-funded broadcasting organisation that provides news, information and analysis in countries where it claims the free flow of information is either banned by government authorities or not fully developed. Opening in 1949 with support from US President Eisenhower, the station broadcast in both English and the native languages of its target audience.

Merging with Radio Liberty in 1976, the organisation moved its headquarters to Prague in 1995 and currently broadcasts to 23 countries in 26 languages.

‘It was very risky to be associated with western radio back home - listening carried a ten year prison sentence, effectively hard labour in the coal mines.’

arrived in Nuremberg, I was elated. Our effectively hard labour in the coal mines. story became popular – the media nick- But people persevered! They closed named the students “the Cambridge their windows and listened under their Pimpernels”. bedsheets. The communist government I ended up in Munich with Bridget tried to jam the broadcasts: when the and a few of the others who helped me jamming kicked in, you could make get on my feet. They were well-con- out a few words before a big whoop nected and sent my story to a couple of frequency dashed across the set. of journalists, including Cecilia Gillie, But still the listeners didn’t give up! Old who worked for BBC Paris at the time. folks especially became very good at I had no qualifications, but both RFE dialling in the best frequencies to get and Voice of America heard of my reception and avoid the jamming. RFE story and offered me work. I ended up started broadcasting its Polish prothe great escape spending a year in Munich working in grammes on 3 May 1952 – Poland’s Jan Nowak-Jeziorański’s Polish section constitution day, a historic national Stash Pruszyński was born in Warsaw at RFE as a consultant. Because I was holiday banned under communism. Its in 1935. After his escape and subsequent year 19 and had lived under the commu- broadcasts were essential: all press in in Munich, he studied History and Economics at Edinburgh University. Graduating in 1962, nist regime, the producers wanted to Poland was controlled, with different he worked for publishers Harper Rowe and know what content would be popular newspapers printing the same stories, several notable Canadian newspapers. After eswith a young, Polish audience. I always simply rewritten but laid out differently. tablishing himself as a restaurateur in Canada, advised that listeners wanted straight, The papers did have a use, however. he moved to Warsaw in 1992 and opened the Radio Cafe, a club for retired radio employees fact-based news and good music. Because the communist regime did not which showcases memorabilia from the station.

The Polish section always did this really deem it particularly essential, had little well – their programmes were very high toilet paper, and the daily news made I ended up working for Radio Free quality and well-focused on what mat- an adequate replacement!

The lack of alternative media meant Europe (RFE) after I was smuggled tered back home. In Poland people had out of Poland in 1955. Under the com- been told that jazz was capitalist - and that people had no idea what was really munist regime, it was a grim, hope- therefore evil - and that Coca Cola was going on. For example, the first time less place with no future at all. Before poisoned to make people subservi- I ever heard of someone being detained I escaped, I lived in an orphanage and I ent to capitalism, so getting the truth was only a few weeks before I escaped. dreamt of America every night. I spent across was very important.

A girl I was seeing, Elżbieta, told me her two great years there after World War father, the famous resistance fighter and Zamość aristocrat Jan Zamoyski, II, when my father worked at the UN. A young “Huligan” After three years living in The Hague Munich was a memorable place. The job had been arrested the year before on - where he was the Polish ambassador paid well and I got to know a lot of the trumped-up charges of collaboration to the Netherlands - he was killed in station’s journalists, editors and tech and espionage. I was shocked. Talking a car accident in 1950 and I returned crew from all of the different sections. was dangerous. I really don’t know how to Poland. In the summer of 1955, over Most of my colleagues were twenty my mother survived; she was a very 30,000 kids came from all over the years older than me, but they spoiled intelligent and well-educated woman world for the International Festival me: they took me for weekend walks who struggled to hold her tongue! of Youth in Warsaw. It was far too in the mountains and affectionately These times seem an age ago now, but many for the authorities to be able to nicknamed me “Huligan” because I don’t where I’d be without the station. deal with. I could speak fluent English ofmy age. Munich was a great place to Having escaped, I had no qualifications, from a young age and I made friends be a 19-year-old – I shared a flat with no job and I knew no-one. Without the with some students from Cambridge Michał Tyszkiewicz, the diplomat and work and connections that RFE gave University. After two fun weeks with songwriter who had helped evacuate me, my life would have turned out conthem, the Festival ended, and they Polish children from the USSR as part siderably different! by Liam Frahm of Anders’ Army in World War II. One agreed to help smuggle me out.

The initial plan was to dye my hair afternoon, a boss at Voice of America’s black and glue a false photo onto one of Polish section took me for lunch and their passports - he would then pretend asked me to broadcast on his station. I to have lost his. Thankfully we couldn’t refused outright. I didn’t want to risk my find a photographer, because the plan family. He said I was overreacting and would never have worked. My hair was that he’d never heard of the relatives of already dyed black though! Instead, an escapee being put in danger. That on the long train to West Germany, was because no-one escaped, I said.

I was stowed away on a luggage rack.

It was very risky to be associated I’d travelled like that before because with western radio back home - listenPolish trains were so cramped. I hid ing carried a ten year prison sentence, under rugs and coats, while one of the party - a literature student called Bridget Haines - lay on top, moaning and pretending to be ill. It was stiflingly hot and I could barely breathe. When we reached Cheb, on the Czech-West German border, I was soaked in sweat and half-dead. After sneaking between carriages and hiding in the train toilet, Bridget managed to slip me one of the group’s passports and somehow I got through the border check. When we

69

culture & history

Radio Free Europe's key role

in challenging state propaganda made it a major target for communist intelligence services.

Andrzej Czechowicz, a Polish operative who famously infiltrated the station in the late 1960s, gathered extensive information on personnel, photographing thousands of sensititive documents before returning to Poland in 1971.

70 Culture & History

It happened in... January 20 January 1977: Zbigniew Brzezinski is appointed as National Security Advisor by US President Jimmy Carter

the big 'zbig'

Zbigniew Brzezinski:

photos: Jim Young (Reuters), Pete Souza (White House), U.S. National Archives and Records Administration

“What we need today is a shared understanding of the things that make our time unique.”

Zbigniew Brzezinski was born in Warsaw in March 1928, although his family originated from Brzeżany (now Berezhany, Ukraine).

As a young child, he lived in both early Nazi Germany and Stalin’s USSR due to his father’s diplomatic postings. In 1938, his father was appointed as consul general in Montreal and, following World War II, he obtained a BA and MA from Montreal’s McGill University, before going on to earn a Ph.D. from Harvard.

He became a US citizen in 1958 and continued teaching, while also becoming a prolific foreign policy writer and advisor for the Democrat party. After completing his tenure as National Security Advisor, Brzezinski returned to teaching, but remained active in foreign policy analysis until his death.

Following

Jimmy Carter's success- the People’s Republic of China (PRC). ful election campaign in 1976, Zbigniew Such efforts are embodied by the US’s Brzezinski, Carter’s principal foreign decision in 1979 to acknowledge the policy advisor, was appointed National PRC as ‘China’, rather than the TaipeiSecurity Advisor on 20 January, as based “Republic of China’’. the president’s administration offiEarlier this year, Brzezinski died cially began. Having previously served at the age of 89, leading to numerous as a counsellor to President Lyndon B. public tributes to his life and actions.

Johnson between 1966 and 1968, ‘Zbig’ Carter commended his career, statwas already an influential player in the ing that “one of the best things that foreign policy community. Together ever happened to the United States with David Rockefeller, he co-founded of America was having him in the the Trilateral Commission – a globally- forefront of shaping our foreign polfocused foreign policy think-tank – icy.” The former president added that serving as director from 1973 to 1976, Brzezinski was “the most brilliant perwhile also a long-standing member son that I have ever known.” Former US of the Council on Foreign Relations Secretary of State Madeleine Albright and Bilderberg group. Additionally, – mentored by Brzezinski – said that he Brzezinski worked at Harvard University was one of America’s “most important from 1953 to 1960, before switch- national security leaders – a man whose ing to Columbia University, where actions helped define American foreign he served until 1989. policy during the Cold War and whose As Carter’s National Security Advisor, ideas still influence policymakers today.”

Brzezinski faced multiple challenges She added that Brzezinski’s “public serduring his four-year tenure. Before his vice and relentless advocacy for US term had even begun, workers’ strikes leadership made America more secure had broken out in Poland, eventually and the world a better place.” leading to the Solidarity movement.

Brzezinski’s death also resoHis support for the Polish group was nated strongly in Poland. Witold Polish Foreign one aspect of his agenda on the USSR, Waszczykowski, while his advocacy of arming Afghan Minister, said that “the world has lost rebels against the invading Soviet an outstanding intellectual, an experiforces was another. Much of his efforts enced and effective diplomat, as well were spent on the SALT II negotia- as an honourable man and a proud tions, which aimed to reduce US and Pole.” President Andrzej Duda praised USSR production of nuclear weap- Brzezinski as “the voice of free Poland” ons. Although the treaty was signed in in the White House and remarked 1979, the Soviet invasion of Afghanistan that he had "greatly contributed to meant that it was never officially rati- both Poland and to the United States.” fied by the US senate. Additionally, Former Foreign Minister Radek Sikorski Brzezinski is known for his role in hailed him as “our statesman” and securing the 1978 agreement between one of the “most important voices for Israeli Prime Minister Menachem Begin a free Poland abroad.” Sikorski added and Egyptian President Anwar Sadat, that Brzezinski “acted as an advisor to solidify the Camp David peace and champion of the new democraaccords. He also helped the normalisa- cies on their way to re-joining Western tion of relations between the US and institutions.” by Liam Frahm

'One of the best things that ever happened to the United States of America was having him in the forefront of shaping our foreign policy’ - US President Jimmy Carter

Above: Zbigniew Brzezinski briefs President Jimmy Carter.

Left: Zbigniew Brzezinski shares a laugh with President Jimmy Carter aboard Air Force One.

Above: Zbigniew

Brzezinski (right) hosts Chinese leader Deng Xiaoping (centre) for a private dinner at his home outside Washington, DC. 30 January, 1979.

Left: Zbigniew Brzezinski with Soviet President Mikhail Gorbachev. President Ronald Reagan in the back. New York, 7 December, 1988.

Bottom: Former National Security Advisers meet with President Barack Obama.

Zbigniew Brzezinski on the right.

Washington, 2010.

Above: Brzezinski and Israeli Prime Minister Menachem Begin play chess during Camp David Accords.

9 September, 1978.

Right: Zbigniew Brzezinski testifying in Washington before the Senate Foreign Relations Committee.

1 February, 2007.

A sister’s gift of hope Poland Today spoke with director Anna Zamecka about her debut feature-length documentary, Communion.

In Poland,

which is predominantly Catholic, the First Holy Communion ceremony is an integral part of a child’s life. Anna Zamecka’s documentary Communion (2016) tells the story of 14-year-old Ola who, with a dysfunctional father and an absent mother, takes on the responsibility of preparing her autistic brother Nikodem for the ceremony, in the hopes of bringing the family together.

The film premiered worldwide at the 69th Locarno Film Festival where it won the Grand Prix of Semaine de la Critique 2016. The movie received more than 20 awards and is on the shortlist of feature-length documentaries for the upcoming European Film Awards.

photos: Przemek Dzienis, posters: www.full-metal-jacket.pl

What inspired you to make this documentary film?

‘I wanted to show autism not as a disability or a misfortune. Kids like Nikodem often have a kind of intense intelligence. They are free in a sense - they can allow themselves to behave in a way that we can’t because of societal norms.’

This story is related to my own experience and was inspired by my own childhood. Even though I’m from a completely different economic and educational background, Ola, the main protagonist, and I have a lot in common.

She is a 14-year-old child with adult responsibilities – just as I was. In Ola’s family, roles are turned upside down: she is the one who cares for her parents and for her disabled brother. Her own needs are pushed to the background.

How did you find your protagonists?

First, I met Marek, the father. I was thinking about making a short fiction film with a character similar to Ola at its centre. It had to be fiction because I didn’t know how to begin to look for real people who had experienced this similar situation.

I met Marek at the central train station in Warsaw whilst researching a completely different project. It was about Euro 2012 and I was filming tourists attempting to communicate with a ticket cashier who only spoke Polish. She was having a lot of trouble understanding a customer.

Suddenly one man from the line - Marek - approached the tourist and started asking him questions in German, then in English, then Spanish, Italian, Serbian, and other languages, wanting to know how he could help him. The tourist was French so Marek helped him buy his ticket. I was completely captivated

by Marek. I shyly approached him to

73

CULTURE & HISTORY

awards – Festival del Film Locarno (Critic’s Week Award) –P olish Film Academy Awards ORŁY 2017 (Best documentary of The Year 2016 plus 2 nominations for Best Editing and The Revelation of the Year for Directing for Anna Zamecka) – Warsaw Film Festiwal (Best Documentary Film) –D OK Leipzig (Young Eyes Award) –J ihlava IDFF (Silver Eye Award) –M insk IFF Listapad (Best Documentary Film) –B ratislava IFF (Best Documentary Film) –T rieste IFF (Best Documentary Film) –Z agreb Dox (Special Mention Award) –M an In Danger FF (Best Documentary Film) –O slo Pix Festival (Grand Prix Documentary Award) – Lubuskie Lato Filmowe (‘Brązowe Grono’ Award) –G dańsk DocFilm Festival (Grand Prix ‘The Gate of Freedom’ Award) –D OK Fest Munchen (SOS-Kinderdorfer Weltweit 2017 Award) – 9th International TRT Documentary Awards, Istambul 2017 (Grand Prix) – International Film Festival; It’s All True / E Tudo Verdade, Brasil 2017 (Grand Prix) – Off Camera Festival, Krakow 2017, (Award for the Best Producer’s Debut for Anna Zamecka & Zuzanna Król) – FilmPolska Festival, Berlin 2017 (Grand Prix) – Polish Section of Fipresci (Special Mention for 2016) –L ET’S CEE Film Festival, Vienna 2017 (Honourable Mention Award) –P olish Guild of Directors, Poland 2017 (Nomination for the Krzysztof Krauze Award for the Best Director 2016 for Anna Zamecka) – Ińskie lato filmowe (Best Documentary)

introduce myself and ask him how he The word “autism” never appears in knew so many languages. He told me the film precisely because Nikodem’s that he was a self-taught linguist. In condition is completely ignored by the 80s, he sold money to foreign tour- everyone around him. Really, the whole ists. In order to cheat them, he taught family is invisible to most of society himself to communicate in as many but especially in his case because no languages as possible. one acknowledges his condition. That’s But then, he started talking to because then they - the church, the me about his kids, Ola and Nikodem. school - don’t have to do anything about He spoke about them with such admi- it or deal with it in any way. It’s really the ration, particularly about Ola and how system and the people around him that he would never do anything without are failing him in the way that they never her, that she was his helper, a mother choose to deal with anything out of the to her younger brother. And all I was ordinary. All the potential Nikodem and hearing was a description of a child with other kids like him have is then wasted. adult responsibilities and it was very close to the topic of the short fiction What was the filming process like? film I was thinking about. A month later, The film was – to a significant extent I visited them in their house.

– based on a script. At first, I had trouble telling the story. There was no startOla is a young girl who took on ing point, no foothold. When I came up the responsibility of caring for the with Nikodem’s communion, everything household. What kind of message did seemed easier. It wasn’t even because you want to send to your audience? the protagonist was about to go through I wanted to talk about growing up a process; the communion turned out and the association of growing up with to be a good metaphor of Ola’s growing disappointments, sometimes pain- up to be an adult – it served as a preful ones – especially when dealing text to show her situation. In Poland, the with our parents. We see Ola grow- first communion sacrament is an occaing up – from a girl who believes that, sion for the entire family to meet and despite all obstacles, her family can integrate. I knew that Ola, who lived be united, to a teenager who accepts in the hope of bringing her mother the fact that it will never happen. back home, would use this event as Accepting one’s limitations is a neces- an opportunity for a family reunion. sary prerequisite for maturity. interview by Monica Zielinski

Autism is not widely talked about in Poland. Did the film open a dialogue about autism?

I wanted to show autism not as a disability or a misfortune. Kids like Nikodem often have a kind of intense intelligence. They are free in a sense - they can allow themselves to behave in a way that we can’t because of societal norms. I saw Nikodem as an artist or a ’prophet’, someone who knows a little more than the others. He hides inside a poetic world of his own – and from its depth, he makes the most acute comments. I didn’t want to evoke feelings of pity or compassion for Nikodem. He has a wicked sense of humour, something that is often dismissed in people with autism. He understands jokes - when he was acting up with the Catechism teacher, it was entirely planned by him - he was just having fun in what could otherwise be a stressful situation.

Anna Zamecka

lives and works in Warsaw, Poland. She studies journalism, anthropology and photography in the Polish capital as well as in Copenhagen and completes the Dok Pro Documentary Programme at the Wajda School. Communion (2016) is her feature-length debut.

74

EVENT rEViEw

MIPIM 2017 real estate faIr

The cutting-edge: Poland Today in Cannes For the third year in a row, Poland Today organised the Poland & CEE content at MIPIM, the world’s most important real estate event. Spread over two days, our programme in Cannes kicked off with a short film produced by Poland Today showing the country’s leading projects of the future. The first day asked the question, ‘Is this Poland’s golden age of development?’ and featured a panel of leading developers hosted by Richard Betts, publisher of PropertyEU. The youth and vitality of those leading the new generation of projects, whose vision is shaping Poland’s cities of the future, was clear to see.

Below, Stanislav Frnka, CEO Poland

of HB Reavis, talked about their Varso Place office tower, under construction in the centre of Warsaw.

Stanislav Frnka, H B Reavis CEO Poland, told how Warsaw city planners were bowled over by plans for Varso Place, the 140,000 sqm office tower grounded designed by world-renowned archi- For the third year in a row, tects Foster + Partners and local firm Poland Today organised Hermanowicz Rewski Architekci.

Meanwhile, Echo Polska Properties’ Rafał the Poland & CEE content Kwiatkowski described Towarowa 22 at MIPIM, the world’s most (working title), a joint project with Griffin Real Estate. He told how the 6.5 ha com- important real estate event. plex, in the early stages of pre-development in the Wola business district, will be the largest mixed use project in central Warsaw, but very different in design Poland. The new tower expanded Olivia and function to the others, providing Business Centre’s floor area from 73,000 entertainment, leisure and retail ballast sqm to 100,000 sqm. Warehousing also to the office-heavy area. stole some of the show: Robert Dobrzycki, CEO of Panattoni Europe, presented Echo Investment CEO Nicklas Lindberg the huge, state-of-the-art four-storey described the development at Browary European Fulfilment Centre for Amazon Warszawskie, a historic brewery com- near Szczecin, the latest in its projects for plex dating from 1846, as a revitalised the internet retailing giant. The project area where the capital’s folk can work, clearly demonstrates how advanced the shop, live and be entertained - not to Polish market is, with cutting-edge techmention drink the local beer brewed by nology now the norm. the renewed brewery. After, Bartłomiej Hofman, head of Immobel Poland, pre- The second day’s panel brought together sented CEDET, a 22,400 sqm Warsaw market leaders to discuss CEE region office-dominated scheme with some fundamentals and the question, ‘Polska retail, located on the site of the former & CEE: closer together or further apart?’

SMYK store, and keeping the core of that The discussion, moderated by Judi iconic design. He outlined how the design Seebus, Editor of PropertyEU magateam recovered the original architec- zine, and Wiktor Doktór, CEO of the Pro tural drawings and are reproducing them Progressio Foundation, was kicked off by using modern materials. Part of the origi- Jacek Jaśkowiak, Mayor of Poznań. He nal historic building – a modernist design showed off his city as a good example of built in the 1950s – is now protected, a city to invest in, with its low unemployafter some of it was tragically destroyed ment rate, well-educated people and a pro-European leaning. In terms of menin a fire decades ago. tality, he commented, the city is almost as Skanska Property Poland’s managing close to Berlin as it is to Warsaw. director Arkadiusz Rudzki shone a light on High5ive, Kraków’s new urban space, Ghelamco’s Jeroen van der Toolen said providing a dynamic exchange between the inflow of tenants had never been so Above, Jake work and social life and reviving the heart high in Warsaw as it is today. After Brexit, Jephcott of Olivia of the city. He particularly emphasised its people seem to be moving from Western Business Centre in talked the strategic location by the city’s main train countries to Poland at an accelerated pace, Gdańsk audience through station and its landscaped gardens, avail- he inferred. Another trend, he stated, is the company’s flagable to citizens and office workers alike. companies taking space in the centre ship Olivia Star Meanwhile, Olivia Business Centre’s Jake of the city at the expense of less central office tower Jephcott took the audience through Olivia areas. Warsaw, he claimed, has one of Star, the largest office project in northern the highest net take up rates in Europe,

Directly above, the City of Poznań was

one of the many Polish cities to exhibit in the substantial Polish area of the MIPIM exhibition space.

75

EVENT rEViEw

Left, Warsaw Spire

brought home the big prize for Poland with Ghelamco’s centrepiece winning the Best Office and Business Development category at the MIPIM Awards.

After the ceremony, Poland CEO Jeroen van der Toolen said, “I’m unbelievably happy because Poland won best office building worldwide for the first time.

We have a fantastic team, thank you very much to everyone for voting."

Left, Bartłomiej Hofman of Immobel

Poland presented CEDET, the office project with a touch of retail in the iconic former Smyk building.

MIPIM is

renowned for its ‘evening networking opportunities’ at the many hotels and restaurants in Cannes.

Right, Arkadiusz Rudzki, Manag-

ing Director of Skanska Property Poland, presented the company’s key office scheme in Kraków, High5ive.

Far left, Nicholas Lindberg, CEO of

Echo Investment, talked about the revitalization project that is Browary Warszawskie.

Left, Robert Dobrzycki, CEO

Europe of Panattoni Europe, represented the warehouse & logistics sector during the CEE conference sessions at MIPIM.

76

MIPIM 2017 real estate faIr

EVENT rEViEw

Above, Richard Betts, Publisher of

PropertyEU, talks to Rafał Kwiatkowski of Echo Polska Properties about their retail project planned for Towarowa 22 in Warsaw.

despite the high Warsaw vacancy rate of around 15%. In centrally-located, newbuild schemes, he said, the vacancy rate was much lower. Finally, van der Toolen pointed out that companies are moving their offices from India and China to Poland and other CE countries. The cost is higher, but so is the quality of employees and quality of life, he said.

In business support services, Katarzyna Zawodna, from Skanska Commercial Development Europe, said the CE region has great professionals, with over three million new graduates each year from a combined population of over 80 million. This quality, as well as excellent R&D centres, quality of space, sustainability and overall well-being, will always attract investors and businesses to the region. In Warsaw’s office market, Maciej Tuszyński from Griffin Real Estate Top right, Jacek Zawodna claimed that rental levels are said that, while general commentary may Jaśkowiak, Mayor very competitive, which shows inves- be that the CEE markets and Poland in of Poznań, Jeroen van der Toolen, MD tors know buildings aren’t over-rented. particular carried certain political and CEE at Ghelamco, She also highlighted the large popula- tax risks, the actual reality is that the mar- Omar Sattar, MD at tion cities other than Warsaw in which kets have already adjusted to the situation. Colliers in Prague Skanska has invested greatly, with major Transactions are closing and investors, he and Maciej Tuszyński projects in cities all over the country, stated, were showing an even more ele- from Griffin RealEstate. including in Kraków and Gdańsk. vated appetite than usual.

Above, Ewa Łabno-Falęcka

of Mercedes-Benz talked about why the company decided to build its new engine plant in Jawor, Poland.

Right, Paweł Zelich,

Head of the Real Estate Investment Group at Noerr LLP law firm said that the legal community has played its part in supporting business development.

Mercedes-Benz’s Ewa Łabno-Falęcka talked about why they had decided to build their new engine plant in Jawor on 50 acres of land. The decision-making process, she pointed out, had started well before the parliamentary elections of 2015 and that the current government had, in their experience, been extremely attentive and helpful. Production at the plant, Mercedes’ first engine factory outside Germany, will begin at the end of 2019. The company considered 35 locations in seven countries before choosing Jawor. The decision was helped by its micro-high unemployment - the rest of Lower Silesia has a lower unemployment rate - and quality infrastructure, especially its proximity to the meeting point of the A4 and S3 highways.

Paweł Żelich, from Noerr law firm, put the panel - and Poland’s situation - in perspective. Despite some less-thanideal PR in the last year or so, he said, the country had done well from a business perspective. He underscored this by suggesting the legal community had played its part in supporting business development by keeping up with its legal needs and servicing it well. Furthermore, he stated that despite the recent legal developments, the legal environment had not really changed for the business community. Finally, Omar Sattar from Colliers International in Prague reminded everyone that CEE is a lot more than just Warsaw and Poland, and played the role of sparring partner to the other Poland-based panelists.

Below, Katarzyna Zawodna, from

Skanska Commercial Development Europe pointed out that the CE region has over three million new graduates each year.

Poland Today will once again organize the Poland & CEE conference content at MIPIM 2018 in Cannes.

To find out about taking part,

contact Richard Stephens at richard.stephens@poland-today.pl

78

Cee suMMIt 2017

Investing in New Europe

EVENT rEViEw

For two days in June, global investors and CEE market leaders from the real estate sector got together to discuss ‘New Europe’ and its impact on cities, sectors, development and capital markets. The conference kicked off with keynote speaker Professor Witold Orlowski, Chief Economic Advisor at PwC, who stated that CEE had regained its strength and was now able to take its rightful place at the heart of the European economy. He said, “We are going back to normality after the sharp deterioration under communism and then the upheaval of the financial crisis. Eighty years ago this region was an integral part of the European economy, and now it is regaining its rightful position.”

As part of a panel looking into the next big drivers for city investment, Michał Mieciński, Counsel at Linklaters, said, “What we are increasingly seeing, apart from traditional investments - offices, retail, logistics - is alternative investments, like student housing, REITS, coworking spaces, hotels and hospitality. In sourcing capital, we are increasingly seeing new investors in the market from Asia and South Africa.” Additionally, he suggested that Warsaw, Tricity, Wrocław, Prague, Bucharest and Budapest offer the best Above, Martin Sabelko, founder of HOI Ininvestment prospects for investors. After ternational and one of the most experienced the first day of proceedings had drawn to investors in the CEE region, gave a masterful summary of the conference and insight into a close, attendents were treated to a cock- regional investment dynamics. tail reception at the historic Szucha palace, kindly sponsored by Szucha Premium Offices, a CEE Summit partner.

The CEE Summit 2017 was organised

for the fourth year running by Poland Today and PropertyEU. The event features speakers from both inside and outside the CEE region.

photos: CEE Summit

The second day was opened by Maurits Cammeraat, Director of Professional Standards, INREV, who gave a keynote speech on what investors need to know about non-listed real estate funds, and Richard Divall, Head of Cross Border Capital Markets EMEA at Colliers International, who spoke about Global Capital Sources. Afterwards, Divall joined a panel discussing which sectors and locations offered the best returns in CEE. He said that infrastructure is one of the key factors governing decisions about where to invest, citing London’s Crossrail as an example of an infrastructure initiative influencing investors’ investment choices.

Asian capital, he went on to say, is looking to diversify from the UK into continental Europe, and there could be some benefits for CEE from this.

Commenting on whether there is too much in the Warsaw office pipeline, Robert Sztemberg, head of German lender Berlin Hyp’s Warsaw office, said that the supply issue should be seen in context.

“I’ve always seen the Warsaw office market as positive, and I still do. It is still a small market of just over five million metres squared in a country with a population of 40m. Compare that to Hamburg,

which has a similar – perhaps even smaller – population, yet three times the office stock.” Moreover, he noted, Poland is much more centralised around its capital than Germany. “Warsaw’s supply in the next three years doesn’t scare me,” he said.

Following a well-deserved coffee break, talk turned to whether or not the CEE could be a driving force for European logistics. According to Robert Dobrzycki, CEO Europe of Panattoni Europe, logistics is “the most attractive asset class going forward. Demand will stay strong.”

He added that Poland had already shown it can embrace innovation - Panattoni’s 67,000 metres squared Amazon warehouse in Poznań, Dobrzycki said, is “the most efficient Amazon building in the world.” Tomasz Kasperowicz, partner and director Colliers International, said, Above, Robert “The Polish market has never been bet- Dobrzycki, CEO ter in terms of attractiveness. It is doing Europe of Panattoni Europe, discussed extremely well, it has great potential the booming wareand is attracting a lot of interest from house & logistics investors. CEE does not have the vol- sector with his peers. ume or critical mass to be the driving force of European logistics yet, but we will get there eventually.”

Right, Professor Orłowski of PwC

answers a question from James Shotter of the Financial Times.

79

EVENT rEViEw

Right, Richard Divall MRICS, Head of

Cross Border Capital Markets EMEA, Colliers International, talked about the different types of investor on the global scene, and which are active in CEE.

Left, Michał Miecińśki Counsel at Linklaters, highlighted that the market is increasingly seeing alternative forms of investment such as student housing, co-working space and hospitality.

Left, Yolande Barnes, London-based

Director of World Research at Savills, gave perspective to global real estate dynamics by talking about new trends driven by the Millennials.

Above, Robert Sztemberg, Head

of Berlin Hyp Warsaw Office, Berlin Hyp, said he was not fazed by the office supply coming online in Warsaw.

Audience participation. Attendees

at the event were not shy in letting their voices be heard.

80

euroPean eConoMIC Congress In katowICe

Shedding light on Poland’s business climate

EVENT rEViEw

The ninth edition

of EEC attracted 9,000 people to the International Conference Centre and the ‘Spodek’ Arena in Katowice, Poland.

During the largest business conference in Central Europe, 132 sessions were held and over 800 speakers took part in the presentations and discussions.

For three days in May, experts from all over Poland and beyond came together in Katowice at the ninth European Economic Congress (EEC). Thousands of participants from many sectors - including real estate, infrastructure, energy, transport, banking & finance and health - gathered in the south of Poland for the three-day event. The programme included over 100 sessions on different aspects of the economy; yet, the common thread throughout discussion was the question: ‘What is the business climate in Poland?’

photos: European Economic Congress

To kick-start the congress, panelists discussed a ‘new capitalism’, especially the role of the private sector in the development of the market and the economy. Democracy, capitalism, state of law and citizenship society - the four elements that determine if a country develops, according to Przemysław Krych, Chairman of the Board at Griffin Real Estate, emphasising that capitalism is only a component part of development.

Mateusz Morawiecki, Poland’s Deputy Prime Minister and Minister of Economic Development and Finance, said strengthening higher education and rebuilding vocational training is a priority to ensure people are prepared for the workforce and in creating a better relationship between innovators and entrepreneurs.

From an investor’s perspective, Paweł Tynel, Partner at EY Poland, claimed (referring to Poland), “We have better predictability, more familiarity, and many companies are already relocating and developing here. This climate, looking from an investor’s perspective, is really hot.” Katarzyna Zawodna, President at Skanska Commercial Development Europe, said “Having returned from this year’s EEC, I am optimistic about the future of Poland and the region. Perhaps this optimism should be a bit moderate Europe faces some challenges that it must overcome - but still, let’s stay positive.”

The Congress

is an opportunity to strengthen the Polish economy and individual businesses as well as build economic relations in Europe and across the world.

81

EVENT rEViEw

Organisers of the EEC aim to define and describe trends that will shape the conditions for business activity in the near future and facilitate discussions to describe problems and propose solutions.

European politicians, representatives of the Polish government and Parliament (Sejm), and chairmen of the board of the largest companies, as well as entrepreneurs, experts and opinion leaders attended the three day event.

82

aBsl ConferenCe

The old world disrupted: smart technology and generational change

EVENT rEViEw

In June, Łódź hosted the eighth ABSL conference, with over 1,000 attendees flocking from around the world to the business service sector event. With expert speakers focusing on the challenge of change and its effect on markets, talent and leadership, a key theme throughout was the constant shifting of the balance of politics and the economy, and its direct impact on business.

David Cameron, Prime Minister of the UK from 2010 to 2016, was the keynote speaker, addressing crucial questions surrounding the future of Europe in a Q&A session moderated by the Financial Times correspondent Henry Foy. The session largely focused on relations between the UK and Poland, especially in business and possible resource relocation.

Additionally, the future of robotics and smart technology featured heavily. Aleksandra Przegalińska from MIT and Fujitsu’s Joseph Reger assured audience members that robots are not to be feared, but assimilated instead. The impact of the smart world was addressed

by Skanska’s Magnus Persson, who said being smart meant making everyday tasks simple and enjoyable by using intelligence, while JLL’s Tomasz Trzósło and Anna Bartoszewicz–Wnuk tackled the issue of reworking and retooling the work environment in light of tech-driven change.

David Cameron

photos: ABSL

discussing the future of Europe with Henry Foy. The former UK Prime Minister resigned in 2016, following the UK's vote to leave the EU. Cameron, who supported staying in the Union, spoke about Poland's role in Europe's future.

Generational change was also addressed, with speakers including Mercer’s Robert Baker and Zain Wadee from Randstad Sourceright discussing what was required as Millennials become the most prominent group in the labour market and how inclusion shapes companies and employees. Finally, Skanska Property Poland’s Arkadiusz Rudzki represented the real estate industry on the panel ‘Disrupt or be disrupted’, which discussed what companies need to do to seize the upside of disruption. by Liam Frahm

Building communities, fuelling economies and inspiring innovation

For two days in April, the Hilton Warsaw hosted the International Council of Shopping Centres (ICSC) European Conference, welcoming over 700 leaders in retail from 42 countries worldwide. Featuring 18 round tables covering every angle of the retail environment and guided retail tours around the city, the conference centred around the theme of “Building communities, fuelling economies and inspiring innovation.”

Retail professionals from around

the world flocked to Warsaw for the ICSC's flagship annual event.

Right: Bill Kistler, executive vice president and managing director, EMEA, of ICSC, opened the event

Affairs were kicked off by Dr Amlan Roy, Research Associate at LSE, who gave a keynote speech discussing the impact and risks of the last year on European economies. Focusing on a shifting world order, discontent with globalisation and a growing rejection of the status quo, Roy offered insightful demographic analysis of the changing economic, political and social trends influence the world’s retail environment.

The first day was brought to a close with the unique Howard Saunders, a Retail Futurist, who took the audience through a visual journey offering predictions for the fast-paced future of retail. He said, “I believe shopping is not only the engine of our economy, it’s the foundation of a thriving community. This isn’t some business to business thing, this is life.” Of particular focus was the impact that the future holds for communities, in addition to cities and high streets, and on the ‘experience’ of retail.

Proceedings were brought to a close

by Jean-Marc Jestin, Chairman of the Executive Board at Klépierre and John Strachan, Non-Executive Director at intu Properties, who gave their thoughts on the current economic environment in Poland, as well as their experiences in dealing with the everyday challenges they faced.

Notably, they gave an in depth focus on the political and consumer trends shaping retail real estate strategies today.

ICSC

EVENT rEViEw

ICsC euroPean ConferenCe

photos:

84

The event was a great opportunity to meet experts from the world of retail.

86

EVENT rEViEw

krynICa eConoMIC foruM

High altitude discussions

(Left) Polish Deputy PM Mateusz

Morawiecki and Vazil Hudak, Vice-President of the European Investment Bank sign deals worth some €1bn for strategic investement.

of Poland shares the podium with Giorgi Margvelashvili, President of Georgia

Right: Polish PM

Beata Szydło was given the Person of the Year award 2016.

Bottom right:

Viktor Yushchenko, President of Ukraine (2005-2010) and His Eminence Stanisław Dziwisz, Cardinal, Archbishop Emeritus of Kraków flank Polish PM Beata Szydło.

It’s the end of the summer, the kids are back at school and so it must be time for the Economic Forum in Krynica. This year, the annual event – which sees Poland’s political and economic elite overrun the small mountain resort town of Krynica Zdrój for three days – celebrated its 27th anniversary. Poland has seen political fortunes ebb and sway enormously in this time, but Krynica has deftly negotiated the often-treacherous political waters, always bobbing up to the surface to float with the current. A foolproof indication of the political climate is the winner of the ‘Person of the Year’ award. This year, Prime Minister Beata Szydło won. Last year, Hungary’s Viktor Orbán claimed the prize and the year before Jarosław Kaczyński, but former President of the European Commission José Manuel Barroso and Donald Tusk, former PM and current President of the European Council, were honoured during more EU-friendly times.

about €2.5bn and 60,000 new jobs. In addition, in the future, more and more SMEs will export. Morawiecki regrets that only 50% Polish exports come from production by Polish companies. Zygmunt An enormous array of topics is discussed Berdychowski, the organiser of the forum, during the event. This year, 344 panel commented: "When I listen to Morawiecki, sessions ran, covering the whole gamut I have no worries." Over the past 27 years including EU investment in Poland, Brexit, he has often heard that investors are leavhealthcare, Polish companies expand- ing Poland. But what happened was the ing abroad, artificial intelligence, hid- opposite. Poland has become increasden champions and terrorism. Krynica is ingly interesting for investors, regardless also the launchpad for new government of political rhetoric." ideas. Writing on 10 September, after the event, Frankfurt Allgemeine Zeitung One thing that Krynica did confirm is that, said: “In Krynica, superminister Mateusz no matter the shifting nature of political Morawiecki presented his plans for the fortunes, the ruling PiS party appears to reform of Polish economic zones: in ten be very firmly in control for the foreseeyears he expects additional income of able future.

photos: supplied by Krynica Economic Forum

Above: Andrzej Duda, President

88

EVENT rEViEw

BlastIng off together

Polish-Belgian Space Day fosters cooperation

Poland is a relatively new player in the representing the Belgian Science Policy The Polish Space Established in 1977, space industry but combining Polish Office and Paweł Szrot, Secretary of State Agency was founded the Polish Academy ambition and Belgian expertise, the in the Chancellery of the Prime Minister, in 2014 and is tasked of Sciences' Space with supporting PoResearch Centre two can become partners in a competi- also took part in the meeting. “Belgium land's space industry is dedicated to tive ecosystem. The first Polish-Belgian has cutting edge expertise. We do not pre- by obtaining funding research of terresSpace Day was held in Warsaw this tend to be the first but we are certainly not from the European trial space, the solar system and the Earth September. Hosted by the Polish Space the last and we can offer optimal solutions Space Agency and using space technolAgency, Belgian Science Policy Office and to many complex challenges,” said Taquet. promoting the everyday use of satellite ogy and satellite the Embassy of Belgium in Warsaw, the technology. techniques. event brought together 30 big names in Fifteen Polish companies and institutions, the space sector in order to facilitate coop- such as Asseco, Creotech Instruments, Association) and its affiliated companies eration between the two camps.

Hertz Systems, ITTI, Syderal Polska, showed off their specialisations. During PSNC (Poznań Supercomputing and their visit in Poland, Belgian representaThe official welcome address was given by Networking Center) presented their tives also attended a meeting at the headCol. Piotr Suszyński, POLSA Acting Vice achievements. On the Belgian side, eleven quarters of the Space Research Centre of President of Defense and Her Excellency firms, including SKY WIN (Aerospace the Polish Academy of Sciences where Colette Taquet, Ambassador of the Cluster of Wallonia) and its members they learned about the institute’s achieveKingdom of Belgium in Warsaw. Francois CSL, Sabca, Amos, Lambda-X and Sonaca ments and further opportunities for bilatXavier Thibaut, Space Program Specialist and the VRI (Flemish Space Industry eral cooperation.

90 impressions

Hold the Surówka Poland Today sits down with Ling Ding, a Chinese analyst in Warsaw, to ask her about living in Poland.

‘My neighbours wave to me and say ‘Dzień dobry’ every time they see me.

It’s so warm.’

Why did you decide to study Polish in China?

What was the hardest thing to adjust to when you moved to Poland?

It was totally accidental. I studied at the best university for linguistics in China, a crib for most of the Chinese diplomats. I had to study a language and my five options were Hebrew, Malaysian, Polish, Serbian or Spanish.

I chose Polish and I didn’t even know where Poland was.

The food - I tried ordering catered food at work and it’s just not my taste.

Western food is very bland – Chinese food is usually deep fried with lots of spices. Whenever I order at Asian places in Poland, I tell them I don’t want surówka - a Polish coleslaw - which they add as a side to every dish. Instead, I ask for double the rice.

What did you know about Poland before moving here?

I didn’t know anything about the country but I met some Polish students at university because they were studying Chinese. They were open, warm people. My only other impression of Poland was from watching the movie, ‘The Pianist’ with my grandmother. It’s a great movie but Warsaw was presented in a horrible state.

How closely did your preconceptions of Poland match your first impressions?

During my second year at university, I spent one year in Katowice and it was close to the Poland I imagined. I lived in a dormitory in a suburb and it was grey, near the woods and quite horrible.

When I traveled, however, I learnt that it’s not like that everywhere and Poland is changing rapidly.

In that case, what is your view on Warsaw?

Ling Ding is from Hangzhou, China and has

been living in Poland since 2012. She works as an analyst at a private equity investment fund in Warsaw. After graduating from the Beijing Foreign Studies University, she landed a job in Beijing. Since she studied the Polish language for four years at university, the company transferred her to a Polish subsidiary in Warsaw.

In infrastructure, I would compare Warsaw to a third-tier Chinese city.

Five years ago, there weren’t as many skyscrapers but now the city is changing so fast. In other European countries, things don’t change so rapidly – new buildings pop up, new roads are built and the maps are changing like crazy.

That’s what I love about it – you see the potential based on how things are changing – just like in China.

What are the most striking similarities between Poles and the Chinese?

In China and Poland, people care about you and invite you to their home to eat. That’s very warm and I don’t know if it’s like that in other countries. My neighbours wave to me and say ‘Dzień dobry’ every time they see me. It’s so warm.

What Polish thing do you wish they had in China?

I wish quality consumer goods in China weren’t so overpriced. Prices are honest in Europe, but if you go to a Chinese department store, the prices are crazy and I don’t know why. If you go to a department store here, clothing and shoes are so cheap. I wish there was honest market competition in China.

What Chinese thing do you wish they had in Poland?

I wish Poland would have the flexible mindset of the Chinese people. The Polish people that I have met are quite rigid – the rules are the rules. They don’t tend to break them, change them, or modify them. Chinese people would rather look for other ways around and sometimes it gets things done quicker.

What advice would you give to someone from China going to live in Poland?

I would tell them to be more social.

I have Chinese friends and we always stick together - that’s a very Chinese thing. If you really want to blend into society, you need to be more social with local people, not just the local Chinese people.

In what ways has Poland changed you for better or for worse?

I’m more relaxed in Poland and it's good mentally. In China, it's very different. The pressure is greater - you have to compete with 1.4 billion people. So, no matter what you’re good at, there are over a million people better than you. However, I think that this has also changed me for worse because if I have to go back to China, I'm worried that I will be too relaxed to compete with other people.

interview by Monica Zielinski