WBJ Observer #3 April 2014

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WITH

20 PAGES april 2014

Number 03

PLN 24.50 (VAT 8% included) ISSN 2353-3714 INDEX-RUCH-332-127

20 PAGES OF REAL ESTATE N EWS

REAL EST A NEWS TE

MIPIM 2014 highlights Immofinanz CEO interview

beverages market

Selling cosmetics in the digital age > 17

Beverages market report

LIQUID GOLD + Turmoil in Ukraine How the latest international crisis will affect polish economy? > 34

april 2014

Aleksander Kwaśniewski

on how to handle Putin > 37

ceeqa report on new trends and digital revolution

Gearing up

Bentleys and Maseratis are fast becoming the cars of choice for Poland’s super-rich > 27 • Top 10 banks • Work 2.0 • Michelin restaurants • E-cigarettes • Apple vs Samsung

fine threads

showroom taking fashion retail to new heights > 40

lll IN THIS ISSUE Try these:

lll news

4-6 In Review Latest news 7 Calendar 8 Who’s News Appointments 9 Facts and Figures Economy 10 Time Machine 11 Infographic Apple versus Samsung

lll commentary

12 Politics Tusk owes Putin one 14 Law New rules for online shopping 15 Stocks Tough times for Polish investors 16 Innovation Dawn of academics

22-26

Beverages sector report – liquid gold

lll features

27-28 Car Sales Luxury vehicles 30-32 E-Cigarettes Flourishing industry 34-36 Ukraine Crisis Polish firms in trouble 37-39 Aleksander Kwaśniewski Interview

lll entrepreneurship 40-42 Showroom Selling Polish fashion 47-49 Work 2.0 Technology upgrading our jobs 72-73 Cityscape Łódź 74-75 Ranking Banks

17-20

lll lifestyle

interview with head of avon in poland

51-71

76-77 Gadgets 78 Restaurants 79 Hotels 80 On a final note

43-44

lokale immobilia W B J O B SERVER • a p r i l 2 0 1 4

Market intelligence from WBJ Group Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Managing Editor, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Remi Adekoya Politics Editor radekoya@wbj.pl Kamila Wajszczuk Editor, Made in Poland, Poland A.M. kwajszczuk@wbj.pl

made in poland

investing in poland

Profile: A guide to Polish exporters and Poland’s fastest growing export industries with macroeconomic and legal analysis. Multi-lingual. Targeted at: Foreign firms seeking Polish goods

book of lists

Profile: Investment calling card for Poland in cooperation with major institutions and consultancies. Analysis of key opportunities, with legal and tax advice. Multi-lingual.

Profile: Extensive database tracking more than 70 Polish industries/sectors, 3,000+ firms; English, Polish

Targeted at: Foreign investors

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Distribution: 10,000 copies to foreign chambers, Polish diplomatic outposts, conferences, trade fairs

Next edition: May 2014

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april 2 0 1 4 • W B J O B S E R V E R

Inreview News highlights of the past month

The last stand

Images: Shutterstock, Ministry of Economy

Ukrainian military base A4515 in Belbek before being taken over a few hours later by Russian forces on March 21, 2014. Russia annexed Crimea after a referendum in which the autonomous region overwhelmingly voted in favor of becoming part of Russia. The move was condemned by the West, with the US and EU imposing sanctions on a number of Russian elites.

april 2 0 1 4 â&#x20AC;˘ W B J O B S E R V E R

news

Shorts

Unofficial: Obama to visit Poland in June

WSE launches two new indices The Warsaw Stock Exchange launched its WIG50 and WIG250 indices in March. The WIG50 portfolio includes stocks of 50 mid-cap companies listed on the WSE Main Market. The index will eventually replace the mWIG40. The WIG250 index is comprised of 250 small-cap stocks listed on the WSE Main Market. Both indices are price indices, meaning their value includes only the prices of transactions concluded in the index stocks excluding dividend income. “After the launch of WIG30, it is time to rebuild the set of indices of small and medium-sized companies. Their growing role in the Polish economy has an increasing impact on the structure of the WSE market,” said Adam Maciejewski, president of the management board of WSE. WSE discontinued the publication of the sWIG80 and WIG-Plus indices on 21 March 2014 and will discontinue the publication of the WIG20 and mWIG40 indices at the end of 2015.

>> Integer.pl secures €3.2 mln deal in asia

A sweet package P oland’s Integer.pl Group, operator of InPost parcel lockers, signed a deal with CX Courier to install 150 units across Hong Kong this year. The contract is worth €3.2 million and may be increased, as it includes an option for an additional 150 lockers by 2016 which would double the value of the deal. CX Couriers has a 20 percent market share in Hong Kong and plans to expand it by an additional 10 percent over the next two years. The company delivers some 4.5 million packages each month. Integer. pl said the deal marked a milestone for its InPost parcel terminals ahead of an anticipated expansion into mainland China. Integer. pl added that it was planning to develop its own InPost 24 branded network of parcel terminals in Hong Kong to run alongside the CX Courier terminals, using CX Courier as its logistic partner.

“ It’s almost decided” Poland’s Deputy Economy Minister, Andrzej Dycha, on the possibility of

Poland joining the US Visa Waiver program after months of negotiations between the EU and US on a trade deal.

US President Barack Obama will visit Poland in June to take part in the 25th anniversary of the first partially democratic elections in Poland after the fall of communism, according to RMF radio. Obama will most likely fly to Kiev afterwards to send a clear message to Moscow that the US is a strong supporter of Ukraine and its new authorities. As WBJ Observer was going to press, the Polish Foreign Ministry had not confirmed the news. Barack Obama was officially invited to Poland in December. Polish President Bronisław Komorowski previously held talks with Obama regarding the matter at the United Nations General Assembly meeting in September last year. Unemployment drops to 13.9% The registered unemployment rate in Poland declined to 13.9 percent in February compared to 14 percent in January, statistics office GUS said in a data release. In an estimate released earlier in March, the Ministry of Labor and Social Policy had expected the rate to remain at 14 percent. Unemployment does not typically decline in February and the last time this happened in Poland was in 2008, BZ WBK economists wrote in an e-mailed comment.

W B J O B SERVER • a p r i l 2 0 1 4

news

“It was a huge money for ukraine mistake to let universal banks hand out mortgage loans in foreign is how much the EU has currencies”

€11 billion

speaking to the Association of Polish Banks on their frivolity on dishing out foreign currency loans, especially in Swiss francs before the crisis.

Sikorski: Sanctions like nuclear weapons

Ukraine signs Association Agreement with the EU

Polish Foreign Minister Radosław Sikorski compared EU sanctions against Russia to nuclear weapons. In an interview with the German Bild tabloid, Sikorski said “It is better to use them as a threat than to deploy them,” adding, however, that “in the current situation we have no choice. We have to weigh up the sanctions and how they will affect us. On the other hand, doing nothing may be costlier in the long term.” Sikorski described the sanctions agreed by the EU as “appropriate.” According to the minister, NATO must be prepared for “every scenario.”

Ukraine’s interim PM, Arseniy Yatsenyuk, signed several chapters of the Association Agreement with the EU towards the end of March. Only the political part of the agreement was signed, while the trade part of the accord, which comprises the bulk of the treaty, is expected to be signed after the upcoming Ukrainian parliamentary elections scheduled for May 25. Meanwhile, the EU reconfirmed its intention to further strengthen political association and economic integration with Georgia and Moldova, hoping to sign agreements with the countries “no later than June 2014.”

Piechociński: Polish exports to Russia are dropping Between January and March 18, Polish exports to Russia dropped by 7.3 percent year-on-year. According to Poland’s Deputy PM and economy minister Janusz Piechociński, there are a number of factors causing such a drop, which include a Ruble depreciation, a downturn in the Russian economy as well turmoil in Ukraine. Overall, Russian imports from outside the Commonwealth of Independent States dropped by 7.8 percent. The drops were observed in the majority of sectors across the board. The biggest, by over 40 percent, could be seen in chemicals, jewelry, pork and fresh fruits heavy machinery, agricultural equipment and many more.

>> Vw announces new investment in Poland

A crafty move

Unemployment drop

13.9

earmarked in macro financial aid for Ukraine, the European Commission announced at the beginning of March.

april 2 0 1 4 • W B J O B S E R V E R

was Poland’s unemployment rate at the end of February according to Central Statistical Office GUS, slightly better than expected.

erman automotive sector giant Volkswagen will build a factory producing Crafter vans in Września in western Poland, the company announced in March. The value of the investment is almost PLN 3.4 billion and will create 2,300 jobs. The new production plant will be located on the territory of the Wałbrzych Special Economic Zone “InvestPark” in Września. One of the decisive factors that prompted the decision was that several companies cooperating with Volkswagen already have their units in the zone. The location is also close to the A2 highway and not far from PoznańŁawica international airport. The company will launch construction work on the site in the autumn of 2014. Production is scheduled to start in 2016.

Images: Shutterstock, International Monetary Fund

Marek Belka,

CALENDAR

MOTOIDEA 2014

APRIL

8-9

Event: The conference will focus on the most important issues and current challenges for the automotive sector in Poland. Outstanding market players will be presented with Moto Idea awards. Location: Kinoteka, Warsaw Web: moto-idea.pl

EUROPEAN EXECUTIVE FORUM 2014

APRIL

10-11

EUROPEAN ECONOMIC CONGRESS

Event: The conference will feature some of the most prominent leaders of the politics, science and business spheres. This year’s main theme is “Leadership in new reality.” Location: Sheraton Hotel, Warsaw Web: executive-club.com.pl

MAY

7-9

HR TECH SUMMIT

APRIL

Event: Ten years after Poland joined the European Union, business and political leaders will discuss the achievements of the past decade and prospects for the future. Location: Katowice Web: eecpoland.eu/en

MADE IN POLAND 2014/15 CONFERENCE

Event: Technology firms present on the Polish market will present software designed to help companies manage human resources. Participants will be able to test the presented solutions. Location: Angelo Hotel, Katowice Web: hrtech.pl

MAY

Event: The launch of Warsaw Business Journal Group’s Made in Poland 2014/15 annual publication will be accompanied by a conference on the state and perspectives of Polish exports. Location: Ethnographic Museum in Warsaw Web: wbj.pl

19TH EUROPOWER ENERGY CONFERENCE

APRIL

15-16

Event: Speakers at the conference will address all issues currently discussed in Poland’s energy sector, with a special focus on renewable energy sources. Location: Westin Hotel, Warsaw Web: konferencjaeuropower.pl

•

W B J O B SERVER • a p r i l 2 0 1 4

Who’s News

NE W S / app o int m ents

Thomas Srnka has been appointed as the President and CEO of Basell Orlen Polyolefins, a LyondellBasell and PKN Orlen joint venture. The company produces polypropylene and highdensity polyethylene. Srnka has been working in LyondellBasell for over 31 years in various capacities. He replaces Dick Stolwijk, who will now be heading the strategy, planning and analysis department in LyondellBasell. “Poland is a country with great potential for development and a strong and stable economy. I’m honored that I could help expand its polypropylene market,” said Stolwijk. Bartosz Hojka replaced Wanda Rapaczynski as the CEO of WSE-listed media group Agora. Bartosz Hojka has served as a Management Board Member since June 28, 2013. He started working for Agora in 1998. In 2005, he became the head of its radio segment. He restructured Agora’s radio operations which resulted in significant improvement in the segment’s profitability and the development of radio operations. He also played a key role in launching the movie channel Stopklatka.tv. Cezary Smorszczewski became the new President of the Board of MCI Management investment fund. “I am confident that MCI, drawing on the vast experience and competences of Cezary Smorszczewski, will successfully strengthen its position on the international investment market,”said Tomasz Czechowicz, Managing Partner at MCI. Smorszczewski was one of the key people behind the success of Alior Bank and its long-standing Vice-President. He also worked at Pekao SA and PKN Orlen. Adam Jasser was appointed by PM Tusk as the head of Poland’s Office of Competition and Consumer Protection (UOKiK). Previously, Jasser was an undersecretary of state and worked for the Reuters news agency for years in various capacities. He was also a director at demosEuropa Centre for European Strategy, a think-tank. He replaces Małgorzata Krasnodębska-Tomkiel who was dismissed in February. The President of the Office of Competition and Consumer Protection is a central organ of public administration, directly subordinate to the Prime Minister.

Spotkanie Liderów

april 2 0 1 4 • W B J O B S E R V E R

n e w s / ec o n o m y

facts and figures Data overview

WARSAW STOCK EXCHANGE IN 2013

450 450450

0.7% overview DataData overview

STOCK EXCHANGE WARSAWWARSAW STOCK EXCHANGE IN 2013 IN 2013 Number of listed companies

CPI inflation

0.7% 0.7% (February)

CPI inflation CPI inflation

listed companies Number Number of listed of companies

Trade volumes

PLN 3,856.56

(February) (February)

Trade volumes Trade volumes PLN 259.15 billion

13.9% 13.9% 13.9%

PLN 3,856.56 PLN 3,856.56 (February)

UNEMPLOYMENT (February)

Average Average salary salary (February) (February)

Shares Shares Bonds

259.15 billion PLN PLN 259.15 billion 1.65 billion

UNEMPLOYMENT UNEMPLOYMENT (February) (February)

€176.4 million

Bonds

Bonds Futures

1.65 billion PLN PLN 1.65 11.8 billion

Foreign trade balance

Futureschange of main index (WIG) Futures Annual

Foreign trade balance Foreign trade balance Poland’s economy:

Annual of main index (WIG) Annual change ofchange main index (WIG)

€176.4 million €176.4 million (January)

PLN 11.8 billion PLN 8.06% 11.8 billion

(January)(January)

8.06% 8.06%

gaining speed

After a year of slower growth, the Polish economy picked up in the fourth quarter of 2013. The Central Statistical Office has said that the country’s gross domestic product grew by 2.7 percent year-onyear in Q4 and by 1.6 percent y/y in 2013. Analysts are optimistic and recent forecasts see the figure growing to around 3 percent this year. Though unemployment remains high and salary growth is still only slight, economists expect domestic demand to rise in 2014 and contribute to GDP growth more than it did in the previous year.

2.7% y/y was the GDP growth in Poland in Q4 2013, confirmed in late February after a flash estimate from the Central was the GDPStatistical was the GDP growth ingrowth in Office earlier month. in that Q4 2013, Poland inPoland Q4 2013, confirmed in late February confirmed in late February afterestimate a flash estimate from after a flash from theStatistical Central Statistical the Central Officethat earlier that month. Office earlier month.

2.7% 2.7% y/y y/y

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Year-on-year growth of industrial 8 7 output in Poland, February 2013 – 6 5 February 2014

Year-on-year growth of retail sales in Poland, February 2012 – February 2014

Feb. '12

National Bank of Poland President Marek Belka on monetary policy guidance.

Gearing up

Perspectives for demand?

Mar. '12

Data source: Warsaw Stock Exchange, Central Statistical Office

Average salary

“ There is no need to expect that once Q3 [2014] is over the Council will pick up its shovel and pickaxe and get to work.”

W B J O B SERVER • a p r i l 2 0 1 4

TIMEMACHINE From our pages . . . 15 years ago

10 years ago

5 years ago

April 1999 – Polsat decided to withdraw from the Cyfra+ digital platform project and launch its own 5 satellite channels. “The company that was to operate the platform simply does not exist and Polsat can’t afford to wait if it wants to launch its own thematic channels.” said owner and president of Polsat Zygmunt Solorz. Polsat eventually launched its own digital satellite platform in December that year.

April 2004 – Chevron Texaco executives visited Poland to discuss the formation of a joint venture company to construct and operate the Brody-Gdańsk pipeline later that year. It was expected to cost PLN 1.4 billion and take until the end of the decade to complete. The extension was set to be extended from Brody to Płock and from there to Gdańsk and then shipped to western Europe.

May 1999 – At least 25 companies have signed up to sponsor the Pope’s tour, donating equipment or funds to help preparations. “We are not waiting for returns in such situations. It is a different situation than sponsoring tennis or other sports,” said Jacek Kozłowski, director of public relations for Bank Pekao, one of the sponsors of the visit. u

April 2004 – Poczta Polska is considering augmenting its suite of financial products by launching a life insurance company. Its research has shown that villagers are underserved in terms of insurance, banking and pension services. Poczta wants to plug the gap. u

April 2009 – International coffee chain Starbucks opens its first Polish location on Warsaw’s Nowy Świat. “I see the Poles have an affinity for coffee when I see all the coffee houses in the city,” said Buck Hendrix, president of Starbucks Coffee EMEA. He noted that the Polish coffee sector has seen 600 percent growth over the last 10 years.

Spotkanie Liderów

april 2 0 1 4 • W B J O B S E R V E R

April 2009 – Kraków-based Polish business IT provider Comarch announced that it will launch subsidiaries in China and Vietnam. “If we want to seriously cooperate with global partners that operate in the Far East,we cannot handle them from Poland,” said Janusz Filipiak, the company’s president. u

n e w s / inf o g raphic

GEMIUS: MOBILE INTERNET IN POLAND SHARE OF MOBILE DEVICES IN ONLINE TRAFFIC

MOST IMPORTANT EVENTS ON PORTABLE DEVICES MARKETS

PRODUCERS Nokia

Apple

Sony Ericcson

Samsung

Sony

others

DEVICES iPad*

iPhone*

Galaxy S*

Asus Google Nexus 7

* ALL MODELS

39%

VII

iPad 1 users go online

20%

21%

40%

20%

60%

9% 1%

80%

100%

MARKET SHARE

VI 2010

TIME LINE

V 2010

PRODUCERS ARE ALWAYS LISTED STARTING WITH THE LARGEST ONE DOWN TO THE SMALLEST ONE

NOTE!

GoClever*

VI 2010

release of Samsung Galaxy S

release of iPhone 4

VIII IX X

GEMIUS:INTERNET MOBILE INTERNET IN POLAND GEMIUS:Apple MOBILE IN POLAND vs Samsung

SHARE OF MOBILE DEVICES IN ONLINE TRAFFIC SHARE OF MOBILE DEVICES IN ONLINE TRAFFIC Nokia

Nokia Apple Sony Ericcson Sony Ericcson Samsung Sony

Apple

39%

20%

40%

34%

XII

9% 1%

VI 2011

Apple catches up with Nokia

100%

14%

14% 2%

iPad catches up with iPhone

X 2011

release of iPhone 4 S

X 2011

Steve Jobs dies

22%

10%

20%

12%

0,3%

XII 2011

percentage of online trafﬁc

Samsung catches up with Nokia

IV V

2,4

I 2012

III

III IV

VIII

V 2012

XI 19%

29%

XII

10%

29% 22%

19%

10%

20%

22% 5%

12%

20% 0,3%

I 2012

12%

percentage 0,3% of online trafﬁc

I 2012

Samsung catches up with Nokia

2,4 2,4 XII 2011

III

VIII

IX 2012

release of iPhone 5

X XI

XII

26%

34%

I 2013 II

Images: Apple, Samsung

I 2013 II

8% 6%

13%

26% 13%

13%

I 2013

Sony catches up with Nokia

I 2013

IX 2013

release of iPhone 5 S

31%

23%

I 2014

31%

13%

4,2

13%

XII 2012

percentage of online trafﬁc

I 2013

Sony catches up with Nokia

VII 2013

Samsung Galaxy S 4 enters the market

IX 2013

XI 2013

IV VII 2013 VSamsung

Samsung Galaxy S 4 enters the market

Galaxy S 4 enters

VIthe market VII

VIII

XII

26%

Sony catches up

with Nokia VII 2013

VII

XII 8%

XII 2012

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I 2013

release of iPhone 5

of Samsung Galaxy S III 26%

XII

IX 2012

4,2 4,2

III

V 2012 XIrelease

online trafﬁc percentage of online trafﬁc percentage ofIII

XI 23%

34% 26%

release of iPhone 5

third generation iPad debuts X

XII 2012

26%

IX 2012

taken over by

IXSony III 2012

release of Samsung Galaxy S III

VII

Sony Ericsson with Nokia taken over by Sony

V 2012

release of Samsung Galaxy S III

VII

II 2012 2012 2012 VIIIISony Samsung catches up Ericsson

third generation iPad debuts

V VI

percentage of online trafﬁc

III 2012

XII 2011

Sony Ericsson taken over by Sony

third generation iPad debuts

VII

VIII

I 2012

III 2012

VI VII

I 2011

VIII

iPad 1 users go online

80%

IV V 2010

V 2010

I 2011

VII

0,6%

MARKET SHARE

XII

13%

ake 60% a look 80% at how100%the inVI 2010 VII VI 2010 VI 2010 VIrelease 2010 release release troduction of new devicesrelease of Samsung of iPhone 4 of Samsung ofGalaxy iPhoneS4 VIII Galaxy S changed the landscape of IX mobile internet traffic. How did it XII 2010 X change over the last four years? XII 2010 percentage percentage of online trafﬁc of online trafﬁc generated Whose gear do Poles use the most XI 34% 24% 17% 13% 0,6% generated 24% 17% 13% 0,6% by portable devices by portable devices and how has mobile internet traffic XII 19% 29% changed over the years? How has I 2012 the release of new devices shaped II the mobile landscape and how has VI 2011 VI 2011 VI 2011 VI 2011 IIIiPad catches Apple Apple iPad catches Nokia fallen from being a market catches up up with iPhone catches up up with iPhone with Nokia with Nokia IV leader to being dead last. And finally, X 2011 X 2011 release release of iPhone 4 S V how Apple and Samsung have beof iPhone 4 S X 2011 X 2011 come the undisputed leaders. VI Steve Jobs dies Steve Jobs dies

VII

III

21% 20% 9% 60% 1%

20% 40%

17%

14%

percentage of online trafﬁc generated by portable devices

VIII

39% 21% 20%

24%

TIME LINE

MARKET SHARE

XII 2010

III

GoClever*

PRODUCERS ARE ALWAYS LISTED STARTING NOTE! PRODUCERS ARE ALWAYSWITH LISTED THESTARTING LARGEST ONE DOWN TO THE SMALLEST ONE WITH THE LARGEST ONE DOWN TO THE SMALLEST ONE

VIII

XII

others

Asus Google GoClever* Nexus 7

* ALL MODELS

TIME LINE

VI VII

iPad* iPhone* Galaxy S* Galaxy S* Asus Google Nexus 7

iPhone*

NOTE! 0%

Sony

How the giants fare in the mobile revolution

iPad* * ALL MODELS

Samsung others

DEVICES

34%

XII

MOST IMPORTANT EVENTS MOST IMPORTANT EVENTS I 2011 ON PORTABLE DEVICES MARKETS ON PORTABLE DEVICES MARKETS

PRODUCERS

Source:

31% 29%

8% 9%

11%

29% 10%

12% 29% 9%

9% 1%

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12%

XI 2013IX 2013

iPad Air release launchedof iPhone 5 S on the market

9,3 9,3

10%

XII 2013 0,2%

percentage of online trafﬁc

I 2014

Samsung catches up 9% with Apple

Datascientists selected from in cooperation with scientists fromofthe Polish-Japanese Institute of Information Technology Data selected in cooperation with the Polish-Japanese Institute Information Technology

I 2014

VIII XI 2013 IXiPad Air

release of iPhone 5 S

launched on the market

XII 2013 XI percentage of online trafﬁc

Samsung catches up with Apple

XII

23%

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I 2014 II

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iPad Air launched on the market

XII 2013

percentage of online trafﬁc

I 2014

31%

29%

12%

Data selected in cooperation with scientists from the Polish-Japanese Institute of Information Technology

Samsung catches up with Apple

W B J O B SERVER • a p r i l 2 0 1 4

co m m e n t a r y / p o litics

remI adekoya politics editor of WBJ Observer He also writes for The Guardian

Tusk owes Putin one Russia’s aggressive actions in Ukraine have radically altered the political dynamics in Poland

few months ago, Civic Platform (PO), Poland’s ruling party, looked sure to lose the upcoming European Parliamentary elections in May. Polls showed the conservative nationalist opposition Law and Justice (PiS) in the lead, outperforming PO by anything from 4 to 10 percentage points. But then Vladimir Putin started flexing his muscles in the Crimean region, sending out aggressive signals and scaring many Poles who still shudder when they think back to the days when the fate of their country was decided within the confines of the Kremlin. Never waste a good crisis PM Donald Tusk, who heads PO, was quick to seize the opportunity. He started addressing Poles regularly, convincing them about the gravity of the situation. He talked about how his countrymen had to realize that Poland’s independence “is not guaranteed forever” and that the Crimean crisis “has all the trademarks of a conflict that could lead to a world war.” At the same time, the PM assured Poles that he was in control of the situation, that there was no “direct threat to Poland” and that his government would effectively mobilize the EU to respond decisively to the threat of Russian expansionism. Tusk delivered his lines convincingly. He came across as tough, but not gung-ho, pragmatic, but no sell-out. The balancing act required here was always going to be the most difficult part for the Polish PM. While many Poles feel a strong distaste and even contempt for the corrupt ex-KGB officers now ruling Russia, they are scared of antagonizing the Kremlin because of the big guns it wields. The only thing Poles want less than a leader who yells “flee” at the mere sight of the Russian bear is one who yells “forward” upon the first viewing of it.

Tusk also succeded in portraying himself as a major player in Europe, holding high-profile meetings with European leaders in the heat of the crisis including with the boss-player herself, Angela Merkel. The PM’s message to Poles was simple: “Danger is nigh but I am here to protect you. Keep me in power and I will keep you safe.” The strategy is working. A voter survey at the end of March had PO with 36 percent support while PiS is now backed by 33 percent of the electorate. Not fair, we said it first PiS and its populist leader Jarosław Kaczyński must really feel cheated here. For years, they have been the ones harping on about how dangerous Mr Putin is while Tusk’s government consistently brushed them off them as being anti-Russian and paranoid. So theoretically, the opposition party should be the biggest political beneficiary of the Ukraine crisis. But when a society feels in danger, it focuses its attentions on the current government and its leaders, those who have the power to make the really big decisions. Furthermore, societies tend to consolidate around their existent leadership in times of crisis. All this has helped boost PO and put it in prime position to win the EP elections. The result of the May poll is more important in Poland than in most other European countries as it will kick off an election calendar set to include local government, parliamentary and presidential polls all within the next 18 months. Whoever wins in May will have the momentum on their side going into the next election. That is why the PM and his ruling party are doing everything to keep the Ukraine issue alive during the ongoing campaign. So far, the emotions the Ukrainian crisis has awoken in Poles have worked to the favor of PO, and if they do win the EP election, they will have none other than Vladimir Putin to thank for it. u

”[tusk] came across as tough, but not gung-ho.

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co m m e n t a r y / it ’ s the la w

Judith gliniecki a partner in Wierzbowski Eversheds Poland

New Rules for Online Stores E-shoppers in the EU will have more rights

t the risk of being labeled a Luddite, I’m going to make a confession. I like the traditional shopping experience – being able to see and touch the goods before I make a purchase. There are times, though, that the convenience of internet shopping trumps my preference, and I pull up the password to one of my online store accounts. Given the crash of the United States parcel delivery system due to e-shopping over the past Christmas season, it appears that I’m not alone.

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Among the most significant of the non-informational requirements will be the extension of the “cooling off ” period during which the consumer may withdraw from a contract. The current period of 10 days will be extended to 14. Deadlines approaching One aspect of the bill has been a specific focus of debate – the definition of “consumer.” The bill expands the definition of consumer to include individuals doing business as sole proprietorships (“działalność gospodarcza”) if the main purpose of the sale is not related to the business activities conducted. This expanded definition has been widely criticized and might be removed from the final version of the Act. Even without this debate, Poland will be hard-pressed to meet the June deadline for the new Consumer Rights Act. While not much consolation, Poland probably will not be the only EU member state to miss this deadline. Online and other retailers making sales in Poland will likely have until the end of the year to spruce up their forms and change the payment procedures portion of their websites. u

Image: Shutterstock

Consumer Rights Directive The importance of e-commerce, and in particular, online retailers, has not escaped the EU’s attention. In 2011, the European Union adopted the Consumer Rights Directive. This Directive grants additional protections to consumers in the EU through enhanced informational and other requirements, with a particular emphasis on online sales. All EU member states are supposed to have national laws implementing the Directive in force by June 13, 2014. In Poland a bill for a Consumer Rights Act is working its way through the Parliament. Probably the greatest impact of the new Consumer Rights Act will be the increased informational requirements. The first big set of changes relates to information that must be provided to a consumer before signing a contract. Under current law, an online retailer must provide customers with 11 pieces of information, from business name to contract withdrawal rights to procedures for claiming defects. Under the new Consumer Rights Act, this catalog increases to 21. The second set of informational changes relates to clarifying all costs of an online order. A consumer may not be charged additional costs if those costs were not specified before making the order. Also, when the consumer goes to click the button to place an order, that order button will need to contain a warning that doing so means making a payment.

co m m e n t a r y / st o c k s

mateusz adamkiewicz Financial Markets Analyst

Tough times for Polish investors Patience is needed for those who invest money in the Warsaw Stock Exchange

his year was supposed to be better than 2013, but it’s not. The Polish economy is doing better and we see more and more signs of optimism in the whole European market, but factors which help other markets are not visible when we take a look at Polish stocks. Last year was definitely disappointing. American or German investors were celebrating new all-time highs, and other developed economies’ markets were doing well too. The global economy was back on track and companies’ earnings were increasing around developed markets.

of the year, we should even be grateful for the WSE’s performance. Conflict causing trouble Another factor which has weighed heavily on Polish stocks is the Crimean conflict, which unfortunately is still unresolved. Maybe economic ties with Ukraine don’t play a crucial role for the Polish economy, but we are dependent on Russia, at least for now. There are many companies engaged in the Ukrainian market, and they are actually losing money right now because of weaker demand and a weaker local currency which are making foreign goods less competitive. Apart from that, several Ukrainian companies are listed on the WSE and we have seen a huge sell-off in their stocks. Investors don’t like uncertainty and are afraid of potential consequences from Russia for the strong Polish engagement in the conflict. We import 95 percent of our oil from Russia, and we cannot easily replace Russian gas. Generally, trade between our economies has gained importance over the last years. We won’t see a bull market in Warsaw before a solution to the conflict. The situation is very complicated now. The European and Polish economies are doing better, monetary policy is expansionary and the government certainly won’t consolidate fiscal policy before the elections. But on the other hand, there are many disturbing factors, which weigh down on the WSE. Broad consolidation between 2200 and 2600 points is the most plausible scenario for the WIG20 in coming months. u

”Investors don’t like uncertainty and are afraid of potential consequences from Russia for strong Polish engagement in conflict.

The Chinese question But the situation is not that clear when we consider emerging markets, especially China. GDP growth in China has weak foundations with more than 15 percent coming from investments, mainly in the real estate market. Internal consumption is still weak and non-optimistic trade data came to the market some time ago. Why is this important for Polish investors? Because Chinese stocks are the main composite of the MSCI Emerging Markets index, which is also a benchmark for the WSE. And when investors are concerned about China and want to reduce their exposure to this market, Polish stocks suffer too. We should not compare the WIG20 bluechip exchange to S&P500, DAX, or FTSE. The Shanghai Composite, Hang Seng China Enterprises, MSCI EM – these are the indices which really count for us. Now, with the Shanghai Composite slumping 10 percent since the beginning

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co m m e n t a r y / inn o vati o n

michał jasieński a graduate of Jagiellonian and Harvard Universities, teaches innovation management and leads the Center for Innovatics at the Wyższa Szkoła Biznesu - National-Louis University

Innovaria It’s time for academics to replace garage-based inventors

Academic silverbacks Innovation-oriented research is expensive and often no longer has the enviable characteristic – taken for granted by academic “silverbacks” – of being financedby-the-state-so-it-makes-no-difference-if-anythinguseful-comes-out-of-it! There are important criteria which should be taken into account. How many of Poland’s actual R&D efforts are covered or supported by competitively-assigned grants rather than government subsidies? Answer: not many. Where do the funds for R&D come from: the state or industry? Answer: the majority comes from the state, of course. What fraction of all research carried out in Poland has

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a clear practical application? Answer: not much. Unfortunately, the term “academic entrepreneurship” is too often used interchangeably with the expression “professorial firms.” I almost fell from my chair recently when I heard the two phrases used in parallel during a panel discussion about innovation and regional development in Poland. By contrast, most new companies in the Kendall Square area of Cambridge, Mass. in the US are founded not by professors, but by graduate students and recent PhDs. What makes Kendall Square and Silicon Valley great is the young dynamism and egalitarian culture, as opposed to the stuffy, backbiting environment of the university. Sneaker-wearing graduates Until we start seeing young, blue-jeans and sneakerwearing graduate students as the true academic entrepreneurs in Poland, we will be stuck in this stuffy, hierarchical world of academic pseudo-business activity. And, Google forbid, we start assessing our professorial entrepreneurs according to the modern criteria of scientometrics. Quantitative tools used for measuring scientific quality of researchers (such as the famed h-index) usually provide unequivocal evidence for the non-existence of Polish local academic celebrities on the global scene. Furthermore, their “firms” use up resources of technological parks, but are just official venues for private consulting offered by professorial experts, and are not meant to grow and turn into real enterprises. Such a firm is just a more glamorous version of a single-guy with his folded table selling goods smuggled across the border: not much of a real entrepreneurial expansion there. u

Image: Shutterstock

f all the varieties of entrepreneurship, so-called “academic” entrepreneurship is growing in importance as we pass the romantic era of garage-based, intuitively innovative inventors. Intuition and tinkering just do not cut it any more. Nowadays, entrepreneurship requires competences in biotechnology, nanotechnology, telecommunications, robotics, etc. In other words, the fields that will propel our civilization forward begin at the PhD level. There is no way around it. One could say, poetically, that all the low-hanging apples have already been picked by – or have fallen on the heads of – 20th-century Newtons. Whatever is left to be discovered and turned into innovation in this century cannot be reached without sophisticated, high-quality research. The miraculous graphene is, of course, the perfect example of such a new and demanding innovation.

The cosmetics industry in the digital age

What women want interview: Oksana Zharkova, head of Avon in Poland, the Baltic states and Finland, talks about a company famous for its print catalogs is surviving in the digital age, how women make decisions on which cosmetics to buy and how the beauty industry has changed in Poland and around the world over the years

AVON Image: Bartosz Bajerski

i n t e r v i e w b y r e m i a d e koya

How have clients of the cosmetics industry changed over the years both in Poland and globally?

Everything has changed, or rather there have been changes in every single element of the business. Letâ&#x20AC;&#x2122;s start with the channels. Nowadays, clients arenâ&#x20AC;&#x2122;t satisfied with only one shopping channel, they expect an omni-channel approach to better understand and

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actress weronika rosati is avonâ&#x20AC;&#x2122;s new ambassador

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Images: Bartosz Bajerski, Avon

INTERVIE W / B U S I N E S S L E A D E R

experience the brand. People prefer to use a combination of offline and online channels. They are more demanding today, products are expected to be multifunctional and provide more than one benefit. There have also been changes in what influences the purchase. Ten years ago we worked with classic advertisements, now we have social media where recommendations have become a huge deciding factor regarding whether your product becomes popular or not. So we have had to adjust.

AVON Talking about adjusting, how is a company famous for its print catalogs and direct sales business model managing to survive in the digital age?

Avon has been around for 127 years. In all this time, we have functioned as a direct selling company adjusting to different times, fads and economic realities. Of course, direct sales channels must now be leveraged by additional access to the products through for instance, e-commerce, so we are definitely moving in this direction and trying to build our expertise in this field. Last year we launched Avon Online, offering customers some extra advantages. If something is ordered online from us, we deliver the product for free, offer the possibility of paymant on delivery as well us a 100 percent guarantee on the product Avon if it has been opened. However, interestingly enough, our studies of online search engines show that there are roughly 100,000 searches for Avon catalogs every month in Poland. These are now often interactive, digital catalogs but nevertheless it shows that many cosmetics shoppers are still very comfortable with the concept of catalogs as a whole. Data also show that 40 percent

Oksana Zharkova has been with Avon since 1997. She started her career as a Sales Manager in Avonâ&#x20AC;&#x2122;s Ukraine office. From 2007 to 2012, she was Vice President of the company responsible for sales on the Russian market. On March 1, 2012, she was appointed Director General of Avon in Poland, the Baltic States and Finland. She is a graduate of the London Business School.

of woman buys products via catalogs at least once a year. Having leveraged our business model to online it has become even more convenient for customers. We created an online enviroment where our current customers can continue their offline relationships and interactions with Representatives. Regarding the beauty industry, what differentiates Poland from some of the other markets you have worked such as Russia and Ukraine?

First of all, regarding channels of distribution, direct selling is more present in Eastern Europe while here in Central Europe, retail infrastructure is very modern and well-developed. There are also differences in the category mix. Skin and body care are getting increasingly important in this part of the world, whereas color plays a big role in Eastern Europe. In terms of style, Eastern European customers are more open to experiments, they use much bolder colors while here in Poland, women tend to use much milder, softer colors. So people pay more attention to image there you mean?

I mean there is a different approach to image there. People everywhere try to create and project certain images of themselves to others, but the question is what exactly you want to underline with the help of cosmetics. In this part of Europe, women use cosmetics just to underline their natural beauty while in Eastern Europe, the way you look is a much bigger part of your overall image and what you want to say to your environment. So what are the three key factors involved in a womanâ&#x20AC;&#x2122;s decision-making process regarding whether to use a particular beauty product or not?

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INTERVIE W / B U S I N E S S L E A D E R

The first is how much this product responds to my needs. Secondly, the brand offering a product should be trustworthy and the consumer wants to feel proud to use its products. It also helps if the consumer has tried the product before and had a positive experience. In this case the recommendation factor I spoke about earlier comes in very strongly.

the recent years of economic turmoil. However, this was more a situation of reduced growth and not a plunge in sales. During this period, companies acted pretty much the same with everyone playing the value competition.

And what are some of the trends driving the industry now?

Exactly. But now things are getting better. Consumer confidence is still not positive enough but it’s growing. However although full 2013 data will be coming through in April, according to preliminary data, Avon Poland outgrew the market last year.

Actually what I mentioned earlier regarding channel changes, product purchase drivers and multi benefits are the key factors that help customers to make “smart” shopping decisions. When provided with this, customers are welling to invest sometime in order to choose the best offers.

So the 2 for the price of 1 pitch?

And you don’t plan to do away with your print catalogs? No, we don’t.

AVON My female colleagues at work told me about the “lipstick effect” a theory suggesting that no matter how bad things get in the economy, women will always buy lipstick. Is there any truth to this? Are cosmetics companies less vulnerable to economic crises? (Laughs) Obviously, it is difficult to fully avoid an economic crisis. Customers change their priorities and behavior. Therefore the cosmetics industry has experienced some slowdown in

Because that’s your trademark…

Exactly, and like I said, people still look for catalogs.

Outside Poland, which are the best-performing markets for your company? Latin America and the EMEA countries, so Europe, the Middle East and Africa.

Avon calls itself “The company for women,” but studies have shown a significant increase in the number of men who use skin care and even beauty products. I did notice some products for men in your catalog, are men becoming more important to the beauty industry?

Yes, that is very true. Although women will be always at the center of our attention, if you are thinking about a woman, you have to think about her life and everything represented in her life. We need to care about what she cares about. And so yes, we have male products such as fragrances or skin and personal care products. However I can tell you in secret that in the near future for the first time ever we will be introducing a male Avon Ambassador. And how do you adjust your products to suit the different skin tones, skin color and prejudices of female clients on different continents?

Two decades of business Avon was established in Poland in 1992. Its factory in the Polish city of Garwolin is today one of its largest and most modern facilities in Europe. Cosmetics produced in Garwolin are distributed to 59 different countries all over the world. Avon is the market leader in Poland in the eye-make up segment, where it has a 20 percent share, and in the anti-ageing cosmetics segment, where it has a 18.9 percent market share, according to Euromonitor. Avon is the world’s largest direct seller of cosmetics.

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So will you change the company slogan to “The company for women… and men?” We’ll stick with “The company for women” for now (laughs). However, we will be strengthening it with the slogan “You make it beautiful.” You can have the best product but at the end of the day, without a womens touch it’s only a product. We give her the inspiration, she makes it beatifull. So yes, women will remain our passion. u

Image: Avon

Avon in poland

We have our own R&D department so this helps us adjust our products to the skin tone or preferences of the customers. For example, it is a well-known fact that in Asia, skincare should be whitening so we take all those kinds of factors into consideration.

co v e r s t o r y / bevera g es

Liquid gold Without water, a person can only survive a few days, and it covers over 70 percent of the globe. This makes it a perfect product to sell. But just as with many businesses, the fight for every penny in the beverage sector can be brutal. Celebrity endorsements, lawsuits and stiff competition is just a normal day at the office

he Polish beverage market is very unique. Although all the global giants are present here, they often face tough domestic competitors. In some battles, it’s CocaCola that’s David while a relatively unknown company, like Oshee, becomes a Goliath in the battle for quenching Poles’ thirst. The market is huge, although like many others, it has been hit by the economic downturn. In 2013, it contracted by 1.1 percent to PLN 11.76 billion, according to research firm Nielsen. The golden era ended in 2009, when the value of the sector amounted to PLN 11 billion. That year growth was “only” 4 percent, while just two years earlier it stood at 17 percent. The Polish beverages market is worth some PLN 11 billion

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Energy boost The most exciting market segment in recent years has been that of energy drinks. The tug of war for clients is bitter, with the pole position changing hands constantly as three brands do battle with each other. It’s also very confusing, as companies are ranked by two different

Images: Shutterstock

b y jac e k c i e s n ow s k i

co v e r s t o r y / bevera g es

200 criteria – value and volume – so usually there are at least two leaders. Currently Red Bull is in the lead in the value category with some 20 percent of the market, which is worth roughly PLN 750 million. Second is FoodCare’s Black with 13.9 percent, while third place is currently taken by Maspex’s Tiger drinks with an 11.2 percent market share. But when you take into account volume, then Red Bull drops down to third position with Black in the top spot and Tiger in second. Pulling no punches The fight is as confusing as it is sometimes brutal. While Red Bull is pretty much doing its thing as it does in every other market, Tiger and Black are constantly at each others’ throats and are involved in a lengthy legal battle (for details see box p.24). The market is truly a battlefield, with over 200 brands on the market. “The Polish sector is very mature with a similar structure to other western countries. There is a place for premium products, saver brands as well as the cheapest ones made by private labels,” explained Dorota Liszka, Maspex’s spokesperson. Private labels are an invisible but significant part of the market. “Combined, they control nearly 30 percent of the sector. Every retail chain has its own and I expect that even more private labels will be popping up on the market. On their own they will never be a significant competitor, but when you combine them all, they are an important player,” said Wiesław Włodarski, FoodCare CEO. It should be noted that both Maspex and FoodCare are not only energy drink

there are currently over 200 brands of energy drinks on the market. most of them are small private labels

What is a private label? Private labels are companies that manufacture products under their customer’s brands. For example, when a company wants to have its own brand of energy drink they order such products in these private labels companies. It’s as easy as going to such a manufacturer, picking a product, the packaging and flavor if you want to go beyond the standard one, and that’s it. They can even design a logo for you and a wrapper if you need it! Now most of their customers are retail chains, but a few years ago, every football club had its own brand. Now that fad is over.

“Combined, [private labels] control nearly 30 percent of the sector.

producers and their product portfolios are quite vast, ranging from pastas and cereals to carrot juices. Both companies are also exporters. Last year, FoodCare sent products worth PLN 43 million to 52 countries, while Maspex sold products worth a staggering PLN 3 billion to over 50 countries as well. Multinationals vs domestic The beverages segment is really unique, as very often giant, multinational companies like Coca-Cola and PepsiCo have a really tough time competing with much smaller domestic producers. Their products are usually positioned in the premium category, which very often ends in failure as customers prefer cheaper domestic brands which they already know.

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co v e r s t o r y / bevera g es

Tiger vs Black The origins of the rivalry date back to 2010, when the Equal Chances foundation, run by a famous Polish boxer and former light heavyweight and cruiserweight world champion, Dariusz “Tiger” Michalczewski, terminated a deal with FoodCare. The contract allowed the company to produce, sell and promote the energy drink under the “Tiger” brand, which quickly became the top selling energy drink in Poland. The boxer explained that he had to terminate the contract because FoodCare halted payments of licensing fees to his foundation. FoodCare claimed that since it rebranded the drink to Black Tiger it no longer was using boxer’s nickname to promote its products.

Such examples can be observed in the bottled water market. PepsiCo have tried to enter this market a few times already, yet their Górska Natura, Świtezianka and Aqua Minerale brands have all proved unsuccessful and as such were all withdrawn from the market. Even though multinational corporations own two of the most popular domestic bottled water brands, Żywiec Zdrój (Danone), and Nałęczowianka (Nestlé Waters), these were acquired with their established brand recognition and significant market share. Domestic producers successfully wage wars with multinationals by offering lower prices. Perfect examples of this include Cisowianka (Nałęczów Zdrój) and the aforementioned Nałęczowianka. Both waters are drawn from the same source, but since Cisowianka is lower priced, it has managed to surpass Nałęczowianka in terms of sales.

A few months later, Michalczewski signed a similar deal with foodstuffs producer Maspex. For some time, two different energy drinks called Tiger were on the market, eventually leading Michalczewski and his foundation to sue FoodCare. Meanwhile, FoodCare hired an even bigger boxer – heavyweight superstar Mike Tyson – and released a new energy drink, Black, which quickly gained popularity and became the most popular energy drink in the country. The lawsuit between Michalczewski and FoodCare is still ongoing and both sides are doing battle in various courts. Michalczewski is demanding PLN 32 million in total compensation in at least two different cases. Recently, the boxer’s new business partner – Maspex – filed a suit of its own against FoodCare. It demands PLN 6 million in compensation for copyright infringement, stemming from the period when both companies were producing Tiger energy drinks. FoodCare’s CEO Wiesław Włodarski says the lawsuit “lacks any merit” and says that Maspex is suing his company “because their version of Tiger is nowhere near as popular as his products.”

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“mike tyson is a spokesperson for foodcare’s black energy drink.

Domestic companies have adapted multinationals’ ideas and tailored them to local conditions. An example of this is the success story of Oshee Polska, founded by two former FoodCare employees. Their company emulated Coca-Cola’s isotonic drink Powerade, released it at a much lower price, and as a result it quickly shot up to the top in its category, beating the worldwide giant with ease. But bottled water is so passé. Despite it being the purest drink possible, which everyone has to consume, companies have found new ways to market it and increase their revenues. Enhancing profits Meanwhile, an enhanced drink is marketed as a water which contains additional ingredients, either vitamins, minerals, sweeteners and natural or artificial flavors. They also promise different “boosts,” like burning calories

co v e r s t o r y / bevera g es

Images: Shutterstock, Maspex, Healthy Marketing Team

“red bull garnered worldwide recognition by sponsoring popular athletes and sporting events.

or providing energy. The marketing of enhanced water usually capitalizes on the healthy image of water combined with the perceived health, taste or functional benefits of one or more of the additional ingredients. Whether it’s all true is debatable, and the consumer advocacy group, the Center for Science in the Public Interest, is suing Coca-Cola, the manufacturer of Glaceau Vitaminwater, claiming that its marketing is “deceptive,” as each bottle contains 33 grams of sugar, which can hardly be healthy. But with customers being more health-aware these days, enhanced water is gaining popularity and slowly replacing unhealthy carbonated soda. For example, US consumption of Coca-Cola in 2011 dropped to the similar levels last seen in 1991. What was the company’s answer to make-up for lost revenue? Enhanced drinks.

$4.1

In 2007, Coca-Cola acquired the producer of Glaceau Vitaminwater, Energy Brands Inc, for a record-breaking $4.1 billion (the highest takeover in Coca-Cola’s history). The US giant had to act fast as its main competitor, PepsiCo, already had a few enhanced water brands such as Sobe, Propel or Aquafina. The steep price Coke paid seems to be paying off, as Glaceau holds some 18 percent of the market share worldwide in its category, the same as Danone’s Mizone brand. Between 2002-2011, the enhanced drinks sector has grown by a staggering 504 percent. In Poland, however, only Glaceau is being distributed by Coca-Cola, while other international brands have not yet introduced their products yet. But this will likely change soon, as the market is rapidly developing and many Polish companies have established their footholds with their own products here. Maspex has

is how much coca-cola paid for glaceau vitaminwater producer. making it the highest takeover in company’s history

Peter Wennström, an international brand management consultant and President of The Healthy Marketing Team, wrote down four factors on how to market a healthy product,like an enhanced water

How to:

re-market water >>1. Need the product Focuses on the lifestyle needs of consumers and perception and relevance of the product in their lives. >>2. Accept the ingredient What is the consumer knowledge and awareness of the chosen ingredient? >>3. Understand the benefit Make consumers understand the benefit of the product and its relevance to their lifestyle >>4. Trust the brand Making sure the brand is a credible provider of the benefit. Pointing out its identity and history. Promising consumers benefits from product consumption

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co v e r s t o r y / bevera g es

Top Choice

Most popular drinks in Poland Brand

its T-Water line, and FoodCare is planning to release its Fitella-brand water in 2015. There are other domestic brands as well. But foreign competition is closely monitoring the situation on the market, and after Glaceau, similar brands might be introduced here. “The Polish market is not any different to other European ones. Customers are getting more wary when it comes to spending, on the other hand they’re becoming more health oriented. Poles are demanding customers and demand novelty from their favorite brands, like low levels of fat and sugar.” said Małgorzata Skonieczna, Director External Communications at PepsiCo. According to Euromonitor International, the whole enhanced drinks sector in Poland will be worth some PLN 37.5 million in 2014, a 14 percent rise compared to last year. And this growth may be even bigger in the future, as Poland is fairly backward compared to other European markets, and as Adam Bogacz from AKB Consulting points out, Glaceau was first introduced in Europe in 2007 and it took six years to be finally sold in Poland. “This is how far we are from developed markets,” said Bogacz. u

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Market Share by value (in %, 2011)

Coca-Cola

8.9

Tymbark

Maspex

8.6

Żywiec Zdrój

Danone

7.9

Pepsi

PepsiCo

4.5

Hortex

Hortex Holding

3.6

Nałęczowianka

Nestlé Waters Polska

3.1

Fanta

Coca-Cola

2.9

Cisowianka

Nałęczow Zdrój

2.6

Hoop

Hoop Polska

2.6

Fortuna

Agros Nova

2.3

Kubuś

Maspex

2.2

Biedronka

Jeronimo Martins

2.1

Kropla Beskidu

Coca-Cola

1.8

Nestea

Coca-Cola

1.5

Cappy

Coca-Cola

1.4

Jurajska

1.4

Lipton

PepsiCo

1.4

Ustronianka

WNWM Ustronianka

1.4

Red Bull

1.3

Source: Euromonitor

Full Picture

The value of major sectors in the beverage market Category

Value, PLN 10,000 (Feb 2013-Jan 2014)

Change (in %, year-on-year)

Carbonated drinks

358,460

-0.9

Water

302,512

2.4

Juices, nectars, still drinks

337,452

-2.0

Ice Tea

45,192

-8.5

Energy and isotonic drinks

92,537

-2.7

Total

1,136,152

-0.8

Source: Nielsen

Image: Shutterstock

“Between 2002-2011, the enhanced drinks sector has grown by a staggering 504 percent.

Company

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In the fast lane

Image: Shutterstock

by john beauchamp

Long gone are the days of the Fiat 126p “Maluch” and its big brother, the 125p. No longer will you see Skoda 120s scuttling down the streets of Warsaw. And if you see a Trabant, it’s usually there as a tourist exhibit of times gone by

ith Poles becoming richer, so too have their tastes in automobiles. But what exactly are Poles driving today? According to the latest figures from Samar, an automotive consultancy, January 2014 saw the largest amount of new cars being registered since 2009. Back then, the Skoda Octavia was the best-selling car, followed by the Toyota Auris with Skoda’s smaller Fabia model in the third spot. A month later, in February, the number of new car registrations grew by 34.7 percent year-on-year to land in at 33,324 registrations. The Octavia won hands down over the Ford

Focus, but Poles seem to have a thing for their Czech neighbors, as four out of the top ten models sold in February were manufactured by Skoda. Other top models from February sales include Volkswagen’s Passat, as well as the Opel Astra. Truth be told, the sudden surge was likely caused by the changes in regulations which limited the amount of tax that can be deducted for vans as of April 2014. “Over a quarter of passenger cars registered were equipped with partitions [separating the back seat from the trunk, that allow them to be used for goods transportation] – nearly 28 percent,” the Polish Automotive Industry Association said in a statement.

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Second-hand cars still winning

Going into overdrive Lu x u r y

c a r

s a l e s

i n

P o l a n d

2012

2013

2 17 2 16 11 15 4

1 Source: Samar.pl

Mark of luxury While the Polish automotive market is holding steady despite economic turbulence, the number of luxury cars being sold in Poland is also on the rise. Bentley has been in Poland for six years, while Ferrari and Aston Martin have been here for three. Newcomers to the scene include Rolls-Royce and Maserati, which opened showrooms in Poland in 2013. According to Samar, the average price of a Ferrari bought in Poland is about PLN 1.28 million, the equivalent of 36 Fiat Pandas. But what about sales of luxury cars

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in Poland? The numbers say it all. In 2013, Poles bought 61 new cars from the luxury segment, spending a total of PLN 59.9 million. But when you add this figure to the premium segment, you get a number closer to PLN 4.6 billion, around 20 percent of the entire market. The top luxury car in Poland in terms of 2013 sales was Maserati, with 17 cars sold, with the close runner-up being Bentley. Considering that manufacturers sold two cars each in Poland in 2012, one could say that sales have gone into overdrive. Ferrari also had a bumper year in 2013, selling 15 cars, up from 11 in 2012. Aiming high Nevertheless, the market is a tough one, and earlier in March, rumors abound that the Ferrari salon in downtown Warsaw was going to close. Luckily for Ferrari-owner wannabes, the company management stated that they’re merely working on a new sales strategy in Poland. Automotive giant Sobiesław Zasada opened Poland’s first Ferrari salon with his grandson, Daniel Chwist. In the beginning, they banked on selling up to 15 new cars annually, an optimistic figure. And while they have had to pump their own cash into the enterprise, they are now finally meeting their sales targets – if they are the same as five years ago… While Lamborghini has only managed to sell one car annually in 2012 and 2013, that too may change, as the Italian manufacturer is to open a salon in Warsaw in April, right next door to the Bentley showroom. “We have analyzed the Polish market precisely and we are certain that we are opening the salon at the right time,” the owner of Porsche Inter Auto Polska, which includes both the Lamborghini and Bentley showrooms, Piotr Jędrach told Forbes Life recently. So while the luxury car segment in Poland is certainly on the rise, the only thing that remains to be built are luxury roads. u

or all the new cars sold in Poland, the second-hand market is still one of the biggest in Europe. When Poland joined the EU in 2004 not only did Poles leave the country in search for work, they also took advantage of the newly-opened market. Soon, the number of Germanregistered cars legally coming back to Poland to be sold was climbing through the roof. Poland’s A4 highway, which runs from the border in Zgorzelec down to Kraków through Wrocław and Upper Silesia, provided an ample route for car imports, with the weekend car market in Kraków’s Rybitwy full of German-registered cars. But whether in Kraków or not, second-hand cars then flooded the country. According to Otomoto.pl, a Polish internet car sales platform, in 2013 the most sought after secondhand car in Poland was black, had a petrol engine, was manufactured in 2008, cost no more than PLN 10,000 and was a Volkswagen Golf. According to the website, almost 5 million searches were conducted for such a car, while in 2012 that number was around 3.6 million. The second-most popular second-hand car was the Audi A4. The searches were reflected in new car sales too, as in 2013, the Volkswagen Group, i.e. Skoda, VW and Audi, accounted for 23 percent of all new car sales, with the Otomoto.pl top ten ranking listing six models from the German automotive group. “When we overlook the pricing and economic aspects, what tops the ranking for the choice of car is where the make stands in the Polish market,” Michał Roszkowski head of the automotive section for TNS Polska, a pollster, told Otomoto.pl. “It is the make which determines Poles’ decisions,” he added. u

8TH APRIL SOHO FACTORY WARSAW WWW.CEEQA.COM/2014/SHORTLIST SPECIAL GUEST: KIM WILDE

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E-cigarette industry flourishing in Poland They are hip, cool and trendy! Electronic cigarettes are gaining in popularity, but health experts worry about the dangers they may pose. Nevertheless, the market for e-cigarettes is growing and they are becoming the talk of the town in Warsaw

ccording to data from the eSmoking Institute, a Polish advocacy group for ecigarettes, traditional cigarette sales are in decline – dropping from 75 to 55 billion units in the last decade. Meanwhile, the consumption of e-cigarettes is rising. In Poland, one out of ten smokers already have them, which in total amounts to about 1.2 million users. Most smoke them because they are cheaper than traditional cigarettes – price is a key factor in switching to the electric replacement for over half of smokers. Other commonly mentioned pros include the absence of the smell which accompanies traditional cigarettes, and health reasons. The cost of buying a quality e-cigarette is about PLN 150. The utensil’s liquid, the flavored substance used to fill it, is a further cost of PLN 1020. Assuming moderate use, this can last a week or even more. An e-cigarette is also cheap to maintain, as the spare parts cost no more than PLN 10. Thus, the economic calculations clearly favor the electronic version of this vice. A vein of gold Around 5 percent of e-cigarettes bought by Poles comes from local factories, the rest is imported; 90 percent comes from China. The golden years for ecigarette distributors began in 2010, when the ban on smoking in public spaces was introduced. The following years saw dynamic growth of the distribution network: CHIC, Trendy and SH Prince kiosks and

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stands appeared all over the country. The market leader, CHIC, has already reached the threshold of a thousand stores and a successful online shop. According to data provided by the Association for e-smoking (STEP), the industry in Poland currently employs approximately 10,000 people, generating revenue of around PLN 1.5 billion annually. Meanwhile, exports amount to PLN 37 million, with an estimated value of the Polish e-cigarette market placed at the PLN 500 million mark. The urgency to enter this market has also caught on to the major tobacco corporations. Phillip Morris has already announced its own device for 2014, while British American Tobacco is currently analyzing the market and its entry strategy. For the tobacco giants, investing in e-cigarettes isn’t just about reclaiming countless clients. These products can also provide them with a loophole against the ban on advertising tobacco products and improve their sales figures. More pertinently, current Polish law doesn’t regulate the ways in which this e-vice can be sold and used – thus an e-cigarette can be bought and smoked by a minor, and the decision on whether to sell the device and its spare parts is solely up to the vendor. Poland, e-smoking leader The Polish domestic market has great potential for further growth. According to a report by Market Research, a company which specializes in industry outlook in-

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1.2 million The first ecigarettes were manufactured in China in 2004

Image: Shutterstock

he idea first surfaced in 1963, when the American Herbert A. Gilbert patented a device described as “a smokeless nontobacco cigarette.” His idea never materialized and it wasn’t until 2003 that Hon Lik from China came up with the idea of using a piezoelectric ultrasound-emitting element to vaporize a pressurized jet of liquid containing nicotine. His modified invention was manufactured the next year.

vestigation, Poland’s potential is boosted by lax or non-existing regulation, little negative publicity about e-cigarettes, and multiple retailers vying for market share. Furthermore, two recent academic publications looked at consumer behavior on the Polish e-cigarette market and found that a fifth of all Polish youth, have at some point tried smoking such a device, pointing to a sustained rise in demand for ecigarettes as these teenagers move into the group of adult consumers. Poland’s rise as a prime e-cigarette market has been coupled with the emergence of Polish companies which have successfully branded their products to consumers both at home and abroad. No other firm is a better example of this trend than CHIC, and its retail arm eSmoking World, which already has half a million returning domestic customers in this relatively new market. The company has also expanded aggressively throughout Europe, seeing rocketing sales in the large markets of the Netherlands, Ukraine and Russia. The company also has further plans of launching a chain of specialized retail stores in the Netherlands by the second half of 2014. Finally, eSmoking World is also a trailblazer in terms of distribution channels, as it effectively combines traditional retail and online sales with a threefold increase in purchases through mobile devices. All

Phillip Morris has already announced its own device for 2014, while British American Tobacco is currently analyzing the market and its entry strategy.

e-cigarettes users in poland Meaning one out of 10 smokers switched to these devices. Price is a key factor here.

in all, the company, whose brands such as Volish, Mild or Provog are market leaders in their respective categories, is poised to become one of the major players in the European market, with a growth potential which is still very much untapped. Health-preserving law A strong argument for e-cigarettes is the health aspect. Many smokers swear that their transition to the e-replacement is beneficial to their health and reduces the risk of suffering from disease induced by tobacco smoke. However, the truth is that this product is relatively new; therefore it is impossible to say how this habit will influence their health status in 20-30 years’ time. According to experts from the eSmoking Institute, smoking e-cigarettes is healthier than inhaling the toxic smoke of traditional cigarettes. While they do contain harmful substances, they have much less and at much lower concentrations than their traditional counterparts. And while nicotine remains toxic and addictive, in the case of an e-cigarette a smoker breathes in 30-40 percent less of this substance. Yet the effects of the rest of the ingredients in the e-cigarette liquids remain unknown. Some scientists fear that this can harm e-smokers’ health in the future and, paradoxically, induce diseases as serious as those caused by traditional cigarettes. With no legal regulations in place, the sale of substances of an unknown provenance and quality is clearly possible. At present anyone can produce the liquids, in unfit conditions and from low quality ingredients. Here, again, the issue of control has been completely left up to the distributors. Buying a cigarette… at the chemist’s? Even though Polish laws don’t regulate this sector, the European Union has decided to look into the matter. Taking advantage of a recent vote on the tobacco directive, European politicians have studied the issue of e-cigarettes. The European Commission wanted a top-down classification of these goods as medical products, which would shift the distribution of e-cigarettes

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to pharmacies. Recently, the European Parliament decided to reject this measure by arguing that this would considerably limit product availability, and this in turn is a product which improves the health of countless smokers. The question of electronic cigarettes remains ill-defined in many aspects. The issues of product quality remain unclear; the legal age of buying them and their accessories is yet to be set. Additionally, the limitations to be imposed on their use have been put on the shoulders of third parties. The public transport authority in Warsaw has implemented a ban on smoking e-cigarettes in their vehicles. Restaurant owners and employers are also busy creating their own bans and limits for e-smokers. E-ciggies – boom or bust? Expert estimates place the current global value of the e-cigarette market at around €2 billion, with a projected rise to €10 billion by 2017. Countries such as Poland also demonstrate that a relatively positive image of the electronic devices as compared to their traditional counterparts can lead to further conversions. If e-cigarettes and their traditional counterparts can be considered as rivals, the former currently have as little as 10 percent of Polish smokers convinced, but they also have great prospects of wooing the remaining 90 percent. Furthermore, on a brand new global market in these products, Polish companies have a unique opportunity to establish themselves as international leaders, without having to battle entrenched incumbents. Yet this rosy outlook comes with several serious risks for the whole industry. One of the main factors propelling its impressive growth has been the move to ban smoking in public spaces, which currently does not include e-cigarettes. This could change. Also relevant is the health factor, considered an advantage of the electronic

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Image: Shutterstock

The question of electronic cigarettes remains ill-defined in many aspects

€10 billion

is the projected value of the e-cigarette segment in 2017. Currently it’s valued at €2 billion

devices over traditional cigarettes. But in time and with further medical studies, this unregulated product may even be found to cause more health hazards than its rival goods, completely reversing the trend. Finally, legal regulations, while slow to address new and fast-growing markets, will finally impose more or less restrictive rules on the products, their distribution and public consumption. The newlyadopted EU tobacco directive is a prime example of how such legislation can limit the appeal of e-cigarettes. Considering all the above, while they may become a very popular consumer product, the market for these devices is still at a vulnerable stage and can just as easily ultimately become a niche offering. u

This year I am celebrating my 20th anniversary of living and working in Poland. I have run a number of leading businesses been the CEO of the British Polish Chamber of Commerce and am currently Director of Trade and Investment at the British Embassy in Warsaw. I start my day with Poland AM and the Warsaw Business Journal is my favorite English language read. I regularly use the Book of Lists to find international companies in Poland and when it comes to manufacturing Made in Poland is an excellent way of finding business partners.

Image: K. Marcinkiewicz/Konceptia

Martin Oxley

f e a t u r e / u k raine crisis

Ukraine: the fallout for the Polish economy How badly could the current crisis in Poland’s eastern neighbor affect businesses here?

b y r e m i a d e koya

he beginning of the 21st century was a golden era for Polish exports to Russia and Ukraine. In 2013, Poland exported goods worth €8.1 billion to Russia, a 6.1 percent increase in comparison with the previous year. Between 2000 and 2012 Poland’s exports to the Russian Federation increased tenfold in terms of value. Meanwhile, Polish exports to Ukraine last year were worth €4.3 billion, representing a healthy 5.2 percent increase year-on-year. In comparison, back in 2000, Polish exports to Ukraine amounted to a mere half a billion euros. But while Russia accounts for a significant 14 percent of Poland’s total trade volume and Ukraine accounts for “just” 5 percent, it is the latter country which Polish businesses have poured more money into in recent years. In addition to the thousands of Polish firms which currently export their products to Ukraine, there are over 2,000 Polish companies operating in Ukraine itself. These firms have invested some PLN

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2.7 billion in the country over the past 25 years, according to Tomasz Starzyk from Bisnode D&B Polska, a business intelligence firm. Meanwhile, Polish companies have made investments worth PLN 1.8 billion in the much larger Russian economy over the same period. Additionally, there are 11 Ukrainian firms listed on a special index on the Warsaw Stock Exchange and these firms have attracted almost PLN 3 billion in Polish capital. So how bad could the fallout from the current politi-

cal turmoil in Ukraine be for Polish firms and for the Polish economy in general? Already feeling the pinch The negative consequences of the turmoil in Ukraine are already being felt by Polish exporters. The Ukrainian Hryvna and the Russian Ruble have depreciated in recent weeks rendering Polish products more expensive and thus less competitive in those countries. In January and February alone, the value of Polish exports to Ukraine dropped by over PLN 2 billion compared

f e a t u r e / u k raine crisis

€8.1 billion

Image: Shutterstock

wAS THE VALUE OF POLISH EXPORTS TO RUSSIA IN 2013, a 6,1 percent increase in comparison with the previous year. Between 2000 and 2012 poland’s exports to the russian federation increased tenfold in terms of value.

to the same period last year. Piotr Soroczyński, chief economist at the Export Credit Insurance Corporation (KUKE), said that the unstable currency situation is also creating “payment problems” for Polish exporters. Aleksandra Małozięć from Śnieżka, a Polish paint producer which has a 24 percent share in the Ukrainian market, confirmed that one of the biggest problems for firms like hers is the weakening of the country’s currency. “For manufacturers like us this means price increases. Of course, we

expect to see a further decline in paint sales on the Ukrainian market,” she said. But as Soroczyński observed, currency fluctuations are not the biggest problem. “What is most important is that in the current state of heightened tension and with the possibility of a civil war, the last thing Ukrainians are thinking of now is buying new TV sets or electronics or other such products,” he said. “Right now, people are concentrating on stacking up on food and the basic essentials and that’s it. Companies

producing other products can forget about Ukraine for now,” he added. Possible scenarios Crédit Agricole analysts have laid out two possible negative scenarios for Polish firms doing business in or with Ukraine. The first assumes an economic collapse in the country which would lead to it “halving its imports from Poland.” The second scenario takes into consideration an escalation of the military tensions in the Crimean Penisula and

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f e a t u r e / u k raine crisis

€4.3 billion in eastern Ukraine. This could mean further sanctions imposed on Russia by the West which would in turn trigger tit-for-tat sanctions from Moscow leveled against the US and European Union countries, including Poland. Any of these scenarios would mean bad news for the Polish economy. Then there is the issue of the numerous Ukrainians who have formed the habit of shopping in Poland’s eastern cities, leaving quite a bit of money behind in the process. Ukrainians are said to spend roughly PLN 4 billion a year buying building materials, electronic equipment, food, car parts and cleaning products in Poland. They will likely spend less this year. Due to all these factors, PKO BP analysts have estimated that a recession in Ukraine could mean a reduction in Polish GDP growth by anywhere between 0.2 to 0.5 percent in 2014 while a recession in Russia (or Russian sanctions on EU products) could have an even worse effect. Political economics Of course, when it comes to Russia, politics will play a

was the value of polish goods exported to ukraine in 2013, a 5.2 percent increase year-on-year

of Russia’s January decision to ban imports of all pork products from the European Union following reports of African swine fever in Lithuania. The Polish Association of big part in determining the Meat Producers, Exporters eventual economic damage and Importers has sent a letter Poland could suffer as a result to Prime Minister Donald of the current crisis. Tusk urging him to help them In his now-famous press resolve the issue. Producers conference in March, while believe they could be losing up addressing the issue of Russian to PLN 70 million a month as military intervention in the a result of the ban. Crimean Peninsula, PresiAndrzej Szczęśniak, an dent Vladimir Putin accused energy expert, is also very Poland and Lithuania of “train- worried about the effects of ing” the protesters in Ukraine’s possible western sanctions Maidan Square who ended on Russia in response to up toppling his ally former the country’s aggression on Ukrainian president Viktor Ukraine. “I am worried about Yanukovych. It is unlikely Pu- possible US sanctions on tin will not want to somehow Russia involving, for example, punish Poland for this. crude oil. Poland would pay “Due to our support for the a huge price for that because present Ukrainian govern95 percent of our crude oil ment, it is very possible that imports are from Russia,” said there could be repercussions Szczęśniak. from the Russian government And so an eventual ban on such as the blocking of certain crude-oil imports from Russia Polish products, especially would mean Poland having to agricultural, from coming into buy the resource on the world Russia,” said Soroczyński. market (where prices would This has, in fact, already have risen because of the ban started happening. on Russian oil). Poland’s meat industry has Moreover, Polish refineries reported huge losses because are built to process Russian

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Should be fine, sometime later We shouldn’t kid ourselves, there will definitely be some short-term pain for the Polish economy as a result of the current crisis in Ukraine. The only questions are how much pain, and for how long? However, despite the negative winds blowing from the east, the Polish economy should still do significantly better this year than in 2013, when it expanded by 1.6 percent. KUKE forecasts that despite the crisis on Poland’s eastern border, the country’s exports, which came in at roughly €155 billion in 2013, should still grow by over 9 percent this year. The moderate economic recovery currently being experienced in the developed world should also help the Polish economy. Furthermore, while one can hardly envy the Ukrainians today, their long-term future is by no means doomed. “We believe that the reforms announced by the government will in the long run, improve the economic situation in Ukraine” said Małozięć. Through his aggressive actions and rhetoric, Mr Putin has succeeded in pushing Ukraine into the arms of the West. If the nation’s leaders are able to reform the country and introduce Western standards in their institutions and economy, then taking into consideration the human and natural wealth Ukraine possesses, there is every chance that in a few years time Polish companies will once again be doing brisk business in Ukraine. And hopefully in Russia as well. u

Image: Shutterstock

crude, so bringing in other varieties would mean an immediate rise in costs and higher prices for petrol in Poland with all the negative consequences that would entail.

i n t e r v i e w / ale k sander k w aśnie w s k i

i n t e r v i e w b y e wa b o n i e c k a

“ We in the West now have to abandon the illusion that we can deal with Putin as a reliable partner.

UNITED AGAINST PUTIN Image: Flickr/Piotr Drabik Photos: Bartosz Bajerski

WBJ Observer: We are talking the day after Russia annexed the Crimea Peninsula and after a speech delivered by president Putin to the members of Russian parliament, in which he presented his plan for building a great Russia. Is this a turning point in international relations and does the West need a new policy regarding Russia? Aleksander Kwaśniewski: Yes, because while Putin has spoken before about his desire to make Russia a superpower and is keen on building a EuroAsian Union, and has called the fall of the Soviet Union the biggest geopolitical catastrophe of the 20th century, now he is turning his words and ambitions into actions. He undertook military action

and annexed a part of another country’s territory, breaking a peaceful European order, and this may not be the end of his expansion in Ukraine. What methods he will use to do so are still unclear. I am convinced that he will try and further destabilize the country so he can get rid of the present Ukrainian government in order to establish a pro-Russian one, thus returning to the situation before Viktor Yanukovych was overthrown, when Ukraine was in the sphere of Russian influence. We in the West now have to abandon the illusion that we can deal with Putin as a reliable partner, because I think that we face a man intoxicated with power, which could be seen during his speech in the Kremlin when he displayed his Tsar-like behavior. The United States has to end its policy of a reset

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i n t e r v i e w / ale k sander k w aśnie w s k i

with Russia. It was a generous gesture on the part of the US, but it did not bring any response from Putin, and was seen by him as weakness on the part of president Obama. Do you consider the West’s response to Russian actions in Ukraine as adequate? The personal sanctions introduced so far are being mocked in Russia and criticized by some observers and politicians in the West… In my view the most important issue here is Western solidarity. Sanctions are only an instrument, but the Russians must know that their calculations – that the West is weak and divided – failed, and that the reaction of the US and the European Union was swift and united. In my view, that solidarity of the Western institutions is a value in itself, and I hope that this solidarity will remain, as sometimes, after a period of great emotion, comes a period of calm and calculation. Sanctions are often difficult to introduce because they affect both sides, and especially when they apply to trade, but in the current situation they are necessary. However, in my opinion the most serious threat, which can be imposed on Russia, is the

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creation of a common energy policy by the West. If the Americans agree for the partial export of their shale gas to Europe, and the European Union will spend money for developing an efficient infrastructure to receive it, this could significantly hurt the Russian economy because currently the country has two economic advantages – gas and oil, which they can use as political instruments as well. Without such a common energy policy, even proposed trade sanctions against Russia will have a limited effect. But building a common Western energy policy could at best take years, during which Russia can continue its aggressive policy. Yes, but taking steps towards building a common Western energy policy will have political significance and act as proof of our determination to limit Russia’s aggressive ambitions. Putin’s idea of building a great Russia will also not materialize overnight, it will be a lengthy process. What happened in Crimea is now impossible to be reversed. Eastern Europe will be in crisis for years, but while war is out of question, we in the West have to think and act in a longer perspective.

“Sanctions are only an instrument, but the Russians must know that their calculations – that the West is weak and divided – failed.

Image: Shutterstock

i n t e r v i e w / ale k sander k w aśnie w s k i

How do you view the interim Ukrainian government led by Arseniy Yatsenyuk?

troops have taken part in various NATO missions and cooperate in many different ways.

The Ukrainian government is now in a very difficult situation, and my suggestion is that the European Union should provide it with substantial financial help. At the same time, we shouldn’t have many expectations of him. Yatsenyuk and his government have to act in a situation that resembles a revolution. The state institutions are in disintegration, especially when it comes to its security forces and the army. The main task of the government is to save Ukraine from bankruptcy, consolidate the state’s structures and prepare for the presidential election scheduled for May 25. And the new president, whoever will be chosen, will have a popular mandate and the chance to consolidate the country. Currently not much can be done when it comes to substantial reforms. In my view, Arseniy Yatsenyuk is the best man for the post of prime minister, I know him and his ambitions to reform the country, but for now he doesn’t have the conditions to carry them out. The reforms should be realized after a new president is elected, so he can cooperate with the government and together they will act towards strengthening the state structures and help prevent the economic collapse of Ukraine. Now the West should deliver the first tranche of financial aid in order to help the Yatsenyuk government function, and after presidential elections, deliver the second tranche of aid to help further reforms in the country. Meanwhile, Putin’s idea is to provoke tensions in the eastern part of Ukraine, which he hopes will end in an overthrow of Yatsenyuk’s government to make room for establishing a pro-Russian political set-up as we saw under Yanukovych, but with someone else in his position.

Poland’s reaction to the turmoil in Ukraine and Russian annexation of Crimea is very strong emotionally and politically, as is our support for Ukraine. Is the government’s approach that Poland should act within the EU’s framework, while advocating the use of sanctions against Russia, seen as effective?

Yatsenyuk is doing everything possible to confirm the pro-European stance of Ukraine, is he seen by the West as effective in doing so? Yes, he is very effective and during his meetings with Western leaders, he has proven that he is the right man for the job. He is trusted, so it was possible to sign the political part of the Association Agreement between Ukraine and the EU. However, I want to point out that I consider it very wise that Yatsenyuk declared he is not interested in joining NATO. It is a very realistic decision, because Ukrainian society will not be mature enough for such a decision for years, as former Soviet propaganda showed NATO as the enemy. From NATO’s point of view, the Ukrainian stance is also seen as wise. Besides, current relations between both entities are already strong. Ukrainian

In my opinion the policy of the Polish government during the Ukrainian crisis is wise, because it is very active in supporting Ukraine but also very rational. The government understands that our reaction on the annexation of Crimea by Russia as well as a change in European frontiers will be the most effective if we push to obtain a common European approach to this case. I also want to point out that during the meetings organized by Prime Minister Tusk and President Komorowski with Polish politicians – which I also attended – there was unity regarding the crisis in Ukraine. This shows that when it comes to security matters, our politicians are able to cooperate. I heard that Russia considers Poland to be its primary enemy, which could be observed when Putin accused us of training “Maidan activists.” How do you think Polish-Russian relations will develop given the current situation in Ukraine? I will say that Russia has a very reluctant attitude towards Poland, but it began much earlier, before the present crisis. Russia and Poland have an entirely different attitude towards the position of Ukraine in Europe and this was demonstrated during Ukraine’s Orange Revolution in 2004. Poland stressed its support, and I was very active in Ukraine at that time, pushing for the pro-European aspirations of Ukraine, while those ambitions were never accepted by Russia, which can be now seen in its aggressive annexation of Crimea. So I want to point out that the deterioration in Polish-Russian bilateral relations goes back to 2005, which was later accelerated by the Smolensk catastrophe [which killed President Lech Kaczyński and 95 other high-ranking officials], the Russian report on it, and the refusal of Russia to return the wreckage of the plane to Poland. Yet those tensions did not prevent the development of mutual trade, including the introduction of visa-free movement between the Kaliningrad exclave and the Polish regions which neighbor it. Now Polish-Russian relations are part of the general Russian attitude towards the West, which is hostile. u

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e n t r e p r e n e u r s / sh o w r o o m

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Local talent on display b y k a m i l a wa j s z c z u k

In a time when a growing number of Poles are having their say in fashion design, two young entrepreneurs have established a website that helps sell their products

ichał Juda and Jan Stasz have known each other since high school. Before they started their fashion e-commerce firm Showroom, they cooperated in organizing events and then ran an interactive agency, Filemon & Baucis, which worked for a number of renowned brands in Poland. But the agency did not prove to be challenging enough. “We were looking for something different,” Juda said. “It happened that our friends had just created their own fashion brand. They came to us saying that they don’t really know how to take care of online sales.” So the two entrepreneurs created an app, named Showroom, for the designer friends to sell their products on Facebook. Observing sales carried out through the app prompted Juda and Stasz to examine the potential of the independent Polish fashion market. So they set out to the Łódź Fashion Week and talked to designers individually about their idea. “We got very positive feedback, they all said the app looked good and they would be happy to try and use it,” Juda said. This set them on the right track and soon they were launching similar apps for the designers they had met. In January 2012 there were already between 30-40 of them cooperating. It was then that the two men decided to create one website to market all of those brands, which they called Shwrm.pl. Smart ideas, smart money They soon knew that it was time to look for an investor. “It was the right

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moment, with e-commerce growing in Poland, especially the fashion segment,” Juda said. A number of venture capital funds expressed their interest, but Juda and Stasz decided to choose the offer presented by HardGamma Ventures. The fund acquired 20 percent in the company in exchange for seed capital. Showroom continued to grow and soon secured a sector investor, Burda International. Now Burda holds 25 percent, HardGamma holds 15 percent, and each of the founders controls 30 percent in the company. Over the two years that passed since the company was created, a lot has changed. “Everything – the website, the approach to customers, the team – is different than it was at the beginning,” Stasz said. “We have also changed a lot compared to what we were two years ago.” One of the things that has not changed is that it is the designers who are the stars at Showroom, Stasz added. “They are the most important, they always were and we hope they always will be.” Some 300 designers currently sell through the website. Another key thing is good relations with investors. “We are not simply looking for money and focusing on the amount secured in subsequent financing rounds. We would like to get smart money and see added value in investments,” Stasz said. HardGamma gave them knowhow on managing a start-up and business contacts. Burda provided them with know-how on fashion, traditional media, especially from the fashion segment, as well as an international outpost. Showroom has also always paid attention to customer service and good

}

e n t r e p r e n e u r s / sh o w r o o m

Did you know?

Showroom offers a wide range of clothes and accessories

childrenâ&#x20AC;&#x2122;s clothes are also on offer

Some 300 designers sell through the site

W B J O B SERVER â&#x20AC;˘ a p r i l 2 0 1 4

e n t r e p r e n e u r s / sh o w r o o m

Michał Juda

jan stasz

navigation around the website. Most of its clients are women, but it is hard to specify an age group. The aim is to reach the widest possible crowd. With the help of tools such as remarketing, or ads aimed directly at a customer who has already been to the site, Showroom tries to establish a long-lasting relationship with its users. “In e-commerce its important to minimize the loss of clients, which happens at every stage of the purchasing process,” Juda said. Local and unique They operate in a niche market, but one with a lot of potential. “In the past few years we have witnessed a boom in independent fashion in Poland,” Juda said. “Poland has always had a lot of spinning mills and sewing facilities. Thanks to that, Polish designers have easier access to producers than their colleagues from the West.” Independent Polish fashion has significantly increased its presence in sector media. Almost all Polish fashion magazines now feature brands that Showroom has on offer. To help promote them, the company has set up a traditional showroom in its office, for wardrobe stylists to choose clothes and rent them out. The company is trying to get the best out of global trends developing in Poland right now. “The first one is the trend for everything local. It is getting increasingly important for customers to

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“In the past few years we have witnessed a boom in independent fashion in Poland.

Growing and learning The plan for the next few years is to “grow, grow and grow,” as Stasz put it, together with cooperating designers. Showroom would like to remain the leader of its market segment and ensure the segment itself grows as well. Juda and Stasz are planning more presence abroad, mostly in the West. The website already has an English-language version, but there is need for a more systematic approach. Poland is a large market by itself and a new e-commerce site usually take a long time to conquer it before even thinking of foreign expansion, Juda said. For the founders themselves, the goal is to continue learning. Juda graduated from the Warsaw School of Economics but says that his management skills have come from actually running companies and not from academic knowledge. He hopes to find out even more as Showroom develops. It is also important to make the core business fairly independent, so they can focus on new directions. Stasz gives a nod to these goals and adds that he would like to be finally able to go on vacation, a wish expressed by many entrepreneurs working hard to develop their business. u

Krzysztof Kowalczyk, managing partner at HardGamma Ventures:

“It was the team not the start-up concept itself that was key to deciding

about investing significantly Showroom for me. I knew the team, I could see how they manage their business, how they use online tools, so I knew I could trust them. The perspectives for the independent fashion segment in Poland were also developing at that time, just like the independent food segment is developing now. Such a boom is however not enough to decide and it raises the question whether an investment will be attractive for funds, whether it will bring enough profits for both the company and the investor. Nonetheless, it was already visible that Polish e-commerce could grow in the future. Based on what we could could see in Germany, the United Kingdom or the USA, we assumed at the fund that Poland would start catching up within five to six years. By now, Showroom has become a strongly-developing company in its growth phase. Our investment horizon is several years. Of course there may appear the possibility of an opportunistic exit, but for now we are continuing the project.”

Images: Showroom, HardGamma Ventures

know where a product has been made, by whom and from what kind of material,” Stasz explained. Another is the quest for unique things, designed by individuals a customer can relate to, he said.

ZacZnij.biZ – idea – business – success

2014

Zacznij.biz – idea – business – success, was aimed at: • micro- and small enterprises with big growth potential, operating in the high-tech sector, seeking to raise capital for development and implementation of new technologies, • academics: researchers, graduate students and students of technical universities, who want to commercialize their innovative ideas, • entrepreneurs with the projects operating in the icT sector with global growth potential.

images: Roxana dawid

Zacznij.biz – idea – business – success, is a business competition organized by the Polish confederation Lewiatan and Lewiatan business angels. The idea behind the contest is to promote entrepreneurship, assist in preparing business plans and attract investors – business angels – to work with the best ideas. a good idea is a necessary but not sufficient condition to receive funding – the ability to execute, experience, commitment (including a financial commitment), and a proper business model are of key importance.

Honorary patronage over the Zacznij.biz competition was taken by: Ministry of economy, Polish agency for enterprise development, national centre for Research and development and Patent Office of the Republic of Poland. in the early stage of the competition the jury selected 88 participants out of more than 100 applications. Members of the Zacznij.biz jury included: szymon Kurzyca (Lba), Jolanta Kramarz-Linkowska (business angel), daniel Lewczuk (executive network), aniela Hejnowska (Groupon Polska), Wojciech Kuźmierkiewicz (Polpharma scientific Foundation), Rafał Mrówka (Kic innoenergy Poland Plus) and Maciej strzębicki (Tomorrow consulting).

On september 16, 2013, the fourth edition of the Zacznij. biz competition was launched. The past three editions saw over 400 projects submitted, representing different business sectors. The prize for those who enter the best ideas into the competition was to interest potential investors from Lewiatan business angels (Lba) – the most active business angels network in Poland.

Material co-funded by the European Union under the European Regional Development Fund

ZacZnij.biZ – idea – business – success

innovatorium i and ii selected contestants were invited to take part in the innovatorium i workshop. The purpose of this workshop was to deliver understanding of business angels' expectations regarding business models, marketing aspects, competitors or financial projections and valuations. after innovatorium i, in november 2013, participants had time to improve their business plans, which were then voted on by the jury. The jury chose 20 projects to take part in the semifinal phase of the competition. Prior to the semifinal presentations, these projects were invited to participate in innovatorium ii. The purpose of this workshop was to prepare the participants for the pitch, i.e. presentation of their ideas to the potential investors – business angels. all the participants then prepared for their project presentations in front of the jury

– which took place on February 11, 2014. each of the contestants had 15 minutes to make their pitch, and a further 15 minutes for a question-and-answer session, just as in the case of real pitching to investors. Jury members admitted that selecting the finalists was a very difficult task mainly because each project was in a different industry. The jury's assessment was done according to how appealing the projects would be to investors. after a day and almost 20 project presentations, the semifinal stage of the Zacznij.biz competition revealed three finalists. apart from the finalists, the jury also decided to reward five semifinalists. The finalists as well as the chosen semifinalists had the opportunity to showcase their ideas at a stand at the Gala.

The Gala

We were honored to have President of Polish confederation Lewiatan - Henryka bochniarz, President of Polish Patent Office – dr. alicja adamczak and director of department of business environment institutions support – Michał bańka, as guests at the Gala event. The Gala was hosted by Joanna Osińska, TVP info.

ZacZnij.biZ • 2014

images: Roxana dawid

On March 4, 2014 in the copernicus science centre in Warsaw the competition Final Gala took place. The Finalists presented their projects to potential investors. The winners of the competition were selected in a live voting by all the guests attending the Final Gala. among the voters there were representatives of the Honorary partners, the Jury, business angels associated with Lewiatan business angels, venture capitalists as well as members of both private and state organizations specializing in supporting entrepreneurship and innovativeness.

ZacZnij.biZ – idea – business – success

images: Roxana dawid

The Winners: 1st Place - agrobazalt

2nd Place - Ubliko

3rd Place - LabToolbox

The project’s goal is to develop and market a new ecologic compound which would improve soil quality and stimulate plant growth. This will be possible thanks to an innovative and patented solution of granulating basalt powder. it will fit perfectly in the market niche in the granulated ecologic fertilizer sector. agrobazalt can be used in ecological agriculture, horticulture, home gardens and vineyards. Production of the granulate also eliminates the need to gather and store mining waste.

ubliko is a solution which could replace internet browsers for mobile app use. The software adjusts applications to the user’s device, geeting rid of the need to create multiple versions of the same software for different devices. it allows the creation and development of multi-device apps, which can communicate with the user via different appliances simultaneously. This way ubliko reduces costs of software development. The software can be implemented in two ways, as a software-as-a-service (saas) or as a module installed on the client’s infrastructure.

LabToolbox is software which in a simple way helps to manage workflow of a research unit. it manages the regular purchase of chemical reagents, booking lab equipment, proper marking of test samples and managing disk space and usage. LabToolbox was designed in cooperation with scientists, which makes sure that all of their needs are taken care of and all the problems that are occurring during the R&d process. The system makes managing scientific facilities easy and lets you spend more time on research work.

during the Final Gala the special prize was handed out by a representative of the Partner of the Zacznij.biz competition – ZF Polpharma sa. The awarded project was LabToolbox. Rewarded semifinalists were: bowman dynamics, audio sense 3d, deligic, Grzybotest, innowacyjna diagnostyka – amplicon.

2014 • ZacZnij.biZ

ZacZnij.biZ – idea – business – success

Polish confederation Lewiatan

Polish confederation Lewiatan was established in January 1999 as a nationwide representation of employers to the state and trade unions. Today it is an organization of 60 sector and regional associations of private employers and 25 individual members. Thus, in total there are about 3,900 companies employing over 830,000 workers. Lewiatan in offices in Warsaw and brussels employs professionals experienced in a wide range of issues such as: labour relations, macroeconomics, the small and mediumsized enterprises sector, and the european union. The confederation participates in social dialogue, taking part in the Tripartite commission for social and economic issues. The Polish confederation Lewiatan contributes to many international activities. as a member of businesseu ROPe Lewiatan is able to influence regulations at the international level. Lewiatan supports the day-to-day activities and interests of its members and provides trade organizations with expert reviews. The confederation facilitates business contacts and, owing to the membership in international institutions, offers its members access to international standards and know-how. For more information visit: www.konfederacjalewiatan.pl

2014

Lewiatan business angels

Lewiatan business angels (Lba) is the largest and most active business angels network in Poland. it was established in 2005 with the use of eu funds under the brand of Polish confederation Lewiatan. Lba matches entrepreneurs who have innovative ideas and ambitious development plans with private investors (business angels). its main goals are to promote the business angels investing in Poland, match private investors with companies seeking growth funding and exchange experience and encourage best practices. Lba assists in gaining capital for companies on an early stage of their development, including start-ups, which are not financed by banks (due to the lack of sureties) nor by venture capitals (the investments are too small in scale), and helps to identify the best source of angel financing for each individual business. examples of companies that have received financing due to Lba are: W biegu café, ekobilet, getMelon, inKantor, MedicaLGORiTHMics, LeGic Luxury Goods import company Ltd., air Ventures. For more information visit: www.lba.pl

On behalf of the Polish confederation Lewiatan and Lewiatan business angels, we would like to congratulate the winners and thank all of our Partners: HOnORaRY PaTROnaTe

PaRTneRs

Media PaRTneRs

Material co-funded by the European Union under the European Regional Development Fund

e n t r e p r e n e u r s / m o dern w o r k place

Work 2.0

how technology is upgrading our jobs

Image: Shutterstock

b y S e r g i u s z P r o k u r at

People desperately want to know whether technology and machines are going to take work away from them â&#x20AC;&#x201C; but this question should be reversed: Who will work in the Digital Age, the world of Work 2.0?

1811, when it was reported that Ned Ludd had infamously destroyed stocking frames in industrial Britain, workers were convinced that machines would take their jobs away from them. However, it turned out that there was more than enough work, both for machines and for people. Economists reassured that workplaces would be created bountifully â&#x20AC;&#x201C; and it has been so over the past 200 years. The Austrian economist Joseph Schumpeter labelled these changes as creative destruction. Many people seem to think that automation is something for the distant future, meanwhile, the process is ongoing right before our eyes. Supermarkets are a good example, where staff are being traded in wholesale for so-called selfservice checkouts. Obviously this is done to reduce costs. Machines are still far from perfect, but we can expect them to be increasingly reliable and supermarkets are in for large savings thanks to them. Man vs. Machine Barring some unexpected changes, everything points to the further robotization and informationalization of the entire space in which we operate. Experts from the International Federation of Robotics reckon that 2014 will be as equally fruitful for robotics as 2013. Computers are everywhere right now. Simple business processes are increasingly automated, with IT specialists and programmers working in nearly all large companies. In the information and communication technology (ICT) sector, changes

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Robots and algorithms are becoming better at building cars, writing articles, translating. There was a time when these tasks were done by humans. So how will we, humans, make a living?

BIG NUMBERS

2.749 billion people

are occurring fast enough to surprise even sector analysts. Automation and robotics are becoming the as-of-yet undiscovered factor transforming our society – but is this transformation for the better? Disappearing jobs Robots and algorithms are becoming better at building cars, writing articles, translating. There was a time when these tasks were done by humans. So how will we, humans, make a living? The answer to this question lies in the list of jobs which computers can do. If a machine can do something, it is just a matter of time before it will be doing it cheaper than a human. “Dancing with Robots,” a report published by the American think tank Third Way, sheds light on the problem of “disappearing” jobs. The authors of the report find that two conditions have to be met for a task to be done by a computer. First, the information: the information necessary to conduct the task has to be gathered in a form understandable to a machine. Second, the processing: information processing necessary for executing the task in question has to be possible to note in a set of rules. The first condition is a question of advanced interface (sight, hearing), the second is a question of information processing – a process similar to human thinking. But can and will machines think like us? Now there aren’t any which can. However, applications, software, machines and robots have acquired abilities such as speaking, listening and learning. We still haven’t noticed that technological change is accelerating geometrically. The calculations of a German mathematician, Martin Grötschel, show that between the years 1988–2003 the efficiency of computers in basic arithmetic operations has increased 43 million times.

APRIL 2014 • WBJ OBSERVER

Upgrading to Work 2.0 The labor market is changing as swiftly as our reality. Today work is being upgraded to version 2.0, where people cooperate and at the same time compete with machines. Work is carried out by people sitting on chairs and gazing into their monitor all the time. Their minds, bodies are informational, flexible, and based on multitasking. They work part-time, sometimes 15 hours in a row, sometimes on a Sunday, often remotely. A worker who engages in Work 2.0 is only remunerated for success – i.e. delivering the product, service and not for the actual work done measured in hours. The worker bears the costs of the equipment he uses, of the insurance taken out on the effects of his work, of continuous education, of the effects of his illnesses. The how, why, when and where of work has never been so open to individual interpretation as now. The world is entering a phase where an increasing number of workers have to be independent, creating their own brand through social media and proving that they can generate added value for enterprises. Employers who want to outdo their competition will have to employ people who will help them build a competitive edge on the market. This means that the demand for creative workers is rising, for workers who can keep up with the changing trends on the market and, most important of all, think independently. Companies in fact want creative workers, workers 2.0. Work 2.0 takes place in the digital world, where work isn’t based on the strength of muscles or machines, but on knowledge. Thus, the most significant wealth of a company is the intellectual capacity of its employees – their creativity and knowledge matter more than resources or capital. The observed

currently use the internet, which stands for 38.8 percent of the global population. Back in December 1996, internet access was a privilege enjoyed by 36 million people, which amounted to 0.6 percent of global population. In June 1997, that number had risen to 479 million. Five years later, the web was used by 1.043 billion people – 16 percent of the Earth’s inhabitants. Sources: Internet World Stats, IDC, Nua Ltd, ITU

51%

is the amount of internet users who have Facebook accounts, with 25 percent simultaneously declaring themselves as Google Plus users, while 22 percent use Twitter and YouTube. Source: GlobalWebIndex

35 zettabytes

is how much data the world will be storing by 2020, which is equivalent to 35 billion terabytes, an increase by a factor of 44 compared to their stock in 2009. Source: IDC

e n t r e p r e n e u r s / m o dern w o r k place

Image: Shutterstock

changes mean shifting to a new paradigm in organizations and management.

SERGIUSZ PROKURAT IS THE AUTHOR OF THE BOOK WORK 2.0: NOWHERE TO HIDE. AVAILABLE AT AMAZON.COM

Going digital The bygone era of mainly industrial production was material and analog. This applied to products, money, invoices, documentation and forms of communication between workers. Meanwhile, the new economy is digital. Products and services are increasingly digitized at the time of their creation, becoming available on a global scale. This is great news – it gives the economy the ability to produce more goods and services. The internet has created a new world, both dangerous and attractive. The

fetishization of technology, innovativeness, creativity and creation takes place online. $25 – this is how much, according to Ed Herr from Herr Food Inc., a pack of fries would cost us, if it were produced using methods from 60 years ago. In 1946, when the company was starting out, producing each pack involved ten times more workers than today (which in economics is known as the labor intensiveness of production). The productivity of work increases with the adoption of new technologies. Of course this means that there are fewer jobs, but profits are higher. We might be on the verge of a fantastic new era… if we all manage to enter into its heydays. u

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THE DEFINITIVE GUIDE TO POLISH EXPORTS AVAILABLE IN MAY 2014 The annual export guide surveys the industries, firms and organizations fuelling Polish exports: > boosts Polish firms and products > profiles fastest growing Polish export industries: this year e.g., design, IT, pharmacy, traditional polish food > expert macroeconomic and legal analysis > available at foreign chambers, Polish embassies/consulates abroad, key Polish and foreign conferences and trade fairs > 12 500 copies distributed annually plus 2500 online version

CONTACT/ADVERTISING + 48 504 201 007 or abrejwo@wbj.pl Strategic partner

Industry partner

Chamber of commerce partners:

April 2014

WITH

20 PAGES OF REAL ESTATE NEWS

High Streets: ul. nowy świat Warsaw’s Fifth Avenue

70-71

market for lofts Interview with Emmerson Evaluation 66-67

Interview Exclusive interview with Eduard Zehetner, the CEO of Immofinanz Group 68-69

First-mover advantage A growing number of developers are taking up refurbishing projects, some with an interesting form of financing

61-65

mipim report The 25th edition of Europe’s most prestigious real estate fair 58-60

PLUS: Poznań City Center sold �� 52 Prologis’ new projects �� 52 Krokus mall redevelopment �� 54 Chmielna 25 changes hands �� 55 Ovo with general contractor �� 56

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Prologis has launched the construction of a new 27,000 sqm unit at the Prologis Park Wrocław V complex. Unlike earlier built parts of the logistic park, it will be a speculative unit. Prologis Park Wrocław V already comprises four build-to-suit units, completed within the past two years. It is located near the intersection between the A4 highway and the S8/E67 expressway. The four existing units at Prologis Park Wrocław V have a total area of 90,000 sqm. They were built for Eko Holding, Neonet, Tradis and UPM Raflatac. Prologis earlier announced it would build an 11,200-sqm build-to-suit distribution center for Prime Cargo, a Danish thirdparty logistics company. The facility will be developed on Prologis’ existing land bank within Prologis Park Szczecin, which offers direct access to road and ferry routes. It is scheduled to be completed in the third quarter of 2014.

retail

ECE and Resolution buy Poznań City Center

Images: ProLogis, ECE Fund

Logistics

Prologis launches new projects

The mall has a GLA of 58,000 sqm

office

Nestlé leases 10,000 sqm in Ocean Business Park in Warsaw

Nestlé Polska and Nestlé Waters Polska will lease 10,000 sqm of office space in the Ocean Business Park, currently under construction in Warsaw’s Mokotów district. The office building, scheduled for completion in Q1 2015, will offer a total of 17,600 sqm of GLA on eight floors. Kronos Real Estate is the investor behind the scheme. JLL represented the tenant in the lease negotiations. “Nestlé was searching for modern, functional and flexible office space. As well as being a prestigious office worthy of a leading global company, the location had to allow for further development of the company’s structures,” said Julita Spychalska, national director at JLL. u

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CE European Prime Shopping Centre Fund and Resolution Property have acquired shopping mall Poznań City Center from Europa Capital and TriGranit. The funds bought the mall through a 50:50 joint venture partnership. The deal value was not disclosed. However, market sources estimate it at over PLN 1 billion. “Poznań City Center is a significant addition to our Polish Portfolio and the center presents strong asset management potential and future development opportunities in line with our European strategy,” said Peter Todd, partner at Resolution Property. “With the acquisition of Poznań City

Center, the ECE European Prime Shopping Centre fund is fully invested,” said Volker Kraft, managing partner of ECE Real Estate Partners. “I am very pleased that we are now also operating in the fifth biggest city of Poland – the center’s highly-frequented city center location makes it even more exciting. The management expertise of ECE will help to further establish the center on the market and to add to its success,” Kraft said. Poznań City Center opened in October 2013. It includes a 58,000 sqm shopping mall and a public transport hub. The mall is 90 percent leased. Its retail tenants include Saturn, TK Maxx, H&M, Reserved, Bershka, Pull&Bear and Toys’R’Us. u

WBJ.PL TO ADVERTISE: AGNIESZKA BREJWO, ABREJWO@WBJ.PL, PH. +48 504 201 007 SUBSCRIPTION: AGNIESZKA MICHALIK, AMICHALIK@WBJ.PL, PH. +48 797 634 123

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Property developer Euro-Styl has announced plans to build Tensor Office Park, an office complex in Gdynia, northern Poland. The complex will include three office buildings that will also have retail space on their ground floors. Construction will be launched in Q2 2014. The first stage of the investment, comprising 4,960 sqm, is scheduled to be completed in the second half of 2015. Altogether, Tensor will have 20,000 sqm of class-A office space and 446 parking spaces. The office complex has been designed by architects from the Degutis Studio. It will be commercialized by JLL.

retail

Krokus Shopping Centre to be redeveloped

Logistics

Point Park Properties to build BTS for Zaparoh Krokus Shopping Centre in Kraków

Warehouse developer Point Park Properties will build an 11,252-sqm built-tosuit production and warehouse facility for Poznań-based furniture producer Zaparoh within the PointPark Poznań industrial park. The company has signed a lease for 4,386 sqm of production area, 6,201 sqm of warehouse space and 665 sqm of office space. The company will employ 150 people in its new facility.

roperty developer Unibail-Rodamco and real estate investment firm Valad Europe have signed an agreement on redeveloping and extending the Centrum Handlowe Krokus (Krokus Shopping Centre) mall in Kraków, the firms said in a press release. Krokus Shopping Centre, part of Valad companies

Offers for PHN expected in April

retail

Zielone Arkady mall to be built by 2015

Construction company Strabag said it will deliver Zielone Arkady, a shopping mall in Bydgoszcz, north-central Poland, in 2015. The investor behind the scheme, which will offer 50,000 sqm of GLA, is ECE Projektmanagement Polska. The construction is set to commence in April 2014 and finish in October 2015. The building will be constructed according to BREEAM sustainability standards. It will be accompanied by a six-storey parking garage. u

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Europe’s Polish Retail Fund portfolio, is located in the north-eastern part of Kraków, Poland’s second-largest city. It now has a total GLA of 30,000 sqm. It is situated next to a Multikino cinema complex and a water park, Park Wodny. The companies plan to add another 50,000 sqm of GLA to the mall. u

oland’s State Treasury would like to have the privatization process of real estate group Polski Holding Nieruchomości (PHN) completed in H1 2014 and expects investor offers this month, Reuters reported.

“Technically it is possible that a bid for PHN will happen in April,” Deputy Treasury Minister Paweł Tamborski told the agency. PHN had a consolidated net profit of PLN 100 million in 2013 compared to a net loss of PLN 170.8 million in 2012, the company said in a financial report last week. Operating loss came in at PLN 7 million compared to loss of PLN 232.5 million a year ago. Operating revenues amounted to PLN 171.3 million compared to PLN 187.7 million in 2012. The company plans to earmark all of its net profit for dividend. u

Images: AXI Immo, Valad Europe, Polski Holding Nieruchomości, LHI, Hampton

office

Euro-Styl to build Tensor Office Park

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mixed-use

hospitality

IVG buys Chmielna 25 from LHI

arsaw-based investment fund IVG, managed by IVG Institutional Funds GmbH, has signed a preliminary sales agreement with developer LHI to purchase the Chmielna 25 office/retail scheme located on ul. Chmielna, one of Warsaw’s high streets. The transaction value has not been disclosed. The nine-storey scheme offers 4,500 sqm of class-A office space and 1,800 sqm of retail space. The retail portion has already been leased for the flagship store of children toys and clothing retailer Smyk. The tenants of the office portion include the developer of the building, LHI, and lender Deutsche Hypothekenbank. The project has been awarded a LEED

427 sqm is how much retail space per 1,000 inhabitants Warsaw has, according to JLL.

Hilton to open another hotel in Poland

Hotel operator Hilton Worldwide has signed a franchise agreement to open another hotel under the Hampton by Hilton brand in Poland, this time in Jelenia Góra, a health resort in south-western Poland. The three-storey scheme, located close to the city’s Old Town and previously serving as a retail facility, is currently being refurbished and transformed into a mixed-use building, comprising a 118-room Hilton hotel. Its owner, a Szczecin-based company called Ariadne, wants to open the hotel by the end of 2014. Hilton Worldwide currently has 17 hotels operating or under construction in Poland. Six of them are scheduled to open this year, including DoubleTree by Hilton Warsaw Conference Centre & Spa and Hilton Garden Inn Kraków Airport. u

Gold certificate. It was designed by the Spotkanie Liderów Bulanda Mucha Architekci architectural studio. u

Spotkanie Liderów

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Anna Duchnowska has been appointed as director of asset management at the newly opened Warsaw office of Invesco Real Estate. It will be her responsibility to coordinate the firm’s Polish asset management initiatives. “Anna’s appointment is testament to our philosophy of having local specialists on-the-ground, who are fully knowledgeable about their marketplace and have the right business contacts to add value to the investments we make on behalf of our clients,” said Andy Rofe, managing director of IRE – Europe. Duchnowska has ten years of experience in asset management, investment, leasing and finance. Over that time she has been focused on property markets in Poland and other countries of the CEE region. She previously worked for Colliers International and AIB PPM. Robert Sztemberg has been appointed as head of the Corporate Finance Department at JLL’s office in Poland. He will lead a team focused on the debt market, including financing and debt refinancing for both investors and developers, and on consulting services for banks. “Robert’s experience in the banking sector is invaluable and it will excellently contribute to the skills within JLL’s Corporate Finance Department in Poland,” said Tomasz Trzósło, Managing Director of JLL in Poland. Sztemberg holds a degree in Business Administration from the Polytechnic in Konstanz. He has extensive experience in the banking sector, including several years at Germany’s HSH Nordbank. u

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mixed-use

Eiffage to build OVO Wrocław

Image: Wings Properties

who’s news

OVO will comprise offices, apartments and a hotel

eveloper Wings Properties has chosen Eiffage as the general contractor for its OVO Wrocław project, the companies announced in their respective press releases. Construction work is due to start in the second half of April and take about two years. OVO Wrocław, located in Wrocław in south-western Poland, will comprise

169 apartments, 28 office units and a DoubleTree by Hilton hotel with 189 rooms. The building’s total area will be 48,627 sqm. The value of the construction contract is PLN 260 million, out of which PLN 100 million was provided by the investor, while the rest comes from a loan granted by Alior Bank. u

13th

683% y/y

is Poland’s position in CBRE’s ranking of the most sought after markets for international retailers, with 60 countries ranked.

is by how much investment in office schemes in Poland’s regional cities grew in 2013, according to a report by Cushman & Wakefield.

retail

Footfall dropping in 2014

oland’s FootFall index published by Experian dropped by 4.7 percent in February in year-on-year terms. Cumulative footfall decreased by 2.67 percent over the first two months of 2014 compared to the corresponding

period of 2013. In January the index was 0.4 percent lower than in the corresponding month of last year. The FootFall index is measured in selected shopping malls across Poland and can be used to estimate retail sales. u

Changes CEEQA report

Modern shopping E-commerce â&#x20AC;&#x201C; opportunity or threat? Winds of change Amazon is influencing all areas of the real estate marke t L i f e t i m e c o mm i t m e n t Paul Gheysens receives Lifetime Achievement Award

Digital revolution

With e-commerce taking hold in CEE and the retail market increasingly adopting a customercentered model, CEEQA experts discuss the possibilities and risks for investors and developers in all areas of real estate

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ceeqa report introduction

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New Europe perspective With new hope coming from the south and turbulence brewing in the east, the CEE and SEE markets are increasingly on investors’ radars

fter half a decade of cautious planning and painstaking calculation, Europe finally breathes a sigh of relief. The worst is behind us and most of Europe is finally ready to turn over a new leaf and start a chapter filled with growth and opportunity. Although Spain is slowly getting out of the doghouse, the other southern states still seem too uncertain to invest in. So investors’ eyes turn even more towards Central and Eastern Eu-

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rope in search of growth opportunities and stable returns. Poland and the Czech Republic have long been the focal point for investors looking at CEE. Their location makes them ideal for logistics hubs. Poland is also the only European country that made it through the crisis without seeing negative growth, further instilling a sense of safety in risk-averse institutional investors. Back on the menu Southern Romania has also made a comeback, seeing 3.5 percent growth in 2013. The forecasts for 2014 are also quite optimistic, with an increasing number of real estate investors turning their gaze to the 20-million nation. However, the sky isn’t all blue. Clouds gathering over Ukraine make some investors uneasy about the future of the market. Others see the developing situation as an opportunity in the long run. Once Ukraine moves closer to Europe, which seems all but inevitable, the western part of the country may open a world of possibilities to money managers looking to make higher-than-average returns. In the spotlight The region is definitely on the radar, not only for European investors, but also for their counterparts from Asia and America. All major international real estate fairs have conferences and events devoted to the CEE and SEE markets. The most recent CEEQA@Mipim event featured a two-hour Insight Summit discussion and a cocktail party, which attracted some 300 industry professionals and CEOs. Experts taking part in the Insight Summit discussion focused on the impact the currently unfolding digital revolution may have on the real estate market in the CEE and SEE region. They discussed the changing landscape across all asset classes, from traditional retail losing ground to e-commerce and what it may entail for the logistics and distribution segment, to the office market and the new trends set by tech firms. Change is inevitable One thing is certain: the world will not be the same in 10 years’ time. As Jeff Bezos put it, “I very frequently get the question ‘Jeff, what’s going to change in the next ten years?’ I almost never get the question ‘what’s not going to change in

Digital Revolution panel “The Money Picture” included (L-R): Michael Kroeger, head of international finance at Helaba; Thierry Leleu, head of funds management at Valad Europe; James Brown, head of EMEA research & consulting at JLL; Eduard Zehetner, CEO of Immofinanz Group; Mike Rodda, head of EMEA cross border retail investment at Cushman & Wakefield; Joseph Ghazal, managing director/ head of capital deployment for Europe at Prologis

The CEEQA@Mipim conference attracted over 300 real estate professionals

the next ten years? I submit to you that the second question is actually the more important of the two.” According to Amazon’s founder it’s necessary to identify the things that will stay the same and build your strategy around them. “It’s impossible to imagine a future ten years from now when a customer comes up to me and says ‘Jeff, I love Amazon but I just wish the prices were a little higher,’ or ‘I love Amazon, but I wish deliveries were a little bit slower,’” Bezos said. Once you realize that, the digital revolution that seems to be turning the real estate business upside down stops being a threat and becomes an opportunity. u

The cocktail reception after the two-hour conference brought together the crème de la crème of the industry

Nicklas Lindberg, president of Skanska Commercial Development Europe (second from the left) hands the RealGreen Investor of the Year award to Peter Heckelsmüller, senior investment manager at Deka Immobilien (first from the right), accompanied by the awards ceremony’s hosts: Monika Richardson and Richard Hallward (read more on p. 16)

The awards ceremony featured live entertainment

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ceeqa report digital revolution

Digital Revolution panel “The Tenant Picture” at MIPIM (L-R): Raimund Paetzmann, director, European CS/ OPS Real Estate, Amazon EU; Hadley Dean, managing partner, Eastern Europe, Colliers International; Gerhard Dunstheimer, deputy CEO, ECE Projektmanagement; Alan Colquhoun, head of CEE, DTZ; Otis Spencer, president, Peakside Polonia Management; Robert Dobrzycki, managing partner, Europe, Panattoni Europe

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Modern shopping This year’s Insight Summit focused on whether and how the fast-approaching digital revolution, particularly e-commerce, will shake the foundations of real estate

ow will retail adapt to the changing environment? Will the warehouse market appropriate a portion of retail, with stores going online and moving their merchandise to distribution centers? Will the office market take the digital revolution in stride or will it dwindle? These are some of the issues experts at MIPIM discussed, with particular focus on the CEE region. Hurricane e-commerce Retailers have been under siege from e-commerce for quite some time now, though some say the real shift has yet to take shape. “The general belief is we’re going to recognize the change in traditional retailing once same-day deliveries happen,” said Colliers’ Hadley Dean. Over the years, traditional brick-andmortar retailers have developed several techniques of dealing with the digital threat: limiting the retail space they operate on, opening their own online stores or making their physical space more appealing by adding entertainment and leisure features. Any way is good as long as it keeps you from getting blown away by the ever-expanding e-commerce hurricane. However, experts posit that it need not be one or the other, and that both e-commerce and traditional retail can co-exist peacefully, maybe even create some synergies. “We have to create a new environment where we integrate online and offline features and combine the advantages of both worlds,” said Eduard Zehetner, CEO of Immofinanz Group. James Brown, JLL’s head of EMEA Research & Consulting agreed saying that shopping is by no means only about purchasing products and that it is increasingly about the experience. Experience W B J O B SERVER • a p r i l 2 0 1 4

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ceeqa report digital revolution

that only physical interaction can provide. “I’m a firm believer in physical space. I think there is very much a future for the physical space and I think it will thrive,” Brown said, but warned that “in order for them to thrive they need to change.” Live and learn No one disputes the fact that change is inevitable. “The only thing that won’t change in the next 10 years is that my

tenants will always say that my rent is too expensive. I will always tell my bankers that their margin is too expensive,” Thierry Leleu, head of funds management, Valad Europe, said jokingly. As with any evolution, those that can adapt will survive. The key here is speed. “Our philosophy about the shopping mall is that it’s a platform and it has to be flexible. We have to adapt faster than we did in the past,” said Gerhard L. Dunst-

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Quadrio, Prague, Czec h Republic Development and Long Term Financing Lead Arranger • Co-Le nder

heimer, deputy CEO of ECE Projektmanagement. To show the pace in which retail space has been changing, he added that 10 years ago the percentage of gastronomy in shopping malls was around 2 percent, and now it’s at 10 percent. Since it is difficult to foresee where future will take us, ECE has adopted a strategy of experimentation. “We’ve transformed a couple of our shopping malls into laboratories and we’re doing trial and error,” Dunstheimer said. Zombie in the middle? With retail increasingly polarizing into dominant, leisure-oriented destination centers and small, food and services focused convenience centers, the ones that are under threat are the ones in the middle. “They are under competition from dominant centers, and they are not close enough to be convenience centers,” explained Leleu.

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Financing Long Term • Agent • Lender Arranger

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“we’re going to recognize the change in traditional retailing once sameday deliveries happen.”

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Hadley Dean, managing partner, Eastern Europe, Colliers International

“It’s inevitable that we’ll see obsolescence in the next 5-10 years,” said Brown. With convenience at one end and leisure at the other, “it will be up to those centers to reposition or to accept the consequences of the new world of retail,” he added. Yet not everyone agrees that this asset class is facing doom and oblivion. “There are very few zombie centers, it’s pretty rare to see something completely dead,” said Michael Rodda, head of EMEA Cross Border Retail Investment at Cushman & Wakefield.

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According to Rodda, there is still hope for the non-dominant centers stuck in the retail limbo. “A center which is less interesting in terms of customer flow could actually become a center for ‘clickand-collect’ for example. Online sales could drive footfall into those centers that we consider dying, which may end up as destination for warehousing and storage,” he explained. Digital remastering For some, the offline showroom may be a necessary cost of doing business. “I spoke to a retailer who is renewing a lease on a loss-making store because his view is that without the physical presence, in the physical catchment he will not be able to serve his virtual catchment. He needs the online and offline to work in tandem in order to deliver the return he wants in the geographical region,” said Brown. Another way of fending off the e-commerce threat could be to use the digital revolution to your advantage “There’s a new product being developed in Poland: small wireless transmitters, so as you walk around the shop it sends news of special offers onto your smartphone,” said Colquhoun refering to the new Estimote smart-tagging system, adding that, “retailers or even landlords could consider installing them in their malls.” Cold calculation For better or for worse, the digital revolution will definitely come at a price. “I think the costs will inevitably go up for retailers because of all this new technology, and the question is who’s going to pay for this: the landlords or the retailers?” said Colquhoun. What may become crucial in the future is how to estimate rental costs in a world dominated by online shopping. “There are several different ideas going around about measuring footfall rather than revenue at stores. And working out a formula that will influence the rental value of the store relevant to the footfall outside the store. It’s definitely not the ‘be-all-and-end-all’ answer but I think it’s a step in the right direction,” said Rodda, adding that “this is something the industry will have to work out over the next medium term.” u

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ceeqa report digital revolution

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Winds of change E-commerce and the proliferation of mobile devices in everyday life will bring changes to all segments of real estate, but not necessarily for the worse

etail is not the only segment that will feel the impact of digital revolution. Office and particularly logistics, will too have to follow the trend. Raimund Paetzmann, director of real estate in the EMEA region at Amazon, said that the biggest shift e-retail has brought about is the change in the supply chain. Instead of large quantities stored in distribution centers, deliveries now go from the producer directly to the fulfillment center. The fulfillment center has actually become the shop, accessible via the internet. The important part is that the fulfillment center is always built close to the

customer. “That’s a huge shift. The old logistics buildings from the past were always close to a highway junction, there was not much requirement for people and it wasn’t close to the customer, it was rather far away from the customer,” Paetzmann said. Power shift E-commerce is enabling permanent feedback from the customer, which helps retailers understand what customers really want. “But what I’m still missing is the customer focus in real estate,” said Paetzmann. Hadley Dean, managing partner at Colliers International, was even more

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straightforward about the need for the market to be more customer-oriented than it already is, not only in the logistics sector, but also in other segments. “It’s time for the real estate sector to shut up and listen to the customer,” he said. Office 2.0 Another question real estate experts are trying to answer is whether the digital revolution, with all the modern tools for videoconferencing, high-speed optical fiber internet and teleworking, will wreak havoc on the traditional office segment. Industry professionals don’t seem to be too concerned, though, as they believe office is much more than just workspace, especially for Generation Y, currently the most numerous group in the labor force. “The office provides a work environment. Even though people can telecommute they still want to come into the office for the social interaction. They want to meet, share ideas,” said Otis Spencer, president of the board at Peakside Polonia Management. Sharing ideas seems to be what Gen Y is all about, and for them physical proximity is essential. “In an office it’s all about creativity. So it’s not how creative you are at home by yourself. If you actually want to bounce ideas, which is what Millenials like to do, they actually want to do it in teams, they want to collaborate. That’s why offices will never fade,” said Colliers’ Hadley Dean.

“what I’m still missing is the customer focus in real estate.” Raimund Paetzmann, director of real estate, EMEA, Amazon

Birds of a feather... The need for interaction is particularly strong for the IT business, currently the most rapidly growing group of office space occupiers. Alan Colquhoun, head of CEE at DTZ talked about a district in London, the so called “Silicon Roundabout” near Old Street, which has seen a spectacular increase in office demand in recent years. A lot of tech firms started to locate there and once a certain critical mass had been reached, all other software and hi-tech companies wanted to be there too. “I think that contrary to what all the gloom mongers are assuming that there will be less office space, I think it’s going to be the other way around,” Colquhoun concluded. u W B J O B SERVER • a p r i l 2 0 1 4

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ceeqa report l i f e t i m e ac h i e v e m e n t

Lifetime commitment

Paul Gheysens is the founder of Ghelamco and this year’s recipient of CEEQA Lifetime Achievement Award

Could you tell us about the beginning of Ghelamco’s presence in the CEE real estate market? Paul Gheysens: In 1985 I established Ghelamco as a development and general contracting company in Belgium. We began to import materials for our projects from many countries, including Poland. That’s when I had an opportunity to visit Warsaw. I remember that when I first went there, I was astonished by the potential the city had for new real estate investments. So after a few more visits I decided that Poland would be the first CEE country Ghelamco would enter. The year was 1991 and there were not many developers active in the market. In fact, the market itself barely existed, so I often heard it was too risky to do business in Poland. Well, I took the risk and now, after over 23 years, I must say that it was one of the best decisions I’ve ever made. How has the market changed since then? What happened in this market is a fascinating story of vision, hard work and engagement. I cannot recall any

other market that started from scratch to become a regional leader and one of the most rapidly expanding markets in all of Europe in only two decades. Of course, the years of shaping the market were not that easy. Everyone, from developers to consultants, general contractors and tenants made efforts to make it transparent, modern, more developed and ethical. It always makes me proud that Ghelamco had the opportunity to take part in this unique process. What projects is Ghelamco involved in now in the region? In Poland we are focused on our Warsaw Spire project, which is also the biggest office complex currently being constructed in Europe. It consists of three buildings and, when complete, it will provide a total of 100,000 sqm of office space. Our other office project in Poland is the 21,000 sqm Wołoska 24 in Warsaw’s Mokotów. We are also starting four retail projects in Poland: three convenience centers of 7,000 sqm to 12,000 sqm located in Łomianki, Piaseczno and Wilanów, and a mixed-use project in the center of

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Litochlebský Park

HELPING TO CREATE A BETTER WORLD

Warsaw on ul. Sienna, of which about 14,000 sqm will be dedicated to retail. We also have many other office and some residential projects in the pipeline. We plan to develop another 300,000 sqm within the next four to five years, not only in Warsaw but also in regional cities. We are also very active in Russia, where over the last 12 months we developed 140,000 sqm of warehouse space and have another 240,000 sqm under development – all in the Dmitrov Logistics Park near Moscow. In Ukraine we have successfully developed Kopylov Logistics Park but, due to the unstable economic and political situation, we had to place some other projects on hold. But I hope and believe that soon Ukraine will again benefit from many good projects as this country has great potential.

www.arcadis.pl www.arcadis.com OUR NEW ADDRESS: Wołoska 22A, 02-675 Warszawa, T: +48 22 203 20 00

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“I often heard it was too risky to do business in Poland ... I must say that it was one of the best decisions I’ve ever made.”

building in Poland (Trinity Park III), we were pioneers of this approach. Now, after only four years, green certificates are a market standard and almost every new building is BREEAM or LEED certified. I would like to see the office market establish a closer relationship between the buildings, the city and its inhabitants. It is obvious that developers have a huge impact on the shape of the cities, but they can also influence the quality of life. These improvements do not require huge amounts of resources. Sometimes just a few nice benches, some grass and trees can create a peaceful area within a business district. This is also something that goes in line with tenant expectations. How does it feel to be recognized with the CEEQA Lifetime Achievement Award? Of course it is a great honor and joy, but I would like to stress that I consider this award as one given to all the people who are responsible for Ghelamco’s success. It is easy to have a vision, but it is impossible to turn it into a reality without a dedicated and experienced team that you spend years getting to know and trust, like the teams we have had in Warsaw, Moscow and Kiev. u

We deliver world-class advice to owners and occupiers of real estate Please contact our Warsaw office: +48 22 820 20 20 www.cushmanwakefield.pl

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ceeqa report entertainment

Entertainment highlights A number of worldclass stars have performed at the CEEQA Gala over the years

EEQA is not only a topnotch business event, it is also renowned for the high-class entertainment it provides. “It’s the only real estate event that gets the entertainment right along with the awards,” said Hadley Dean, managing partner for Eastern Europe at Colliers International.

This year’s star performer – Kim Wilde

Bananarama at CEEQA Gala in 2013

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The live shows accompanying the event include a mixture of contemporary talents, both Polish and international, as well as some blasts from the past, including 1970s disco legend Boney M, who gave a stunning performance in 2007, Sister Sledge, who electrified the audience in 2008, and girl group Bananarama, who gave an exhilarating show in 2009 and then again in 2013. Gloria Gaynor, often called “The Queen of Disco,” stole the spotlight in 2012 with some of her most memorable songs, including “I will survive.” Apart from Bananarama, last year’s entertainment highlights also included leading Polish diva Edyta Górniak and danceduo Wet Fingers. Górniak first came into the limelight in 1994 as Poland’s first Eurovision contestant, where she claimed a very creditable second place with her song “To nie ja” (English version: “Once in a Lifetime”). She has released six studio albums and numerous singles. Wilde thing The entertainment at this year’s CEEQA Gala will be spearheaded by legendary entertainer Kim Wilde with a special show direct from the “Rock Meets Classics” European tour, as well as an acoustic set with her touring band. Kim stormed into the charts in the eighties with a string of global hits including “Kids In America,” “You Came,” “Cambodia” and “You Keep Me Hanging On” and has continued to record and perform new material as well as her well-known classics. The live show promises to top all previous concerts at the CEEQA Gala. u W B J O B SERVER • a p r i l 2 0 1 4

ceeqa report w i n n e r s a n d n o m i n ee s

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CEEQA 2014 Industry Awards As many as 22 statuettes will be awarded this year to companies, projects and professionals

part from announcing this year’s RealGreen Awards winners, the shortlist for CEEQA 2014 Awards was also presented at CEEQA@MIPIM event. The CEEQA awards will be given out in 22 categories, including real estate projects (office, retail and hotel/leisure and residential), companies (developers, investors, lenders, construction firms, property managers and advisories), agents and industry professionals. Sustainability seems to be a must for office schemes these days, as almost all the projects shortlisted for this year’s award have been BREEAM or LEED certified, many of which have LEED Platinum and

BREEAM Excellent ratings. The green trend is increasingly present also in the retail segment. The winners in each of the categories will be selected by the CEEQA Jury, composed of representatives of top advisories and industry operators. The guests at the Gala will have a chance to vote on the Company of the Year from among the category winners. Another highlight of the night will be the Lifetime Achievement Award, once again sponsored by the Financial Times. At the 2013 CEEQA Gala, the honor went to Brian Patterson, managing partner of AIG/Lincoln. This year, Ghelamco’s founder Paul Gheysens will be distin-

guished with the standout prize. Special achievements Refurbished “palaces” stole the spotlight at last year’s Gala. Warimpex’s Le Palais office building in Warsaw snatched the Building of the Year CEE and the Office Development of the Year awards, while The Palas Iasi in Romania was named the Building of the Year in the SEE region as well as the Retail Development of the Year. Last year the Gala guests also gave out two special 10-year anniversary awards. Hochtief Development’s Rondo 1 snatched the prize of the Building of the Decade 2003-2013, while JLL was distinguished as the Company of the Decade.

CEEQA 2013 winners

GRAND AWARDS

Lifetime Achievement Award Winner Brian Patterson, managing partner at AIG/Lincoln Industry Professional of the Year Paweł Dębowski, partner and head of CEE real estate at Dentons Building of the Year CEE Le Palais, Warsaw Building of the Year SEE The Palas Iasi, Iasi, Romania Green Leadership Award Skanska Commercial Development Europe

DECADE AWARDS

Building of the Decade Rondo 1, Warsaw

Company of the Decade Jones Lang La Salle

BUILDING AWARDS

Office Development of the Year Le Palais, Warsaw

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CEEQA 2013 winners - cont. Retail Development of the Year The Palas Iasi, Iasi Romania

Hotel, Leisure and Retail Development of the Year Kempinski Hotel Cathedral Square, Vilnius, Lithuania

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COMPANY AWARDS

Developer of the Year Skanska Commercial Development Europe Industrial Developer of the Year Panattoni Europe Investor of the Year Union Investment Real Estate Lender of the Year Deutsche Pfandbriefbank Legal and Financial Consulting Company of the Year Dentons Development Services Company of the Year Arcadis EC Harris Construction Company of the Year Skanska SA

Malta House, Poznań, Poland

Generation Park, Warsaw, Poland

Green Horizon, Łódź, Poland

Corso Court, Prague, Czech Republic

Dominikański, Wrocław, Poland

Nordic Light, Budapest, Hungary

Green Court Bucharest, Romania

Kapelanka 42, Kraków, Poland

Riverview, Prague, Czech Republic

Silesia Business Park, Katowice, Poland

Property Management Company of the Year Colliers International

AGENT AWARDS

Agent of the Year (office agency) Jones Lang LaSalle Agent of the Year (retail, leisure & residential agency) Cushman & Wakefield Agent of the Year (industrial & logistics agency) Colliers International Agent of the Year (capital markets) Jones Lang LaSalle

REALGREEN AWARDS

RealGreen Building of the Year Green Towers Wrocław – Phase A, Wrocław, Poland RealGreen Developer of the Year Skanska Commercial Development RealGreen Investor of the Year Union Investment Real Estate RealGreen Services Provider of the Year Arcadis EC Harris

skanska.com/property

Skanska CD Properties

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CEEQA 2014: RealGreen winners Once again, Skanska was in the spotlight at the CEEQA RealGreen Awards ceremony at MIPIM

EEQA seeks to champion the business case for green building investment through research, consultation and business-leader events such as the RealGreen Awards. Every year since 2008, the most sustainable developments and companies have been awarded statuettes at a ceremony held at MIPIM in Cannes, France. On March 11, 2014 another batch of statuettes was picked up by real estate firms. This year, just like the year previously, it was Skanska that took center stage, claiming two out of four prizes on offer that evening. Skanska’s office project Malta House, located in the western city of Poznań, received the award for the RealGreen Building of the Year, while the company itself was named the RealGreen Developer of the Year. Skanska also sponsored the RealGreen Investor of the Year 2014 award, which went to Deka Immobilien. Meanwhile, Arup was distinguished as the RealGreen Service Provider of the Year 2014. u

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RealGreen Building of the Year 2014

Malta House Poznań, Poland GLA: 15,800 sqm Certification: LEED Platinum Developer: Skanska Commercial Development Europe

RealGreen Developer of the Year 2014 Skanska Commercial Development Europe

RealGreen Investor of the Year 2014 Deka Immobilien

RealGreen Services Provider of the Year 2014 Arup

l o k a l e i m m o b i l i a / m ipi m

The biggest European real estate fair focused on new technology and the post-crisis investment landscape

MIPIM 2014 Conferences - keynote address by Boris Johnson Mayor of London on housing in London, population and the economy

his year’s MIPIM fair celebrated its 25th anniversary. Experts from all over the world once again flocked to the Palais des Festivals in Cannes to discuss the burning issues of the real estate business. They discussed how new technology will influence the industry and tried to predict what real estate will look like in the future. The stands of Polish cities and developers covered over half of a floor in the Palais des Festivals. As usual, city representatives were trying to lure potential investors with a variety of plots and properties located in attractive districts and ripe for development. Poland and the CEE region were the focus of several panels and events, including a two-hour CEEQA@Mipim discussion on the effects of the digital revolution on real estate in the CEE region across all asset classes (see the supplement with a special CEEQA report). Transport issues One of Poland’s biggest figures at MIPIM was once again Warsaw Mayor Hanna Gronkiewicz-Waltz, who talked about the city’s transport system at a conference devoted to implementing new technology in city transport. She said that not dismantling the system of trams was the right choice, and that the city will even expand it further, including to the Wilanów district. She said that intermodality of the city’s transport system has been one of the key priorities. The creation of a public bike-sharing system, called Veturilo, has spread across the city, and expanding the network of bike lanes is an example of how the city is tackling the problem of ever-increasing traffic congestion. When asked about plans of establishing a congestion charge like the one in London and Stockholm, GronkiewiczWaltz explained the city has not yet

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Image: Reed MIDEM / Y.Piriou / Image & Co

New tech and transport

Cee Trade Fair For Retail Investment

May 28-29, 2014

NATIoNAl STAdIum, wARSAw, PolANd

are you ReDI? CEE TRaDE FaIR FoR ReTAIl INVeSTmeNT

Retailers – developers – Cities

European Meeting Point

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Organizer

1200+ PARTICIPANTS 120+ exhIbIToRS 400+ ReTAIl NeTwoRkS

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l o k a l e i m m o b i l i a / m ipi m

exhausted other possibilities of limiting traffic in the downtown area. Parking in the center is both too cheap and too accessible, at least above ground. One possibility is to build underground parking lots, which would be financed thanks to public-private partnerships. Russian camp One of the major focuses at MIPIM was Russia, with dozens of panels discussing investment opportunities in the country across all real estate segments. The country had two big tents set up in front of the Palais des Festivals, one for the Russian Federation and one purely dedicated for Moscow. However, the ongoing Crimean crisis clearly threw a monkey wrench in Russia’s plans at MIPIM, as the interest in Russian real estate panels and presentations was moderate at best.

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MIPIM 2014 - MIPIM Awards ceremony - winners

However, the one Russian theme that attracted quite a bit of attention was a Russian lady who chose to stage a one-woman protest outside Moscow’s tent at MIPIM. Dressed in red and black, she strolled outside the Moscow tent and Palais des Festivals with a bag portraying Putin’s likeness with a crown on his head behind a “no entry” sign.

She explained her husband, a German, was at MIPIM on business and she decided to accompany him in a slightly unorthodox way. When asked why she decided to protest, she said, “Because I’m ashamed. My country’s ships are invading another country and I have to protest. Ukraine is an independent country.”

Beata Socha

l o k a l e i m m o b i l i a / invest m ent

First-mover advantage It is no longer only big developers that are capitalizing on revitalizing historic real estate. Individual investors are also taking to the refurbishing business

Image: Mediadem

hen foreigners come to Warsaw for the first time, one of the things that raises eyebrows is the extremely uneven level of property development in some of the central districts. Beautifully restored historic tenements clash with neglected and dilapidated buildings with crumbling facades, sometimes situated next door to one another. There are entire city blocks inaccessible to people, such as the area of the former heat and power plant in Powiśle, one of the areas overlooking the River Vistula and within a 10-minute walk from the city center. Mixing is the future The Wola district, with its industrial past, also offers some remarkable pieces of real estate, in desperate need of an investor to bring out the beauty of their red brick walls and 19th century architecture. The district has become the hottest office tower development site with Ghelamco’s Warsaw Spire and Skanska’s Atrium 1 only two out of many examples. There are, however, also a few revitalization projects in the pipeline, including Capital Park’s ArtNorblin scheme, currently at the preparatory stages. The developer is preparing to redevelop a former factory and turn it into a city quarter with an entire host of functions and uses. “We believe in mixed-use projects. That is why we have designated 23,000 sqm out of the entire 64,000 sqm of ArtNorblin to retail and services. Mixing functions is the future of city development,” said Jan Motz, CEO of Capital Park.

A real cornucopia Wola, as well as the downtown area, offer some real gems that have yet to be discovered and polished. But a real cornucopia of opportunities lies in Praga, on the east bank of the river, with hundreds if not thousands of old tenements gradually falling into ruin. The biggest scheme about to be launched in the district is the joint venture of Liebrecht & Wood and BBI Development, which are redeveloping an old vodka distillery in Praga. The project, dubbed Koneser, is being developed on 4 hectares of land and will offer 330 residential units, as well as 28,000 sqm of retail and leisure space and 22,000 sqm of office space.

Capital Park is working on revitalizing the Norblin factory in Warsaw’s Wola district

“Mixing functions is the future of city development. Jan Motz, CEO of Capital Park

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l o k a l e i m m o b i l i a / invest INVESTM mE ent NT

Images: Balmoral Properties

The project will be located right next door to the Warszawa Wileńska shopping center, but the investors are not worried. “We do not intend to compete with the nearby shopping mall. We will be a city development, a lifestyle project, we will have roads and squares. So people will not see it as a project. They will see that the city has been renovated and redeveloped here,” said Marc Lebbe, managing director at Liebrecht & Wood. A historic change Indeed, many streets of the Praga district are still a far cry from an attractive neighborhood. Its largely neglected state is the product of its location on the right bank of the river, which has thus far lacked convenient transport options (the bridges spanning the river are known for their bottlenecks by drivers and public transport users). This, however, is about to change as the long awaited second subway line will finally offer a fast and traffic-resistant connection between Praga and the city center. “The subway will change the city fundamentally. It will be a historic change, whose effects we will continue to consume for decades to come,” said Rafał Szczepański, vice president of the management board at BBI Developemnt, the major partner in the Koneser project. Double-digit It is somewhat surprising that Praga, about to become virtually a part of the city center, is still heavily dominated by dilapidated and decaying tenements. Investors can still enjoy the first-mover advantage in these neighborhoods and flip these properties even at doubledigit profit margins. One would think the wealth of opportunity would have investors swarming to repair, refurbish and resell Praga’s decaying tenements. So what’s stopping them? “The complexity and specific nature of such investments makes

Kraków’s historic appeal

he refurbishing craze is not limited to Warsaw, though. Poland’s second largest city, Kraków, also offers some amazing properties, most of which are located in the Kazimierz district, south of the city center. There are also some refurbishing opportunities right smack in the city center, such as the 19th century brewery called Browar Lubicz, which Balmoral Properties, a privately owned company founded in 2007, is currently turning into a mixed-use scheme, covering over two hectares of land. Is revitalizing old buildings different in Poland than in the UK? In the UK most of the old buildings have already been done, whereas in Poland there are still some amazing opportunities, like Browar Lubicz. It’s very hard to find something like this in the UK. Have you encountered any problems with the investment? We had a lot of complications in the early stages. Just because they’re old buildings. We’ve had a lot of support from Kraków’s curator of historic buildings who helped us with a lot of issues. But then we found a lot of things as we were making the excavations. Some of the foundations required more work than we anticipated. Are you looking to sell the investment once you’ve completed it? No. We also have an investment arm of the business. We like Browar Lubicz so we’ll keep it.

Do you think the market is right for this kind of investment? It seems to be. Our residential sales have been excellent. I think it’s mainly because we’ve kept our apartAlun Jones, the direc- ments at attractor and president of tive sizes, an Balmoral Properties average of 5560 sqm. We’ve also got some penthouse, high-end units. They’re very high quality but not overly priced. How is the commercialization of the retail space going? It’s almost completed. We’ve leased 75 percent of the commercial part and we have the last few small units remaining. We’re very impressed with the progress.

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l o k a l e i m m o b i l i a / invest m ent

Tomasz Gruszka, marketing director at Magmillon

The renovation of the tenement on ul. Kamionkowska took the developer a little over a year

these processes time-consuming, and demands considerable efforts and financial resources. At a later point in time, all of that can be reflected in high lease rates or selling prices for premises located in such buildings,” said Magdalena Zienkiewicz, legal counsel and partner at law firm Wierciński, Kwieciński, Baehr sp.k. Interest is however rising. “Although there are few investors specializing in such investments, recently we have seen an increasing interest in tenement building renewal from development companies, mostly due to the attractive locations and architectural values of such buildings,” said Zienkiewicz. A piece of the action Indeed, the multitude of possibilities is attracting not only major developers, but also smaller investors, including individuals, who are looking to partake in the refurbishing business.

21 – 22 May 2014 SAMORZĄD SAMORZĄD

INWESTOR INWESTOR

Fair of Services for Local Self-Government Units

Regional Investment and Development Showroom

contact

venue

Michał Wadowski - Project Manager phone +48 32 788 75 27, fax +48 32 788 75 02 mobile +48 515 220 057 e-mail: michal.wadowski@exposilesia.pl

Expo Silesia ul. Braci Mieroszewskich 124 41-219 Sosnowiec, Poland www.exposilesia.pl

At the same time there will be: Fair of Recreational Space Arrangement for Children and Adults

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Images: Magmillon, Liebrecht & Wood

“Seeing that each year they lose a part of their capital, these owners will eventually be forced to sell.

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“we have seen an increasing interest in tenement building renewal from development companies.

Magdalena Zienkiewicz, legal counsel and partner at Wierciński, Kwieciński, Baehr sp.k.

BBI Development and Liebrecht & Wood are preparing to launch construction on the Koneser project, revitalizing an old vodka distillery

A company called Magmillon, a partner of developer 2C Partners, is currently working on a number of revitalization projects in Warsaw’s Praga and Śródmieście districts, but their financing model is slightly atypical for the development industry. “We have no debt financing, instead we look for individual investors who become shareholders in special purpose vehicles and then participate in the profits,” said Tomasz Gruszka, the company’s marketing director. “The minimum share is PLN 100,000. The shareholders give us power of attorney and we get on with the investment,” Gruszka explained. The financing system relies on dividing investment risk between a number of investors, but the projects the firm targets are also more of a “safe bet.” “We are only interested in buildings that can be repaired. We try to save and recreate what we can. Sometimes the technical state of the building makes any refurbishing

“The subway will change the city fundamentally. Rafał Szczepański, vice president, BBI Development

impossible and we are not looking at such buildings,” Gruszka said. Common goal As the goal of the company coincides with the interest of the city, which is often a stakeholder in such properties, the company has been enjoying support form the city hall, which sometimes helps vacate the tenements and even participates in repair costs. For instance the city covered the roof repairs on Magmillion’s tenement on ul. Nowogrodzka. The business model seems sound and thus far has proven effective. “We’ve completed several such projects, with over 140 apartments sold. We have ongoing projects in Praga and the city center, but we are also looking at Żoliborz and Mokotów,” he added. Naturally, it is no smooth sailing. However, as with most refurbishing schemes, the investor has to deal with the restrictions set by the curator of historic buildings, poor technical conditions of the properties as well as a host of legal issues. “Sometimes there is only one entry in the mortgage register of the entire building so in order to sell individual units, we need to set things straight. And that can be rather time-consuming,” Gruszka explained.

Sticky wicket The biggest problem with such properties are usually the restitution claims from the inheritors of the original owners. Sometimes there can be 20 or 30 of them for one tenement house and that’s when the situation gets particularly hairy. “I know of one tenement in the Praga district in Warsaw where the inheritors who reclaimed the property could not reach an agreement,” said Dariusz Książak, property valuer and president of Emmerson Evaluation. “Some wanted to sell at the price that was offered them, some wanted to negotiate better terms. There were also a few who considered the property their patrimony and did not want to sell it at all,” Książak explained. Brighter future In order not to freeze investors’ capital for too long, Magmillon only takes up projects that are either already clear of restitution claims or with claims that are close to being settled. What about the rest of the projects, which may have complicated legal status and dire technical conditions? They continue to scare off potential residents and investors, delaying the sale process and driving prices down. Gruszka seems confident the situation will eventually resolve itself, by the sheer power of market forces. “Seeing that each year they lose a part of their capital, these owners will eventually be forced to sell,” he said and added, “I believe Praga is heading towards a bright future.”

Beata Socha

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l o k a l e i m m o b i l i a / invest m ent

Market for lofts

”our country is not helping such investments. Apartment subsidy programs set unrealistically low ceilings on apartment prices and thus favor peripheral locations of major cities. affordable. Meanwhile, in Poland they are simply expensive, much more so than apartments in regular residential blocks. Besides, our country is not helping such investments. Apartment subsidy programs set unrealistically low ceilings on apartment prices and thus favor peripheral locations of major cities. Meanwhile, almost all historic properties are located in or close to the city center, where land prices are too high to meet these government ceilings.

i n t e r v i e w b y b e ata s o c h a

Dariusz Książak is the president of the management board at Emmerson Evaluation

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Is transforming an old factory or brewery into apartments a good investment in Poland? The demand is not as strong as was expected a few years ago. There were a lot of such investment schemes announced in 2007 and 2008 but only a fraction of them actually took off. Warsaw’s Praga district offers many such opportunities but it will take a long time to revitalize it. There are a host of problems to deal with: there is no heating in these buildings, there are residents who are difficult to relocate, the surroundings also make the investment less attractive to buyers. This kind of investment is also much more difficult in Poland than in Western Europe because of the legal procedures and the involvement of the curators of historic buildings. The success of these lofts in old refurbished buildings in Western Europe relied on their relatively low price. They were

What about commercial space in such buildings. Is there a lot of demand from tenants? The price of revitalized buildings for commercial use depends on the tenant portfolio and lease conditions. These buildings are an attractive investment because due to their location, they carry lower risk than office schemes outside the city center. The past few years have shown that central locations are more resistant to crisis. Their supply is lower so they have lower vacancies and thus rent level fluctuations are also smaller. What are the most typical problems investors face in this type of investment? First, the investor has to go the nine yards with the curator of historic buildings to get the permit for revitalization. Curators in Poland can be unrealistic in their design restrictions which can limit how effectively the space is used. The biggest difficulty is that it’s never just one inheritor, but there could be even 20 or 30 inheritors to a single property.

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Images: Liebrecht & Wood, Emmerson Evaluation

These are people with different material status and they have different ideas as to what to do with the property. I know of one tenement in the Praga district in Warsaw where the inheritors who reclaimed the property could not reach an agreement: some wanted to sell at the price that was offered them, some wanted to negotiate better terms. There were also a few who considered the property their patrimony and did not want to sell it at all. Your company has participated in several such projects, hasn’t it? Yes. We’ve been a part of several revitalization projects. For example, Browar Lubicz in Kraków, which I think was a great and relatively safe investment. The investor got some old buildings as well as a lot of empty land to develop on. The master plan for the area included some retail and some residential space. Apartment sales have been going very well in that location. We’ve also participated in Capital Park’s Art Norblin investment. It is currently at the preparatory stages, set to

be launched in a year and completed in three to four years. This was a slightly more risky purchase, as the property had a somewhat complicated legal status. The investor had to deal with claims from former occupiers and that is almost always difficult. However, the worst is already behind the investor and the project should be really successful. The old refurbished buildings designated for commercial space will have no competition, particularly in the central location of the Wola district. Are there many foreign investors interested in refurbishing historic real estate? There are. Of course, they need someone with an excellent understanding of the local market and its specifics. Foreign investors look mostly to Warsaw and maybe two or three other cities: Kraków, Wrocław and the Tri-City (particularly Scandinavian investors). One of the major obstacles is settling old claims to the property. It is no coincidence that so many investors from Israel decide to venture here. They often have at least some claim to the property. u

”The biggest difficulty is that it’s never just one inheritor, but there could be even 20 or 30 inheritors to a single property.

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l o k a l e i m m o b i l i a / intervie w

‘ If you want to harvest you have to sow first’ Eduard Zehetner is the CEO of Immofinanz Group, an international real estate investor and developer. The company’s focus in Poland is on retail schemes in a variety of locations, as well as office projects in Warsaw

i n t e r v i e w b y b e ata s o c h a You said once that you should only invest if there is enough growth. Is there enough growth in Poland for more investment? You build office space only if you have enough support from economic growth. You basically need a growth rate of 3-5 percent. Anything below that is too small to absorb a new workforce and new office space. You can of course find an ideal place and location, but at the moment it is still not the time for broad-range investments into the development of properties. Generally in Poland the glass is always half full not half empty. In Romania, for instance, it’s the other way round – the glass is always half empty. Poles are more optimistic. But in general, the CEE countries are slowly confirming their substantial growth potential. There is room for growth, there is no reason why these countries should not catch up with the rest of Europe. But it has to be enhanced. If you want to harvest you have to sow first. We have to differentiate between locations. Warsaw is already overcrowded in terms of office projects, especially projects which have only been announced. I believe that there will be much less built

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than is expected. The vacancy rate is already increasing. You have also secondary locations in terms of the office market, like Kraków and other regional cities, where you have a reasonably high rent level. If you look at actual rents in prime space, it’s €10 or below. And that is not profitable in the long run. I think, in the end we will see less development than is being announced at the moment. Because if you add up what is declared to be built, office space in Warsaw would increase by 900,000 sqm and who needs that? What about retail? Retail offers more possibilities. There’s some room for growth, but with reasonable prices of land. You have to examine the profitability of each project. And of course, it’s all about location, location, location. We’re investing in several segments. Obviously, there’s not too much room left for large high-quality centers throughout the country. The next level is located in smaller cities, such as Stalowa Wola, with 40,000 to 100,000 inhabitants and a direct catchment of minimum 200,000. In these locations we are going to build a new retail format, a one-level shopping center

with approx. 30,000 sqm and a strong fashion and entertainment focus. This can be a format which has a high degree of standardization, like our STOP.SHOPs. It can be duplicated as often as you like. The third level comprises retail parks for smaller cities, along with a food retailer, DIY shop, with some everyday goods shops. This is a format we call STOP.SHOP. We have 52 of these STOP. SHOPs in six countries: two in Poland, with a third one under construction. We will build more of these. You also invest in large retail schemes, like Tarasy Zamkowe in Lublin. Yes, that is the upper class. We’re opening it in the first quarter of 2015. Another shopping center in the city has just opened, the 75,000-sqm Atrium

l o k a l e i m m o b i l i a / intervie w

”With internet businesses, people still often think that once you bring it to the stock exchange, you will become as rich as Mr Zuckerberg.

Image: Immofinanz Group

Felicity mall. Aren’t you afraid your scheme will come too late and will have a hard time competing with an already established one? I think we have a far better location, as we are in the heart of the city. And we will also have a better tenant mix. E-commerce is growing in Poland, although its share in total retail is still much lower than in Western countries. Do you think it poses a real threat to traditional retail schemes? You cannot frame e-commerce vs offline retail business. You have to bring to your mind how the digital world affects everything in our life. And there has to be much more integration of everything that the “Googles” of the world provide. Whether we like it or not, they change our behavior.

You could do a lot by combining the possibilities of the internet with our brick-and-mortar shopping centers, e.g. tracking people’s preferences, their shopping habits, etc. We’ve kind of exceeded George Orwell’s 1984 in a way. Not only does the NSA listen to our phone calls but the CIA also watches over what we do on the internet (laughs)... But in the end, it is an enhancement and you have to combine online and offline. However, it’s not true that everything will eventually go online, as online retail has its problems too. What kind of problems? A lot of online stores receive so many returns that they are no longer profitable. You want to go to a party, you order a new dress, wear it and then return it the

next day. They have huge problems with this kind of shopping habit. With internet businesses, people still often think that once you bring it to the stock exchange, you will become as rich as Mr Zuckerberg. You have to work on acquiring customers for years, before you start generating a profit. It took Amazon years to become profitable. And they had the first-mover advantage. Amazon was the first company to sell books online on such a large scale, then all the other products followed. Still, that is not really that much of a new idea. It’s nothing else but a mail order business, only technologically advanced. In general, e-commerce shouldn’t be seen as a general threat, but as a source of change. u

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l o k a l e i m m o b i l i a / hi g h streets

Part three of a series f you compare Polish high streets to their counterparts in Western Europe, there are few that can hold their ground. While several other locations are attracting investors with the promise of low purchase cost and high future returns, ul. Nowy Świat has long been established as one of the most expensive locations, both for real estate people and for regular customers. When you look more closely, however, the street does have some truly Polish accents. The second line of buildings houses a number of low-price bars and pubs, which attract a truly diverse crowd of Varsovians, particularly during the summer. Ul. Nowy Świat is considered the most popular high street in Warsaw by 27 percent of the city residents, and falls behind ul. Marszałkowska, which is considered the top high street by 30 percent of Varsovians, according to data by Colliers. The main drawback of ul. Nowy Świat is probably that it is a little further from subway stations than ul. Marszałkowska. That situation, however, is about to change, as the second subway line is scheduled to open by the end of 2014 with a station at the intersection of ul. Nowy Świat and ul. Świętokrzyska. u

Ul. Nowy Świat retail units by category

Gastro Clothin Health Jewele Grocer

10%

40%

17%

Source: JLL, 2013

The High Streets: ul. Nowy Świat

Where foodies dine

6% 7% 7%

House Multim Service Banks Other

13%

Vacant Gastronomy Clothing, footwear and accessories Health & beauty Jewelery & accessories

Groceries

Household goods & accessories Multimedia Services Banks and financial services Other

Vacant units

Ul. Nowy Świat is Warsaw’s most famous high street and currently also a highly popular meeting place for tourists visiting the Polish capital. It is a picturesque promenade along a row of revitalized tenement houses, connecting Pl. Trzech Krzyży with the Old Town area. The street is accessible only to pedestrian traffic and public transport, which generates more footfall both for gastronomy and the retail segment. The second subway line, which is soon to be operational, will further strengthen the position of ul. Nowy Świat, as the number of potential buyers will increase greatly.

The second subway line may also raise the status of potential high street locations, such as ul. Świętokrzyska. The retail offer of the street is dominated by Polish and international mainstream and premium brands, as well as a variety of cafés and restaurants. JLL data shows that in 2013, as many as 40 percent of all tenants were gastronomy establishments. Clothing, footwear and accessories stores made up 13 percent of all tenants, while health and beauty boutiques accounted for 7 percent. The most recognizable brands present on ul. Nowy Świat are H&M,

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Recently: Foksal City Anna Wysocka, Head of Retail Agency Poland, JLL

Empik, Pandora, Sephora and Inglot. The offer will continue to expand, as exemplified by the recent refurbishment at ul. Nowy Świat 68, which after completion will combine office and retail functions. u

Polski Holding Nieruchomości has recently completed construction of an office boutique called Foksal City near ul. Nowy Świat. The scheme offers 3,000 sqm of class-A office space. Construction started in Q3 2012. Retail segment: Mainstream and premium brands, wide gastronomical offer Top tenants: H&M Orsay Empik Orange Worldbox

Images: PHN, JLL

Warsaw’s Fifth Avenue

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‘Bargaining chip’

under construction

Świętokrzysk a (currently

closed)

Świętokrzysk a Bazarnik

Nowy Św iat

Ichiban Sushi

Zapiecek Inglot Zepter / Bioptron

Dedalus Bookstore

La Cantina

Silver Line

Bierhalle

Grycan

Vincent

Kępka – leather & bags

Starbucks

Społem

Warta

Warecka Janira Lingerie

Ordynacka

Franck Provost

Nespresso

Bollywood Lounge

World Box

Tchibo

Dawne Smaki

North Fish

Ispace

Sopocki Dom Aukcyjny

InFashion

Ferroni / Hobo Bag

Tea Herbaty

Galeria Wypieków

Ecco

Coffee Heaven

L’Occitane

Oto!Sushi

Bookstore Leksykon Familijny

Orange Czarno na Białym Blikle delicatessen Józefina

Pizza Eataliano So! Cafe Sphinx Ara shoes Pizza Corleone Haagen-Dazs

Kamanda Lwowska

Blikle Cafe

Bajka Cafe Gałczyńskiego

Pandora Frey Wille

Nowy Świat

Rinascimento outlet

Specjały Regionalne

Brooklyn Burgers & Wings

Sabat

H&M

Papaya

Flow

Socjal

Frida

Foksal XVIII

Skok na Sok

Foksal

Tiger Buddha Indian Restaurant Amatorska Cafe

Six Viking Bar

Carrefour Express Subway

Piotruś Cafe

Pijalnia Wódki i Piwa

Salad Story

Nowy Świat

Sephora

Swiss Smolna

Empik

skie rozolim Aleje Je

How is the commercialization process going? Foksal City is proving to be very popular with tenants due to its unique central location and the quality of the office space. The entire office space is under advanced negotiations with international companies. The building has already received occupancy permit and soon the first tenants will move in.

Krakowski Kredens

Manufaktura Cukierków

Costa Cafe

Villa Foksal Kameralna

Petit Apetit

Chianti Opasły Tom PiW

Besuto Sushi

Meta Seta La Fiesta

Orsay

Cava

PHN has recently completed work on a new office building, Foksal City, close to ul. Nowy Świat. What made you choose this location for your investment? Developers are building a lot of A-class space in Warsaw and soon the highest technical standards won’t be enough to attract tenants. Location will inevitably become the top bargaining chip in lease negotiations and Paweł Laskowskiprestigious addresses will prevail. Fabisiewicz Vice-President of We decided to build an A-class office building here because ul. Foksal the Managing Board is the synonym of prestige and luxury. at Polski Holding Nieruchomości The number of companies looking for (PHN), responsible a comfortable and prestigious office for new investment space is increasing. projects Besides historic surroundings and magnificent tenement houses, there are numerous points of interest nearby: the Fryderyk Chopin University of Music, the Fryderyk Chopin Museum and the Przeździeccy Palace. All the restaurants and coffee houses on ul. Nowy Świat make the place a buzzing and lively destination point. A large number of buses and trams and the second metro line, under construction (stations: Nowy Świat and Centrum Nauki Kopernik) provide quick and easy access from anywhere in Warsaw.

Rondo de Gaulle’a Aleje Jerozolimskie

Can you tell us something about the building’s architecture? Foksal City combines all the elements of prestige and elegance with the conveniences of modern A-class office space. Its architecture is consistent with the scheme’s surroundings. At the same time high-quality materials and subtle architectural details accentuate its individual character. The stone facade, art deco interiors, granite floors in the lobby, sandstone-tiled walls and soft illumination at night all emphasize its elegance. Foksal City meets the needs of even the most demanding tenants. u

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cityscape / ŁÓdź

Did you know?

1945-48 Łódź acted as an an interim capital of the country while Warsaw still lay in ruin from the damage it suffered in the World War II. There was even talk of permanently moving the capital to Łódź, which is conveniently located in the center of Poland. Ultimately the idea of rebuilding Warsaw prevailed.

1948

That’s when the Leon Schiller National Higher School of Film, Television and Theatre was established, which helped Łódź become Poland’s top artistic center. The school’s most renowned alumni include Academy ward winners and nominees: Andrzej Wajda, Roman Polański as well as Krzysztof Kieślowski.

Favorite son

Artistic past, corporate future

he name of the city means “boat.” Legend has it that the first resident came here in a boat via a stream that then flowed on the surface. He then used the boat as a roof for his shack, the first ever human lodging in what was to become Łódź. It was not until mid-nineteenth century that Łódź started to resemble the city that it is today. The industrial revolution and trade with businesses in the Russian Empire prompted the development of what the city would become most famous for – the textile industry. Now Łódź is Poland’s third-largest city in terms of population and fourth in terms of area. When it was officially

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recognized as a settlement by King Władysław Jagiełło in 1423, it was given an area of approximately 6.7 square kilometers. It now covers an area over forty times that size. Modern-day Łódź is a post-industrial city, which is growing to become an outsourcing hub, a goal supported by city authorities. They are nonetheless also working on a more attractive image of Łódź as a city of creative people, promoting events such as the Łódź Fashion Week. Businesses currently based in and around Łódź include Procter & Gamble (Gilette factory), ABB, Dell, Adamed Pharma and Bosch-Siemens. u

Born in 1867 to a family of a church organist as Stanisław Władysław Rejment. He went on to become one of Poland’s most successful writers, though he refused to get a standard education. In 1924 he became the second Pole ever to win the Nobel Prize in Literature. As the committee wrote, he was awarded “for his great national epic, ‘The Peasants.’” This was just one of his many novels which are still widely known in Poland. Another one of his books, “The Promised Land,” describes the industrial boom that triggered the growth of Łódź in the second half of the nineteenth century. When preparing to write that novel, Reymont worked in one of the city’s factories for a year.

Images: Anton Graff, Marketing Miasta Lublin, Wikimedia

Władysław Reymont

London 1,350 km Paris 1,255 km Berlin 422 km

Moscow 1,271 km

Prague 399 km

Rome 1,219 km

Mayor: Hanna Zdanowska area code: 42 Area: 293 sq km Nearest airport Łódź Władysław Reymont Airport

Population (dec. 2012) 718,960

Distance to the city center 6 km

highways A1, A2

working-age Population (dec. 2011)

458,800

unemployment rate (DEC. 2013)

12.3% median pay (2012)

PLN 3,379.55 Modern office space 267,100 sqm office vacancy rate 13.5% prime headline rents €11.50-€13.00

number of universities

number of students

number of graduates a year

120,000

27,500

Percentage of city covered by zoning plans: 5.4% major inDUSTRIES: Clothing and textile, electronics, BPO Recent major investors Amcor Citi Handlowy Fujitsu Nordea Samsung Tate & Lyle

Special Economic Zone Łódź Special Economic Zone Industrial and Technology Parks Łódź Regional Science and Technology Park technopark.lodz.pl

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observer ranking

OBSERVER TOP 10

Banks

1PKO Bank Polski Net assets:

PLN 190 billion (as of beginning of 2013)

PKO BP is Poland’s biggest lender both in terms of assets and revenue. Founded in 1919 as Pocztowa Kasa Oszczędnościowa. Until 2004, when its stock was floated on the Warsaw Stock Exchange, it was controlled by the Treasury, which still holds some 31 percent of the lender’s shares. The company is also present in other countries, most notably Ukraine, where it owns Kredobank. It also has a leasing business in Sweden and is planning to enter Germany. The bank is also very aggressive on the Polish market when it comes to acquisitions: just recently, it purchased Nordea Bank Polska’s assets and is not ruling out acquiring other lenders, not only in Poland but also abroad.

2 Bank Pekao Net assets:

PLN 146 billion Established in 1929 as an institution servicing expats and their finances. It had its branches in all major countries where there was a significant Polish population. During the communist era it issued its own currency, Bony towarowe Pekao, which were used instead of foreign currencies and used to buy products in special shops that were not available elsewhere (such as premium alcohols, Lego bricks, imported confectionery). Since 1999, the bank is controlled by the Italian UniCredit group, which purchased a majority stake from the Treasury. Total revenue (PLN million): 12,138 Net profit (PLN million): 2,956 Costs/Income ratio (%): 47.1 Share capital (PLN million): 262.5

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Images: Ghelxxxx

Total revenue (PLN million): 17,574.5 (2012) Net profit (PLN million): 3,748.6 (2012) Costs/Income ratio (%): 39.9 (2012) Share capital (PLN million): 1,250 (Dec. 31, 2012)

observer ranking

Net assets:

Bank Zachodni WBK

PLN 101.8 billion

PLN 53.5 billion

Total revenue (PLN million): 5,913.7 Net profit (PLN million): 1,462.6 Costs/Income ratio (%): 43.9 Share capital (PLN million): 746.4

Total revenue (PLN million): 5,534 Net profit (PLN million): 386 Costs/Income ratio (%): 37.4 Share capital (PLN million): 2,650.1

Net assets:

mBank

Bank Millennium

PLN 98.8 billion

PLN 50.8 billion

Total revenue (PLN million): 6,441.9 Net profit (PLN million): 1,203.8 Costs/Income ratio (%): 46.4 Share capital (PLN million): 9,163.9

Total revenue (PLN million): 4,077 Net profit (PLN million): 472.2 Costs/Income ratio (%): 57,4 Share capital (PLN million): 1,213.2

Net assets:

ING Bank Śląski

Bank Handlowy w Warszawie

PLN 69.7 billion

Images: PKO BP, Bank Pekao

Getin Noble Bank

PLN 41.5 billion

Total revenue (PLN million): 5,086.2 Net profit (PLN million): 832.3 Costs/Income ratio (%): 56.9 Share capital (PLN million): 130,1

Total revenue (PLN million): 3,476 Net profit (PLN million): 970 Costs/Income ratio (%): 52 Share capital (PLN million): 523

Net assets:

Raiffeisen Bank Polska

PLN 53.8 billion Total revenue (PLN million): 3,694.7 Net profit (PLN million): 8.1 Costs/Income ratio (%): 71 Share capital (PLN million): 2,207.5

Nordea Bank

PLN 35.3 billion Total revenue (PLN million): 1,510 Net profit (PLN million): 151 Costs/Income ratio (%): WND Share capital (PLN million): 2,148

Data source: Warsaw Business Journal Book of Lists; www.bookoflists.pl

This ranking is based on a survey conducted by the Book of Lists team. Companies not responding to our survey are not listed.

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Technology to make your life easier

We live in an age of gadgets: some are useful, but most are just a waste of time and money. We sift through the latest tech available to pick those that we believe will help you live your life more comfortably and confidently.

Gadgets Pebble Smartwatches

One of the first ever smartwatches that started the new fad. It’s compatible with both iOS and Android devices. Besides having standard features like incoming phone calls and text message notification, it can also be connected with your social media accounts, track your health and fitness progress, control music and many more, as the apps are constantly being developed. Price: $150-249

getpebble.com

LaCie Sphere hard drive This beautiful hand-made silver sphere contains a 1 TB hard drive. It’s USB 3.0 compatible and doesn’t require a power cable to work. The sphere, made in association with silversmithing company Christofle, is beautiful to look at, but hardly portable, as it weighs 500 grams and is quite big for such a device (134 x 134 x 125 mm). It also comes with a steep price tag but it will definitely catch the attention of everyone that steps into your office. Price: $490

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The projector has two main advantages. Hidden in a modernlooking credenza, it doesn’t need to be mounted on the wall. Rather, it is simply placed in front of the wall and can double as a stylish piece of furniture. It also displays a crisp high-definition image that can be sized up to an impressive 147 inches diagonally. It should be available this summer.

Sony short throw 4K projector

Price: $30,000-40,000

sony.net

Sonos TV Soundbar

This easy-on-the-eyes speaker is a great solution if you plan on expanding your sound system in the future. You can add additional speakers with ease and the bar will automatically detect their presence and adjust the sound accordingly. You can even put them in different rooms and control them with your phone or tablet. It automatically adjusts the sound accordingly to the movie you’re just watching, whether its a nature documentary, action flick or a period piece. It also allows you to stream wireless music from your mobile devices.

Mac Pro The newest version of Apple’s most powerful machine looks very innocent. Some might even confuse it for a trash can, but in reality it packs quite a punch. Two models are currently available, the entry level powered by a 3.7 GHz quad-core Intel Xeon E5 processor with 12 GB of RAM and 256 GB of flash storage, with the high-end version packing a whopping six-core Intel Xeon 3.5 GHz CPU, 16 GB of RAM. This machine is built for professionals, graphic designers, video editors, music producers, but can also handle simple e-mail and spreadsheets, just in case.

Price: €699

sonos.com

Price: $2,999-3,999

apple.com

Images: LaCie, Pebble, Sony, Sonos, Goji, Apple

Goji Smart Lock This smartlock is a very unique security tool. It allows the user to open the door with a mobile phone. You can control your locks with special apps and, for example, allow someone access to your apartment only on a Wednesday afternoon. It can also snap pictures of everyone that knocks on your door while you are away.

Price: $278

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l i f e s t y l e / restaurants

welcome to the club Michelin Newbies Good to see we’re not forgotten in Poland – the latest Michelin Main Cities of Europe guidebook found space to include 22 Warsaw restaurants and 19 from Kraków. And while Atelier Amaro retained Poland’s sole star, the big news was the fresh inclusion of a few hotties:

Winosfera

Biała gęś

One of the biggest openings of 2013 is so much more than a wine bar, a point driven home by a nod from the Michelin corner. Head chef Jakub Adamczyk has used the experience gained working under Phil Howard of The Square to return to Poland and front Winosfera. His menu is a celebration of the seasons and muddles fine local produce with international styles and influences.

It’s all very ‘to the manor born’ in The White Goose, a rambling pre-war villa with a design that’s heavy on flowers, frills and flock wallpaper. With a more traditionally slanted offer than most, BG was seen as something of a surprise choice by some though the quality of product quickly offsets misgivings. Goose, as you’d expect, is the specialty.

Insider Knowledge Evening reservations recommended. Soups and starters from PLN 19-44, mains from PLN 59-94 (without extras). Peerless wine selection with represented vineyards including the increasingly on-trend Sicilian Baglio di Pianetto and Argentinean Antigal. Smart casual / upscale. A raw warehouse style that somehow manages to maintain intimacy that’s right for all occasions: from date night to dinner with the CEO. Michelin: one fork and spoon symbol. ul. Chłodna 31, winosfera.pl

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Insider Knowledge Evening reservations recommended. Starters from PLN 28-48, mains PLN 39490. Recognized by Wine Spectator magazine for its ‘exceptional wine list’, glasses start from PLN 19. Elegant dress. The goose menu includes such delicacies as foie gras with strawberry salad, and tops out at PLN 490 for a ‘coated goose.’ Michelin: two fork and spoon symbols. ul. Belwederska 18A, bialages.pl

Brasserie Warszawska

From the same brother and sister team that brought you Butchery & Wine, Brasserie walks the line between casual and class and gets away with it: there’s everything from a burger (foie gras, of course) to Chateaubriand. Mixing French with traditional Polish cuisines, the narrow-looking Brasserie is the kind of place that convinces visitors to become customers for life. Insider Knowledge Reservations recommended. Starters from about PLN 20 to 70, mains from the mid-50s to PLN 220 for the Chateaubriand. Wine by the glass from PLN 14. Smart casual. Six course set tasting menu available for PLN 180, and for PLN 360 with wine and alcohol pairings. Michelin: two fork and spoon symbols, a Bib Gourmand ul. Górnośląska 24, brasseriewarszawska.pl

l i f e s t y l e / h o tels

Hotel Spotlight: Sheraton poznań

Images: Shutterstock, Biała Gęś, Brasserie Warszawska, Winosfera, Sheraton

hen it comes to Poznań I’m something of a frequent traveler – not for business (unless you count monkey business), but certainly qualified to comment on where to stay and where not to stay. I’ll deal with the latter first. While the Blow Up Hall 5050 is something of a media darling, I wouldn’t really recommend it for either business or pleasure. Billed as ‘an interactive art piece’, it is indeed something of a design miracle – but practical it is not. It’s all very well having iPhones in place of keys, but not if said iPhone runs out: then it’s back down the corridor you go for a charger. And then back again when you realize the socket is well hidden. So while the big chain hotels seem a cop-out, I’ve no problems recommending the Sheraton as my lodgings of choice. And why ever not, this is after all the de facto choice for visiting football teams (Italy, Ireland) and stars (Nelly Furtado, Jarvis Cocker). Opened in 2006, its location on the doorstep of both train station and trade fair give it a heavy footfall of business travelers. A cunning design, however, means it never feels generic. The reception area is intimate, and flanked by the Qube bar whose masterstroke is a snug little fireplace lounge. Also on the ground floor are the excellent Fusion restaurant and the Americanthemed Someplace Else bar. In a city where dining remains a pot luck affair,

The Sheraton is ideally located in Poznań’s downtown

these are welcome indeed. It is upstairs, though, that the Sheraton comes into its own. Generous rooms are kitted in neutral, comforting tones, with the star of the show being a bed you might refuse to leave. It’s worth upgrading not just for a bit of extra room, but access to the executive lounge – unlike some hotels, this is not an afterthought, rather an integral part of the hotel. But if lounging isn’t your thing, then get active in the fitness center, which comes complete with a cool little pool and stunning views of the town down below. u

A range of dishes can be had at the Sheraton’s Fusion restaurant, complete with open kitchen

Sheraton Poznań

Number of rooms: 181 Number of suites and apartments: 13 Distance from the airport: 5.7 km Distance from the train station: 700 meters ul. Bukowska 3/9

www.sheraton.com/poznan

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l i f e s t y l e / o n a final n o te

alex webber editor of the Warsaw Insider

Planet Toruń It wasn’t reported widely, but in March I visited a different planet. It’s called Toruń.

quote L.P Hartley, they do things differently there. Strange place it is, a little micro-planet whose habitants survive on gingerbread. True, they do have restaurants, but they don’t serve the kind of food to which most humans are accustomed. It might even kill you – certainly, it nearly killed me. I shan’t mention the restaurant’s name, only that it served what is without doubt the worst meal I’ve encountered since leaving boarding school. What had been described as pork medallions transpired to be a dish of such diabolical nature that I found myself hiding food in the nearest plant for the first time in thirty years. And judging by the meaty scraps festering in the aspidistra, I wasn’t the only one with this idea. This is not meant as a sly dig at the Planet Toruń. It’s a grand place, and even more so when viewed in the hazy half-light of a shimmering spring. As the day closes and the shadows swirl, the Gothic old town takes on a warm, reddish glow, its steeples and spires piercing the sunset. There’s a film set quality to it all; and it feels paused in time. You bet I’m happy to volunteer for the next manned mission to this quaint little place. So the reason I mention my experience is not to slam the quality of dining in Toruń, but because I’m just so darn surprised about the whole misadventure. I’ve lived in Poland for fourteen years, during which time much of my work has centered on writing about food. And truly, at times, it was a struggle to remain positive. There was a clutch of good and a smattering of decent, but the lion’s share of eateries were desperate affairs – and that’s just the capital. Going further afield and the odds of something passable tumbled even further. But Polish dining has enjoyed a remarkable renaissance, and the underlining proof has been my expanding waistline. Ten years ago I was a hollow-eyed skeleton, today I turn sideways to fit through a door. Where did it go right? According to Robert Sowa, one of the original Polish celebrity chefs – if not the first –

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the answer is simple: “until the 90s,” says Sowa, “being a chef was considered one of the worst jobs you could have – it was a job for stupid people.” Slowly, such opinion changed. And so did the public. “Five years ago,” says Jacek Grochowina of Nolita, “nine out of ten people would order their steak well done – now, that same number will choose medium rare.” And as both chefs and public have changed with the times, so have suppliers. Where once much of Poland’s good produce was marked for export, today more and more of it is landing in local kitchens. These are, indeed, glorious times to be dining. Neither is this just my tilted personal opinion. Rene Redzepi, mastermind behind Noma, declared a few years back: “I really believe contemporary Polish cuisine can obtain the same worldwide success as the New Nordic Kitchen.” His prediction, a little outlandish at the time, appears to be bearing true. While the latest Michelin ratings deemed Poland worthy of just the one star, that is more a reflection on the complex machinations of the Michelin process. The state of Polish dining is in rude health, a point proved not just by the growing number of elite restaurants with global pretensions, but the locavore philosophies that have filtered right down: from casual six table restaurants to urban markets and even food trucks. A good restaurant is no longer judged on the beauty of its paintings nor the price of its food, but by the quality of its product. As a country, we’ve come a long way. Now, if only a troop of Polish chefs would care to undertake a pioneering trip to Toruń… u

Where once much of Poland’s good produce was marked for export, today more and more of it is landing in local kitchens.

A new gallery in Bydgoszcz

Galeria Dominikańska, Wrocław, 2001

Galeria Łódzka, Łódź, 2002

Galeria Krakowska, Kraków, 2006

Alfa Centrum, Gdańsk, 2006

Galeria Bałtycka, Gdańsk, 2007

Galeria Kaskada, Szczecin, 2011

ECE is developing a new retail centre in Bydgoszcz at al. Wojska Polskiego. The scheme will consist of 200 stores totalling ca. 50,000 sqm of leasable space and will off er 1200 parking places. It will be the biggest shopping, leisure and service centre in the voivodeship of Kujawsko-Pomorskie. ECE Projektmanagement Polska Sp. z o.o. ul. Fabryczna 5a, 00-446 Warszawa, Poland Phone +48 22 310 60 00, fax: +48 22 310 60 02 www.ece.pl, info@ece.pl