Poland Today magazine special supplement for Krynica Economic Forum 2016

What the head of PAIiIZ thinks about the challenges ahead for his agency. page 14

Time for Polska: Polish businesses need to pull together to develop a common strategy. page 18

Making a successful sale to Poland’s Mittelstand means understanding them. page 34

Q3 2016 supplement

Polska goes global

Poland has ambitions to become a force to be reckoned with in foreign trade

Sp e

Kr cia yn l s u Fo ica pp ru Ec lem m o e 20 no nt 16 mi for c

PRICE: 25 PLN / 7 EUR

photo: Marcel Clemens

page 10

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

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table of contents

editorial page

Poland in a nutshell

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Global media round uP

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All the facts and figures you need to know

A summary of news about Poland around the world Polska Goes Global

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When life Gives you aPPles…

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PromotinG Polish businesses abroad

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Winds of chanGe

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time for Polska

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Poland has ambitions to become a force to be reckoned with in foreign trade

The humble apple shows how Poland’s exports can adapt to the unexpected turns of international trade

Interview with Bartłomiej Pawlak of PAIiIZ about the challenges ahead for his agency

Moves are afoot to build a network of Polish chambers of commerce around the world

The whole is greater than the sum of its parts a tale of tWo cities

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the untaPPed Potential of WarsaW

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HB Reavis's Stanislav Frnka discusses the difference between developing in London and Warsaw

Harald Jeschek of Karimpol looks back at the last two decades of real estate development in Warsaw internationally enGaGed

Poland Today’s conferences, taking the Deputy Prime Minister to Cannes and bringing US mayors to Warsaw, show our foreign reach confident, indePendent and touGh

Making a successful sale to Poland’s Mittelstand means, above all else, understanding them

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The change in emphasis has been barely perceptible, but suddenly it’s out in the open. Many Polish businesses are no longer satisfied with confining themselves to Poland’s borders – they’re raring to put their products and services to the acid test of international demand. Whether this is because the country is now just too small, or Polish companies are bigger in their boots – in other words, a lot more confident - it’s the new state of affairs.

And where once the Polish establishment talked almost exclusively of attracting foreign investment into Poland, the new government is emphasizing the potential markets for Polish expansion abroad. In our supplement for Krynica Economic Forum - a taster for the full issue coming in October – we take a look at what lies behind this new attitude and talk to some key figures playing an instrumental role in its rise.

Founder & Editor, Poland Today

Poland Today Sp. z o. o.

ul. Złota 61 lok. 100, 00–819 Warsaw, Poland tel/fax: +48 224648269 mobile: +48 694922898, +48 602214603 www.poland-today.pl

Founder & Editor Creative Director Financial Director Business Development Director New Business Consultant International Client Director International Business Strategist

Richard Stephens Bartosz Stefaniak Arkadiusz Jamski James Anderson-Hanney Tomasz Andryszczyk Toby Hancock Ana Hermoso

Marketing & Communications Director

Sylwia Ziemacka

Contributing Journalists

Patrick Ney Liam Frahm Monika Zielinski

Photographs

Polska Agencja Fotografów Forum

Printing house © 2016 Poland Today Magazine reproduction without permission is prohibited

Richard Stephens

KF Partner Sp. z o.o. ul. Drogowa 4, 03-109 Warszawa

Magazine layout www.madeinPolska.eu

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in focus

general statistics

Poland in a nutshell

If you’re interested in further analysis

on a specific business or economic topic please call us on +48 505 029 696.

Geography: Poland, officially the Republic of Poland (Polish: Rzeczpospolita Polska), is a country in Central Europe, bordered

by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian enclave, to the north.

Population:

Total area:

Ethnic groups:

312,685 km2 120,696.41 mi2 69th in the world

Time zone:

CET (UTC+1)

Main river:

Vistula (1047 km) Oder (854 km)

History: The establishment of the Polish

Coat of arms:

The White Eagle symbol appeared for the first time on the coins made during the reign of Bolesław I (9921025), initially as the coat of arms of the Piast dynasty.

The eagle’s graphic form has changed throughout centuries. Its recent shape, accepted in 1927, was designed by professor Zygmunt Kamiński and was based on the eagle’s form from the times of Stefan Batory’s reign (1576-1586).

state is often identified with the adoption of Christianity by its ruler Mieszko I in 966, over territory similar in size to that of present-day Poland. The Kingdom of Poland was formed in 1025, and in 1569 it cemented a long association with the Grand Duchy of Lithuania by signing the Union of Lublin, forming the Polish–Lithuanian Commonwealth. The Commonwealth ceased to exist in 1795 as Polish lands were partitioned between the Kingdom of Prussia, the Russian Empire and the Austrian Empire. Poland regained its independence as the Second Polish Republic in 1918.

Two decades later, in September 1939, World War II started with the Nazi Germany and Soviet Union invasion of Poland (Molotov–Ribbentrop Pact). Over six million Polish citizens died in the war. The People’s Republic was declared in 1952 although Poland was a client state of the Soviet Union from 1944. During the Revolutions of 1989, the communist state was overthrown and democratic rule was re-established in the form of the “Third Polish Republic”.

Despite the vast destruction the country experienced in World War II, Poland managed to preserve much of its cultural wealth. There are currently 14 heritage sites inscribed on the UNESCO World Heritage list in Poland. Since the end of the communist period, Poland has achieved high rankings in terms of human development:

Higher education rate: 26.3% of adult population (2015, Eurostat)

Gini coefficient: 30.8

Life expectancy at birth:

men: 73.7 years women: 81.7 years (2014, Eurostat)

Fertility rate: 1.32 16th most equal in the EU (2014, Eurostat) (2014, Eurostat)

Human Development Index: 0.82

25th in the world (2014, United Nations)

GDP (PPP):

Total: $993 bn 19th in the world Per capita: $26,135 46th in the world (2015, World Bank)

researched and edited by Bartosz Stefaniak

GDP (nominal):

Total: $475 bn 23rd in the world Per capita: $12,494 53rd in the world (2015, World Bank)

Capital city:

Warsaw (1.74 mn pop.)

Main cities:

Kraków (0.76 mn) Łódź (0.71 mn) Wrocław (0,63 mn) Poznań (0.55 mn) Gdańsk (0.46 mn) Szczecin (0.41 mn) Katowice (0.30 mn)

Key dates:

Christianisation: Apr 14, 966 Kingdom of Poland: Apr 18, 1025 Polish-Lithuanian commonwealth: Jul 1, 1569 Partition of Poland: Oct 24, 1795 Duchy of Warsaw: Jul 22, 1807 Congress Poland: Jun 9, 1815 Independent Poland: Nov 11, 1918 Invasion of Poland, WWII: Sep 1, 1939 Communist Poland: Apr 8, 1945 Republic of Poland: Sep 13, 1989

38.5 million 6th in the EU 35th in the world (2011 national census)

Internet: .pl Phone: +48 Drives: on the right

Density:

123/km2 (320/mi2) 83rd in the world (2011 national census)

98.1% Polish 0.6% Ukrainian 0.2% German 0.2% Belarusian 0.1% Lithuanian (2011 national census)

Official language:

Polish

Law: the legal system has been developing

since the first centuries of Polish history, over 1,000 years ago. In 1791 Poland became the first country in Europe (2nd in the world) to adopt a Constitution as supreme law on its territory.

Constitutional Tribunal is the highest jurisdiction in today’s Poland. Court decisions can be appealed to the European Court of Justice in Strasbourg. The Republic of Poland recognizes also the International Court of Justice.

Political system: a parliamentary representative democratic republic, whereby the Prime Minister is the head of government of a multi-party system and the President is the head of state. Executive power is exercised by the Council of Ministers. Legislative power is vested in both the government and the two chambers of parliament, the Sejm and the Senate. The Judiciary is independent of the executive and the legislature.

Administrative order: Poland is a unitary

state. After the 1999 administrative reform, it is now divided into 16 provinces (voivodships), 380 districts (powiat) and 2479 local government communities (gmina).

President:

Prime Minister:

Next presidental election: 2020

Ruling party:

Andrzej Duda

Beata Szydło

Prawo i Sprawiedliwość

National defense:

Next parliamentary election: 2019

Memberships:

National parliament:

Army: 100,000 (professionals) Yearly defense budget: $10.5 bn (2016) Scheduled equipment purchases: $41 bn

UN, United Nations (1945) EU, European Union (2004) NATO, North Atlantic Treaty Organization (1999) WTO, World Trade Organization (1995) IMF, International Monetary Fund (1986) Schengen Agreement (2007) G6, Group of Six (2006) Council of Europe (1991) OECD, Organisation for Economic Co-operation and Development (1996) OSCE, Organization for Security and Co-operation in Europe (1994) Visegrád Group (1991) Weimar Triangle (1991) EEA, European Economic Area (2003) CBSS, Council of the Baltic Sea States (1992) IEA, International Energy Agency (2008) IAEA, International Atomic Energy Agency (1957) ESA, European Space Agency (2012)

Sources: National Statistics Office (GUS), National Bank of Poland, Min. of Finance, Min. of Economy, Min. of Employment, 2011 national census, Warsaw Stock Exchange, Eurostat, World Bank, United Nations, OECD

460 members (female deputies: 27%)

Political parties:

PiS: 234 seats (50.8%) PO: 134 seats (29.1%) KUKIZ: 36 seats (7.8%) Nowoczesna: 30 seats (6.5%) PSL: 16 seats (3.4%)

Number of Polish deputies in the European Parliament:

51 seats (6,76% of total)

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993 960

857

898

931

in focus

794 688

730

643 577

Currency:

Currency exchange rates:

Polish Złoty (PLN)

EUR: 4.30 (y/y+1.6%) USD: 3.81 (y/y +4.5%) GBP: 5.04 (y/y -12.1%) CHF: 3.95 (y/y +1%) JPY: 3.80 (y/y +22%) (Aug 25, 2016, National Bank of Poland)

Interest rate:

Aug 2016: 1.50% Jul 2016: 1.50% Jun 2016: 1.50% May 2016: 1.50% (National Bank of Poland)

usD billions

527

Working time:

Average salary:

Workforce productivity:

Minimal salary:

$29.9/hour (2014, OECD)

1850 PLN gross (Jan 2016, Ministry of Employment)

Nominal GDP (PPP): free float of the national currency helped the country maintain development even in the middle of the global crisis. (World Bank)

Total employment:

Main tax rates:

GDP (PPP) per capita in relation to EU28 average: 2004: 49%; 2015: 69% (Eurostat)

Mar 2016: 6.8% Feb 2016: 6.8% Jan 2016: 6.9% Dec 2015: 7.0% (Eurostat)

498 419

443

av. 1963 hours per year 7th place in OECD 2nd place in EU (2015, OECD)

460

01 02 03 04 05 06 07 08 09 10

National bank governor:

CPI Inflation (y/y):

National bank reserve:

prof. Adam Glapiński

Jul 2016: -0.2% Jun 2016: 0.1% May 2016: -0.1% Apr 2016: -0.2% Mar 2016: -0.5% Feb 2016: -0.6% Jan 2016: -0.5% Dec 2015: -0.5% (National Statistics Office)

Jul 2016: €98 bn Jul 2015: €90 bn Jul 2014: €77 bn Jul 2013: €83 bn Jul 2012: €82 bn Jul 2011: €75 bn Jul 2010: €71 bn (National Bank of Poland)

International rating:

Fitch: AMoody’s: A2 S&P: BBB+ (Aug 2016)

Foreign direct investment in Poland:

Inward stock: $213 bn Inflow in 2015: $7.5 bn (2015, United Nations)

Polish direct investment abroad:

Outward stock: $28 bn Outflow in 2015: $3 bn (2015, United Nations)

WIG20 blue chip index change:

2015: -20% (1859 pt) 2014: -3% (2315 pt) 2013: -7% (2400 pt) 2012: +20% (2582 pt) 2011: -22% (2144 pt) 2010: +15% (2744 pt) 2009: +33% (2388 pt)

imports (€ billions): 71

81

101

120

142

108 134

153

154

157

168

175

exports (€ billions): 60

71

88

102

116

98

120

137

143

155

166

179

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05

06

07

08

09

10

11

12

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Foreign trade balance: Poland’s economy plays an important role in the chain of supply of many global companies. A significant part of imports are capital goods needed for industrial retooling and for manufacturing inputs, rather than imports for consumption.

Poland is also highly dependable on external fossil fuel suppliers. The current economic slowdown in Europe combined with the free float of Polish currency is exerting a major influence on Poland’s foreign trade.

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17.4 million people (2015, OECD)

1990-2015 GDP per capita (PPP) change: +337% (World Bank)

Unemployment:

percents (Y/Y)

Economical overview: after 25 years

of constant economic growth, Poland with a GDP (PPP) per capita of $26,135 is recognized as a high income economy. It is the biggest economy in Central Europe, the sixth largest in the EU and, according to different sources, 20th to 25th in the world. It is also one of the most dynamic economies on the globe. According to the United Nations Statistics Division, Polish GDP (PPP) rose from $228 bn in 1990 to $993 bn in 2015. During the ongoing crisis, Poland was the only member country of the European Union to have avoided a decline in GDP. In 2015 Poland’s GDP was 36.1% higher than in 2008, a peerless performance among all EU 28 countries.

Poland is also home for the biggest and most dynamic stock exchange in Central Europe.

According to Deloitte’s CE TOP 500 survey, four of the 10 biggest companies in Central Europe are Polish.

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3.6

Paweł Szałamacha

5.0 3.5

PIT, personal income: 18% (below zł 85k/y) 32% (above zł 85k/y) CIT, corporate income: 19% (flat tax) VAT, value added: 5%, 8%, 23% (Ministry of Finance)

Minister of finance:

7.2 6.2 5.1

4252 PLN gross (y/y +5%) (Jun 2016, National Statistics Office)

3.9

3.7

3.3

10 year government bonds (PLN) interest rate:

3.6

2.6 1.6

1.2 1.4

01 02 03 04 05 06 07 08 09 10

11

12

1.3

13

2.5% (Aug 2015, Ministry of Finance) 14

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GDP growth rate: Poland’s GDP figures since

Public debt:

Warsaw Stock Exchange:

Balanced budget amendment:

the mid-90’s have varied greatly but, crucially, they have never gone into negative growth.

While serious challenges remain, the figures are a testament to those who set the course of the economy during and immediately after the transition from communism to a freemarket economy. (World Bank)

Listed companies: 486 (53 foreign) Total capitalization: €219 bn Capitalization of foreign companies: €104 bn Number of IPOs: 23 (2013), 28 (2014), 30 (2015) Number of investment accounts: 1.5 mn 2015 total stock sales: €48 bn 2015 average stock sale per session: €191 mn (Jun 2016, Warsaw Stock Exchange)

Exports by sector:

Imports by sector:

Exports by destination:

Imports by origin:

Food and beverages: €18.5 bn (11.2% of total) Industrial supplies: €45.2 bn (27.2% of total) Fuels: €6.4 bn (3.9% of total) Capital goods: €27.0 bn (16.3% of total) Transport equipment: €31.3 bn (18.9% of total) Consumer goods: €36.7 bn (22.2% of total) (2014, National Statistics Office)

Developed countries: €139.3 bn (84.1% of total) Developing countries: €14.3 bn (8.6% of total) OECD countries: €133.5 bn (80.6% of total) European Union (28): €128.4 bn (77.5% of total) CEE countries: €12 bn (7.3% of total) Germany: €43.6 bn (26.3% of total) Czech Republic: €10.7 bn (6.5% of total) United Kingdom: €10.5 bn (6.4% of total) France: €9.2 bn (5.6% of total) (2014, National Statistics Office)

2015: 51.3% GDP 2014: 50.5% GDP 2013: 56.0% GDP 2012: 54.0% GDP 2011: 54.4% GDP 2010: 53.3% GDP 2009: 49.8% GDP 2008: 46.6% GDP (National Statistics Office)

Budget deficit:

2015: 2.6% GDP 2014: 3.3% GDP 2013: 4.0% GDP 2012: 3.7% GDP 2011: 4.9% GDP 2010: 7.5% GDP 2009: 7.3% GDP 2008: 3.6% GDP (National Statistics Office)

Poland’s constitution (adopted in 1997) caps public debt at 60% of GDP - the government cannot take on any financial obligations that would cause that limit to be exceeded.

To ensure this level is never breached, Poland has a self-imposed debt threshold of 55% of GDP, and the government must take action to balance the budget once this level is exceeded.

Food and beverages: €11.9 bn (7.1% of total) Industrial supplies: €55.1 bn (32.7% of total) Fuels: €20.2 bn (12.0% of total) Capital goods: €36.6 bn (21.7% of total) Transport equipment: €22.0 bn (13.1% of total) Consumer goods: €22.1 bn (13.2% of total) (2014, National Statistics Office)

Developed countries: €110.9 bn (65.9% of total) Developing countries: €37.6 bn (22.3% of total) OECD countries: €112.7 bn (66.9% of total) European Union (28): €99.5 bn (59.0% of total) CEE countries: €19.8 bn (11.8% of total) Germany: €37 bn (22.0% of total) China: €17.5 bn (10.4% of total) Russia: €17.3 bn (10.3% of total) Italy: €9.5 bn (5.6% of total) (2014, National Statistics Office)

Exports dynamics: Developed countries: +11.8% Developing countries: +18.3% (2011/2010, Ministry of Economy)

Imports dynamics:

Developed countries: +10.7% Developing countries: +15.1% (2011/2010, Ministry of Economy)

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DW News (Germany) Warsaw given constitutional crisis deadline

in focus

Time for Polska

photos: Andrzej Strzałkowski, URSUS, Wojciech Pacewicz (Forum), Zbigniew Komorowski (Forum)

For decades, Polish businesspeople have worked steadily behind the scenes to arrive to a point where it is their time to shine on the main stage of international stage. With a little nudge and some much-needed team spirit, this nation is destined to succeed, whatever comes its way. see page 18

Global news review

Reuters (UK) PGE invests to meet emission reduction regulations

Europe:

In order to meet EU emission reduction targets, PGE, Poland’s biggest power producer, has estimated that upgrades to its power stations will cost up to 1.8 billion złoty ($471.96 million) by 2020. Poland’s power stations have to be upgraded in order to meet the requirements set by the Industrial Emissions Directive (IED), which come into effect in 2021. One lobby group focused on power companies has estimated that the total cost of improving Poland’s power stations could be up to 12 billion złoty ($3.03 bn).

Following alleged democratic breaches made after the ruling Law and Justice (PiS) government came to power last October, the European Commission has set a three-month deadline for Poland to reverse changes made to its Constitutional Tribunal. Such a procedure is unprecedented within the EU, and as such, the penalties and the EU’s willingness to implement them remain unclear. One potential fate that Warsaw may face is the suspension of its voting rights in the EU’s central decision-making body, the European Council of Ministers.

Kallanish Energy (UK) Ministry of Energy announces plans for Poland’s first nuclear power plant

“Currently, the Energy Ministry is preparing a programme for the construction of the first nuclear power unit with a capacity of roughly 1,000 MW, which will be built in the next 10 years,” Krzysztof Tchórzewski, energy minister, said in a statement. The Polish government said that “modern, high-efficiency and lowemission coal-fired power plants” remain the basis for Poland’s energy security. However, it appears that nuclear energy may also help to meet the country’s growing electricity demand with two locations, Lubiatowo-Kopalino in Choczewo and Żarnowiec in Gniewino and Krokowa (both in the north of the country), currently being considered. In addition to five coal-fired power plant projects planned or currently underway, Poland needs three additional coal-fuelled plants to meet present energy demand, according to the ministry.

Sputnik News International (Russia) Poland maintains Kaliningrad border controls

Temporary restrictions on the PolandKaliningrad border were introduced by Poland because of the NATO summit, hosted in Warsaw on July 8-9, and World Youth Day, held in late July. However, by the beginning of August, the border controls to the Russian exclave had yet to be removed, with the government citing security reasons. Krzysztof Szczerski, adviser for Foreign Affairs in the Presidential Office, said: “As we see it, when the situation is re-evaluated and there are no [security] assumptions, the situation will change.” This position was echoed by Interior Minister Mariusz Blaszczak, who said that movement would be resumed when “the causes that related to the security of the Polish state disappear”.

New Europe (Belgium) Polish government attempts to address foreignexchange loan risks

A special working group has been assembled by the Polish president, including members of the central bank, finance ministry, financial market watchdog and Bank Guarantee Fund. The focus of this group is to draft solutions in order to help banks restructure their FX loan portfolio, through agreements between banks and clients. In early August, Poland offered bank inducements to help more than half a million struggling home owners transfer their costly Swiss-franc mortgages into złoty.

Offshore Wind Journal (Online) Poland's first offshore windfarm given green light

Polenergia has secured a permit for its Baltic Środkowy III offshore windfarm, making Poland's largest privately-owned energy group the first group to secure such a permit. Jacek Glowacki, head of the company, said “Polenergia as an energy group is diversifying its activity in conventional energy and renewable energy.

One pillar of the company's development of renewable energy is windfarm projects in the Baltic. Obtaining the first environmental decision for an offshore windfarm in Poland is a critical milestone in the development of these projects.”

With construction touted to begin in 2019, the windfarm is projected to be one of the largest offshore windfarms in the Baltic Sea with an initial capacity of 600 MW.

Telecompaper International (The Netherlands) Polish internet users hits 25 million

In July, the number of internet users in Poland reached 25.2 million according to a Gemius/ PBI survey, up from 10.6 million in 2005. The report also showed that PCs were used by 22.9 million Poles while mobile devices, including smartphones and tablets, were used by 17.6 million, suggesting that internet users commonly accessed online content from both types of devices. The top 10 domains used by internet users were google.pl, facebook.com, youtube. com, google.com, onet.pl, allegro.pl, wp.pl, wikipedia.org, olx.pl and interia.pl. This comes as an OnAudience report highlights Poland as a European leader in internet users blocking advertising, with 42 percent of total users using advertisement-blocking software. According to Telko.in, Poland is followed by the UK with 38.85 percent and Norway with 38.5 percent of users blocking internet advertising. Some 200 million users are estimated to block advertising in browsers, with AdBlock, the most popular software in the category, used by over 40 million internet users.

The Calvert Journal (UK) World’s first Pokémon GO tournament held in Warsaw

Organised by Vistula University, the Vistula Cup competition was held in Warsaw with a top prize of free tuition at the private university and two runner-up rewards of reduced admission fees for one semester of study at any faculty of their choosing. Pokémon GO was released earlier this year and uses the phone’s GPS capability to locate, capture, train and battle virtual Pokémon. The game has proved to be a massive hit in Poland, with Warsaw alone far outranking Berlin, Lisbon and London in “PokéStops”, places which allow you to collect items in game. According to the contest’s initiators, “the number of app users exceeds even such giants as Facebook, Instagram, Twitter and Snapchat. The game breaks records in Poland”.

Americas:

USA Today (USA) United States to deploy extra battalion in CEE

At the NATO Summit in Warsaw, President Obama announced a movement of troops, saying American soldiers would “serve shoulder to shoulder with Polish soldiers”. A 1,000-strong battalion is being deployed in addition to an armoured brigade, which will be continuously rotated and based out of Poland. “Poland is going to be seeing an increase in NATO and American personnel and the most modern, capable military equipment, because we will meet our Article 5 obligation to our common defence,” President Obama said at the Summit.

The addition of the armoured unit will bring American military presence in the region to three combat brigades, each consisting of roughly 4,200 men.

Asia/pacific:

News.com.au (Australia) Treasure hunters start Nazi gold train dig

Amateur enthusiasts Piotr Koper and Andreas Richter, who unleashed a storm of speculation last year after claiming they had found a lost Nazi armoured train buried in the mountains of Poland, finally began their dig in early August. Despite their initial anonymity, the pair later went public with their alleged find, fuelling speculation that they had found a Nazi train laden with treasures from Jewish gold and Russia’s lost “Amber Room”.

Last August, the pair lodged a claim with Wrocław district government to guarantee a 10 percent cut of any find.

Vietnam.net (Vietnam) Vietnam highlighted as promising market for Poland

As part of a new Polish trade promotion effort, Vietnam has been designated as one of five key markets for Poland. According to Mariusz Boguszewski, Economic Counsellor and Head of Commercial & Development Cooperation at the Embassy of Poland in Hanoi, “this places Vietnam at the centre of a long-term Polish effort to deepen the bilateral trade relationship in the near future.” Although Vietnam remains a net exporter, with over $1.5 bn worth of Vietnamese goods imported in 2015, Poland’s bilateral trade relationship with the country is rapidly developing. As of the first half of 2016, Vietnam is Poland’s primary trading partner in ASEAN and seventh largest among nonEuropean countries, after the US, China, India, Turkey, Japan and South Korea

Africa:

IOL News (South Africa) Echo Polska Properties to list on Johannesburg Stock Exchange

The retail property fund plans to raise around €100 mn via a private placement before listing on the main board of the JSE next month.

The fund, in which the listed Redefine Properties has a 49.9 percent shareholding, is aiming for a dual listing on the Luxembourg Stock Exchange as well as the JSE. Hadley Dean, chief executive of EPP, said that the main mission of the company was to deliver sustainable double digit annual growth in distributions a share, and that Echo Investment, a 25 percent shareholder in EPP, was a strong partner for the fund. Echo Investment is backed by Griffin Real Estate, which holds a 65.99 percent shareholding in the company.

Barack Obama: “Poland is going to be seeing an increase in NATO and American personnel and the most modern, capable military equipment, because we will meet our Article 5 obligation to our common defence.”

The Citizen (Tanzania) Poland to finance Tanzanian tractor factory

According to Dr Adelhelm Meru, Tanzania’s Permanent Secretary in the Ministry of Industry, Trade and Investment, the construction of the factory, expected to be built in Kibaha in the east of the country, would start before the next financial year. “The construction will start soon and we expect to produce about 2,400 tractors annually for local consumption and sell to other East African countries,” he said at the Tanzania-Poland Business Forum. The Tanzanian government confirmed that it had secured a $110 mn soft loan from the Polish government, while Polish firm Ursus S.A. agreed a contract with the Tanzanian National Service economic wing, SUMA-JKT, for the supply of tractors and development of assembly plants.

Ready for action. Paratroopers from the 173rd Airborne Brigade Combat Team disembark a plane while taking part in the Anakonda military exercises on Polish territory in 2016, which saw the participation of more than 30,000 troops, of which 13,000 from the US.

compiled by Liam Frahm

10 leader

2002

Exports: €43 billion

Polska goes global Poland has lofty ambitions of becoming a force to be reckoned with both in terms of foreign trade and attractiveness to investors from overseas.

2003

Exports: €48 billion

2004

Exports: €60 billion

2005

Exports: €71 billion

The country is of course almost unrecognisable

Richard Stephens

founded Poland Today in 2012 to help bring Poland to the world and the world to Poland. He has a degree in Theology and Religious Studies from Bristol University in the UK.

from the place it was in the heady days of the early 1990s, when the free market – back then still very much a new concept – was booming. For decades Poland, wedged tightly behind the Iron Curtain, had been forced to watch as others in the region expanded their economies. For the last few years, however, it’s been Poland's turn to shine – and the country’s businesses now have their sights set firmly on international horizons.

The forecast is good. Polish exports will continue rising steadily over the coming years – by 6.9 percent so far this year, with 2017 and 2018 seeing growth of 9.6 percent and 9.0 percent respectively, according to analysts at Bank Zachodni WBK, the Polish arm of Santander. These figures are especially promising, the bank emphasises, as last year’s figure was 7.8 percent and 2014 saw 7.0 percent.

“All sectors will see a rise in export figures,” Feliks Bentkowski, BZ WBK’s Sectoral Credit Director, wrote in a statement, adding that well-known Polish exports will certainly experience an increase, while “some less obvious” industries will also profit. In first place, according to a growth-potential ranking compiled by the bank, is the furniture and furniture-accessory (such as hinges, locks etc) industry, with 75 points out of a maximum 100. The sector is no newcomer to being a star of Polish exports. “Foreign sales of this industry have been growing rapidly for many years. In 2015, growth in the sector amounted to 9.6 percent year-on-year to a value of 42.2 billion złoty,” the bank said. There is a large global appetite for Polish furniture, with many producers exporting beyond the European Union to the US, Canada and China.

Furniture – sitting on its laurels?

For more information

about Polish trade balance as well as other statistics covering Polish economy, go to page 6

But is there room for further growth? Ignacy Morawski, an economist at WiseEuropa, says that despite booming sales, what Poland lacks is a design identity for its furniture. “Poland used to have a very established aesthetic for its consumer products in the 1950s and 1960s. What today’s producers could do is take a page out of that book and reinvigorate some of those designs,” he said, explaining that doing so would increase the profits of products sold abroad. “At the moment Polish furniture is selling very well, but the margins are fairly small. Poland could increase its profits by selling trendier, cutting edge designs which appeal to a wealthier clientele,” the economist added. “In Scandinavia, this is established. Poland could learn a thing or two from them.”

The agricultural industry has long been a heavyweight of Polish exports, especially as it has gained heavily from EU

2006

Exports: €88 billion

2007

Exports: €102 billion

2008

Exports: €116 billion

subsidies and grants since Poland joined the European Union in 2004. And the funding is not drying up any time soon.

The inflow of money from the EU to Poland will increase in the 2014-2020 period, says the Polish Development Ministry.

The European Parliament has approved the budget, which will see Poland receive a total of €105.8 billion – the biggest beneficiary of EU funds, according to the ministry. Of this, €28.5 billion will go to Polish agriculture. (See box for an account of how Polish apples have shown their versatility).

Not all that glitters is gold Expansion is a positive thing, but it’s not always easy. Some new destinations might be hard nuts to crack. Experts say that as Poland looks for more markets further afield, risks rise exponentially. Far away markets involve difficulties which are more significant than when selling to EU countries. One of the most obvious problems is cost. The further away a target market is from Poland, the more expensive it will be to ship there, impacting on the bottom line. Different regulations from one country to the next, even between countries in the same region, can be a major headache for exporters, while cultural differences can exacerbate these problems even more. Businesses dipping their toes into the export game can be caught off guard. “Exporters do not always pay enough attention to these issues,” Robert Antczak, from BZ WBK, said. “And it is things like cultural differences which often determine the success, or failure, of attempts to establish or develop international business relationships.”

It often pays to find local experts to help navigate the murky waters of conducting business in a foreign market.

Rudradeb Mitra is a Poland-based consultant who assists companies in setting up shop in his native India. Polish businesses, he says, are keen to expand into such a large market and are often surprised to learn that Indians are quite affluent and the locals can afford top-shelf goods. In Mitra’s opinion, the lack of knowledge could be because of a deficiency of educational materials and conferences in Poland which prepare the groundwork for aspiring exporters.

Poland's Information and Foreign Investment Agency (PAIiIZ) now aims not only to assist foreign companies establish a foothold in Poland, but also Polish firms to expand their horizons. The agency conducts programmes targeting the four corners of the globe – including the Arctic region.

PAIiIZ acting president Bartłomiej Pawlak told Poland Today that the agency can help establish first contact, but success largely depends on the tenacity of individual businesspeople, wherever they find themselves in the world – and tenacity is

For the first time in its history,

Poland saw a trade surplus of €4 billion in 2015.

2009

Exports: €98 billion

2010

Exports: €120 billion

one thing that Polish companies have in large supply. “It is beyond doubt that if Polish enterprises apply their knowledge worldwide they will prove very successful. Furthermore, companies that place more focus on innovation and research & development, will enjoy a greater comparative advantage in business abroad,” Pawlak said. (go to page 14 to read the full interview).

In and/or out

2011

Exports: €137 billion

of Poland's GDP up from 27% in 2000.

Source: OECD

2012

Exports: €143 billion

‘Those who have followed Polish affairs over the last decade can attest to the fact that the country has a knack for knowing what it wants and where it wants to go.’

As Poland looks upon the world as its oyster, the world is also eyeing Poland and assessing its profit potential. In recent years the country has made significant inroads in appealing to foreign capital. According to EY’s Europe Attractiveness Survey 2016, Poland and Russia – somewhat counter-intuitively - were the top performers by FDI project growth in Europe overall, with an increase in market share of 61 percent and 60 percent respectively over the previous year. Although this result placed Poland firmly in the top five ranking in terms of growth, it placed 7th in terms of actual number of projects. Concerning manufacturing, Poland saw the creation of 117 projects in 2015, an increase of 34 percent over the year before, putting it in first position above Turkey, which had 105 projects. Foreign direct investment led to 19,651 jobs created in Poland in 2015, and while this figure put it in an impressive 2nd position in Europe after the United Kingdom, in terms of year-on-year growth between 2014 - 2015 it was, at 27 percent, dwarfed by several countries, most notably Hungary on 141 percent and Serbia on 108 percent. To put it into perspective, however, France only managed eight percent growth and Russia came in with -25 percent negative growth.

And FDI could also potentially experience a boost in the short to middle term if the country sees a rise in investments following Britain's decision to exit the EU. The United Kingdom comes second behind Germany as a destination for Polish exports, with the country importing a wide range of products, including home appliances, furniture and food.

Some experts believe that Brexit will result in a sharp drop in EU exports to the UK, although at present this is only an educated guess. As negotiations continue, EU and British author-

11

In 2014 exports represented 47%

leader

2013

Exports: €155 billion

2014

Exports: €166 billion

ities could introduce changes allowing Poland to still enjoy a profitable cooperation with the country. “The United Kingdom can remain in the European economic area, without a vote, like the Norwegians or the Swiss, but still enjoy the common market,” Piotr Soroczyński, chief economist of the Export Credit Insurance Corporation, recently told Polish Radio.

To whatever degree Britain separates itself from the rest of Europe, Poland could potentially steal some of the limelight from its more developed partner as companies weigh up the possibility of setting up a base outside the UK in another EU member country. Poland has many things going for it: a young and educated workforce, geographical proximity to many of Europe's major hubs as well as steadily developing transport infrastructure. WiseEuropa's Ignacy Morawski, however, doubted that companies will be leaving the United Kingdom in the near future, but agreed that Poland could offer an alternative for those seeking a stable base for growth within the European Union.

To return to the near-term forecasts. According to analysts at HSBC and Oxford Economics, in the years 2016-2020 Polish exports will increase by a total of 55 percent, at an average of 9.1 percent annually. Such dynamic growth, the authors say, will be possible thanks to the rapid intensification of trade with developing countries, especially in Asia, markets which have yet to be tapped. Those who have followed Polish affairs over the last decade can attest to the fact that the country has a knack for knowing what it wants and where it wants to go - and achieving its aims. It thus makes a mockery of the country's unfounded - but difficult to shake off - reputation during the second world war and into the cold war for romantic hot-headedness. In the 27 years since becoming a free market economy, Poland has developed a sophistication and understanding of the inner workings of the global economy that is nothing if not impressive. It has learnt the finer nuances of international trade through observation and is now ready and willing to become a fully active participant. And once it has set its eyes on the seven continents, the sky is very literally the limit. by Richard Stephens

2015

Exports: €179 billion

Main destinations for Polish exports in 2015:

Germany: 26.3% Czech Republic: 6.5% United Kingdom: 6.4% France: 5.6% Italy: 4.5% Netherlands: 4.2% Russia: 4.2% Sweden: 2.8% Hungary: 2.6% Spain: 2.4% Source: National Statistics Office (GUS)

Cumulative Polish direct investment abroad:

2000: $0.3 bn 2010: $16.4 bn 2015: $27.8 bn Source: United Nations

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When life gives you apples…

The humble apple has recently become a poster boy of the Polish export market and has shown how Polish industry can adapt and succeed when obstacles arise.

For years Polish apples were sent wholesale to countries in the east, particularly Russia. Following the imposition of EU sanctions on that country in 2014, ministry of agriculture officials looked good and hard at expanding its agricultural exports, travelling the width and breadth of much of the civilised world – to countries such as Morocco, Kazakhstan and Malaysia – trying to find new export markets for the Polish jabłko, as well as much more.

Poland is set to become the EU leader EU sanctions on Polish fruit exporters. in apple production in the near future, In August 2014, his Association wrote especially if current growth is sustained. a letter to then-agricultural minister “No other EU country has seen such warning that the embargo could result a rapid growth in apple production as in companies in the sector folding, leadPoland over the last decade,” accord- ing to thousands of job losses in the ing to Mariusz Dziwulski, an econ- industry. Two years later, Polish apple omist at BGŻ BNP Paribas, in an farmers are looking for new and exotic interview with daily business newspa- destinations for their apples. per Rzeczpospolita.

What Poles lack in options, they In 2015 Poland accounted for nearly make up for it in sheer determination. one in every three apples harvested If apples cannot be exported, there in the EU, head and shoulders above must be something to do with this fruit, the competition. Agriculture experts surely? The answer came in the shape of also expect this year’s harvest to be a a drink which has been a favourite tipbumper one due to positive weather ple of the British for centuries, but has conditions. Poland’s Central Statistical only recently found a foothold in Poland Office (GUS) forecasts 3.5 million – cider. The market for cider is growtons of apples to be picked this year, ing by 500 percent a year, according an increase of 10 percent over the pre- to Ambra, a leading Polish producer vious year, and as much as 70 percent and distributor of alcohol. Back in more than 2005 – a year after Poland 2012, London-based market researcher joined the EU. Euromonitor deemed Poland’s marBut the abundant harvests have ket for cider to be “negligible”, but by caused a headache for farmers who 2015, Poland has become a leader in the struggle to sell all of their produce. “If CEE region. Euromonitor now says that we were to drop the embargo with manufacturers “have been very active Russia […] which imported as many in terms of capitalising on the growas one million tons of apples from ing consumer interest and establishing Poland, we would not have any prob- recently launched products.” Although lems with what to do with this fruit,” this market is not earth shattering, and said Mirosław Maliszewski, president of will not single-handedly save Polish the Association of Polish Fruit Growers. apple exports, it is testament to a very Maliszewski was among the first to Polish attitude. When life gives you lemunderstand the potential losses of the ons… by Richard Stephens

‘In 2015 Poland accounted for one in every three apples harvested in the EU’

Thinking out of the orchard.

By turning apples into cider, Polish business people have shown that where there is a will there is a way.

photo: Viktorus

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Promoting Polish businesses abroad Interview with Bartłomiej Pawlak, acting president of the Polish Information and Foreign Investment Agency (PAIiIZ) about the challenges ahead of his agency.

How is PAIiIZ different to other entities dealing with investors and investment, such as WPHI, the departments of economy at the Polish Embassies, and PARP (Polska Agencja Rozwoju Przedsiębiorczości – the Polish Enterprise Development Agency)?

Bartłomiej Pawlak

The acting president of PAIiIZ, Pawlak took on the role in May 2016. Between 2005-2006 Pawlak was a member of the board of gas monopoly PGNiG. He earlier also worked at Ernst & Young, as well as Polish bank PKO BP.

abroad under the supervision of PAIiIZ. of contact for investors. They have to There is already one in Shanghai which deal with lots of people along the way works very well, focusing only on busi- – the ministries, the special economic ness. It helps Polish businesses in China zones, city and regional officials.

– and those which want to enter the There are two different elements to Chinese market – as well as Chinese the issue. Political power is one thing, companies intending to come to Poland. a one-stop approach is another. We However we will not create one dedi- don’t have political power of course, First of all, PAIiIZ will continue in its cated strategy for all foreign offices of and we are not the decision maker, but traditional role of helping foreign inves- PAIiIZ. Each will operate according to we collaborate closely with the governtors in Poland. We will, however, take the specifics of the local market. ment and we can support the invesa slightly different approach, and I will tor in its contact with local authorities. address this first if I may. For exam- Will these PAIiIZ offices abroad We can facilitate the investment by ple, we will favour investors which are be part of the embassy structure? bringing both parties to the table and more attractive for Poland – companies In Shanghai it is separate, with its help with finding solutions. It doesn’t which are innovative, technical, invest in own office overseen by PAIiIZ – it’s not mean that we can’t be the central instiR&D, engage with local universities, use part of the embassy structure, although tution that resolves all the problems Polish contractors and subcontractors, we collaborate with WPHI and diplo- of the investors, but we would rather impact positively on their local commu- matic structures if necessary. We would bring others to the table. I would like nity – that sort of thing. like to strengthen the team there and PAIiIZ to offer a much broader range Secondly, we want to support those enlarge its scale of activities. The aim of services and ideally tailor-made that are ready to invest in less devel- is to concentrate on businesses on a solutions for investors. oped regions of the country. Some micro level. We support Polish exportareas are already saturated with foreign ers looking for local partners, helping Does the political will exist to investment. We won’t stop anyone from them with certification, paperwork, allow PAIiIZ to do this? In the past, investing in these places, but we will documentation, legalities, consulta- different ministries were unwilling show them that there are other places tion, barriers etc. However, we do not to give it the degree of independence to invest in – such as eastern Poland do the kind of economic reporting that necessary to be more effective.

– and provide incentives to invest in i.e. is expected of the Ministry of Foreign This is not a matter of a political will, Lublin, Kielce, Olsztyn, Zielona Góra – Affairs or the Ministry of Economic but , rather it’s a matter of mutual undercities with big potential, but not so visi- Development of Poland. standing, the climate in the country and ble on the radar of investors. Sometimes the government’s treatment of business. investors ask us for advice as to where Deputy PM Mateusz Morawiecki It’s going in the right direction under they should locate, and we point out not wants to attract only investors that the influence of deputy Prime Minister Mateusz Morawiecki and his entourage, only the best known places, but also try bring innovative technologies and to promote the rising stars, like Lublin, R&D – highly skilled jobs. But how as they are former business leaders.

I can see they understand the needs because it’s an academic city with can this be done in practice? good infrastructure, and it’s developing First of all, we create a profile of of the business community. In previous dynamically. There is already a certain the company – a record of its activi- administrations there was a reluctant level of foreign investment there. ties, its plans and its strategy, plus data approach to business – it was rare for We also want to support Polish entre- on the scale of its investment. This is Polish politicians to support Polish busipreneurs, for example, by making spe- part of the process if they work with ness, like what Morawiecki did for [traccial economic zones accessible to them, PAIiIZ. What we want to do from now tor maker] Ursus in Germany, which was including those which want to export. on is to evaluate the information more a clear signal that the government is not If we help them to grow in Poland, they carefully, to see how it will impact the afraid to communicate with business will be able to expand abroad better. local business community and what – that he’s ready to intervene.

For the last decades Polish entrepre- effect it will have on Polish competineurs have been treated almost like tors. Foreign companies somehow can- But doesn’t this “intervention” 2nd class citizens. First came foreign not be privileged on the local market. give investors legitimate fears investors, then big state-owned com- Up until recently the impact of foreign that the government can meddle panies – and then Polish entrepreneurs. investment was sometimes devastating in their affairs, or change the busiThis is going to change. for smaller Polish companies. It cannot ness environment unexpectedly?

As you say, we want to strengthen go on like this.

This is only intervention on request of PAIiIZ abroad and in this we’d like to the company in need. That’s why there is no fear. If you go into numbers, the cooperate with Polish companies. We’ll I spoke to some foreign investors situation is actually the opposite. If you focus on key markets from Poland’s who said that PAIiIZ doesn’t have point of view both within the European political power, meaning that it lacks look at the PAIiIZ pipeline, we have Union and emerging markets in Asia teeth, so to speak. Another criticism investors knocking at our door. We are talking to about 180 foreign companies, and Africa. We will create trade offices was that there is no one single point

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About paiiiz PAIiIZ was set up in 2003 following a merger of two other state institutions. Today it focuses on helping investors to enter the Polish market and find the best ways to utilise the possibilities available to them. They guide investors through all the essential administrative and legal procedures that involve their projects.

which is about 15 percent more than this time last year. At the end of July there were 36 projects completed, compared to 26 this time last year. The number of jobs is up. There is bigger interest in Poland. Poland is held in high regard among foreign investors – higher than some politicians and journalists would have us believe.

Which sectors have the biggest chance of succeeding on global markets?

I am confident that Polish companies can be competitive on the global markets, especially those operating in i.e. food-processing, furniture, marine and ICT industries. To illustrate this point with a couple of examples, Poland is one of the leading manufacturer of a high quality processed food and very well known for the design and manufacture of yachts across the world. What’s more almost 100 percent of parts and components in automotive and aerospace industry produced in Poland by foreign companies is exported. Those foreign companies are more and more relaying on local Polish suppliers helping them to succeed on global markets.

It is beyond doubt that if Polish enterprises apply their knowledge worldwide they will prove very successful.

Furthermore, companies that place more focus on innovation and research & development will enjoy a greater comparative advantage in business abroad.

Is PAIiIZ looking to any other countries for best practices on economic diplomacy, investment support? Which and why these?

‘Poland is held in high regard among foreign investors.

Higher than some politicians and journalists would have us believe.’

Given the broad assistance we offer our investors, we always strive to do it in the most professional way following the best practices in this field.

While Trade & Investment Agencies in other European countries may be a good reference in that respect, we also draw from the practices set by other institutions such as the Japan External Trade Organization (JETRO), Korea Trade-Investment Promotion Agency (KOTRA), UK Trade & Investment or Business France. That’s why I also was very interested listening to a speech by a colleague of mine from Kaznex Invest during the recent Poland-Kazakhstan Business Forum in Warsaw.

Interview conducted by Richard Stephens Founder & Editor, Poland Today

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‘Last year PAIiIZ helped 56 investments to choose Poland, which will create over 9,000 new jobs in the near future.’

Which global markets do you consider as potentially the most attractive for Polish business?

Logically the EU offers the most benefits to doing business across the Single Market and facilitates trade and investment. Nonetheless, we need to keep our eyes open for other markets, most importantly the emerging markets of Asia, including ASEAN, Africa and Latin America. Polish companies have been very successful in establishing their divisions in different parts of Africa in countries such as Kenya, Ethiopia and Algeria. Latin American and Asian markets, especially China, may entice Polish companies across the industries too. In short, possibilities for Polish businesses exist in these places and that’s why soon PAIiIZ trade offices will start opening in those specific places.

How can the success of PAIiIZ be evaluated?

We constantly keep track of all projects in our pipeline and closely follow the investment landscape as it unfolds.

Therefore, we monitor and can measure how much capital has been invested and how many new workplaces have been created as a result of the comprehensive assistance PAIiIZ provides to its investors. As of August 2016, PAIiIZ boasts a total of 180 active investment projects with its global value exceeding EUR 4 bn and more than 46,000 new jobs. Naturally, not all investment projects will come to fruition, but these figures may give you an understanding of the scale of activities undertaken by PAIiIZ. To be precise, last year PAIiIZ helped 56 investments to choose Poland, which will create over 9,000 new jobs in the near future.

Poland is clearly turning its attention to China. Some people say that China is always only out for itself, more so than other countries. What will Poland get from the relationship with China?

PAIIIZ successes in 2015 – 56 investment decisions – 9,098 new jobs created – ¤766.9 mn investment outlays

After 1989, Poland was involved in internal transformations. The next steps were to join the European Union and to establish its position on the EU market.

For 20 years, Poland has largely forgotten distant markets of Southeast Asia and slept through the moment when Western countries were building their position in the growing Chinese market. After getting a stable position on the European market, Polish companies have begun to think of more exotic markets. Undoubtedly, the Russian Federation embargo on Polish products has contributed to this trend.

China continues to remain the largest market for the food and beverage sector, after overtaking the United States in 2011. As a result, the Chinese market

is becoming increasingly attractive for European brands, especially in the context of changing behaviour of Chinese consumers. Despite the complex distribution infrastructure and growing local competition, the chances of European SME related with products' sale in China will likely grow. Apart from the aforementioned food sector, it gives an opportunity for the Polish export offer in the fields of natural cosmetics, environmental protection, biopharmaceuticals and medical technology. Due to abolition of the one child policy at the beginning of 2016, a group of products dedicated to the mother and baby sector can also count on increased interest from Chinese consumers.

Another area of mutual cooperation is the "One Belt One Road" initiative developed by Chinese leadership, as well as Poland joining the Asian Infrastructure Investment Bank. The Chinese side did not specify with which countries it intends to cooperate with on this project. The exact course of the route has not been determined, either.

China expects a concrete investment offer from the countries through which it can run. Now we can observe a rivalry among CEE countries, which are trying to present their country as a hub for business in China in Europe. In the context of the new development plan and the potential of existing connections and logistics centres, the promotion of the so-called “northern corridor”, which runs through our country – or ends here – is crucial for Poland. We need a new growth model after 2020, independent of European funds – one option could be cooperation with China. The development strategy of the “One Belt One Road” project creates the potential to intensify political and economic cooperation with China. Due to the fact that the current revitalisation of the Silk Road is one of priorities of the Chinese government, issues of infrastructure can become one of the leading topics in the bilateral relations in the years to come.

The name of the agency is a bit hard to pronounce.

Shouldn’t PAIiIZ have a name that rings a bell with foreigners?

Indeed, PAIiIZ is quite a lengthy acronym standing for the “Polish Information and Foreign Investment Agency” and some foreigners may find it problematic. That’s why we have forged a brand under the name of “Invest in Poland” and this is the one often used when referring to the activities of PAIiIZ. I personally use the name “the Agency” and probably soon you will find us under the new, more client-friendly name which describes both directions of our activities to and from Poland.

interview by Richard Stephens

17

Winds of change

leader

Moves are afoot to build a network of chambers of commerce around the world to further Poland’s commercial interests

While not every

EU country or As it turned out, she was not alone. advanced nation boasts a coordinated “The Spanish-Polish Chamber in Spain, international chain of chambers of com- led by Javier Sosnowski, contacted merce, many do. Any country which us to propose that we become part aspires to flex its economic and busi- of an international network of Polish ness muscles around the world and Chambers of commerce. And others are wants to help its businesses maxim- open, so together we started discussing ise their potential abroad should have how to build up such a network.” There just such a network. While Poland has is no wish to impose a standard model several individual chambers in various on other chambers, only to encourage countries across the globe, there is lit- a certain standardisation and conformtle or no coordination between them. ity and develop the concept together There are people, however, working with our counterparts.” The idea, she to change this. One of them is Joanna says, is to propose their concept to Schuhholz, a Polish former marketing other Polish chambers abroad and and sales manager in the logistics sec- get their feedback.

An important question is what kind tor, living and working in Holland as an Executive Director and Board Member of relationship the chambers of comof the Polish Chamber of Commerce in merce will have with the government in the Netherlands. Joanna is playing an Poland and – by extension – the Polish instrumental role in efforts to set up embassies in their respective countries. such a network, and she’s starting close Relations with local embassies will vary to home. "Until recently there were two from country to country, Joanna says, Polish chambers of commerce in The but emphasises that the Polish embassy Netherlands, but this wasn't ideal," says in the Netherlands is fully supportive of Joanna. "So we created one unified their mission and goals. “Chambers are chamber as a first step towards align- associations of businesses and are not ing the chamber with the real needs of state related. We do not expect finanPolish companies wanting to do busi- cial help from the government, although ness in the country. They need a strong some chambers of other countries are partner who knows the local market supported by their governments, such well, can share useful insights and has as the British and German ones. There good local contacts.” are many other ways we can support The Netherlands, she says, is a much each other.” In due course the hope more powerful country in terms of is that Polish companies looking to trade and business than many people in develop abroad will have one coorPoland think. Belying its size, the coun- dinated network of chambers which try is actually the 5th largest global will help them access several markets exporter and the 7th biggest investor. through one entry point. “It could be And that’s the point – a local cham- that Polish companies will take a global ber knows its host country intimately membership. Companies are already because they run businesses there and, asking us to assist them when estabin many cases, have settled down. The lishing contacts in other countries. And chamber can help Polish businesses the government will have a powerful, plug into the potential that so clearly independent global network to work lies in accessing such a country – some- alongside.” Individual chambers, she thing that can be replicated around the points out, have very often existed for world. Another goal of the chamber is to many years, putting down strong local promote a genuine picture of Poland’s roots and having a deep knowledge of business landscape. "Information about the country. That, she emphasises, can Poland abroad is not always accurate,” be priceless, and again something the she states. “It is in our interest, at the government can tap into.

The potential, once such a network heart of the Polish business community in Holland, to make sure the press cov- is established, for the enhancement ers Poland in a well-informed way.” of Polish business around the world is From the beginning of her activi- huge. Those who have taken it upon ties with the Chamber, Joanna saw the themselves to carry this through are need to establish relations with other confident it is only a matter of time.

Polish chambers of commerce abroad.

by Richard Stephens

The first meeting

of the group of Polish chambers of commerce abroad will take place after the ‘Polish-Dutch Business Forum’ on 24 November in The Hague. The Forum will be attended by Deputy Prime Minister Mateusz Morawiecki and is supported by the Dutch Enterprise Agency, a part of the Ministry of Economic Affairs.

Joanna Schuhholz,

whose professional background is in logistics, is a Board Member and Executive Director at Polish Chamber of Commerce in the Netherlands. She is a graduate of the Warsaw School of Economics.

‘While Poland has several individual chambers in various countries across the globe, there is little or no coordination between them.’

18 Leader

Time for Polska The whole is greater than the sum of its parts, so it makes sense that Polish businesses work together to develop a common strategy for taking on markets in all four corners of the globe.

In the dynamic,

Sylwia Ziemacka,

Leader of International Projects at Rzeczpospolita and Poland Today

crowded, exciting global world which we live in, a positive national brand can either give a company a distinct advantage, or, on the flipside, it can be a burden which creates unnecessary obstructions. Simon Anholt, policy advisor and founder of the Nation Brands Index, points out that, as a consequence of globalisation, all countries must compete with each other for the attention, respect and trust of investors, tourists, consumers, the media and the governments of other nations. A powerful and positive national brand provides a crucial competitive advantage.

Time for Polska is a new project

by Polish daily Rzeczpospolita under Poland Today's patronage. Its objective is to promote Poland abroad, with an important aim being to improve the business environment for Polish companies operating in – or wishing to expand into – international markets. A series of publications under the title Time for Polska will be dedicated to different industries and sectors in which Poland has particular expertise or success. The first issue in the series will be dedicated to Polish consumer and corporate brands, and will be launched in October. In the pages ahead, we bring you a curated selection of companies to be highlighted in the first edition. Poland’s image is often based on historically negative stereotypes. In the eyes of many foreigners, Poland still has strong associations with the former Soviet Union and wrongly believed to be a “tier two” country. This image is a far throw from the aspirations of Poles today. Therefore this modern and enthusiastic country needs a more coherent image – of efficiency, professionalism and, above all, unity.

Discovering Poland anew As Polish-American journalist Monica Zielinski was preparing to leave the US for Poland to work on the Time for Polska project, her friends and family in the United States thought the relocation was a foolish idea, deemed to fizzle out by the year's end. Months later, scrolling on her social media feed and seeing the beautiful pictures and reading the fun stories from her experience in Poland, they have changed their tune,

‘Now is the time for Polska because we are hungry for success.’

Poland ranked 45th in the Country Brand Index 2014-15 published annually by Future Brand. It is a rise of 30 places compared to the previous edition of the survey.

Poland ranked 24th in Monocle's Soft Power Survey 2015/16. It is a rise of one place compared to the previous edition of the survey.

and now enthusiastically want to visit.

We Poles do not seem to be aware about how little the world knows about us, and we don’t invest enough in our image abroad. When Poland Today organised an international press tour in 2014, 50 respected business journalists from around the world took part.

For many, this was their time visiting Poland. One of the key mistakes Polish companies make is to assume that foreigners know about Poland. Because of this they often create materials that are irrelevant for people abroad, sometimes laden with historical and cultural references which might completely go over the head of a foreign audience.

Some products sell in Poland because the marketing rings true on a national level, with a nod to the way Poles spend their free time, dine, or work. Without tweaks, these methods are very often not effective enough for a similar success overseas.

One other basic mistake that Polish companies make is to simply translate their marketing texts into English (or a selection of other languages), assuming that this is good enough for foreign markets. Yet clients and customers abroad are different and need to be approached in a way that makes sense to them. A case in point: In March, Poland Today organised a day of conferences and networking events about

Poland at MIPIM, the prestigious global property trade fair in Cannes. Our aim was to target foreigners, however after the conference had ended, some Polish people politely informed us that they hadn't learnt much from the panels.

This anecdote encapsulates some of the attitudes of Polish business in general: “If we know it, everyone does”. The secret of a good business strategy is to educate potential clients, and then build on that strong and solid foundation.

Playing on the same team Perhaps the problem is not a matter of What, but How. Poland has a number of successful international stories in dozen of fields, yet business people have so far not managed to effectively package this information in a way to impress anyone, irrespective of where they are in the world. To win this fierce battle for global recognition, not only do they need to play on the same team, but try to score in the same goal. Instead of focusing on bettering their own local competitors, every Polish entrepreneur, institution and business organisation needs to engage in the process of building Poland’s image abroad together. The power of each individual story is a drop in the ocean when analysed in the global context, compared to all those stories presented together.

Foreigners, and even Polish people living abroad, say the Polish business community should be more united because together they can achieve more. Their investment in Poland’s image abroad is a long-term investment in their company's development.

There are so-called economic patriots who emphasise the importance of being Polish, but on the flip side there are pragmatic businessmen who like to be associated with their country of origin only when that image is positive (or at worst neutral), and they can derive some benefits from that association.

There are also those who admit that being connected with Poland could even disturb the image of a company.

Some Polish products are labelled as “Made in the EU” rather than “Made in Poland”, believing that being associated with other industrial powerhouses with years of tradition such as Germany or France, could give them the edge in the cutthroat international marketplace

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$602 billion

Poland's brand value According to Brand Finance Institute

leader

from the UK, Poland's brand value has risen significantly over the last few years.

The highest year-on-year increase - and also the highest increase of all 100 countries featured in the ranking - was by 75 percent in the year 2012. This increase was in large part due to the successful EURO 2012 football championship co-hosted by Poland.

$566 billion

$497 billion

dominated by substandard products.

Being a successful global company from Poland is possible. Everything has roots, and nurturing those roots is a key part of building credibility, which in turn is a key business factor.

$472 billion

The trickle-down effect

$269 billion

$229 billion

2010

Country rank: 25th

2011

Country rank: 24th

2012

Country rank: 20th

2013

Country rank: 20th

2014

Country rank: 20th

2015

Country rank: 20th

The general expectation among businesses of all sizes in Poland is that the government should motivate those young entrepreneurs to pride themselves in being associated with this country. The business community can also play an important role here, which will be beneficial for them. It’s about creating a new business culture based on cooperation and openness.

This approach is mainly aimed at the younger generation. The startup community is a prime example. Members share their experiences – even the sour ones – to prevent others from making the same mistakes. That is the kind of approach Poland needs. But on a wider scale. The new Time for Polska project is based on these insights: when we work together we can achieve more, be more visible and show off our real potential.

The main objective of the project is to promote Polish companies abroad, but at the same time it’s also about creating a business platform for Polish companies to integrate, share experiences, and meet targets – together.

Now is the Time for Polska because we are hungry for success. Many foreigners say that in Western Europe, the current generation inherited its success, and is not as motivated as their predecessors. There were many Polish brands founded in the 1990s after the fall of Communism which have achieved global success. Their experiences are valuable lessons and they help open doors for those who follow in their footsteps. Poles are well-educated, hardworking and flexible. Our multilingualism and our access to the same technologies as our Western partners give us an advantage. Polish entrepreneurs have passion, vision and a determination to succeed. These qualities, together with an injection of vigour and creativity from the younger generation, combined with the Time for Polska programme, produce a winning recipe for the success of Poland’s global image.

by Sylwia Ziemacka

Most valuable nation brands (2015) according

to Brand Finance Institute:

1. United States 2. China 3. Germany 4. United Kingdom 5. Japan 6. France 7. India 8. Canada 9. Italy 10. Australia 11. Brazil 12. South Korea 13. Mexico 14. Switzerland 15. Netherlands 16. Spain 17. Sweden 18. Russia 19. Turkey 20. Poland

20 Leader

Asseco Asseco is a technology company

that provides software and services to over half the banks in Poland, as well as the largest insurance companies, energy, telecommunications, health care entities and public administration. With operations in 55 countries and nearly 21,000 employees, Asseco Poland is the largest IT company listed on the Warsaw Stock Exchange. In 2013 it was ranked the 6th largest software vendor in Europe in the Truffle 100 ranking. For more than 25 years, Asseco has developed software solutions for key sectors of the economy. With a presence in most European countries, Israel, Japan, US and Canada, the company continues to expand through planned and executed acquisitions around the globe.

platige image Warsaw is the home to one of the most

Social Wi-Fi Free wireless internet has been transformed into an information gathering and communication tool for businesses. Social Wi-Fi is an analytics and marketing tool that allows business owners to identify their clients and be able to interact with them. When guests log in to the establishment’s Wi-Fi, they are presented with promotions, surveys and are asked for feedback about their experience. Social Wi-Fi is used in 20 countries including Germany, US and UAE.

advanced and competitive film studios in the region. Platige Image is an award-winning visual effects, post-production and animation company. With a multicultural workforce of 300 directors, art directors, graphic designers and producers, the team has released more than 3,000 projects internationally. Platige is one of the top five studios in Europe that specialises in video game trailers. Best known for its cinematic work, Platige Image cooperates with top brands such as Ubisoft (“Watch Dogs 2”), Microsoft (“Halo 5: Guardians”), CD Project RED (“The Witcher” series) and Crytek (“Ryse: Son of Rome. Legend of Damocles”). The company also creates commercials for top brands such as Coca-Cola, Nike, Microsoft, Pepsi, Fiat, McDonald’s and Kellogg’s. With its own production house, motion capture studio and top-ofthe-line equipment, Platige Image can produce content from concept to final product.

One of the company's best known directors, Tomek Bagiński, has been nominated for an Oscar and an Emmy and won a BAFTA Award for his groundbreaking work.

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22 Leader

Sher.ly

Monster & Devices

Sher.ly provides a subscription-based data

A high-tech company has created a com-

syncing and collaboration service for businesses. Logged-in users have access to all versions of the files, and can access them anywhere. The solution feels like using a cloud, but data stays on the user’s own device and synced through a secure, invite-only network. Once the connection is established, users can create projects and invite co-workers to collaborate on files from anywhere.

puter programme that transforms any wall into a touchscreen. Monster & Devices creates software based on depth and image analysis. The company's Touch Anywhere uses complex 3D algorithms to convert a wall into a touchscreen using merely a computer, sensor and projector.

The company would like to see this solution being used in schools as a cheaper alternative to the multimedia boards currently on the market.

Atm Bettermaker What to do when you're on the market for top-notch studio equipment but nothing suits your needs? Music producer Marek Walaszek decided to create his own! All That Music Bettermaker's line of eight diverse handmade devices offers a pure analogue signal path with the control possibilities of a Digital Audio Workstation, to create a workflow with the ability to save presets and automation. All while maintaining the classic analogue sound.

Bin-e The world’s first intelligent waste container,

Bin-e, identifies, sorts and compresses waste – making recycling effortless and cost effective.

When objects are placed into the Bin-e, sensors determine if it is paper, plastic, glass or organic material, and they are tossed into the corresponding compartment and compressed.

The bins are emptied much less frequently due to the compression, and save as much as €3 per sqm of office space per year.

Elephant The founder of this product once heard a friend talking about a break-in at her flat, so he decided to prevent the incident from repeating itself. And thus, (following a long gestation of R&D and testing) the Elephant was born.

The company's first product, Elephant Door, is the first smart door alarm intended for apartments. The device has already won six startup competitions abroad, and partnered with Microsoft to perfect the technology.

23

arrinera The Italians, French, Germans and Americans all have supercars of their own.

And now so do Poles! Arrinera SA is a capital group which has built the first Polish racecar.

The company is listed on the Warsaw Stock Exchange and participates in car shows in Poland and abroad. The first car they developed is the Hussarya, a vehicle co-developed by British legend Lee Noble. This 789 horsepower beast will soon be burning rubber around the world.

genicore Engineers in Warsaw have developed sintering machines that produce composite materials used in multiple industries around the world.

GeniCore’s technology produces a range of materials to manufacture metal and composite machinery, surgical equipment, construction and stone drilling equipment, as well as for a variety of other applications. Devices have already been exported to Japan, and multiple projects are pending in Europe and Asia.

Śnieżka

kruk

Śnieżka is a paint and varnish company

Not all debt collection companies want to be portrayed as the “bad-guys”. Kruk wants to provide relief from financial difficulties. Kruk is the largest debt-collection company in Poland and the leader of the receivables management market. Founded in 1998, the company operates in Poland, the Czech Republic, Germany, Italy, Romania, Slovakia and Spain with plans to expand. Kruk has managed over 3.3 million cases and purchased 86 debt portfolios.

that owns many of the leading brands on the Polish, Ukrainian, Belarusian and Moldovan markets. The company began production in 1984 and is one of the leaders in Poland in terms of quantity and value. Śnieżka has opened five production facilities in Poland, Ukraine and Belarus. The company's state-of-the-art R&D centre helps it stay ahead of competitors and respond to market demands.

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26 Leader

Malwina konopacka

Vzór

Malwina Konopacka's limited-edition vase

In the late 1950s, a Polish artist designed a series of armchairs, but only a few were produced. In 2012 an art school graduate decided to start a company and bring the creations back to life. Nearly 60 years after Roman Modzelewski designed the first fiberglass armchair in Poland, Vzór is producing and selling his creations around the world. In 2013, Vzór was awarded in the furniture category at the World Interiors News Annual Awards in London.

collections are intended to serve a purpose in addition to being eloquent decorative pieces.

One of the distinguishing characteristics of Konopacka’s collections are the depressions in the vase surfaces. The curved indents create an unpredictable, unique design element.

Konopacka plans to continue participating in collaborations, exhibitions and publications all over the world.

LPP

LANCERTO

One of the fastest growing clothing compa-

Lancerto is a premium brand that

nies in CEE, LPP has been around for over 20 years and manages five fashion brands. With 1,600 stores in 16 countries, the Gdańsk-based company continues to expand rapidly. LPP’s flagship brand, Reserved, offers stylish and affordable clothing and accessories for women, men and children. With over 400 stores located worldwide, the brand turns runway styles into practical streetwear.

specialises in comfortable, ready-to-wear men’s suits, shirts, coats and jackets. With 40 showrooms in 32 cities throughout Poland and an online store, this leading brand is looking to continue its expansion internationally.

Normally, menswear brands have 26 sizes.

Lancerto has 52. For men who frequently go to the gym or are thin, finding a suit that fits can be challenging. Not anymore.

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special focus on real estate

A tale of two cities HB Reavis's Stanislav Frnka discusses the difference between developing in London and Warsaw, and why there is still space for growth in the Polish capital's office market.

Poland Today

caught up with Stanislav Frnka just before he headed off for some R&R in Liptov, a valley renowned for its geothermal energy located between the low and high Tatras in his native Slovakia. At the age of 10 he dreamed of joining the police so he could work with sniffer dogs, but instead he joined HB Reavis after a degree in engineering from the City University of Seattle in Trencin, Slovakia.

He is now CEO of the company in Poland, establishing it as one of the most successful developers in Warsaw.

Stanislav Frnka,

CEO, HB Reavis Poland

HB Reavis is a partner

of Poland Today’s edition for the Krynica Economic Forum 2016

As a company active in the United Kingdom, how do you see Brexit effecting the Polish real estate market?

I don’t see any immediate effects.

Some investors try to play the Brexit card, trying to get the price down, but when you get into the details – there are no arguments why they should wait, why they should get a discount.

Investors are cautious, but what we started before Brexit we are continuing now. There’s no difference. Will more businesses come to Poland? There are speculative discussions, but no negotiations have started. Maybe there’s a longer term effect on banks with the clearing issue, euro vs the pound. There could be losses or gains, so there could be an effect on banks.

Its feeling good but it’s not ready yet. It’s a project with great influence on Warsaw’s urban landscape. We hope to be able to share our idea with the people of Warsaw soon.

Can the Warsaw office market take what will be a very large office building?

Let me answer that by going back in time a bit. In 2007/2008, when HB Reavis was looking at Warsaw, the perception of Poland by Slovak people was not so positive. It was perceived as grey, not very attractive for tourists. It was HB Reavis is active only unusual compared to other European in offices in Poland at present, capitals, so why should we go there? and in other countries you also When I first came I saw there was develop retail and logistics centres. a lot of space for development. A lot What about the hotel market? of space. If you compare it to Vienna, there’s something like ten million sqm We’re in discussion with several hotel chains about potential for hotels If Brexit is not a big issue for of space for a population of around two in some of our schemes. the Polish real estate market million. Warsaw had less than four milat present, what are the big lion sqm. Now, when West Station 1 is handed to the market, it will pop to just As far as I’m aware, you’re the issues facing the market? only central European developer Big issues? I can’t think of any. over five million sqm. So you see that active in the London Market.

Everything is going so well – something there is still a lot of potential. The worry What lessons has HB Reavis learnt has to go wrong! I don’t like the amount is short-term thinking, or simply peofrom your London projects? of money being pumped into the sys- ple are used to a lower vacancy rate.

It’s a different culture, a different tem – it’s not good for risk assessment. This is a result of “easy” money with set up. In the Visegrad 4 countries [of There’s funding from the EU, funding for developers building on spec and now Poland, the Czech Republic, Hungary start-ups. If you lose the money, there struggling with empty space. You can and Slovakia – ed.] we have the same are no consequences. It’s not healthy. also compare Warsaw with other citoperation model – we do the construc- If you’re getting money for nothing, ies in another way. I took part in a distion ourselves, and the architects have what’s your lesson if you go bankrupt? cussion called “Warsaw 2030”, where to follow what we want. In London it’s You need to create long-term profit. expats were asked what they see in the different and we’ve had to adjust, just I have heard that the new genera- city and what they expect from it. A guy like we had to adjust when we first came tion is unwilling to work in BPOs and from Paris who moved here several to Warsaw. The cycles are faster than SSE s. In Warsaw the new outsourc- years ago said the quality of life is betin CE, with more opportunities to buy – ing centres are more advanced, with ter in Warsaw than in Paris! Warsaw is and of course the GBP has depreciated. more advanced services. For example, doing really well. The way I know, Polish There are more companies interested IT back offices. and Eastern European people, we’re in a plot, seven eight, or even more. In hungry for success. We want to get to Warsaw there are less big players so it’s I can’t do this interview without the same level as in the West. This is usually only two or three. It’s all valu- asking about progress on the the main motivation of young people. able experience. We were positively Chmielna project. People are This is why, business-wise, it’s worth surprised about the divestment of our waiting to hear when it will start… coming here.

33 Central project (to Wells Fargo). We built on spec, and first they wanted to What other sectors are lease, then to buy – and they did. you looking at in Poland?

Logistics no – there are too many How did a Central European big players here and the margins are development company with no low. We’d like to go into retail, but not residential. We’re not active outprevious track record in London find such excellent plots? side Warsaw so far, but we’re always discussing different sectors, differYou have to sniff around. Tomas Jurdak (CEO of HB Reavis UK) was ent markets. We would like to grow in there. There was a tender (for 33 Poland – there’s a limit to how much Central) and we were the lucky winner. you can do in Warsaw.

‘Polish and Eastern European people, we’re hungry for success.’

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special focus on real estate

Developing in the city. HB Reavis is the

only Central European developer active in the London market.

The 33 Central project will provide 21,000 sqm of gross leasable area to the English capital and will be delivered in 2017.

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Special focus on real estate

The untapped potential of the Polish capital Harald Jeschek, Managing Partner of Karimpol Group, looks back at the last two decades of real estate development in Warsaw, and where we go from here.

Karimpol has been in Poland for around 20 years.

What were the circumstances behind your arrival here?

Harald Jeschek,

Managing Partner, Karimpol Group (Equator, Skyliner)

The first time I came to Poland I was in a state of shock, even more so as I had just come from a Tenerife shopping centre project in the Canary Islands. It was April and it was snowing. I saw a city of a type I was not used to – the architecture was completely different. It was partly reconstructed and now I see the advantages of that – Warsaw had the chance to rebuild. It’s now a pleasant city to live in and tourism is increasing.

At that time Karimpol was quite strong in Prague and we wanted to expand further in the region. The first changes in legislation were happening in Poland, and the first wave of investment was coming in. Although there was a lot of legal uncertainty and it was not easy to develop, it was very easy to lease. Now it’s the opposite – it’s much easier to develop but much more challenging to lease. You need exactly the right product in exactly the right location. This is why our buildings have always leased well and continue to do so.

You have said that the metro is important for the project, but isn’t it a bit over-hyped at this stage?

It’s only two lines and management in Poland tend to drive to work.

Karimpol Group is a partner of

Poland Today’s edition for the Krynica Economic Forum 2016

The metro is why we chose the location. It’s true that in a city like Vienna the metro plays a more prominent role than in Warsaw. It will come into play more in the future than now, which is why we decided to keep lots of parking spaces.

How do you view the demand and supply situation in Warsaw in general, and Wola in particular?

There are a lot of new buildings on line and under construction.

There’s clearly a lot of construction, but also a very high demand for office space. Tenants are willing to move into new premises and they’re looking.

It could be a bit imbalanced in the next few quarters, but we’re only looking at the longer term, and in my experience most predictions that are made don’t come true. A couple of years ago I read views that the market might even collapse, but that hasn’t come true. There

have been two booms and one bust in the last 20 years. The first boom was from the mid-late 1990s until 2001, when the dot.com bubble burst and investment slowed. I don’t know why the dot.com bubble had this effect on the Warsaw market – trigger events often don’t relate to the results. The other boom was from 2004 to 2008, but you could even say it’s continued to this day because the financial crisis did not hit hard in Poland.

You’re going to build the Skyliner office building at Rondo Daszyńskiego in Wola.

Why office, why Wola?

In Poland we only develop office, like in the Czech Republic, but we do other sectors in other countries. We’re a private family-owned developer, so we have to diversify, but not in an endless way. In every country we only invest in the capital because investors always buy in the capital. We see lots of activity in secondary Polish cities, even investment activity, but we concentrate on Warsaw as we find a continuing potential to develop here.

Where is Skyliner in the development cycle at the moment?

The underground preparations are already complete and we’re currently holding a construction tender.

Construction is planned to start at the end of the year. In the meantime we are offering the space to a few potential key tenants.

Rondo Daszyńskiego seems to be quite a hotbed of construction at the moment - too much perhaps?

I think that the success of the latest completions there show that the decision of many developers to locate in Wola was the right decision and this is reinforced by tenant interest. In CBD the vacancy rate is 15 percent, but in Wola it’s lower. The vacancy level is a bit of a worry, but it’s up to the individual developer to build good quality buildings in the right location.

The effect of Brexit is still very much on people’s minds and the implications still ahead of us. What effect do you think it could have on the Polish market?

Brexit was of course a surprise. The only negative consequence I see in the next few months is the uncertainty.

People don’t know what will happen and how long it will take. Once there is a road map, people will feel more secure and then I don’t think there will be much uncertainty. In the end the EU is diversified internally as well, so we feel safe investing in countries which are strong by themselves.

What made you go for a skyscraper, in terms of Warsaw’s office market? It’s said to be more risky, as a high building necessitates a significant amount of space at one time.

We planned it in a way that we wouldn’t exceed a certain amount of space beyond which we wouldn’t be able to manage the leasing. The building has 43,633 sqm of office space which corresponds to the usual office requirements on the Warsaw market.

It´s only twice the size of Equator II.

What would you most like to see the Warsaw city authorities change or introduce to improve: 1) the construction of office projects, and 2) the city of Warsaw as a whole?

Only to do more of the same thing.

Build more infrastructure for traffic and services, continue investing more in the development of public spaces.

Why are the improvement of public spaces important for you as a developer?

Because functional and attractive surroundings create an additional attraction for your building. I would like to see the city investing even more in refurbishing spaces around public buildings. You see the work on the roads, but more care needs to be taken to make them look better.

In your opinion does Warsaw have a strong enough identity abroad?

Warsaw is creating for itself a great living environment – that’s the most important thing right now. At the same time Warsaw´s recognition around Europe is increasing as more people are aware of what’s happening here in business but also in cultural life and tourism.

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EVENT rEViEw

InternatIonally engaged

Poland Today: MIPIM fair in Cannes Poland Today actively brings Poland to the world and the world to Poland, including through our events. To the world’s premier real estate event, MIPIM in Cannes, we recently brought Deputy Prime Minister Mateusz Morawiecki to talk to foreign investors, and helped the leading property players in the country reach a high-level international audience.

Centre left:

Maciej Król of Xcity Investment.

Left: Mateusz

Morawiecki addressing the international audience at Poland Today's 'Poland & CEE Day'

Above: Deputy

Prime Minister and Minister of Development Mateusz Morawiecki (right) is greeted by the CEO of Reed Midem, Paul Zilk.

Right: The RICS

photos: Mipim

panel led by Maarten Vermeulen (far right)

InternatIonally engaged

Poland Today: CEE Summit in Warsaw At the CEE Summit in Warsaw, together with The Urban Land Institute (ULI) and Property EU, we flew in Carl Weisbrod, Chairman of the New York City Planning Department, and Tom Murphy, the former Mayor of Pittsburgh, to share their rich experience in urban development with a rapt audience.

33

EVENT rEViEw

Below: Tom Murphy, former mayor of Pittsburgh.

Right: Hadley Dean, CEO of Echo Prime Properties, with Robert Dobrzycki, CEO of Panattoni Europe Below: Carl Weis-

photos: Agata Dąbrowska

brod, Chairman of the New York City Planning Commission

Left: Gordon Black, Senior Managing Director, European Private RE Equity Group, Heitman.

Above: Przemysław Krych, Founder & CEO, Griffin Real Estate

34 Business

Confident, independent and tough Making a successful sale to Poland’s Mittelstand means, above all else, understanding the history and culture of the business owners.

Poland’s stunning economic recov-

Patrick Ney

delivers digital marketing for businesses at communications agency Questia. He has previously advised British exporters and investors to Poland at the British Embassy and British Polish Chamber of Commerce supporting British exporters.

ery from the ruin of war and decades of communist mismanagement has been all the more remarkable for its speed, driven in part by Poland’s 15,000 midsized businesses. Collectively they make up 11.6 percent of the country’s GDP, employ one fifth of the labour force and are a real testament to Poland’s entrepreneurial spirit and determination. But selling to – and working with – these companies can be frustrating for foreign companies.

“This generation of entrepreneurs lived through a unique period of economic and political transformation,” Michael Dembinski, Chief Advisor to the British Polish Chamber of Commerce, told me. Poland’s mid-sized business owners are mostly male, predominantly in their 50s and 60s, and are, in the words of PwC Polska’s Head of Public Policy, Bartek Kwiatkowski, “not unlike 19th century American tycoons – confident, driven, independent and tough.”

Pan Prezes culture Having cut their teeth in Poland and then Europe (over 70 percent of Polish exports go to EU markets) mid-size owners are now facing a series of challenges in order to grow and expand market share. In theory, they should be ripe for external consultancy services and supply chain sourcing. But international companies looking to sell to them often run up against a series of challenges only too familiar to experienced international business people in Poland. History and culture matters. Many businesses are run by the original founder (Pan Prezes) whose business style was forged when Poland’s business culture was very different. “Many have strong memories of fighting the old system,” Michael Dembinski said. “They’ve soaked up a command-and-control philosophy rather than a more democratic, open management style.”

I once met the new export manager for a successful Polish food production company. He was eager to sell his products abroad for the first time, but was visibly frustrated by his CEO’s refusal to consider a rebrand to suit the target market. If it worked in Poland,

‘Pan Prezes is [...] unwilling to take advice. And to pay for that advice?

Forget it!’

PWC's Kwiatkowski “which makes them cautious to spend money on non-core services.”

Stuck in the mud International companies often fail to understand and adapt to this psychology. One British company which I consulted for, refused to shift their high-end Western pricing model to a bite-sized entry level scheme suited to Polish companies, and as a result failed to do business. For foreign businesses, discovering the differences can be frustrating. It s not uncommon for Polish mid-size companies to happily spend $50,000 on a production investment, but leave the design of product brochure to a family friend. “Polish mid-sized business – unlike those in Western Europe – still do not feel comfortable paying professional service fees,” De-Roy said. I was once asked to support a British services company whose initial approach identified flaws in their targets’ business models.

Unsurprisingly, this didn’t get a positive reaction. Poles are entrepreneurial, hard-working and defiantly gutsy. But they can appear prickly in comparison to a fail-fast Western entrepreneurial culture. Michael Dembinski puts it in blunter terms: “Pan Prezes is authoritarian and unwilling to take advice. And to pay for that advice? Forget it!”

it should work abroad too, was the verdict from the boss. “We’re talking about strongly centralised businesses,” PwC's Kwiatkowski said, “with key decisions concentrated in the hands of founders.”

For better or worse, Pan Prezes still runs the show.

Even in a larger company, finding the right decision maker can be tough.

One British businessman running a successful services company in Poland tells me that, “decision making is still in many cases being made and signed off only at the top by C-level executives who are notoriously difficult to contact.”

This lack of contact is partly because, according to Poland’s Central Statistics Office, 15 percent of medium sized businesses have no website, and less than a third use any form of social media to communicate externally. That pattern is mirrored by individual behaviour – according to Megapanel PBI/Gemius only 16 percent of Polish Linkedin users are aged 55+, compared to 27 percent Bright future ahead in the UK and 23 percent in the US. If this article has struck you as pessimisAs a result, companies looking to tic then fear not, the future is positive. target these firms, frequently have “The next generation of business leaders to contact younger, mid-level man- running mid-tier businesses will have agers to advocate on their behalf or grown up in democratic, free-market get nowhere when they approach Poland,” said Michael Dembinski, “they the boss. He’s likely to be the hardest will have studied abroad and gained person to connect to. He is also most work experience overseas – and they likely to deeply rely on personal rela- will still have a Polish determination tionships, which, as a foreign company, and a fire in the belly required to sucyour business is unlikely to have. Many ceed.” Poland and Polish companies Polish businesses closely guard their have a choice. We can fall into the midpurse strings. This is partly about lack dle income trap of markets like South of capital but also about a powerful Africa or Brazil or continue to rise – indiunderlying corporate culture born from vidually and collectively – and break through the ceiling of inertia which surviving tougher times.

“There is a long-standing culture early success can bring. Knowing Poles of frugality and a lack of liquidity,” in as well as I do, I’m optimistic that the businesses which is, “predominantly next 15-30 years will be a time when equity-financed and not debt-financed Poland's economy breaks into full galdue to both legacy issues and limited lop – with mid-size business playing accessibility of capital for SMEs,” added a key role. by Patrick Ney

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