Warsaw Business Journal September 2017

WARSAW

BUSINESS JOURNAL E c o n o my | Te c h

PLN 24.50 (VAT 8% included) ISSN 2543-9529 INDEX-RUCH-332-127

SEPTEMBER 2017 ~ No. 08/09 (40)

N e ws | Re a l E s t a t e

For daily news visit us at wbj.pl

PIOTR KOCHAŃSKI The founder of Kochański Zięba & Partners pulls over to talk business

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SEPTEMBER Food Exports

Pass the butter 28 | Interview: Bakalland 31 | Interview: Mieszko 24

IN REVIEW

News highlights from the previous month from wbj.pl

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COMMENTARY

Alliance, holding, consortium................. 10 Subscriptions for shares......................... 11 Commodity exports.................................. 12 Interview: Karsten Klepsvik................... 22

Exclusive

Interview with Piotr Kochański.............. 14

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TECH INSIGHTS

FinTech in Poland..................................... 37 Interview: PKO.......................................... 41 Interview: Open Source........................... 42

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LOKALE IMMOBILIA

Real estate news...................................... 45 Airport cities.............................................. 52 Interview: Mindspace............................... 56 Służewiec makeover................................ 58 Interview: First Property Group............. 62 Public spaces............................................ 64

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LIFE + STYLE

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EVENTS

Arabian Horse Days................................. 78 JLL Volleyball Tournament..................... 80

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Labor Shortage

In need of fresh blood 32 Interview: Henryka Bochniarz 20 Interview: Jobsquare 35

SHUTTERSTOCK

Fall fashion................................................ 71 Business restaurants............................... 74

Nieruchomości Orange

Na sprzedaż Ośrodek wypoczynkowo-szkoleniowy nad Zalewem Zegrzyńskim

ka

Serock, ul. Wyzwolenia 57 woj. mazowieckie ws za Wa rs

36 000 000 zł

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yzw

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Cena netto:

Warszawa

Powierzchnia budynków:

19 513 m²

Powierzchnia gruntu:

87 361 m²

Możliwości inwestycyjne:

hotelowe, rekreacyjne, usługowe

Kontakt:

Dariusz Afrykański, tel.: 508 336 195

240 miejsc noclegowych w pokojach 1-5 osobowych i apartamentach Sala kinowa oraz 9 sal konferencyjnych Bar, restauracja, sala bankietowa i chata grillowa

Infrastruktura rekreacyjna: basen, korty tenisowe, sauna, siłownia Więcej: tel.: 800 300 400

CC_nieruchomosci@orange.com

nieruchomosci.orange.pl

Zapraszamy agencje pośrednictwa do współpracy z firmą Orange Polska S.A. przy sprzedaży nieruchomości na terenie całej Polski. Więcej informacji pod numerem telefonu: 800 300 400 oraz na nieruchomosci.orange.pl

FROM OUR EDITOR Morten Lindholm Editor-in-Chief/Publisher mlindholm@valkea.com

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

This September is going to be an eventful time for professionals and business leaders in Poland

azdrodowski@wbj.pl

Michael Evans Copy Editor

Kevin Demaria Art Director

Contributors

Ewa Boniecka Magdalena Iwańska Karolina Papros Sergiusz Prokurat Alex Webber Sales

BY MORTEN LINDHOLM

AFTER A HOT AND SUNNY SUMMER, it’s time to get back to business. Between the Economic Forum at Krynica, the European Forum for New Ideas in Sopot and a number of industry gatherings, this September is going to be an eventful time for professionals and business leaders in Poland.

To get the ball rolling, WBJ’s September issue focuses on big success stories. Our editors have talked to Piotr Kochański, founder of Kochański Zięba & Partners, a leading law firm, about the ebbs and flows of building a successful law firm in Poland. We also sat down with the CEO of Polish chocolatier Mieszko to discuss leadership style.

Our journalists look at the European butter shortage that has shaken commodity exchanges and how Polish dairy exporters are benefiting from the crisis. Further, we talked to the CEO of Bakalland, Marek Moczulski, about the export opportunities available to Polish food producers.

We also examine the labor market in Poland and ask whether immigration can balance the scales at a time when unemployment is at an historically low level. Henryka Bochniarz, president of the employers’ confederation Lewiatan and Marcin Fiedziukiewicz, CEO of Jobsquare, a Tinder-like app for employers, chime in.

In our Tech Insights section, we focus on FinTech revolution: a game-changer for the banking system in Poland and elsewhere.

Our Lokale Immobilia section focuses on the airport areas and the opportunities they present to commercial space developers. We also take a look at Warsaw’s business hub Służewiec, and its need for a makeover after all its negative press.

Speaking of a makeover, our lifestyle section presents the hottest fall fashion this season, as well as an overview of the essential restaurants for a working lunch or expense account dinner.

Enjoy the read.

PR & Marketing

Agata Wolny awolny@valkea.com Magdalena Czopur Subscriptions

mczopur@valkea.com Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com Magda Gajewska Event Director, Valkea Events

mgajewska@valkea.com Contact: phone: +48 22 257 75 00 fax: +48 22 257 75 99 e-mail: wbj@wbj.pl

WBJ.pl WarsawBusinessJournal

@wbjpl

All photographs used in this issue are courtesy of partners and companies unless specified otherwise.

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PORTRAIT BY KEVIN DEMARIA

Back to business

Magdalena Klimiuk mklimiuk@valkea.com Justyna Lund jlund@valkea.com Katarzyna Pomierna kpomierna@valkea.com A. Julita Pryzmont jpryzmont@valkea.com

The POZIOM 511 Design Hotel & SPA is a modern, 4-star facility located at the heart of the Kraków-Częstochowa Jurassic Upland, in the Eagle’s Nest Landscape Park. Our guests have 42 spacious rooms, including six suites, with modern interiors, at their disposal. A unique wellness area is the visiting card of the POZIOM 511 Design Hotel & Spa - our hotel guests are free to use a 20-meter swimming pool, a jacuzzi with water massage, as well as a steam bath and a sauna that lie adjacent to a natural limestone rock.

The Kraków-Częstochowa Jurassic Upland is the perfect place for anyone appreciating active recreation: for those who love trekking and cycling, climbing, skiing, and looking for new, unconventional trends in tourism and recreation.

The Upland is also a perfect alternative for those seeking a place to calm down, to clear their minds and to have close contact with nature that is not disturbed by the city noise and shows its full beauty, ensuring intense sensations. Sport and relaxation.

Stop for a while…

Take a deep breath and regain your balance.

W B J SEPTEMBER 2017

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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

As president I don’t feel this law would strengthen a sense of justice. These laws must be amended,” President Andrzej Duda commented on his surprising move to veto two of the three laws within a major judicial overhaul passed earlier by the Polish parliament.

The European Commission has also launched legal proceedings against the Polish government’s attempt to undermine the independence of judges.

prospects for further growth,” Work Service CEO Maciej Witucki said.

As much as 50.8 percent of employers in Poland claim that they have difficulty recruiting new workers, which is 15 percentage points more than last year and a record high, according to the latest report by HR consultancy Work Service. Among employers who have suffered from shortages of candidates, as much as 68.1 percent declare that this situation directly affects their business, the report said. “As much as 32.6 percent of companies had to abandon new contracts because of staff shortages. For the same reason, 12.8 percent of entrepreneurs choose to limit or completely abandon their investments, which significantly hampers

OIL

50% of companies have trouble finding WORKERS

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LOTOS eyes US oil WSE-listed, state-owned gas giant Lotos is considering buying oil in the US, although the company isn’t expecting the first deliveries this year. “We are working hard on opening up the US routes when it comes to oil,” the company’s deputy CEO Jarosław Kawula said. He added that currently, based on the information from potential suppliers, Lotos is developing the optimum blend of the raw material to meet refinery requirements. The company wants to order a test delivery first to its refinery in Gdańsk, before committing to a longer deal. “If I said I wanted it to

happen by the end of the year, it would be too optimistic,” Kawula said. At the same time, the company is continuing to buy raw materials from the North Sea as well as the Middle East. It currently buys 26 percent of the raw materials it processes from sources other than Russian Urals oil. “The overriding objective is the economic interest of the enterprise,” Kawula explained.

RETAIL

Poland suspends RETAIL TAX till 2019 Poland is suspending the retail tax till January 1, 2019, the Ministry of Finance said in its draft bill submitted to the cabinet. This means that the state coffers will not receive PLN 1.59 billion from the tax planned for next year. Back in 2016, Poland introduced

SHUTTERSTOCK

ECONOMY

the retail tax with two rates of 0.8 percent for turnover between PLN 17 million and PLN 70 million and 1.4 percent for turnover above PLN 170 million. It was suspended in October 2016, after the European Commission launched an investigation into the tax.

In July, the Commission said that the tax violates the bloc’s law, as the progressive revenue-based rates give low-income companies a selective advantage over their competitors in violation of EU state aid rules.

FMCG

BEER production up 14% Beer production in Poland has increased by 14 percent over the past ten years, with 42 million hectoliters produced in 2016, compared to 37 million hectoliters in 2007, according to a Central Statistical Office report. At the same time, the lowest level of production was recorded in 2009, when it amounted to 36 million hectoliters. Production of non-alcoholic beer in 2016 stood at 602,000 hectoliters vs. 316,000 in 2012.

Last year, €157 million worth of beer was exported from Polish breweries. The biggest consumers of Polish beer are the Dutch, followed by the Germans and the British.

Also in 2016, €44.6 million worth of beer was imported. Poland buys beer mostly from the Czech Republic, the Netherlands and Germany.

AUTOMOTIVE

NEW CAR REGISTRATIONS up by 16.63% y/y in July New passenger car and van registrations totaled 41,614 in July and was 16.63 percent higher y/y, as well as 11.96 percent lower than in June 2017, according to a report by market researcher Samar citing the national car registry. The y/y number has been growing for 28 consecutive months.

It is also the first time new car registrations have broken the 40,000 mark. “High sales in July, as has been for a long time, are due to high activity by institutional clients, which acquired 18 percent more passenger cars in July compared to the corresponding month of last year. Also, the figure increased by 20.5 percent for the first seven months of the year,” Samar said. In total, as many as 283,900 passenger cars were registered in Poland between January and July 2017, up by 17.3 percent from the same period of last year. New truck registrations stood at 34,321 for the first seven months of 2017, which was up by 0.37 percent compared to the same period in 2016.

RETAIL/FASHION

LPP with PLN 651 million revenue in July WSE-listed fashion retailer LPP recorded consolidated revenue of PLN 651 million in July, which marks a 22 percent increase y/y, the company stated. For January-July 2017, revenue amounted to PLN 3.72 billion, a 16 percent increase y/y. Internet sales stood at PLN 28.2 million in July and were 188 percent higher than in the corresponding month of last year, while for the JanuaryJuly period it reached PLN 164 million (a 110 percent increase). The retailer’s store space stood at 927,000 sqm at the end of July and was 6 percent bigger y/y. LPP has several fashion brands in its portfolio, including Reserved, Cropp, House, Mohito and Sinsay. It has been listed on the Warsaw Stock Exchange since 2001. In 2016, the company’s consolidated revenue stood at PLN 6.02 billion.

RETAIL/FOOTWEAR

CCC revenue soars by 48.4% y/y in July, online sales nearly double WSE-listed footwear retailer had PLN 308 million in revenue in July, a 48.4 percent y/y increase. Year-to-date, the company’s sales grew by 34.5 percent to PLN 2.15 billion.

CCC recorded PLN 43 million in revenue through its online sales channel, marking a 99.5 percent increase y/y, and reaching PLN 302 million at end-July, a 131 percent annual increase.

M&A/TELECOMS

TELECOM ORANGE Polska buys energy company for PLN 37 mln Orange Polska has signed a conditional agreement with Tokida Investments to purchase 100 percent of shares in Multimedia Polska Energia, Orange said in a statement. The value of the transaction stands at approx. PLN 37 million and will be adjusted based on the share capital and cash reserves as at the date when the transaction is closed. “The deal is part of Orange Polska’s strategy to develop services for households that are complimentary to telecommunication services. It will allow Orange Polska to increase its client base using the Orange Energia service to some 100,000,” the company stated. Multimedia Polska Energia sells energy to corporate and individual clients and has some 75,000 clients in its portfolio.

The closing of the transaction is contingent on Orange Polska receiving permission from the antimonopoly watchdog. The decision is expected within three months.

TRENDING STATS

6.2%

Industrial production increase in July (y/y, GUS)

7.1%

Retail sales growth in July (y/y, GUS)

4.5%

Average employment increase in July (y/y, GUS)

4.9%

Wage increase in July (y/y, GUS)

4,501PLN Average salary in July (GUS)

3.9%

GDP growth in Q2 2017 (y/y, flash estimate, GUS)

1.4%

HICP inflation index in July (y/y, Eurostat)

1.7%

CPI inflation in July (y/y, GUS)

0.8%

Base inflation in July (y/y, NBP)

Commentary EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

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Building a major law firm is not as easy as it sounds – we asked Piotr Kochański, CEO of Kochański Zięba & Partners, about his path to the top, as well as his views on the upcoming changes to data protection laws

ALL PORTRAITS COURTESY OF PARTNERS EXCEPT TOP LEFT BY BARTOSZ MACIEJEWSKI

How are the recordlow unemployment and ongoing tax reforms impacting the economy? – interview with Henryka Bochniarz, president of Lewiatan and head of the Social Dialogue Council

Norway’s Ambassador to Poland Karsten Klepsvik discusses the northern country’s energy and immigration policy, as well as Polish-Norwegian shared history and relations

CEO of chocolate producer Mieszko Igor Jeliński shares his views on what lessons a leader can learn from car parts and paint manufacturers that can be vital in revamping an FMCG business

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Get a lawyer’s take on optimal corporation forms for large enterprises, new tax regulations on share subscriptions and commodity exports

W B J SEPTEMBER 2017

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WBJ COMMENTARY | OPINION

Alliance, holding, consortium – various forms of big enterprise cooperation

THE INCREASING PACE OF TECHNOLOGICAL DEVELOPMENT, CHANGES AND ONGOING GLOBALISATION MAKE IT DIFFICULT FOR EVEN THE STRONGEST BUSINESS ENTITIES TO ACHIEVE ESTABLISHED GOALS. AS A RESULT, MANY STRUCTURES AND COOPERATION METHODS FOR ENTREPRENEURS HAVE BEEN CREATED THAT ENABLE THEM TO WORK TOGETHER TO ACHIEVE AMBITIOUS GOALS

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ooperation of enterprises may take various forms, e.g. a consortium, a strategic alliance or a holding. It should be noted, however, that these concepts have not yet been defined in Polish law, but only in practice, doctrine and jurisdiction. Below we present some characteristics of the most popular options.

Katarzyna A strategic alliance is an agreement between enKosicka-Polak terprises that want to execute a project together or to Legal Counsel, conduct specific business that will help them achieve a Co-founder common goal, maintaining the independence of both and Partner parties. An alliance’s goal is to improve management, MKZ Partnerzy to use resources more effectively, to achieve a better position on the market. In strategic alliances, unlike during mergers and acquisitions, both parties keep their autonomy. It is also possible to withdraw from the agreement easily. They usually encompass many segments of the market, in extreme cases they encompass it as a whole. There is no such term in Polish law, however, in accordance with the principle of freedom of contract, such agreements made as a form of entrepreneurs’ cooperation are acceptable.

A consortium is an organisational form of business cooperation developed in the turnover practice. In Polish Law, it has not yet been defined and regulated.

A consortium is understood as a connection, usually temporary, oriented at enterprises cooperating in their area of development, or in undertaking a new business.

It may also comprise cooperation in execution of a big financial operation. This kind of connection between enterprises is a sign of common activities to perform, with joint risk and on the basis of joint responsibilities, given specific results, such as building a power plant.

The possibility of concluding such an agreement results from the principle of freedom of contract from the Civil Code and from the fact that it has not been legally regulated. It means that a consortium is a totally contractual agreement and, thus, it may only be formed on the basis

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of a contract. The general regulations concerning legal actions from Articles 56-65 of the Civil code, and the general provisions regulating contracts from Articles 66-81 of the Civil Code shall apply here. The contract of a consortium is consensual – it is concluded by mutual declaration of will and produces effects by the agreement of the parties as such. There is no need to hand over the subject of the agreement. It is an agreement obliging both parties to perform a specific action for the remaining parties and thus – for the whole consortium.

It can be a mutually obliging contract as well as a multilaterally obliging contract, if the consortium comprises more than two entities.

A holding is a type of capital concentration by entrepreneurs. It is a vertical connection, consisting of one of the entrepreneurs owning shares or interests in another.

It is to provide correct control over subordinate companies, especially in terms of organisational and decisionmaking processes, which is possible because of owning a given number of votes on the general cooperator’s meeting and by performing different processes beyond the meeting. A holding often comprises more than two entities. It is based on the parent companies and the related subsidiaries. The contract of a holding is not a multilateral contact – it is concluded independently by and between the overarching entity and each of the controlled entities. As a result, the overarching company can invest in the chosen subsidiary and it does not result in a necessity to contribute to other entities which may result in losing some financial resources. The parent company takes on risks of the business of the subsidiary only to the extent of the amount of held interest, but is also responsible for its development and results.

As it has been indicated above, these contracts are unnamed contracts, in which, in accordance with Polish law, because of the principle of freedom of contract, the parties can govern their relations according to their own preferences. It should be noted, however, that their content and purpose cannot be contrary to the nature of a relation of obligation, to any legal acts and principles of social interaction.

“An alliance’s goal is to improve management, to use resources more effectively, to achieve a better position on the market

Subscriptions for shares in companies under new tax regulations

DESPITE THE AMENDMENT TO THE TAX LAW RESULTING IN THE RECOGNITION OF INCOME IN THE MARKET VALUE OF SHARES SUBSCRIBED FOR IN-KIND CONTRIBUTIONS, IT IS STILL POSSIBLE TO HAVE SUCH A SUBSCRIPTION FREE OF TAX

Tomasz Wojdal Head Legal Advisor at KRS Kancelaria Legal Office

S

tarting from January 1, 2017, shareholders who submit an in-kind contribution to a company (other than an enterprise or an organized part of the enterprise) must recognize revenues equivalent to the value of that contribution specified in the company’s article of association. In such cases that the value of the contribution specified in the company’s article of associations is lower than its market value, the shareholder must recognize revenues equivalent to the market value of that contribution.

For comparison, before January 1, 2017 any shareholder who submitted an in-kind contribution to the company recognized only the revenue equivalent to the nominal value of the shares/stocks to which they subscribed. In practice, this regulation was used in such a way that contributions were made on a small part of their value to the share capital – which corresponded to the nominal value of shares/stocks, and surplus over the nominal value of the shares/stocks was allocated to the supplementary capital (premium). Currently, applying the described procedure, a shareholder is not prevented from recognizing the revenue at the full market value of the in-kind contribution.

Despite the introduced amendments, shareholders who submit the in-kind contributions are entitled to recognize the tax-deductible costs at the date of subscription for shares/stocks. The level of these costs depends on the type of in-kind contribution made by the shareholder. The laws enumerate the following situations: - If the contribution is in the form of fixed assets, the cost is the value of those fixed assets reduced by tax depreciation; - If the contribution is in the form of shares or stocks: a) previously acquired for an in-kind contribution (other than an enterprise or an organized part of the enterprise) the contributing shareholder will recognize costs that correspond to the value of those shares or stocks as indicated in the company’s articles of association; b) subscribed for cash, the amount of the expenses corresponds to the value of expenses incurred to cover those shares or stocks; c) subscribed for the in-kind contribution in the form of an enterprise or an organized part of an enterprise, the costs correspond to the value of the assets of that

enterprise or organized part of an enterprise established at the date of subscription of those shares or stocks; - If the contribution is in the form of material things other than described above, the amount of costs corresponds to the value of expenses incurred for the acquisition or production of those things; - If the contribution is in the form of assets received by a shareholder as a result of the liquidation of a partnership, the value of the costs corresponds to the value of expenses incurred for their acquisition or production if they were not fixed assets or the initial value of these assets reduced by tax deprecation recognized in the liquidated partnership; - Finally, the legislator preserved that when a shareholder subscribes for shares and the contribution is in the form of shares subscribed as the result of a transformation of a one-person business, he can recognize income costs corresponding to the value of assets specified in the accounting records of that one-person business enterprise, including the records of fixed assets.

It must be remembered that only income earned by the shareholder from subscribing for shares/stocks for in-kind contribution is subject to tax. Such income is the difference between the market value of the in-kind contribution and the tax-deductible costs determined in accordance with tax law. Consequently, the mere act of subscription for shares/stocks may be neutral for the shareholder submitting an in-kind contribution.

“It must be remembered that only income earned by the shareholder from subscribing for shares/stocks for inkind contribution is subject to tax W B J SEPTEMBER 2017

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WBJ COMMENTARY | OPINION

Magdalena Zielińska Advocate WKB Wierciński, Kwieciński, Baehr

Export of Polish commodities, Polish food brands abroad

POLISH EXPORTERS HAVE FACED AND PREVAILED AGAINST MAJOR CHALLENGES IN THE PAST FEW YEARS. NOW THEY ARE LOOKING AT GREAT OPPORTUNITIES SUCH AS THE INTRODUCTION OF CETA

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oland has become a leading European food exporter. In 2016 exports of foodstuffs reached a record value of over €24 billion, i.e. more than PLN 100 billion. This upward trend is expected to continue in 2017. It is worth emphasizing that the positive results in Polish exports were achieved despite such trade obstacles as the Russian embargo (in force since 2014) and the Chinese ban on the import of Polish pork meat (introduced in response to the fear of African Swine Flu).

Such positive results clearly show that Poland has learned to enjoy the benefits of the Common market.

Indeed, over 80 percent of all exported Polish food products was destined for other EU markets. The majority of Polish commodities were purchased by German, British and Czech consumers. Among the best-selling products were: meat and meat products (especially poultry), dairy products, confectionery, cereal, fruit and vegetables.

Notwithstanding the above, Polish food producers are not confining their search for commercial partners to the EU. Last year the biggest recipients of Polish food in eastern markets were Belarus, Saudi Arabia and Hong Kong. Is this a good direction? Certainly. Polish entrepreneurs should seek the chance to increase their presence on the markets of developing countries. Taking into account signals of protectionism already present in certain European countries and increasing competition

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in the common market, focusing on African or Asian countries would undoubtedly be a good idea. Polish producers have absolutely nothing to be ashamed of.

Foreign customers appreciate Polish agri-food products not only for the great price-quality ratio but also for their perceived safety and good taste.

An interesting perspective for Polish food exports occurred in the light of CETA – the Comprehensive Economic and Trade Agreement signed between Canada and the EU. CETA was signed on October 30, 2016 in Brussels. It has already been approved by the European Parliament, but in order to fully enter into force, it has to be ratified by the parliaments of all member states. It will obviously take some time. Before it occurs, CETA will apply only in its commercial aspect.

Canada, with its considerable market, constitutes a good sales outlet for Polish food producers. Most products from the agri-food industry will now be exported to Canada duty-free. This applies to, among others, fruit and vegetables, wine industry products and spirits or traditional products with protected geographical indications. According to a recent joint communication of the President of the European Commission and the Prime Minister of Canada, CETA will partially enter into force in September 2017.

Considering the above, Poland undoubtedly stands a chance to strengthen its position in international markets. Given the promising trend, Poland should already be considered one of the most interesting food industry markets to invest in.

“...over 80 percent of all exported Polish food products was destined for other EU markets

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WBJ COMMENTARY | EXCLUSIVE INTERVIEW

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INTERVIEW BY BEATA SOCHA

On solid ground

PIOTR KOCHAŃSKI, FOUNDER OF KOCHAŃSKI ZIĘBA & PARTNERS, ONE OF THE BIGGEST LAW FIRMS IN POLAND, DISCUSSES HOW THE LATEST DATA STORAGE REGULATIONS WILL INFLUENCE COMPANIES AND PEOPLE, AND HOW THE LABOR MARKET IS CHANGING. HE ALSO REVEALS THE SECRET TO BUILDING ONE OF THE MOST SUCCESSFUL LAW FIRMS IN THE COUNTRY

WBJ:

One of your company’s fields of specialization is new technologies, which includes IT in general and big data solutions in particular. We leave tons of data wherever we go, whatever we do: when we pay by credit card, enter a shopping mall, use navigation or visit a website. Some say we live in transitional times, when data sources are ubiquitous, but we’re not quite sure who all that data belongs to. How will the introduction of the General Data Protection Regulation (GDPR) (in Polish dubbed RODO) change things for a regular Joe and for the entrepreneurs who collect data?

Piotr Kochański: The new regulation will mainly affect companies that process a considerable amount of personal data at a regional, national or international level – that is financial institutions, banks, internet service providers, telecoms and insurers, etc. They will now have to implement a brand-new data protection compliance system that will cover practical, organizational and legal issues. Companies will need to incorporate privacy features from the very beginning of the design process and take into account how data processing may affect a customer’s privacy, particularly in cases which involve customer profiling or monitoring of geolocation data collected in public places.

W B J SEPTEMBER 2017

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WBJ COMMENTARY | EXCLUSIVE INTERVIEW

plicit consent. Additionally, companies such as telecoms, banks and insurers will need to conduct, on a regular and repeated basis, a privacy impact assessment or privacy risk analysis, which will include an assessment of the risks to the rights of customers. As stated in Article 29 of the Data Protection Working Party, these activities should commence as early as practically possible in the design of the processing operation, even if some of the processing operations are still unknown. In practice, this means that personal data protection shall become a significant part of each and every company’s internal DNA.

In addition, companies conducting regular and systematic monitoring of data subjects on a large scale will need to designate a data protection officer who, among other things, will inform and advise them of their obligations and monitor compliance with the GDPR. The GDPR aims to give control back to customers over their personal data, meaning the customer will have the right to receive his or her personal data in a commonly used format and have the right to freely transmit that data to another controller. To sum up, this new and challenging customer-oriented regulation unifies personal data protection law in the whole European Union and is widely viewed as a very positive change.

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The two industries that have the most data at their disposal are probably telecoms and banks.

We already see banks partnering up with insurers and insurance firms venturing into the world of finance. Will the new regulation impact their business and their clients?

The GDPR aims to protect customers from having their personal data used against them. This includes data categorized as “sensitive,” for example, data relating to medical and personal health. For instance, assessing whether or not a customer is eligible for credit by way of an automated algorithm will not be permitted without the customer’s ex-

Will the regulation change the so-called “right to be forgotten” as well?

Yes, in fact, it will strengthen it. Once the regulation is in force, if a person demands that his or her data be removed (for a legitimate reason of course), the data administrator will not only have to comply with the wish but also inform all other administrators who were given access to the data about the request.

It seems like a lot of businesses will indeed be affected by the regulation. Do you think Polish companies are prepared for the GDPR? They have less than a year left before the regulation becomes the law.

The GDPR is a perfect example of a horizontal regulation which is applicable to all European entities in the value chain. According to surveys carried out before July of this year (by the IT WIZ magazine), 26.5 percent of Polish entrepreneurs were planning to start preparations in the second half of 2017, 25.3 percent are waiting for the Polish sector-specific regulations and 41.3 percent have already started preparations. So it is a rapidly changing scene, and I do think we are in the middle of the transformation.

Employers in Poland are increasingly often faced with a talent shortage. With record low unemployment and increasing employee turnover (according to a recent study, young graduates change jobs twice

BARTOSZ MACIEJEWSKI PHOTOGRAPHY; STYLING BY SANDRA BRONISZEWSKA

“I came to work one morning and found myself shut out of my own office, standing with my computer in the street

There have been numerous reports about hackers stealing sensitive data or preventing companies from accessing their resources and then demanding a ransom. Does the new regulation change how security breaches are handled?

According to the new regulation, when a cyberattack has been carried out or following any other personal data breach, the affected companies will have to, without undue delay and, when feasible, not later than 72 hours after having become aware of the breach, inform the data protection authority about the security breach.

Moreover, in some situations, the affected company shall communicate the personal data breach to customers as well. Consequently, companies will no longer be allowed to sweep such incidents under the carpet. Subsequently, their incentive to pay ransoms to cybercriminals to avoid the threat of public exposure will be lower, and it is hoped that cybercriminals will ultimately be detracted from carrying out the attack in the first place.

as often as their colleagues who are only 10 years older). Have you ever had problems with high employee turnover?

No, not in any of my firms. The youngest generation in the workplace is indeed different to their predecessors. They are well traveled, have more experience of living and working abroad and accordingly their expectations are higher. Their expectations are not unreasonable, however. They are much more comfortable with technology, for instance, which makes them more valuable in many businesses, including law firms. It pays to listen to their needs and respond to them. I believe that this is something positive for Poland as it forces employers to respond to this and improve working conditions.

We seek out the most talented young lawyers and provide them with opportunities that few other law firms can offer. A great deal of our focus is on allowing our young lawyers and staff to grow through eliminating the glass ceiling often found at other law firms, through training and development and most importantly through the trust and loyalty that we place in them. As a result, this trust and loyalty is reciprocated.

run a legal office, I want to build an inclusive company, a business that takes chances on people, offers them growth opportunities and is based on mutual business interests and trust.

Have you ever been burnt by that trust?

Many times. But it has not changed my approach to doing business. You have to anticipate risks and accept that failure is sometimes inevitable. I was once the target of a major hostile takeover attempt from within my own company. It got really ugly: I came to work one morning and found myself shut out of my own office, standing with my computer in the street, no access to my company network. I couldn’t even get into my own building. There were times I thought I was dead in the water. I was on the verge of giving up. But my mentor from my days at Hogan & Hartson, Bob Glen Odle, told me: “You can’t let them steal what’s yours.” I had to resort to every last legal remedy there was in the book to get my firm back. In the end, I succeeded and even managed

to strengthen my company during the process.

The silver lining was that it happened at the time of the crash of 2008. In 2009, large companies were streamlining and laying people off. After the unsuccessful takeover attempt, my team was about 70 percent of what it had been before. I didn’t have to downsize – on the contrary, I kept everyone who stayed with me through the ordeal.

Do you still trust people as you did before?

Yes. You could call me an unreformed optimist but I have learnt a few things since then. I wrote the bylaws of my company in such a way as to prevent any similar takeover attempt from happening in the future. I also learned to rely more on my intuition when choosing the people I work with. Intuition is vital when making decisions and getting to know others. Trust cannot be blind. It has to be based on solid grounds.

You’ve worked at two major law firms in the US. Do you think that Polish law firms will follow the same patterns – going pan-regional, offering comprehensive services for every sector, with a branch in every major city? Right now, each city in Poland has its own top law firms, and most have several specializations.

It’s not as easy as it may seem, and not only for Poland. Yes, there will be a period of growth, consolidation and mergers. We are already seeing signs of this. About 10 percent of the firms currently operating on the market will remain: those with the best organization, covering every busi-

You yourself had the opportunity to gain experience abroad as a young attorney. You studied in Kraków, went on a scholarship to France and you were then immediately offered a job in a prestigious law firm in the US. How did all your experience influence you later when you started your own company?

When I went to France for an internship back in 1988, I was in awe of how law firms operated there. Being a lawyer commanded incredible prestige and respect. And that was also when the first modern law firms in France started to form: rather than individual practices, lawyers began to join forces and create partnerships, and ultimately became the law firms we see today.

That is what I am doing here. I love it when people value and trust each other, and combine their strengths to offer clients a more comprehensive and better service. I don’t want to

W B J SEPTEMBER 2017

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WBJ COMMENTARY | EXCLUSIVE INTERVIEW

ABOUT Piotr Kochański born in 1961, graduated from Jagiellonian University in Kraków in 1985.

He was a visiting Scholar at the George Washington University in Washington, DC, where he lectured on Technology Transfer, 19931995. He is an attorney, member of the Warsaw Bar and Washington DC Bar. He is the founder of Kochański Zięba & Partners, established in January of 1999. In his early career he established the Polish office for Hogan & Hartson, the third US law firm to open its office in Poland immediately after the first free election and the beginning of the systemic political and economic transition in the 1990s. Later, he was a Partner at another top-tier US law firm – White & Case from 1996 to 1999. He has been awarded distinctions

by Chambers Europe, Global Law Experts, Legal 500 EMEA and PLC Which Lawyer. He was named “Patent and IP Star” in the Managing Intellectual Property ranking and ranked three times

by European Legal Experts as the Best Polish IP lawyer in 2005, 2007 and 2008.

Aside from his many hobbies, which include painting, playing drums and car and motorcycle racing, his favorite pastime is spending time with his wife Kamilla and their two sons at their horse, cattle and bio-plant farm that they run together.

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ness aspect, with the best technical support, with the top experts in every field. Clients are starting to group firms into so-called panels encompassing the law firms that they trust with their business.

In Poland, just like in the rest of the world, firms will have to face global competition. It will polarize the market to some extent: large corporations with multi-million-dollar cases will seek representation from the biggest and the best firms. But of course there will also always be room for small firms, handling smaller cases, representing individual people. Highlyspecialized firms will also find their niche. It’s the medium-sized firms that will face the harshest competition. They will either have to grow or merge with others. Otherwise, they will likely go under.

Do you plan to branch out into other cities in Poland?

Our objective is to be the first choice law firm for both Polish and international clients operating or investing in Poland. Our current focus is on further developing our Kraków and Warsaw offices. However, whereas in the past top Polish companies that originated in other major cities moved their headquarters to Warsaw, we are now seeing a trend of companies choosing to remain in their home cities. Moreover, we are seeing a growing trend of international companies deciding to locate their offices in other major cities.

We want to be competitive and there is huge value in being located physically close to our clients. Therefore, at some point we will be looking at other cities, but I believe this will arise through mergers with regional firms as opposed to establishing brand new offices. Additionally, we might look abroad for business partners. Our firm is already one of the largest in Poland, and the fastest growing. We wish to grow further, and be the one taking over, as opposed to selling to a global player.

Can Polish law firms even compete with global giants?

Of course they can! In many cases it is an advantage to be an entirely

Polish firm. Imagine a deal between global corporations in Poland. You need to be sure there is no conflict of interest on the case: that the company representing you doesn’t have other international clients whose objectives conflict with those of your own.

Once, when we were competing with other firms to represent a major state-controlled company in international negotiations, we were thoroughly vetted to verify if we had any clients in Russia. If we had had, we wouldn’t have been allowed to represent the company.

You have to remember that the success of the global giants (predominantly US and UK law firms) derives from them following their clients internationally. We also understand this and have structured ourselves to do the same. With Polish companies going global more and more, we are with them every step of the way.

You have successfully built not one but several law firms in your career. What is your strategy when creating a business?

I established our law firm in January 1999, which I then named Kochański & Associates. We were located in Saska Kępa, Warsaw. We called our office our own Silicon Valley.

The economy was growing at a crazy rate back then, businesses were expanding, investors were coming to Poland.

Our business was booming as well. We occupied the first floor in the first year, then two floors in the second year and before long we were running out of office space. Then came the crash – the dot com bubble of 2001. Suddenly, clients started having problems with payments. I told my employees that I would still continue paying them, even out of my own pocket, although we did have to tighten our belts for a while. We survived the downturn and afterwards I paid off every last penny I owed my employees. I never laid people off.

If you are the best, business will come to you. My co-managing Partner Rafał Zięba and I, and in fact all of our Partners, have a mission to go beyond merely offering legal advice. Companies can get that anywhere. We are a Business Law Firm, which means that we guide firms in their business endeavors. Companies expect us to know their industry as well as they do. They don’t have the time to explain the intricacies of their business, so our lawyers are already equipped with that knowledge.

Our Partners specialize in several business areas, including defense and aviation, FMCG, automotive, energy and natural resources, real estate and construction, finance, media, new technologies and pharmaceuticals. This represents huge added value for our clients. We have specialists in each and every one of these fields. There are law firms in Poland with very good M&A lawyers. However, they are not equipped to understand, for example, the telecommunications industry as we do. Our unique selling point is that we not only have excellent M&A lawyers, but if a client is looking to acquire a telecommunications company, we already have the experts in house that understand the business and the industry, its technicalities.

It is my belief that the success of any company derives from listening to the market and our customers. At pres-

ent and for the foreseeable future, across every industry, there is a drive to make the customer-experience more convenient at a lower cost.

In the same way that telephone, internet and cable TV providers have branched out to supply utilities such as electricity and gas, we have established a group of companies that provide services complementary to the core legal business. The KZP Group includes: Kochański Zięba & Partners Accounting & Finance, which provides bookkeeping, accountancy, tax, payroll and audit services; and REACH BFM, which stands for Restructure Effect Access Capital House Business Finance Management company. It provides financial advisory, business matching, advice on mergers and acquisitions and real estate transactions, restructuring, capital structure advice and general strategy. Another exciting development we have been engaged in is the building of a Closed Investment Fund entity for purposes of increasing capital gains for our Firm and business Partners. We have a software house through which we build our most sophisticated advanced software product that allow us to enhance the effectiveness of our communication with clients.

Through the KZP Group companies, we are able to offer our clients a complete package of services, providing a full and convenient onestop-shop experience. The response from clients to this has been fantastic.

Clients greatly appreciate that they only need to go to one place, with one point of contact for all their needs, and at a cost that is less than if they were to seek those services from separate unrelated providers.

To run such a corporation you have to have the best, world-class Partners, Associates and Managers, and all adequately educated support staff. And we have them. Only through and with them have I been able to accomplish what I have so successfully to date.

Only then can you offer an exemplary service that your clients expect and are happy to pay for.

I am very fortunate to have met all the wonderful people who work in our firms.

Apart from being a successful lawyer and businessman, Kochański is also a big car and sports motorcycle enthusiast. His four-seat, convertible Porsche 911 Turbo S, has been modified to reach 630 horsepower and hit 100 kph in 2.9 seconds. “Launch control in this car is an experience unlike anything else. You almost get a feeling that the car is doing a stand-up wheelie, like a motorcycle,” he says. He has chosen this car also because, unlike most high-performance sports cars, it is a four-seater, which allows him to enjoy rides together with his wife and their two boys, “the new generation of car enthusiasts.”

W B J SEPTEMBER 2017

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WBJ COMMENTARY | ECONOMY

Low unemployment is also related to low labor force activity. Currently, the indicator is only 3 percentage points higher than the historic low of 55.7 percent. That is why it is imperative to increase labor market activity by encouraging emigrants to return to the country and creating conditions for people with desired qualifications – including foreigners.

Economic dilemmas

IS THE LOW UNEMPLOYMENT GOOD OR BAD FOR THE ECONOMY? HOW ARE THE RECENT TAX AND LABOR MARKET REFORMS AFFECTING COMPANIES? IS THERE A REAL DIALOGUE BETWEEN THE GOVERNMENT, THE PRESIDENT, EMPLOYERS AND WORKERS? THESE ARE THE QUESTIONS WBJ ASKED HENRYKA BOCHNIARZ, PRESIDENT OF THE EMPLOYERS’ CONFEDERATION LEWIATAN AND, SINCE NOVEMBER 2016, HEAD OF THE SOCIAL DIALOGUE COUNCIL, A PLATFORM FOR COOPERATION BETWEEN WORKERS, EMPLOYERS AND THE GOVERNMENT. ALL OF THOSE IMPORTANT ISSUES WILL BE DISCUSSED DURING THE SEVENTH EUROPEAN FORUM FOR NEW IDEAS IN SOPOT 20

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WBJ: Poland now has the lowest unemployment rate in over

25 years, currently standing at 7.1 percent. What has caused the record low unemployment level?

Henryka Bochniarz: The record low level of unemployment in Poland is the product of strong economic performance, as well as other factors: demographics, economic migration of younger Poles, the supply of foreign workers nearing depletion and the lack of policies encouraging older generations to remain in the job market. Then there is the question of the pension reform that will enter into force on October 1, which may drive 300,000 people out of the labor market.

Is this level of unemployment good for Poland’s economic growth?

The low level of unemployment is something to be happy about. In the long run, however, it will increase companies’ operating costs. It’s also a signal that employers need to start looking at their business long-term and in a socially responsible manner.

For the first time in 26 years we are looking at an employee’s market and employers need to adjust to market expectations. If they start investing in their employees: their training, increasing their competencies and qualifications, it will strengthen economic growth in the long run.

Spending money on training and modern production infrastructure will become fundamental for Polish companies’ competitiveness, as well as a clear signal to international firms that they will be able to find highlyskilled employees in Poland.

The low level of unemployment will also incentivize employers to increase competitiveness by implementing new technologies, robotics and automation. This will allow Poland to join the group of economies that determine the direction of further development.

Which industries are affected most by the employee shortage?

Can immigrant workers balance the market in these industries?

Employee shortages affect many industries: construction, industry, transport and logistics, as well as retail. The road transport industry alone could employ as many as 100,000 drivers. Employers are forced to look for employees abroad.

Interestingly, they no longer look just at Ukraine or Belarus, but even further east, like India.

INTERVIEW BY BEATA SOCHA

Being able to employ foreigners legally is of key importance. In 2016, one out of every seven companies employed Ukrainians and 40 percent of those polled were considering such a solution (according to a survey carried out by Randstad and TNS Polska in June 2016).

How are the changes in civil law contracts that are being introduced influencing the labor market?

Since the beginning of 2017, the minimum wage in Poland has been PLN 13 per hour, which is also applicable to people working on civil law contracts. It was implemented upon a consensus reached by the Social Dialogue Council.

The market responded to the new regulations calmly. Companies accept the new minimum wage (according to the results of an audit conducted in H1 2017, less than 10 percent of companies lowered the wage). What is problematic is the extra administration required: changes in contracts, working hours statements, rigid payment schedules). This is particularly difficult for small companies that do not use payroll services.

Since June, companies who use the services of self-employed people and temp work agencies have to carry out and archive three or four different types of statements. It adds extra work.

The government’s clampdown on entrepreneurs who avoid paying VAT has been deemed a success, adding an estimated PLN 15-20 billion to state coffers in 2017.

How do you assess the policy?

It’s a positive change. Closing the loopholes in the tax system is important for the budget as well as for honest entrepreneurs, who often find it difficult to compete with tax-avoiding fraudsters. Oftentimes, tax avoiders use tax carousels to hide from the authorities, who in turn go after those who were unwittingly involved in the scheme. It is unacceptable. The government must remember (and it is something that Lewiatan is advocating for)

that honest entrepreneurs should not bear the costs of plugging the holes in the tax system. Some of the changes introduced have a negative impact on honest taxpayers, e.g. the reverse tax in the construction industry has hampered the financial liquidity of Polish contractors. Also, an entrepreneur who makes an error in their tax statement (something that is not that easy to avoid given how complicated the tax system is) also has to pay a fine of 30 percent.

Tax authorities now have more insight into companies’ finances, which can be unpopular with entrepreneurs, but it should in fact limit the number of tedious tax audits.

Do the planned changes (in PIT and CIT) in the tax system impact employers and investors in Poland? And if so, how?

Firstly, employers are negatively affected by the inconsistent communication coming from the government, such as the recent confusion surrounding the single tax and higher taxation on economic activity, as well as some other irrational tax proposals.

The changes to CIT and PIT that counteract aggressive tax planning should be balanced, taking EU directives into consideration.

Otherwise, Poland may become unattractive to investors. With CIT at 19 percent and with additional restrictions on tax reductions, companies will start wondering whether it makes sense to invest in Poland at all. Meanwhile, countries that offer more favorable tax systems, like Bulgaria, will be able to take advantage of that.

The percentage of employees aged 55-64 has increased in Poland, but it is still below the EU average. In 2016, it stood at 46.2 percent, while in the EU it is at 55.3 percent. How important is it for the long-term growth of the Polish economy?

It’s very important. Firstly, we live longer and have fewer children.

Secondly, the low share of 55-64 year-olds who are professionally active means that the state will have

to spend more on pensions, which is already a huge burden on the country’s financial stability. That’s why it is important that we work longer.

Receiving a pension decreases the incentive to work and many people decide to leave the workforce.

This directly translates into lower economic growth. Higher spending on pensions limits capital that could be used for investments, which determine the long-term economic growth of any economy.

The pension reform that will enter into force on October 1, 2017 may drive 300,000 people out of the labor market

As the president of the Social Dialogue Council, how do you assess its work so far?

Since November 2016, when I took over as the head of the council, we’ve had six general assembly sittings and four summits. We’ve written opinions on 21 proposals and sent 32 statements to the government.

There are both positive and negative examples of the Council’s activity over the past two years since its inception. We were able to influence the value of the new minimum wage.

However, at times the government foregoes consultations with the Council, like in the case of the retail tax, or it fails to take into account the position of its social partners, like in the case of the education reform.

That’s why I think that consultations with the Council on all new bills proposed by MPs and by the president should be obligatory. Although the president has thus far submitted all of his proposed bills for consultation.

We have sent a bill proposal on the Council’s activity to the president, and we hope it will be passed this year by the Sejm and the Senate.

Dialogue is necessary because it allows all parties to be heard. And even though it’s not perfect, the Council’s activity is a step in the right direction. We will discuss the greatest challenges Polish employers and employees are facing at the European Forum for New Ideas in Sopot this year, at a round table meeting of employers, trade unions and politicians, including Minister Elżbieta Rafalska and Minister Andrzej Dera.

W B J SEPTEMBER 2017

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WBJ COMMENTARY | FOREIGN RELATIONS

WBJ TALKED WITH KARSTEN KLEPSVIK, NORWAY’S AMBASSADOR TO POLAND, ABOUT BREXIT AND EUROPE’S REFUGEE CRISIS, THE DISTRIBUTION OF NORWEGIAN FUNDS IN POLAND AND THE COUNTRIES’ MUTUAL RELATIONS

Monument of Polish sailors from "ORP GROM" warship who died in battle of Narvik in 1940

WBJ:

While not an EU member, Norway has very strong ties with the European Community, having Association status with the EU, and as a member of the European Union Economic Zone and the Schengen Area. How do you see Norway’s role in dealing with the problems the EU is now facing, such as Brexit?

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Which of the problems that the EU is now facing do you consider the most urgent?

First, I want to stress that Brexit is not the end of the EU. We know that in the past the EU has gone through various crises and overcome them, as it will do now. The refugee crisis is a big challenge and I believe that Norway, together with the EU, will find a solution. We have to increase the help for refugees in places where they are residing, and to control influx.

We are aware that Norway and Poland have different attitudes towards accepting refugees. Norway has accepted many refugees and we have managed to integrate those people in our society. They are not settled in ghettos, they are settled in various parts of our country, they learn our way of life, the Norwegian culture, our history, our language, they have jobs and their children attend Norwegian schools. For us it is a successful policy, Norwegians are not afraid of refugees from Asia and North Africa and other countries.

Poland’s goal in the field of energy is to diversify its gas supplies and reduce, eventually entirely, its imports from Russia’s Gazprom.

The Polish government is in talks about returning to the 2002 project of connecting Poland with gas sources in the Norwegian shelf in the North Sea through Denmark by building the Baltic Gas Pipeline. How do you see this project and its prospects?

PHOTO THIS PAGE SHUTTERSTOCK, OPPOSITE PAGE MIREK CYRYL WÓJTOWICZ

Poland’s northern ally

Karsten Klepsvik: The UK after Brexit will remain a very important country to all of us for trade and security reasons. It’s important for us that the UK strikes a good deal with the EU that will satisfy both sides. And for Norway it is a particularly big challenge to maintain and develop good relations with the UK. At the same time, we are fully aware that Norway has to contribute to integrating and strengthening the EU, because – like for Poland – the free flow of trade and maintaining an open market are crucially important for us.

INTERVIEW BY EWA BONIECKA

The Norwegian government is not a part of the talks regarding that project. Building the Baltic Gas Pipeline has to be a commercial deal accomplished by private corporations.

It has to go through Denmark so Danish firms would be a part of the discussion with the Polish side. Of course, some Norwegian companies could potentially be involved in that deal as well, because it will be gas from Norway. Norway has huge gas resources that are being exploited in the North Sea and due to its effective exploitation. Plus, because of the development of high technology, our substantial oil exports, as well as the wealth of fish in our waters, Norway is a prosperous country.

Our free market economic structure, based on a mix of private and state companies, is effective and secures our finances and the state budget, allowing us to afford generous social policies.

There are a growing number of Norwegian investors in Poland. In what areas do you see potential to tighten our ties?

We are keen to enlarge our activity in the technological sector in Poland, our firms are investing in the IT sector, developing our cooperation in the military sector, also in producing missiles. Norwegian investors are involved in developing green energy production in Poland, which contributes to the reduction of CO2 emissions. And for Norway, the world’s top exporter of fish, Poland is the biggest market.

After the EU’s enlargement in 2004, Norway established the Norwegian Funds, providing 15 countries with funds helping to level the economic and social differences in Europe. Poland has been the biggest beneficiary of that money. Our countries are now in talks about a third edition of those funds. When do you expect these talks to be concluded?

How will the money be distributed and what will the priorities be?

The Norwegian Funds supported the restoration of historical objects, the activity of cultural institutions,

protection of the environment, civil society activity and small and medium firms. There were 28 projects realized all over the country. Now we are negotiating the distribution of Norwegian Funds for next year, and Poland can expect to receive €810 million. The negotiating process is very complicated, Norway stresses that the money should be distributed by non-government organizations, not by the government. And our side points out that the funds have to be distributed in a transparent way all over Poland – to small cities, to children’s institutions and civil organizations, and that we must keep a check-and-balance system in that process. I hope that we can conclude those negotiations as soon as possible while it is now in the hands of the Polish government.

I am optimistic that we will achieve a proper agreement.

In what other areas are PolishNorwegian ties the strongest?

Educational cooperation is very important for our countries. In the frame of the EU Erasmus program and our Horizon program there are many Polish students at Norwegian universities and a large number of Norwegian students studying at Polish medical schools. The ties between academics are lively, especially in technological fields.

Tourism is also a major part of our relations. Young Poles love to visit Norway and explore its northern part. The number of tourists is still rising on both sides, as Norwegians also love to visit Poland. For instance, in Gdańsk there are a lot of visitors from our country and the Norwegian language can be heard everywhere during the summer.

I want to point to our common history in the victorious battle of Narvik, fought against the Nazis by the allied forces between April 9 and June 8 of 1940. A Polish brigade of 5,000 soldiers participated in the battle, which is a source of pride for both our nations.

ebrated and cherished in Norway. In Narvik, there is a beautiful military cemetery, where Polish soldiers are buried and there is a War Museum where all exhibits are annotated in Norwegian, Polish and English to commemorate all of the soldiers who fought in that victorious battle.

I was there in 2015 when the President of Poland, Andrzej Duda, and King Harold V of Norway celebrated the anniversary of the battle and many people from all over our country, old and young, took part in it. And in Poland the memory of the battle in Narvik is also vivid and Polish tourists visiting our country came to Narvik to pay respect to the soldiers who fought and lost their lives in that battle.

Poles are the biggest minority group in Norway.

They are fully integrated and respected

How many Poles are there living and working in Norway, and how does the Polish community integrate with Norwegian society?

There are now 105,000 Poles living in Norway, which is 1.8 percent of the whole population. Poles are the biggest minority group in Norway. They are fully integrated and respected, their children attend Norwegian schools and Poles working in various professions speak our language. There are also various active Polish societies in our country that promote Polish culture and traditions. They also learn Norwegian tradition and customs, building friendly ties with our entire society.

I would like to see Poland’s media more frequently present the picture of our integrating society, of which Poles in Norway are a vital part. I think it is important in our troubled world.

How is the Narvik battle remembered in Norway?

Every anniversary of the battle is cel-

W B J SEPTEMBER 2017

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WBJ COMMENTARY | INDUSTRY INSIGHT

WBJ:

What was your early career like? In 2001, as a 30-yearold, you joined the management board of Polifarb CieszynWrocław, the market leader in paint production in Poland.

Three years later, you were promoted to CEO of the company.

What challenges did you have to face as the youngest member of the board and later as the head of the company?

Igor Jeliński: It was a big challenge, as many of the members of the management board were about 55 years old. First, I had to win credibility within the highly experienced management board.

It helped that at the time when I was hired, the company had a serious tax-related financial problem. It was my number one priority. They had been looking for a solution for a year. Within two months, I pulled the company out of the trouble. By solving this case, I legitimized my position on the board and as a CFO.

Discovering the undiscovered

WHAT DO PAINT, CHOCOLATE AND COSMETICS HAVE IN COMMON? HOW CAN EXPERIENCE WORKING FOR AN AUTO PARTS MANUFACTURER EQUIP YOU TO RUN AN FMCG COMPANY? HOW CAN A 30-YEAR-OLD CEO WIN OVER THE TRUST OF SUBORDINATES TWICE HIS AGE? THESE ARE SOME OF THE QUESTIONS THAT IGOR JELIŃSKI, CEO OF CHOCOLATE PRALINES AND SUGAR CONFECTIONERY MANUFACTURER MIESZKO, CAN ANSWER FROM HIS OWN EXPERIENCE. HE TALKED TO WBJ ABOUT HIS EXPERIENCE IN VARIOUS INDUSTRIES AND HOW IT HAS HELPED HIM TO SHAPE HIS BUSINESS ACUMEN 24

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What did you do next?

Then we started restructuring the company. The company had been formed from two firms: Polifarb Wrocław and Polifarb Cieszyn, two of the largest paint producers in Poland, which had previously been competitors. However, not all synergies from the merger were fully implemented. To improve the performance of our business we decided to make specialized plants by reshuffling production lines.

The Wrocław plant focused on decorative paints and the Cieszyn plant on industrial coatings. What we also did was sell all non-core assets: all non-paint business related affiliates, real estate, incinerators, kindergartens, holiday resorts etc.

We also transferred the fire station we owned to the city. We basically tidied up the cost-side of the business.

Despite it being a massive restructuring process, there wasn’t a single lay-off. There were outplacements, early retirements, we helped some employees establish their own businesses which later cooperated with Polifarb.

INTERVIEW BY BEATA SOCHA

Then, still as the CFO, I was appointed Interim Sales Director for a period of eight months. One of my tasks was to find a new sales director.

I hired a person from outside the industry, from the FMCG market.

That’s when I was promoted to CEO. Finding the right person for the job and stabilizing the business’ sales was the final test I had to pass before becoming CEO.

tive parts industry operates on low margins. That’s why the cost-side of the business is vitally important.

The automotive industry in France is considered a perfect way to earn your chops in finance controlling and cost cutting.

Do you think that working in so many different industries: FMCG, automotive, coatings and paint offers valuable insights into business Why did you choose someone in general? from the FMCG market?

Absolutely. Working in one busiThe company had an aggressive com- ness may limit your ability to think petitor that was encroaching on our creatively. Everyone wants “out-ofbusiness. We were facing a shrinking the-box” thinking these days and market share and had to remedy that. it helps when you have a broader That was the job of the new sales di- perspective. As the Czech writer rector and his team. We had replaced Milan Kundera once said, you have some 80 percent of the previous to live many lives. If you’ve only lived sales team, mostly with people from one life, it’s as if you haven’t lived at the FMCG industry. That’s because all. Different work experience can we wanted to implement solutions teach you things you never expected, from FMCG into a company that like taking tried and true solutions produced coatings and paints. from one industry and implementing them in a different one, being at the What kind of solutions from forefront of change in the business FMCG did you adopt? and shaping it.

We were inspired by the way FMCG were sold. One of the things that had What changes did you make when existed in FMCG for years and was you took the helm at Mieszko? not used in the coatings and paints I started with getting to know the business was pre-sellers: people who business. Chocolate pralines and visit stores taking orders and making sugar confectionary was a new thing direct contact with the store. At the for me business-wise. The first thing time DIY stores were still in their I did was sell Artur, one of the affiliearly stages in Poland. Some 70-80 ated companies, which produced percent of paints and coatings was cookies and crackers. I decided it sold through traditional retail. wasn’t worth chasing two rabbits at the same time. Instead I decided What were the results? to focus on chocolate pralines and Very positive. It took less than a year sugar confectionary – go back to the to see the downward trend reversed company’s basics. At the same time, and sales going up. The company was we decided to concentrate all our finally back on track. production in Racibórz, in one place.

To do so, we had to close our factory What other industries did you in Warsaw and transfer production work in before joining the choco- lines. We also withdrew products late business? that were performing poorly, those I started in FMCG, I worked for that sold at very low margins or Pernod Ricard in France and for the simply did not fit well into our new distributor of French milk producer strategy. We want to continually Cedillac-Candia in Poland. After my improve the taste and quality of military service, I wanted to return our products. First, you have to do to Poland and the opportunity “better business, and then bigger came from a producer of automobusiness.” It doesn’t make sense to tive spare parts. Everyone in the chase a market share at all costs. business knows that the automoI also made the R&D department,

“It doesn’t make sense to chase a market share at all costs.

which used to be just a part of the operations, a separate unit within the firm, reporting directly to the CEO. I think its role was underappreciated before. I believe R&D is the heart of a company.

Also, all top management had to be replaced. It was the first time I’d ever made such a move, but it was necessary. We had to replace the people who didn’t share or did not get onboard with our new strategy.

It took some time to complete the new management team: some people were promoted from within the company, but most came from outside the organization. One of the people I was looking for was a head of marketing. I chose a person from the cosmetics industry.

Why the cosmetics industry?

For two reasons. One, there are several companies in the market like us. I wanted to make our firm stand out. I didn’t want someone who had spent half their career working for our competition. I wanted to avoid a copy-paste approach.

Secondly, just like in the case of paints and cosmetics, it is usually women who decide what chocolate to buy. We all eat chocolate, but it is women who drive the act of purchase.

What is your strategy when it comes to Mieszko’s products? Is it easy to introduce new brands in the chocolate business?

Chocolates are often purchased as a gift, like cosmetics and alcohol.

Mieszko’s products were seen as a present you buy only for special occasions. They were big, cumbersome boxes that you wouldn’t buy for yourself. We decided to enlarge our product offer in order to present to our consumers and clients products you would also buy for yourself, for

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WBJ COMMENTARY | INDUSTRY INSIGHT

everyday pleasure, something to share with relatives and friends, to lift your spirits etc. I want to steer the brand towards becoming an everyday purchase.

We’re doing that by offering additional and different packaging sizes that correspond to current trends.

But it’s not an easy market to introduce new brands. You need strong marketing support. And sweets and chocolates belong in the impulse buy category, where loyalty is very low.

What trends have you observed in the chocolate industry?

First, smaller packages: up to 200 grams. Their sales are growing. Large, decorative boxes are becoming a thing of the past. Just like in Western Europe, where they appear on shelves mostly during Christmas or Easter and disappear soon afterwards. Smaller sizes also give you the feeling of controlling your consumption.

Another trend is good quality with a large percentage of natural ingredients.

In one of our top products, Michaszki, we just increased the amount of peanuts to 25 percent. Consumers don’t want saturated fats, chemical additives etc. It’s part of the health trend.

Consumers expect additional benefits and that’s why we’re expanding our functional sweets segment: candy with natural juices, vitamins, and herbs such as eucalyptus with salvia. We’re also developing our candy business because it is less seasonal than chocolate. We aim to offer our clients and consumers products they can enjoy all year round.

Poles are becoming increasingly demanding as they discover the world and educate their palates. They want to taste life and we want to give them what they’re looking for. For instance, a lot of chocolates and pralines are now dessert-inspired: they can be panna cotta or tiramisu flavored, like for instance our Amoretta Desserts.

In one word, Polish consumers are smart shoppers, they expect high-quality products for a reasonable price.

What kind of management style have you implemented at Mieszko since you took over as CEO? I implemented cross-functional teams – I was inspired to do so by Carlos Ghosn, who saved Nissan from the

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verge of bankruptcy in the late 1990s. We define problems in the company and then we build teams made up of talented people from many different departments. A problem can’t usually be solved by one department alone.

One of the most important challenges of leading a company is managing change. When people are the authors of a solution, they are more open to adopting it. Of course every team needs a leader, but there are no directors as part of these teams, as that could limit the creativity.

You have to be open to new challenges and accept the fact that the way you did business yesterday may not be the right way to achieve success tomorrow. The capacity to keep questioning yourself, your preconceptions, everything you think you know is essential.

I love sailing and to me leading a company is similar to steering a boat.

You need a direction and you need to keep on course. Otherwise you’ll find yourself going in circles. At some point you will come up against waves and storms along the way. You can’t be afraid of them. Every ship needs a captain who knows where it is headed and who is able to convince the crew it is worth the effort to get there.

The captain is a kind of engine for the team but he or she is nothing without the right crew.

You are known for your unorthodox approach to doing business, like employing a marketing director for a chocolate company with background in cosmetics or implementing FMCG tactics to sell paint. What drives you to do things differently?

When I was eight I left Poland to live in France. We lived close to the first Carrefour ever opened. The store had toys displayed on shelves in a way I had never seen before in Poland during the communist era.

And there I was, just sitting on the floor of the store looking at all the colorful toys. I was impressed by such a huge offer of toys. Later on, when I was studding philosophy, I was very much inspired by Plato who said: “If you do not know goodness, beauty or science, you cannot desire it because you do not know it.” Those experiences led me to want to do more and better, to push the boundaries.

When I travel with my family, my wife and our three kids like to make an occasional stopover. They look out the window, find a spot and want to stop. However, I look down the winding road and think to myself: “What might there be around the next turn in the road? Perhaps there’s an even nicer spot.” And I keep going, I keep surpassing my own expectations. I want to discover the undiscovered.

FEATURE / FOOD EXPORTS

PASS THE BUTTER...

The European butter crisis is good news for Polish milk exporters. They have been reaping the benefits of price hikes, selling nearly €1 billion worth of dairy in H1 this year.

Poland has a lot more to offer than butter, though. Polish food brands are becoming increasingly recognizable all over the world

BY KAROLINA PAPROS

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PHOTO BY KEVIN DEMARIA

T

he butter shortage in Europe, according to numerous reports, has led to a sharp increase in both retail and wholesale prices. According to statistics office GUS, retail prices of butter increased in Poland by 28 percent between July 2016 and March 2017. “A similar situation can be seen in other EU countries. In Germany and the Netherlands, the price of butter increased by over 30 percent in the same period,” said Marcin Lipka, chief analyst at Cinkciarz.pl. Wholesale prices have grown even more: the Polish Chamber of Milk estimated a wholesale price hike of over 70 percent over the past year. Currently, 100 kilograms of butter costs approx. PLN 2,230. The underlying cause of the butter situation is the reduction in milk production across the EU. Analysts attribute the drop in milk production to the 2016 drop in milk prices, caused by the Russian ban on EU milk imports. Given how hard last year was for milk producers, it is hardly surprising that some have decided to call it quits this year and shift to more stable sources of income. Now, with the widespread milk shortages, some say there might not be enough dairy products for this year’s Christmas, a period of increased consumption of butter and cream.

While the shortages and price hikes could be disconcerting for consumers, it is hardly bad news for Polish milk exporters. In the first six months of 2017 they exported 42 percent more dairy than in the corresponding period of last year, reaching a record amount of €984 million, according to BGŻ Paribas, citing preliminary calculations from the Finance Ministry.

In fact, dairy has long been one of Poland’s top export bestsellers. It is the second most popular exported food group, accounting for 13 percent of the country’s total food exports. And it is

not only on the wholesale market that Polish dairy is popular. Many Polish dairy brands have already made inroads into foreign markets. The Chinese already enjoy dairy products of SM Mlekovita and OSM Łowicz, as they are said to be of higher quality than the national products. China Daily Europe reported the words of Joanna Skoczek, Poland’s consul general in Guangzhou: “People in South China, especially the Guangdong province, are very interested in foreign food. They’re ready to pay a higher price for high-quality health products.”

KABANOS, RASPBERRIES AND PTASIE MLECZKO

Apart from dairy, the main Polish food products exported abroad include meat, cereal, vegetables and fruit. Meat, particularly poultry, beef and pork, has the largest share of Polish food exports (around 20 percent). Again, Poland’s competitive advantage is quality. A very short supply chain guarantees that the meat is safe and not packed with drugs and hormones.

Cold cuts, such as kabanos sausages and hams are also gaining recognition around the world. The biggest Polish meat producers that have managed to popularize Polish cold cuts around the globe are: JBB, ZM Henryk Kania, ZM Silesia, Tarczyński, ZM Olewnik, Peklimar, Lenarcik and Morliny, as reported by All 4 Comms, a Polish marketing communications agency in the UK. Polish cereal and pasta made of durum wheat, soybeans and buckwheat are also high in demand. Orchard owners are also doing well, even apple producers, despite the Russian embargo. Poland also proudly holds the top position among EU countries in frozen raspberry production.

While fresh fruit may be tricky to export beyond Europe, dried fruit does not pose such challenges. Bakalland, the market

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DEALING WITH EMBARGOES

There are some 3,000 companies operating in the Polish food sector.

Thanks to EU subsidies since the country’s accession in 2004, many of them have managed to adapt to European standards and are now on par with their Western competitors.

According to the Agricultural Market Agency (ARR), Poland is in the top 10 leading food producers and exporters in the European Union, with exports reaching almost €25.6 billion in 2016.

However, Polish food exporters have not always had it easy. Some

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WHAT ABOUT VODKA AND BEER? of the biggest setbacks they have had to overcome include embargoes imposed, among others, by Japan, South Korea and Russia on Polish pork and apples, as well as the African swine fever that prohibited Polish agri-food companies from exporting their pork to China. Fortunately, exports to other markets expanded at the same time, mostly thanks to the US market, according to Wiesław Różański, the President of the Union of Producers and Employers of the Meat Industry (UPEMI). However, he also stressed the need for Polish producers to constantly conquer new markets. Unlike in Europe, Asian and African populations will continue to grow in the coming decades, making them even more attractive for Poland’s food producers.

Vodka is one of Poland’s top alcoholic beverages that is exported worldwide. In fact, Poland exported more liters of vodka in 2015 than Russia and is currently the fourth biggest producer of this alcoholic drink in the world. ITE Food&Drink, the world’s leading organizer of international trade exhibitions, reports that Poland supplies around 7 percent of the global market - to France and the US in particular. When it comes to beer, Grupa Żywiec is the biggest exporter in Poland, with its export figures growing every year. Currently, the company exports its products to almost 30 countries, including South Korea, Iraq and Cape Verde.

SHUTTERSTOCK

leader in Polish mixed nuts and dried fruit, has already put its expansion plan into action. The company has a strong foothold in Asian and African markets. Bakalland’s cereal power bar Ba! is a well-known brand in South Africa.

Even though Poland may not be immediately associated with chocolate production, it does have its export stars in this food group too.

Wedel’s Ptasie Mleczko (chocolatecoated foams) and Delicje (chocolate covered biscuit-sized cakes with fruit jelly) are the most famous and recognizable Polish sweets abroad.

Wedel already exports products to over 25 countries worldwide, with the US, Canada and the UK being its key markets.

Still, most Polish food exports end up on EU markets, with Germany being the country’s main trade partner. Currently, around half of Polish food exports go to its neighbors. However, over the last couple of years Polish food exports to EU markets have been recording a slow decline. At the same time, the country’s food producers have been increasingly successful in building a customer base in Asian markets.

Andrzej Gantner, the head of the Polish Federation of Food Industry (PFPZ), claims that Polish food products may conquer not only China, but also Malaysia, Indonesia and African countries such as Algeria, Egypt or Morocco. The Canadian market is next in line thanks to the new European free trade agreement signed between the European Union and Canada last year.

A proven concept

GROWING PROTECTIONISM, LOW BRAND RECOGNITION, CULTURAL DIFFERENCES – THESE ARE ONLY SOME OF THE RISKS THAT POLISH FOOD EXPORTERS FACE THESE DAYS. DESPITE ALL THE CHALLENGES, POLISH FOOD EXPORTS ARE ON THE RISE, AND FOR GOOD REASON INTERVIEW BY SERGIUSZ PROKURAT

WBJ: What are the most important challenges

for Polish companies wishing to export food abroad?

Polish food exports are growing quickly. What is disconcerting, however, is the increasing protectionism, both within the European Union and around the world.

We need to try to understand this trend – people living in a specific place want to feel local and choose products that are manufactured somewhere nearby. It has nothing to do with any kind of narrowmindedness, but is a form of expressing affection towards one's place of origin. It is a worldwide trend now. Unfortunately, this does not make exporters’ lives easier.

I believe that the world develops through exchange and not by isolation. Meanwhile, the free movement of products between different countries is encountering growing problems. The problems include legislative matters, which simply lead to the exclusion of products that – depending on the country – do not comply with the accepted standards, as wwell as delicate issues associated with advertising and PR that encourage consumers to choose only local products.

One of the main challenges is also the absence of Polish brand recognition. For

example, certain products are often manufactured in Poland under a German brand name and the consumer is not even aware of this. We have to create brand products rather than simply being a cheap supplier. To do so, we will obviously need institutional support.

You have not mentioned cultural barriers.

Yes, it’s another challenge.

China, for example, has a population of almost 1.5 billion people, of a completely different culture than Europeans, but each province is different as well. Each province has a separate legislative system, different customs duties and law regulations. It is undoubtedly an additional point that we need to be aware of.

Do you, as an entrepreneur, travel alongside official delegations? And do you find them effective for exporters?

There are cultures in which it is indeed relevant whether a business enjoys the support of its government and politicians. In some countries, when a businessman is traveling together with the president of the country, people think: “It’s worth doing business with him.” The President has a certain role to

play in business relations. On the other hand, the first and primary task of the government is to give entrepreneurs the maximum freedom to do business effectively. In other words, they should not hinder entrepreneurs, but facilitate their work, asking: “What can I do for you?”

How important is the planning stage when exporting food?

Sometimes a certain product just happens to be a perfect fit for a specific foreign market. Such was the case with our BA! energy bars in South Africa. They sold well immediately upon reaching that country. More often than not, however, you need to prepare to expand your business beyond Poland. It’s a long-term process that may take years.

Besides, if you want to roll out a new product abroad, first make sure it is successful on the local market. You need to have a proven concept.

For example, Maspex has been incredibly successful in the neighboring markets of Central and Eastern Europe.

Wherever we go, Kubuś juice is already there. But the brand first became successful in Poland. The same was with Mokate, which started from Poland and is now present in many neighboring markets.

That was also the story behind our BA! energy bars.

In less than four years after their introduction, they have become the leader on the Polish market within the field of cereal and dried fruit bars.

How do you prepare to launch a product in a new market?

We examine each market closely before we enter it. We

need to know whether our product requires modifications to its recipe, packaging or qualitative composition.

Nutritional tables are completely different in different countries. We also look at how much effort it would take to market our product in a particular country.

It is a different thing when we receive an offer like: “Please produce certain products for me, under my brand, and I will buy a certain volume.” This type of contract is practically without risk and the only issue to debate over is the price. But if we are entering a market with our own product, we must obviously assess all the risks, including political ones.

Of course, our primary market is the local market and export is just an addition – nevertheless, there are several markets which are significant for us: Hungary, Bosnia and Herzegovina, Croatia, South Africa, Hong Kong and China. We are also entering Arab countries. Generally, we are now enjoying this prosperous period for Polish food exports, and in terms of our position, Polish food has a favorable trade surplus, so we can look optimistically to the future.

Marek Moczulski, CEO of Bakalland

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FEATURE / LABOR MARKET

IN NEED OF FRESH BLOOD

The Polish job market is one of the most robust in Europe, with a record low unemployment level of a mere 7 percent.

Employers are hard pressed to fill the vacancies being created. In their search for workers, employers have turned their gaze to the East. However, even increasing migration from Ukraine may not be enough to close the ever-growing gap on the labor market

BY SERGIUSZ PROKURAT 32

SEPTEMBER 2017 W B J

SHUTTERSTOCK

“It was not by gold or by silver, but by labor that all the wealth of the world was originally purchased,”

the economist Adam Smith wrote in The Wealth of Nations. And it is for this reason that Poland, one of the busiest nations in the world, has managed to come significantly closer to the wealth of Western societies. Over the past 25 years, the Polish labor market has indeed come a long way. From cheap labor, low-level jobs, and products of dubious quality in the early 1990s, the country has become a paragon of healthy economic growth, having embraced modern employment standards, attention to quality and high efficiency.

Unemployment in Poland has dropped to unprecedented levels. In July it stood at just 7.1 percent and is expected to fall below the 7 percent threshold soon. It seems unthinkable that only 14 years ago, in 2003, it was above 20 percent. Today, jobs are abundant, and Poles are becoming increasingly picky. They seem to know their value. This bonanza for workers spells complications for employers, whose costs depend primarily on labor.

Employers have every reason to be concerned about the lack of a skilled workforce. It may pose a serious threat to their further development. Particularly since the lowering of the retirement age, which parliament introduced earlier this year, will lead to a reduction in the workforce by 1-1.5 million people within only five years. The labor market will be abandoned by experienced workers and, which is even more troubling, the exodus will not be offset by young workers entering the labor pool: in a few years the number of people leaving the labor mar-

WAV E O N E : FRO M T HE E AS T ket will be twice as high as the number of Poles entering it.

Given the country’s demographics and economic indicators, it is more than likely that in the 2020s the earnings of young people will rise more than in previous decades. Wage growth is still going to speed up, exceeding the increase in employee productivity. Even the unemployed have increasing payment expectations (that is the wage an unemployed person would be willing to accept): they grew by 8.1 percent this year, which is exactly the same as the minimum wage.

BUSY LIKE A POLE

Poles are one of the busiest societies. For many years, in terms of the number of working hours, they have been ranked in the top tier among OECD countries – well above average. Poland is the leader when it comes to the annual total number of working hours – they spend an average of 1,963 hours each year at work.

Germans, on the other hand, spend the least amount of time at work. This phenomenon is often explained by productivity, which is still substantially higher in Germany than in Poland.

According to official statistics, 120,000 jobs remain vacant. Unable to find suitable candidates to fill the posts, employers are increasingly looking for employees from the East, most notably from Ukraine. The growing number of Ukrainian workers is becoming increasingly evident in stores, cafes, restaurants and even in highly skilled professions. The summer period is also the peak of seasonal work and without help from the East, for jobs such as strawberry harvesting, meeting labor demands would be next to impossible.

This is confirmed by data from the Ministry of Family, Work and Social Policy, which indicates that during the first five months of this year almost 735,000 declarations of intention to employ Ukrainians were registered. It is 50 percent more than the previous year and mainly involves unskilled jobs, while if certain qualifications are required, there is often a problem with permits and certificates that must conform to Polish standards.

Unofficial data indicates that there are over a million Ukrainians in Poland, and it is not the only growing community.

There are also more and more Belarusians and even Indians – in terms of these two nationalities the number of applications for resident permits has doubled. In the first six months of 2017 Belarusians submitted 4,500 such applications (2,100 in the same period of 2016). In the case of Indians the number increased from 1,800 to 3,500. These are still very small numbers compared to Ukrainians, but the trend is clear.

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FEATURE _ LABOR MARKETS

WAV E T WO : F ROM T H E SOU TH

EMBRACING AUTOMATION

Westbound migration for work is not the only phenomenon that Poland is benefiting from. Large cities in Poland are also particularly attractive to southerners.

According to Eurostat figures, unemployment rates in Greece, Spain and Italy are among the highest in the EU, respectively 22.5 percent, 17.7 percent and 11.3 percent. Also, an increasing number of Erasmus exchange students from those countries study at Polish universities.

However, when they come to work, they look for well-paid jobs.

WAV E T H R EE: BOOMERANG There is yet another wave on the horizon.

With the wage gap becoming smaller and standards of living improving, Poles who left the country after 2004 in search of a brighter future in the old EU countries could soon realize that the best direction to move could be, in fact, back.

Poles living in Poland will likely welcome them with open arms. Work Service research has demonstrated that the majority of Poles believe that employers should primarily bring back migrant Poles from abroad – 73 percent of respondents think so. In Great Britain, Ireland, the Netherlands and Belgium the average earnings of Poles are the minimum wage, so it is rather likely that in the long term, especially after Brexit becomes reality, they will come back to Poland.

According to a recent report prepared

by HR firm Adecco, it is already happening. In 2014, when unemployment stood at 12 percent, logistics firm Clicktrans had more clients moving from Poland (51 percent) than to Poland (49 percent). In 2017, the ratio is quite different: 74 percent of relocations are into the country while only 26 percent is Poles moving abroad.

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The “labor force boomerang” may alleviate the problems employers are dealing with, at least to some extent. And the wave of repatriates could be substantial. According to Colliers International, around 845,000 Poles are estimated to be in the UK at present, a third of their Western European total and equivalent to 2.2 percent of Poland’s population.

The situation in other CEE countries is similar: 14.1 percent of Romanians, 9.8 percent of Bulgarians and 6.6 percent of Poles reside in Western Europe. Romania for instance has a diaspora of 1 million in Italy alone.

“Future wages will grow faster in CEE, which is the argument for workers to stay in their native countries. The far superior rate of wage cost growth historically in the CEE-6 is something that, with low unemployment rates and high GDP growth rates, looks very likely to continue over the next 10 years,” commented Mark Robinson, CEE research specialist at Colliers International.

Many Poles have reservations about robots replacing people doing simple, repetitive tasks.

The fear of new technologies that could deprive us of our jobs has accompanied humanity for at least 500 years. For example, in 1589, Englishman William Lee invented an automatic knitting machine, which increased productivity tenfold. However, despite such impressive results, Queen Elizabeth I refused to grant him a patent. Why? All because of her concern of her subjects.

She lamented about what the invention would mean for her subjects, claiming that it would do harm, deprive them of work and turn them into beggars.

In the meantime, the progressive acceptance of Europeanization comes in tandem with the acceptance of automation in Poland. Poles have grown accustomed to large-surface self-service stores, even self-service checkouts. Polish companies manufacture components for autonomous vehicles, buses and trucks.

“It is a major misconception to associate automation with only the simplest, repetitive tasks and so-called bluecollar work. In practice, only about 5 percent of posts could be fully automated,” said Anna Wicha, CEO of Adecco. The real shift will come gradually.

While most positions will not be fully automated, 60 percent of jobs could become partially automated, with at least 30 percent of the actual work being performed by machines, Wicha explained.

Tinder for jobseekers

How has it changed the work environment?

Everything is done through relationships now. By dating, you learn how to build a relationship with someone.

You need the practice for when the real deal comes along, possibly even your life partner. Similarly, in the early years of your career it is generally good to start from jobs that require fewer qualifications, just to develop a number of soft skills. There will be time later on to acquire hard skills, such as business knowledge, which are necessary to build a career based on expertise. But soft skills are essential to become more confident in the labor market.

mainly on computers and emails.

We did some research on that together with the Polish Business Roundtable in the framework of the partnership in the Career Program, which is addressed to young people, students and graduates. It turned out that over 40 percent of respondents stated that one of their basic problems was the excessive amount of stress involved in the course of seeking work.

Young people are not yet formally prepared to work.

Traditional job interviews seem unnatural to them.

This is why we take advantage of the tools they are comfortable with, tools they know from everyday life, to decrease stress and communication barriers when contacting an employer. It is the perfect solution for people looking for a job.

The problem lies with employers though. It is not that easy to convince them to use mobile technologies for recruitment. They are still used to traditional resumes, just like 20 years ago. That’s going to be a thing of the past soon. The entire market will change.

Why is recruitment so different today compared to, say, 15 years ago?

When we look at what is going on in the market and how young people behave, we see that the phone has become an integral tool in all our everyday relationships. People hardly ever let go of their cell phones; they even watch TV on them. The phone is the go-to communication tool for the younger generation. Not at work, however. In Polish corporations people still rely

What was your business model when you decided to develop the app? The technological solution is quite easy to make, the question is: how do you turn it into a product with added value?

An application or a website can be developed fairly quickly, while it is sales and promotion tools that are top priority. You need to ask yourself: who is the priority in such applications? The job seekers or the employers? It is a bit of a chicken-and-egg

TRADITIONAL RESUMES AND JOB INTERVIEWS ARE BECOMING A THING OF THE PAST. POLISH EMPLOYERS NEED TO EMBRACE MOBILE TECHNOLOGIES IF THEY WANT TO KEEP UP WITH WESTERN ECONOMIES. LOOKING FOR A JOB OR FOR AN EMPLOYEE IS BECOMING INCREASINGLY SIMILAR TO DATING INTERVIEW BY SERGIUSZ PROKURAT

WBJ: Is it true that your project, Jobsquare,

is known as the Tinder of jobseeking?

Yes, today’s labor market is set in the convention of an employer-employee date.

An employee searching for a partner meets a specific and selectively chosen employer.

He or she can stay with the employer for longer or leave.

The labor market has changed within the last two or three years and presently we are witnessing an “employee’s market.” We date and select our partners.

How do employers react to this trend?

Employers in Poland are not yet prepared to participate in such “dating.” Recently, I took part in a technology conference in Barcelona that was devoted to the labor market. On one hand I was very impressed with the scale of switching to mobile services when looking for a job and, on the other hand, I was slightly terrified about the gap between the Western labor market and what we have here.

In Poland we are still struggling to convince people to recruit through mobile services, with the majority of people still using traditional forms – while in the West, both in Europe and the

United States, this form of recruitment has already won.

situation. Our premise was that we would not artificially stock our app with job offers.

All our job offers are real. That is why there are not as many offers as job seekers would expect. We do this quite consciously, so that there is a real employer on the other side who is keen to speak to candidates. Our application is sold by advisers, who we call mobile HR advisers. It is their job to search for companies.

Do you think your app will replace conventional job boards?

We do not want to compete directly with PRACUJ.PL or other large job boards, or with job agencies. We go to companies who have not yet used mobile technologies in recruitment and we convince them that it’s worth a try.

Now we have started generating word-of-mouth from satisfied clients, our partner portfolio has expanded quickly. Now large companies have started to come forward themselves. For example, our services are used by the Polish Post Office in their search for postal workers. KFC, Pizza Hut, Subway and McDonald’s have come to us as well. We also cooperate with Orlen and Żabka. We position our app as a different channel through which companies can reach candidates, and we hope that this market will grow. It definitely has the potential.

Marcin Fiedziukiewicz, CEO of Jobsquare

W B J SEPTEMBER 2017

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TECH i n s i g h t s

Written By

BEATA SOCHA

SHUTTERSTOCK

THERE’S ALWAYS ROOM FOR MORE TECH IN FINANCE

In Poland, it is banks, not just start-ups that spearhead the FinTech revolution. They have strived to remain at the cutting edge for two decades now. With the introduction of the PSD2 directive, they may face some competition from start-ups, but some are already prepared for the changes and others may be looking to buy tech firms that will put them ahead of the curve >>> W B J SEPTEMBER 2017

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TECH

W

arsaw is the 45th most competitive financial center in the world and 12th in Europe, according to the Global Financial Center Index (GFCI).

Not that impressive in itself, but Poland’s capital is an undisputed leader in CEE as a financial center. The country as a whole was placed 24th in the Doing Business 2017 ranking, which is a relatively high score, particularly compared to the Global Innovation Index, where Poland ranked 39th and continues to trail other European economies. “Poland is not particularly innovative when compared to other European economies. The financial sector is an exception here. It is highly innovative compared to other industries,” said Artur Martyniuk, director, Financial Advisory at Deloitte.

The FinTech market is worth some €2.2 billion in Central and Eastern Europe, with Poland accounting for €860 million (PLN 3.6 billion) of that sum, according to a report prepared by Deloitte. However, unlike in other countries, start-ups are not the chief disruptive force of the FinTech market. In fact, Polish banks are considered some of the most innovative in Europe and their technological solutions are already licensed by other countries, according to Martyniuk.

One of Poland’s highly popular mobile payment services was in fact created by the country’s six biggest banks, which banded together to improve customer experience. In 2015 they introduced BLIK, which currently has over 4 million users. It allows them to pay in stores, make banking transfers and even withdraw money from ATMs using nothing but their mobile phones. No credit card is required. “In Poland, banks, not start-ups, do FinTech,” as Aleksandra Sroka, principal in consultancy BCG Poland, told The Financial Times.

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FROM THE GET-GO In the early 2000s, Polish banks were among the first worldwide to offer internet banking, led by the creation of mBank, then an entirely internet-based bank (only later did it open regular bricks-and-mortar offices). In order to remain competitive, others followed suit, including Alior bank, and even the biggest of the country’s lenders, like PKO with its Intelligo online service. By the mid-2000s Poland’s banking services, including money transfers were among the fastest in Europe. A regular money transfer between banks was completed within one working day.

Seeing how impatient Polish bank clients can be, a number of websites were created showing exactly at what time money would appear in the recipient’s account, for example kiedy-przelew.pl (English meaning: when’s the transfer) or kasanakonto.pl (English meaning: money in the account). But even that proved too slow for the demanding Polish shopper. The surge in e-commerce has led to the development of online payment systems, such as przelewy24.pl (English: transfers24), which effected payments 24/7 eliminating any delays arising from bank transfer sessions. These days, it is not uncommon to purchase an item online from one of the thousands of online stores and have it delivered the very next day. “Most internet retailers have integrated their electronic stores with banks, which allows clients to pay for their online purchases in just a few clicks. You can pay for shoes purchased in an online store directly from your account,” explained Grzegorz Pawlicki, director of Innovation and Customer Experience Office at PKO Bank Polski. It doesn’t take Amazon’s drones to achieve expediency if all the pieces of the puzzle fit so well.

DON’T TOUCH MY CARD A similar revolution came with payment cards. In the mid-2000s chip cards were introduced, replacing the less secure magnetic striped ones and also increasing customer convenience. The proliferation of contactless payments, where you put your card near a terminal to effect a transaction (in transactions of less than PLN 50 you don’t even need to enter your PIN), is the standard today. So much so, that many customers feel uneasy these days when the shop assistant reaches for their card. Gone are the days when a dishonest clerk could swipe your card through a

What is blockchain?

Blockchain was created in 2008. It is a distributed internet ledger which is revolutionizing the way transaction between regular users are closed, settled and registered, as it circumvents a central institution such as a bank. It is most commonly used for transactions (the most popular use of blockchain is cryptocurrency bitcoin). It can be also used in any transaction between users that requires high security levels, such as document authentication, digital signatures in state administration and notary services.

- Michał Grams, CEO of TogetherData

skimmer to capture its details and then sell the data that would later be used in fraudulent charges online or with a counterfeit credit card.

Perhaps another payment card revolution is just around the corner. In early 2017, Poland’s biggest bank PKO BP acquired ZenCard, a tech start-up founded in 2013, which has developed technology allowing for a full virtualization of loyalty cards. One can’t help but wonder what Poland’s biggest lender could do with this technology.

But financial institutions are not stopping there. “Banks are investing in

FINTECH

artificial intelligence, e.g. chatbots and intelligent OCR systems that reduce operational costs and make business processes faster,” explained Michał Grams, CEO of TogetherData, a Data Science House with a strong focus on FinTech and banking.

WELL PREPARED He believes that the biggest changes in the finance market have yet to come, with the implementation of the PSD2 (Payment System Directive 2). “PSD2 will revolutionize the FinTech market. It will force banks to open their system to third-party service providers, such as SMEs and startups,” Grams explained. It will not only increase convenience for bank clients, who will be able to use a single app to access their different accounts, and offer them access to more information about different financial services available, but also increase security by lowering the number of unauthorized transactions. “The costs

of financial operations and card payments will also decrease,” he added.

PKO’s Pawlicki agrees. “This will create a new area for services at the intersection of banking and technology. It will no longer be only in the domain of banks to provide a mobile payment application, open a current account or offer a loan. A third party, like a travel agency or a store will be able to do that by accessing the bank, of course upon the client’s consent.”

In fact, Polish FinTech firms are ready to take full advantage of the new regulation.

Some of them have already been snatched up by financial moguls. Such was the case with Kontomatic (previously known as Kontomierz), established in 2009, which developed an API system that verifies client identity and allows read-only access to bank accounts, thus facilitating cooperation with any bank worldwide. The company was acquired by German Kreditech for a seven digit figure.

CONSOLIDATION IS COMING More M&As are probably underway, though the list of acquirers may not be limited to banks. Investment funds are also looking eagerly at the FinTech world.

“Banks are the natural acquirers of some of these businesses globally but their balance sheets aren’t always in the best of shape.

Also they may not be the best cultural fit and most natural home for the type of innovative executives who work within FinTech start-ups. There has been very significant consolidation globally in areas such as payments (Vantiv/ WorldPay) and this is likely to continue in sectors where scale and global reach matter,” said Andrew Young, principal and head of FinTech at Permira, a private equity firm which recently invested in Swedish FinTech start-up Klarna. According to TechCrunch, the investor paid some $225 million for a 10 percent stake in the FinTech business, which focuses on payment

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TECH

Ahead of the game WHICH TECHNOLOGIES ARE DRIVING THE FINTECH MARKET IN POLAND WINTERVIEW BY BEATA SOCHA

services for e-commerce companies.

However, while Poland is the leader of the FinTech business in CEE, Polish venture capital investments constitute a mere 0.005 percent of the country’s GDP. Deloitte analysts stated that the private sector should increase its involvement in financing investments in the sector.

As much as 72 percent of start-ups are predominantly financed by the founders themselves. A necessary prerequisite for Polish FinTech firms to achieve success is expanding beyond Poland, the report said. So even if Polish venture capital firms and private equity investors are still cautious with getting into the FinTech game, money is clearly out there waiting for firms with innovative ideas and a proven concept. All they have to do is grab it.

WHAT ABOUT BREXIT? Poland is already called the “back office” of London’s City, with support and outsourcing centers of Credit Suisse, UBS, Citi and BNY Mellon all located in Poland. Whether the upcoming Brexit hinders or accelerates the development of Polish FinTech firms remains to be seen. There are concerns, as for many Polish FinTech start-ups London is a very important piece of the puzzle. If UK-based financial institutions lose the financial passporting rights, the cooperation could become problematic. Several Polish FinTech firms have even moved their headquarters to London, like Billon, a distributed ledger instant payment system, or even started out there, like Azimo, a digital international money transfer service.

The founder of the latter, Marta Krupińska decided to launch her firm in London to utilize the regulatory environment, which is far less restrictive than Polish banking regulations, as well as access to capital.

“Of course Brexit has an impact on the functioning of my company but it is not going to break it,” she told The Financial Times. However, others see Brexit as an opportunity, the least of which could be more financial outsourcing finding its way to Warsaw and other Polish tech hubs.

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WBJ: WBJ: Poland has been named the CEE

Who will come out on top?

FinTech companies are increasingly competing head on with banks. Some have complementary business models but many are attacking attractive margins on products that have historically been poorly served by banks. This is true in areas where banks have failed to invest in technology and failed to put the customer first, effectively giving FinTech companies a blank sheet of paper to rethink a product or service. One only needs to look at what startup companies (such as TranferWise) are doing in the FX transfer market as an example. In the UK, you also find digital-only banks that offer current accounts, well-priced travel FX or P2P payments all through an app and they can also issue debit cards. We believe it is only a matter of time before they get into lending.

- Andrew Young, Principal and Head of FinTech at Permira

leader in FinTech. What is the FinTech market like in Poland? Is it just composed of tech start-ups?

Grzegorz Pawlicki: Poland has succeeded in creating a dynamic innovation environment in which many FinTech companies were founded. This year, for the first time Warsaw was ranked among 44 citieshubs in the Deloitte report “A tale of 44 cities. Connecting Global FinTech: Interim Hub Review 2017.” This was possible thanks to our local FinTech companies, founded at the time of e-commerce payments and acceleration programs (let’s take the example of Zencard – the first Polish start-up in which PKO Bank Polski has invested). We also have qualified managers in the banking sector who are actively engaged in start-up projects.

FinTech is not only startups but also technologically advanced banks. Polish banks are still ahead of the game.

For instance, not so long ago the US market used oldfashioned magnetic payment cards, checks and even the old-fashioned embossed cards, that require making a physical impression of the number when making a transaction. Poland is also a

OPENSOURCE

leader in contactless payment, with widespread use of MasterCard Paypass and Visa Payway. Poles no longer use magnetic cards. Chip cards are already standard in Poland, and of course we developed our national mobile payments standard – BLIK, which is a world phenomenon.

Poland joined the modern banking world relatively late, in early 2000s. Is that why Polish banking systems are considered modern?

Because Poland never had the opportunity to adopt the previous standards?

To some extent yes. It’s called leapfrogging. But now Polish internet banking, which was created some 15 years ago, is already getting old. Now, it’s FinTech start-ups that are creating dedicated solutions, not with the bank in mind, but the customer. Poles have always valued convenience and they quickly took to internet banking. The first internet bank accounts were created in 2000/2001, when mbank and Intelligo were created. They pushed the development of FinTech forward.

ic stores with banks, which allows clients to pay for their online purchases in just a few clicks. You can pay for shoes purchased in an online store directly from your account.

In Europe, you still predominantly use credit cards to make payments. The growth in e-commerce over the past few years is the driving force behind these developments.

What is developing the fastest in FinTech right now?

There is currently hype around big data providing a better understanding of what clients need and to provide them with new and better services. It’s about creating technologies that increase customer experience: fewer signatures, better customer services, less paper. This also increases security. The FinTech market is all about added value for clients, which will accelerate after the PSD2 (Payment Services Directive 2) is introduced. It will create both risks and many chances and boost FinTech solutions.

What will it change?

It will open banking systems to third parties. Banks will Are we still on the cutting have to allow other compaedge of things? nies to access their systems, It depends on the area of upon the client’s consent, banking. In mobile payment of course. This will create a we are definitely the top of new area for services at the the top in the world. Thanks intersection of banking and to interbank agreement, the BLIK payment system allows technology. It will no longer be only in the domain of clients to pay in store with banks to provide a mobile their mobile phones. Now, payment application, open Android Pay and Apple Pay, as well as Visa, are introducing a current account or offer their mobile payment systems. a loan. A third party, like a Meanwhile, Poles already have travel agency or a store, will be able to do that by accessa working standard.

Also, most internet retailers ing the bank, naturally with have integrated their electron- the client’s consent.

How do you secure such transactions?

It will be up to banks to deliver a good API (Application Programming Interface) system. Now FinTech firms are doing screen scrapping, often semi-legally. Once PSD2 is implemented, it will be regulated, secured, and standardized. It’s a major breakthrough in FinTech and banking.

the second round of acceleration is taking place, with the participation of FinTech startups. On September 1, a new recruitment will be open to another accelerator, the Bridge MassChallenge Warsaw, an international start-up competition that aims to identify and support the development of young innovative companies in the CEE region, as well as combining startups with the global market How important is blockand MassChallenge network chain for FinTech? Is it the around the world. PKO Bank future of secure banking Polski, being its Founding transactions?

Diamond Partner, brought I’d rather look at blockchain this accelerator to Poland. not as a tool for securing As for blockchain, there are inbanking transactions but for processes involving more than ternational groups working on two parties. Blockchain is a using blockchain for securing form of a distributed ledger, so banking transactions, but the it is ideal for transactions indevelopment is not necessarvolving many parties, making ily going in the right direction. processes such as document Some banks have withdrawn circulation or trade finance from it: for example JP Mormore intuitive and simpler, gan has backed out of the R3 and thus lowering their cost. consortium, which works on In our start-up accelerausing blockchain for banking tion project, “Let’s Fintech transactions. Implementing with PKO Bank Polski,” we blockchain in banking transachave a blockchain company tions would require a major Coinfirm. They are working reorganization of a system on using blockchain for docu- that is already functioning. ment exchange in transacThat’s not going to be easy. On tions involving e.g. a bank, a top of that, cryptocurrencies notary, a company providing like bitcoin are creating bad a service and the recipient of PR for blockchain through the service. Blockchain allows their association with the for a more secure and easier shadow economy and illegal way of document exchange. business.

Coinfirm is one of several companies participating in an acceleration program in which PKO Bank Polski is a main partner, MIT Enterprise Forum Poland. The program was awarded a grant in the ScaleUp contest conducted by Grzegorz Pawlicki, director PARP within the framework of Innovation and Customer of the government program Experience Office at PKO Start In Poland. Currently, Bank Polski

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TECH

We all use open source

PHONES, FRIDGES, TVS, EVEN DRONES – THEY ALL USE OPEN SOURCE IN THEIR PROGRAMMING. IN POLAND, ABOUT 97 PERCENT OF TECH COMPANIES USE OPEN SOURCE SOLUTIONS IN THEIR OWN PRODUCTS. HOW MUCH DO WE KNOW ABOUT THEM? HOW IS OPEN SOURCE BETTER THAN PROPRIETARY SOLUTIONS? DARIUSZ ŚWIĄDER, CEO OF LINUX POLSKA, TALKS ABOUT THE EVER-GROWING OPEN SOURCE MARKET, SECURITY ISSUES, COSTS, LICENSING AND THE FUTURE OF OPEN SOURCE 42

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TECH

WBJ: In which areas is open source the most prevalent and successful

these days?

Dariusz Świąder: Using open source is very common these days. In fact, there is hardly an area where open source solutions are not yet present. Our refrigerators, TVs, phones, the IT systems of global banks, factory production lines, and even drones – they all work on open source software. We use them unaware that they are based on open source and we enjoy new functionalities and apps being developed. We are even eager to pay for additional functionalities.

Many governments have based their IT development and their Computer Science education on this model.

How many companies use open source solutions? What type of solutions are these?

Global research indicates that over 80 percent of companies use open source solutions, ranking them as the most secure and high-quality option. According to our own survey we conducted for the Open Source Day 2017, nine out of ten respondents – people from the Polish tech sector – use open operating systems and 97 percent use open source technologies for developing their own IT solutions.

The respondents named cost optimization, flexibility, security and no vendor lockin as some of the biggest advantages of open technologies. The survey indicates that open source is becoming a key element of Polish firms’ IT infrastructure, including their email service, operating systems through web engines and accounting software. Others use open source in the control systems of their own products and devices.

Are open source solutions more secure than proprietary ones?

Yes. Any bugs, vulnerabilities and code injection attempts are discovered quickly and can be immediately corrected. As Eric S. Raymond, one of the top figures in the open source movement, said: “Given enough eyeballs, all bugs are shallow.”

Apart from security, what are the biggest advantages of open source vs. proprietary solutions for companies that use them?

One of the most important pros is no vendor lock-in, which means that a company is not dependent on any one software supplier. Open source solutions are also more flexible, as you can modify them internally

ANY BUGS, VULNERABILITIES AND CODE INJECTION ATTEMPTS ARE DISCOVERED QUICKLY AND CAN BE IMMEDIATELY CORRECTED

or easily replace them for a different one.

This allows you to monitor costs more efficiently: you decide what you pay for and how you want to use the software. These solutions usually offer more functionality, because the open source community works on a global scale and the systems they produce take into account specific local conditions. They are also developed more quickly and offer a wide range of interconnectivity: contrary to proprietary technologies, open solutions can be combined with any technology without limitations.

Open source is clearly beneficial to the IT market, as it allows companies to build upon the technology created by others. But what advantages can open source solutions have for the companies that make them? How do you make a successful business based on open source?

As a commercial enterprise that develops open source software, we have several ways of making money. First, you can go the traditional open source route, selling commercial support for your own or third-party solutions, because large institutions and corporations require stability, guaranteed performance and technical support.

Another source of income is creating additional functionalities for existing solutions and commercializing them in combination with support and development services.

This way usually ends up in takeovers. A good example here are website and portal engines that have been expanded with thousands of add-ons, therefore increasing their functionality.

There’s one more way of making money on open source software: implementing open source solutions and integrating them

with closed solutions. Each of the models offers a possible revenue stream from offering education, training, workshops, publications etc.

What do you consider the most successful open source product?

Linux is an excellent example of open source’s global success. Solutions such as OpenStack, OpenShift, Ceph, Docker, Kubernetes are the pillars of the digital transformation that we are seeing right now.

What impact do various licensing models have on the open source market?

Today we see a number of different licenses for open solutions, some more restrictive, some less so. All of them have to conform to the Open Source Initiative guidelines, which are a complex legal matter, combining copyright, civil law, double licensing, merging open and closed works etc. I think that open source in all its forms has had a fantastic and very positive influence on the development of the IT market and on global cooperation.

What do you expect the future of open source to be?

I think that today there is no better way for the IT market to develop than through open source, not only for apps, but also for the development of so-called open hardware. People have come to believe in cooperation, sharing knowledge and research. It shortens the time to market and lowers production costs significantly, which allows producers to deliver innovative solutions with reasonable and clear use policies.

I believe that you can’t put constraints on the free flow of knowledge and thought.

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Latest news in the office, retail and logisitics sectors

52

Prospects for airport city development in Poland

Office KARIMPOL to start building Skyliner tower in Warsaw Developer Karimpol has selected Warsaw Stock Exchange-listed builder Warbud as the general contractor of its planned Skyliner office skyscraper project located in the Wola district of the Polish capital. Construction work on the scheme is scheduled to launch in September and finish in mid-2020. The latest addition to the growing pool of new office developments in the quickly developing Rondo Daszyńskiego area of Wola, Skyliner will rise 195 meters and offer almost 44,000 sqm of leasable space. Karimpol will finance the development of the investment, which was designed by the APA Wojciechowski architectural studio, with a loan granted

by Bank Pekao. The project is the largest and the most prestigious scheme of the Karimpol Group in Central and Eastern Europe, said managing partner Harald Jeschek.

56

Interview with Dan Zakai of Mindspace

58

Transformation of Warsaw's largest office hub

62

Interview with Ben Habib of First Property Group

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Public areas around new office buildings

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LOKALE IMMOBILIA | NEWS

Office (continued)

DENTONS leases 5,600 sqm in Elektrownia Powiśle in Warsaw

SPACEPLAN working on new projects in Warsaw

Law firm Dentons has leased approximately 5,600 sqm of office space in the Elektrownia Powiśle mixed-use complex, which a fund managed by Tristan Capital Partners and White Star Real Estate are now developing in the Powiśle area of downtown Warsaw. The tenant, who was advised by JLL during the negotiations process, will move into its new premises in 2019. Located close to the Copernicus Science Centre and the University of Warsaw Library, the Elektrownia Powiśle complex will comprise 23,000 sqm of office space, 15,500 sqm of retail space, 6,000 sqm of residential space and 5,500 sqm of hotel space.

Fit-out company Spaceplan is now working on arranging office space for American cable and satellite television network HBO, which will be one of the tenants of the Ethos building in downtown Warsaw. The tenant will occupy approximately 1,000 sqm on the fifth floor of the building with the new premises set to be completed in September. Spaceplan is now also working on fitting out space for Akademia L’Oréal Professionnel, which has leased around 450 sqm in the Defabryka post-industrial complex in the Żoliborz district of Warsaw. The tenant’s new space in Defabryka will be ready in October.

430,000

sqm

the record amount of office space that could be completed in Warsaw in 2020 provided that the current economic conditions remain unchanged and developers go ahead with all of their planned projects Source: Cushman & Wakefield

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Almost 723,000 sqm of office space leased in H1 – JLL A total of nearly 723,000 sqm of office space was leased in Poland in H1 2017, which is the best result in the history of the office property market in the country, according to JLL. In Warsaw alone, tenants took up 391,400 sqm of office area in the period.

“Total demand in H1 2017 among regional markets was a strong 331,400 sqm, which is 24 percent up on the same period last year. This result is fairly similar to the demand recorded in Warsaw, which further emphasizes the strength of the regional markets,” said Łukasz Dziedzic, a consultant at JLL.

Mixed - Use SKANSKA launches Nowy Rynek mixed-use project in Poznań Developer Skanska Property Poland has launched construction on the first phase of its Nowy Rynek mixed-use project in Poznań, which will be developed on the site of a former bus station in the downtown of the city. The first phase of the scheme will involve the development of an office building with 25,000 sqm of leasable space, and is scheduled to be completed in the second quarter of 2019. The entire complex will comprise five buildings sitting on a 3.8-hectare plot and developed around a central square. They will offer a total of approximately 100,000 sqm of leasable area. Nowy Rynek is Skanska Property Poland’s third project in Poznań.

now (in cooperation with WSS Społem Śródmieście) developing in the downtown of the Polish capital. The scheme, which will be located near the intersection of ul. Marszałkowska and ul. Świętokrzyska, will comprise a combined 16,500 sqm of leasable space (including 3,400 sqm of retail area) with CBRE acting as the exclusive leasing agent. As a result of the latest lease agreement, the office space in Centrum Marszałkowska is now over 40 percent leased out.

BBI signs major tenant for Centrum Marszałkowska in Warsaw A debt buying company whose name has not been revealed has leased a total of more than 5,200 sqm of office space on four floors in the Centrum Marszałkowska mixed-use project that Warsaw Stock Exchange-listed developer BBI Development is

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LOKALE IMMOBILIA | NEWS

Residential ASBUD buys land for two residential towers in Warsaw

ATAL selling micro-apartments in Warsaw Warsaw Stock Exchange-listed developer Atal has launched sales in the latest phase of its Nowy Targówek residential project in the Polish capital, which will comprise a total of 157 micro-apartments in two buildings. The apartments, which are sized from as little as 22.2 sqm, are being offered as hotel units and are targeted at students, tourists and entrepreneurs looking for accommodation in Warsaw. They are also being marketed by the developer as an investment product. Apart from this phase of Nowy Targówek, Atal is now also commercializing three other phases of the scheme, which comprise regular apartments. The development is located in the Targówek district in the eastern part of the city, close to a planned new stop of the second subway line. The micro-apartments offered in the latest phase of the investment are scheduled to be completed in the second quarter of 2019.

MURAPOL buying land for major Warsaw project Murapol, one of the largest residential developers in Poland, has signed a preliminary agreement for the purchase of approximately 4.4 hectares of land in the Ursus district of Warsaw as it continues to strengthen its presence in the city. The acquisition of the plot, which is valued at almost PLN 45.8 million, will allow the company to develop (in three phases) a project comprising a total of 569 apartments in 15 buildings. Warsaw is a key market for Murapol, which wants to be one of the leading developers in the city, said management board president Michał Sapota. He added that the company’s strategy envisions the development of at least ten projects annually in the Warsaw market. Murapol has been active in Warsaw since 2011 and is currently developing two residential schemes in the city. Apart from the new investment in Ursus, the developer is now working on a further six future projects in the Polish capital, which will comprise a total of around 3,200 apartments.

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Developer Asbud Group has acquired almost 18,000 sqm of land located on ul. Towarowa in the quickly developing Rondo Daszyńskiego area of the Wola district of Warsaw where it plans to build a major residential project comprising approximately 900 apartments. The scheme is to include two 30-floor skyscrapers. Asbud already has a strong presence in the Rondo Daszyńskiego area where it is currently selling apartments in two residential projects (Grzybowska 85 and Metropoint, which offer a total of approximately 1,000 housing units) and commercializing two office schemes (Karolkowa Business Park and Metropoint Office that offer a total of around 80,000 sqm of space).

ARCHICOM acquires majority stake in mLocum Warsaw Stock Exchange-listed Archicom, a leading developer in the residential market in Wrocław, has finalized the first phase of its acquisition of mLocum, a residential developer that is active in Kraków, Wrocław, the Tri-City, Poznań and Łódź.

Having secured the approval of Poland’s anti-trust watchdog, Archicom has bought 51 percent of mLocum shares paying PLN 32.9 million, with a further PLN 23 million due to be paid by the end of next year. Also by the end of 2018, Archicom is expected to acquire a further 29-percent stake in mLocum. In total, the acquisition of the 80-percent stake in the company will cost the buyer PLN 87.6 million. Dorota Jarodzka-Śródka, the management board president at Archicom, said that the acquisition will allow the company to step up its development activity and have a positive impact on the company’s apartment sales results.

33,400 the total number of new apartments that developers put up for sale in the six largest residential markets in Poland (Warsaw, Kraków, Wrocław, the Tri-City, Poznań and Łódź) in Q2 2017 Source: REAS

Logistics

1.6 million

More than

sqm – the amount of warehouse and industrial space that was under construction in Poland at the end of H1 2017 Source: Savills

Poland with THIRD LARGEST net logistics take-up in Europe in H1 The total net take-up (new lease agreements and expansions) in the logistics property market in Poland reached 1.3 million sqm in the first half of this year, which is the third best result in Europe, according to a recent report by JLL. Only Germany and the Netherlands saw higher net take-up levels in the period, the study said. The most leasing activity in H1 was recorded in

central Poland. “Retailers accounted for the largest share of net market demand,” said Tomasz Olszewski, head of industrial CEE at JLL. The company’s experts now predict that the combined 2017 take-up could reach the record level of 3 million sqm.

PHN sells stake in WROCŁAW logistics park to SEGRO A subsidiary of state majority-owned, Warsaw Stock Exchange-listed commercial real estate investor Polski Holding Nieruchomości (PHN) has sold its 50-percent stake in Wrocław Industrial Park, the owner of an eponymous logistics project in Wrocław, to warehouse space developer SEGRO. The value of the transaction amounts to PLN 23.4 million. PHN and SEGRO, which owns the other 50-percent stake in Wrocław Industrial Park, developed the project in a joint-venture formula, having signed a cooperation agreement back in 2011. The sale transaction is in line with PHN ‘s strategy for 2017-2023 which, with regard to the logistics property sector, envisions focusing on development activity and selling new schemes once they have been completed and commercialized.

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Investment market ARCONA adds SZCZECIN office building to growing Polish portfolio Investor Arcona Capital has finalized the acquisition of the Centrum Biurowe Maris office building in Szczecin from Bywater Properties for approximately €8.9 million. The transaction further strengthens the investor’s presence in Poland with the company having finalized the acquisition of 11 shopping centers across the country from RECE Group last and this year. Following the latest acquisition in Szczecin, Polish assets now account for 40.5 percent of the portfolio of Arcona’s Property Fund. Maris is a six-storey building offering more than 5,400 sqm of leasable space. Mateusz Siejka, the managing director of Arcona Capital in Poland, said that the company is interested in further acquisitions in the Polish market and is now looking at a number of potential investment opportunities.

HINES sells PROXIMO I office building in Warsaw for over €116 mln Developer Hines has announced that the Hines Russia & Poland Fund has sold the Proximo I office building in Warsaw to the CSNF fund, which is managed by Czech investor REICO IS ČS, for €116.6 million. The acquisition of Proximo I represents an important step towards the regional diversification of REICO IS ČS’s risk exposures and access to prime product which is hard to get in its home markets of the Czech Republic and Slovakia, said Chief Investment Officer Tomáš Jandík. Proximo I is located near the Rondo Daszyńskiego subway stop in the Wola district of Warsaw and was officially opened for business in June 2016. The building comprises a total of more than 28,300 sqm of A-class space on 12 floors and is currently over 95 percent leased out.

CATELLA finalizes Złota 44 apartments acquisition Investment fund Catella Real Estate has finalized its acquisition of 72 luxury apartments located on floors 11 through 19 of the iconic Złota 44 residential tower in downtown Warsaw from investors Amstar and BBI Development. The unprecedented transaction was first announced in July last year and marked the beginning of an institutional luxury rental property market in Poland. The buyer will offer the Złota 44 apartments for long-term rentals under its newly created No. 44 brand, with the service targeted at clients including CEOs and other top managers of international companies, expats and diplomats.

In a recent interview with WBJ, Xavier Jongen, management board member at Catella, said that the rental rates would range from approximately PLN 9,000 to around PLN 21,000 per month, depending on the standard and the size of the particular apartment. Catella will offer the apartments in three different finishing standards.

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“There is no doubt that so far this year Poland has been the top performing country in the CEE region both in terms of investment volume and number of transactions. With the hotel industry continuing to perform strongly, generating high income returns, the appetite for hotel investment among both international and local investors is set to grow” - Maria Zielińska, senior hospitality advisor at Cushman & Wakefield in Poland

Retail GALERIA PÓŁNOCNA mall with occupancy permit After over two years of construction work, Warsaw Stock Exchange-listed investor and developer Globe Trade Centre (GTC) has obtained an occupancy permit for its Galeria Północna shopping center in the Polish capital. The mall is to be officially opened for business on September 14. GTC’s flagship retail project in Poland, Galeria Północna is located in the Białołęka district of Warsaw and comprises 64,800 sqm of leasable space. The scheme has been LEED-certified at the “Gold” level.

CORNERSTONE laid for PLATAN mall extension in Zabrze Investor Rockcastle and general contractor CFE Polska have held a cornerstone-laying ceremony at the construction site of a new part of the Platan shopping center in Zabrze in Silesia.

Opened in 2003, the mall currently comprises 31,000 sqm of space and houses almost 80 stores and points of service.

Due to the extension project, which is scheduled for completion in the autumn of next year and whose value is estimated at approximately €40 million, Platan will get an additional 11,000 sqm of leasable space and the number of units in it will increase to around 120.

SAVE THE DATE

"Giving buildings a new life" conference September 7, Hotel Bristol, Warsaw The revitalization of existing assets has been a growing trend in the commercial property market in Poland in recent years, as landowners bring ageing buildings up to standard to make sure they remain attractive to tenants. The "Giving buildings a new life" conference, which will be held on September 7 at the Hotel Bristol in Warsaw, will feature the first thorough and comprehensive discussion of the trend in Poland.

Participants will focus on the financial, legal and technical aspects of revitalization projects, as well as the influence of those projects on the development of cities.

WBJ is one of the media partners of the event.

The conference agenda can be found at:

drugiezyciebudynkow.pl/agenda/

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LOKALE IMMOBILIA | AIRPORT CITIES

CENTRAL OPPORTUNITIES

Poland’s government is planning the development of a centrally located hub airport that could compete with some of the largest airports in Europe. Would the construction of the project create an attractive location for commercial space developers?

BY ADAM ZDRODOWSKI

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P

olish ministers earlier this year recommended building a huge new airport in central Poland that would serve as a regional transit hub and be one of the most important airports in Europe. It would be located between Warsaw and Łódź and become operational in about a decade. Although the exact location and size of the planned investment are not yet known, the completion of such a large infrastructural project would certainly be of major importance for the Polish economy. What implications could it have for the real estate market?

With few details available, an early forecast is hard to make. The success of so-called airport cities around the world largely depends on the volume of air traffic at particular airports, noted Kamil Kowa, head of valuation and consultancy at Savills. However, as the planned hub will likely be located relatively far from the centers of Warsaw and Łódź and very close to major roads, it is expected to mainly attract logistics (and potentially hotel and retail) space developers, rather than office developers.

DISTANCE WOES

According to Jan Jakub Zombirt, an associate director, strategic consulting, at JLL, office developers, who are paying more and more attention to whether a given site is easily accessible by public transport, may be skeptical about the location of the planned airport. For the new airport to be attractive, it would need to offer excellent transport connections with downtown Warsaw and downtown Łódź – indeed, both cities would need to be within a 30-minute commute of the hub, Zombirt argued.

What is more, the peripheral location would need to feature much lower rents than those seen in Warsaw and Łódź in order to be appealing to occupiers, he claimed. However, competitive rents alone will not attract tenants in today’s office market. With the labor market evolving and now being dominated by Generation Y employees, the office market does not favor outlying locations, said Joanna Mroczek, a senior director and head of research and marketing at CBRE. Tenants expect easy access to a whole range of services that are available in city centers. “At the moment, even non-central office locations in Warsaw are not popular with tenants despite low rents,” Mroczek said. Also, in the opinion of Piotr Capiga, a senior negotiator in the office space department of Cushman & Wakefield, the development of office projects near the planned airport could prove a serious challenge when it comes to the commercialization process.

Schemes in such a location would likely be unable to compete successfully with office

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LOKALE IMMOBILIA | AIRPORT CITIES A preliminary vision of a Chopin Airport City

developments in Warsaw and Łódź. “Even the necessary huge infrastructural investments will not guarantee the creation of an office zone near the centrally-located airport,” Capiga said. He noted that there is a lot of vacant office space in the Polish capital, which is offered to tenants on very favorable financial terms. For its part, Łódź still offers plenty of room for the development of office projects near the downtown area.

LOGISTICS BOOST

If the planned new airport in central Poland is unlikely to prove attractive for office developers, it may certainly generate some demand for other types of commercial space, which is more closely related to the transport of people and goods. This could mean room for new hotel, retail and logistics projects. Of course, the scale of any potential real estate investments near the airport would depend on the size, success and further development of the airport itself.

Hotel space developers would certainly be interested in the location if the new airport generated significant air traffic and attracted businesspeople. It would help if the airport served as a transfer point, also for passengers on intercontinental flights, Zombirt said. Also,

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retailers would inevitably be attracted to the new hub. Boutiques and restaurants have long been a fixture at passenger terminals around the world, with some of the largest featuring complementary health and entertainment facilities such as clinics, cinemas and museums.

The area between Warsaw and Łódź is home to several major logistics markets. According to Mroczek, the construction of a large airport near Even the Mszczonów or Stryków could give a boost to the necessary huge inframarkets and make the whole area one of the best structural developed logistics areas in Europe. Of a similar investments opinion was Zombirt who said that new transport will not guar- connections with the planned airport would defiantee nitely benefit the logistics sector even if the airthe creation port itself would not, at least initially, create much of an office additional demand for logistics space. This is zone near the centrally- because air cargo transport in Poland is still in an early phase of development, he explained. Even located though it is set to grow rapidly in the near future, airport it will not be before long that the industry grows big enough to justify the development of dedicated logistics space. Nevertheless, the freight forwarding companies that currently operate at Warsaw Chopin Airport will probably be interested in moving to the new location. It is assumed that if the planned hub is indeed completed, the existing Warsaw airport will be closed down.

WARSAW-FOCUSED

The development of business areas around international airports, often dubbed “airport cities,” has been a growing global trend in recent years. According to Zombirt, as air transport in Poland continues to develop, airport locations in the country will gain in significance. Developer interest in plots located close to international airports has been seen in large Polish cities, including Warsaw, Kraków, Gdańsk and Wrocław.

Admittedly, it is mainly good connections with city centers, rather than proximity to airports that make such plots appealing.

At the moment, the most commercial real estate in airport locations is in Warsaw. Projects that have been developed near Warsaw Chopin Airport include a Courtyard by Marriott hotel, a Hampton by Hilton hotel and the Aeropark Business Centre office complex. A Renaissance hotel (pictured) is now under construction. In the pipeline is a huge commercial real estate project called Chopin Airport City, which state-owned airport operator Przedsiębiorstwo Państwowe “Porty Lotnicze” (PPL) announced a few years ago (see box).

Interestingly, and perhaps ominously for the planned centrally-located hub, Warsaw Modlin Airport, which was opened in 2012 and is located over 30 kilometers from the downtown of the Polish capital, has not attracted any major interest from office space developers. Even the completion of a new convenient railway connection between Warsaw Modlin Airport and the center of Warsaw and Warsaw Chopin Airport has not changed the situation for the better, Capiga pointed out.

As for regional airports, there is a Hilton Garden hotel in Kraków and a Hampton by Hilton hotel in Gdańsk with the latter location also featuring a major office complex. Kowa said that preliminary planning work is underway on airport cities in both Kraków and Gdańsk.

However, the development of those schemes is not expected any time soon. According to Kowa, investor, developer and tenant interest in airport locations in regional cities in still limited as the airports there feature relatively small, on the European scale, passenger traffic.

DEVELOPMENT BARRIERS

A number of barriers to private real estate investment in airport locations in Poland remain.

The decision-making process at state-owned companies in the country (like those managing airports) is generally longer than that at private companies, Kowa pointed out. Planning restrictions in areas lying close to airports, which apply, for instance, to building heights, are another

challenge that developers must cope with. On the other hand, many such areas are not covered by zoning plans.

Certainly, the location of a real estate project close to an airport does not in itself guarantee success, as each such location is different in terms of the size of the particular airport, the volume of air traffic, the availability of development land and the distance to the city center.

“Airports always attract attention and can be attractive for developers of commercial space.

However, each investment decision needs to be preceded by careful analyses and be based on the real needs and potential of the particular market,” Mroczek said.

PHN, CHOPIN AIRPORT DEVELOPMENT MULL COOPERATION

State majority-owned, Warsaw Stock Exchange-listed commercial real estate investor and manager Polski Holding Nieruchomości (PHN) and Chopin Airport Development, a subsidiary of state-owned airport operator Przedsiębiorstwo Państwowe “Porty Lotnicze” (PPL) have signed a letter of intent regarding their potential future cooperation on the development of office and hotel projects. PPL is focused on the development of schemes located near the largest airports across Poland.

The company’s portfolio includes existing airport hotels in Warsaw and Gdańsk with PPL now also planning new airport hotel developments in Katowice and Poznań. A few years ago, the company announced its plans to develop a large piece of land located near Warsaw Chopin Airport, which could potentially accommodate a major office park. When PPL was showcasing the project at the MIPIM property fair in Cannes in 2012, there was talk of a complex of 16 buildings comprising over 165,000 sqm of usable space.

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LOKALE IMMOBILIA | OFFICE

LOCATIONS WITH LIFESTYLES

WBJ met with Dan Zakai, CEO and co-founder of co-working space operator Mindspace. Currently active in Israel and Germany, the company will open its first location in Poland next month

WBJ: According to a recent report by Cushman & Wakefield, co-working space opera-

tors are generating more and more demand for office space in Poland. Is this a trend that can now be seen in other countries around the world too?

Dan Zakai: Yes, definitely, this is a global trend now.

We started our business four years ago in Tel-Aviv – at that time there were just a few buildings in the city comprising co-working space and now there are dozens of them there. In Germany, the concept of coworking spaces has been strong for a long time now, but it has, until recently, mostly been targeted at niche segments – freelancers and start-ups. What we are seeing in the German market now is a growing demand

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Co-working is completely different, on many different levels.

It’s a flexible, plug-and-play solution

for co-working from larger companies.

We are seeing the growing demand for co-working everywhere. We are present in Israel and Germany, and will be opening our first location in Poland soon, but we are already working on starting our operations in several other countries, including the UK and the US. We expect co-working spaces to account for a much larger chunk of the office market in the future than it does today. Currently, in established office markets, co-working spaces account for only about 0.5 percent of all office space, but the sector is growing very fast.

How is co-working space different from regular office space?

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INTERVIEW BY ADAM ZDRODOWSKI

It’s completely different, on many different levels. It’s a flexible, plug-and-play solution. When you look for a traditional office space, you need to find the right location and sign a lease agreement, which can prove to be a long process. You commit for a relatively long period of time. Once the building has been developed and you have moved in, you need to maintain your offices, which means hiring a lot of service providers. Coworking, the way we deliver it, takes all of this hassle away from the customers, whom we call Mindspace “members.”

Why do you call them members, rather than tenants?

We sign membership agreements, rather than lease agreements with our customers since we think of ourselves as a community. It’s not only about the space – each Mindspace location has its own lifestyle. We organize a lot of events and workshops to benefit our members professionally and socially, and to foster creativity and cooperation among them. The main type of membership agreement says you can leave at any time after you have given us one month’s notice. Members stay with us for an average of 11 to 12 months.

opportunities at the right moment and on whether the market is ripe. We have known that the market in Poland is ripe since we started looking for a location here a year ago. The economy is growing, foreign companies keep coming to Poland, and there is a move in the country towards tech and innovation. The opportunity element was the completion of Hala Koszyki, which we think is a unique piece of property.

Warsaw is your first location in CEE. Are you planning further expansion in the region?

Yes, we are. We are now in the process of expanding, having completed the first round of financing half a year ago. We will announce a number of new locations in the coming months. Any potential further expansion in Poland will depend on the success of the Warsaw project.

Do you select members? For example, do they need to come from a given sector?

No, we usually take up large office areas that can accommodate a large variety of customers, from freelancers to small teams to representatives of large companies. In the same Mindspace location you are likely to find an accounting firm, a marketing company, a programmer and a graphic designer. Interestingly, the networking opportunities offered by co-working do indeed translate into business cooperation among the various customers. A survey that we have conducted shows that more than 50 percent of our members do business with each other.

How do you reach your customers?

We mainly use social media marketing channels, but we also work with agents from some major real estate services firms. We have actually recently organized a broker event in Warsaw to present our co-working space concept and our way of cooperating with real estate agents.

Are co-working space operators competitors for developers offering traditional offices?

No, I would say that we work together with developers.

If a developer has a project that is interesting for us, then we will be the developer’s tenant. The space that we offer in Hala Koszyki in Warsaw has been leased from the developer of the project.

Why have you decided to enter the Polish market right now?

The decision to enter a new market is always the result of a number of factors. It depends on the emergence of

ON AN EXPANSION SPREE Mindspace is to open its first location in Poland in October this year.

The company will occupy a total of more than 3,000 sqm of space on three floors in the Hala Koszyki building in downtown Warsaw, which is owned by listed real estate investor Griffin Premium RE. The location will accommodate approximately 450 people. Founded in 2014, Mindspace is currently present in Berlin, Hamburg, Munich, Herzliya and Tel Aviv, and is also expected to begin operating in London in December.

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WAITING FOR A REBOOT

Warsaw’s largest business area has received a lot of bad publicity and seen decreased development and leasing activity in recent years.

Nevertheless, reports of its death are probably exaggerated

BY ADAM ZDRODOWSKI

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WANING INTEREST

The first modern office building – Curtis Plaza – was completed in Służewiec in 1992. The year 2008 saw the start of a development boom in the area with almost a half of all the office buildings in the business district having been delivered after that date.

According to a recent report by Savills which focused on the current trends in and prospects for Służewiec, the area currently features a total of more than one million sqm of office space in 77 buildings. As of June, an additional 73,100 sqm of office area was under construction.

In the past few years, new office supply in Służewiec exceeded demand with the vacancy rate in the area having increased from 6 percent in 2011 to almost 20 percent at the beginning of 2016.

Admittedly, it has been going down in recent months and stood at less than 19 percent in March. Record-high leasing activity was seen in Służewiec in 2012 (198,600 sqm) and 2015 (194,100 sqm).

The 2012 volume accounted for as much as 33 percent of the total office demand in Warsaw in that year, according to Savills data.

The figure has decreased significantly since then. “In the first half of 2017, Służewiec generated 15 percent of the total demand for office space in the Polish capital,” said Mateusz Polkowski, head of research and consulting at JLL. Służewiec currently attracts fewer new companies than a few years ago, but a considerable number of lease agreement extensions are still signed in the

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he Służewiec area of the Mokotów district of Warsaw, which features the largest concentration of office space in the city and, indeed, in Poland, is now undergoing a major transformation that is expected to rekindle developer and tenant interest in the location. After several years of rapid growth, defined by intense development activity of private investors and an insufficient level of public investment in transport infrastructure, this part of the Polish capital seems to have become a victim of its own success.

Notorious for its traffic jams and derogatorily called “Mordor” by thousands of commuters who spend a lot of time every day getting in and out of the badly planned, post-industrial area, Służewiec has lost much of its former luster in recent years. Competitors have emerged – notably the Wola district, currently the fastest-growing office location in Warsaw. However, experts argue that it is too early to write Służewiec off, as the area keeps changing and still has a chance to become a much better place to work and live.

area. “This means there is a strong group of tenants who have taken to Służewiec as a business address,” Polkowski said.

Of a similar opinion was Henryk Bilski, a leasing manager at investor Penta Investments, which has just completed its D48 office project in Służewiec. The scheme is the first office development to have been launched by the company in the Polish market. Bilski stressed that Penta Investments’ choice of the area for the company’s first office location in Poland was an informed Within the next decision. “We are fully aware of the fact that this five years, is one of the best recognized business districts in Służewiec Warsaw,” he said. will definitely “The more than one million sqm of existing modern, high-quality office space and the new of- get a second lease on its fice investments under construction testify to the office life continued interest of potential tenants in the location,” Bilski added. According to Jarosław Zagórski, the commercial and development director at developer Ghelamco Poland, which has been very active in Wola but is also still commercializing an office project in Służewiec, there is no risk that all tenants will turn away from the latter location.

The company continues to view Służewiec as an area that appeals to a large number of occupiers. The hub is dominated by business parks and there are tenants who are looking for that particular type of office project, and who do not need to be close to the city center. Besides, Warsaw’s largest office location offers relatively attractive rents. “Służewiec will always be competitive in terms of prices as the cost of land was much lower there than in Wola,” Zagórski said.

INFRASTRUCTURAL IMPROVEMENTS

Several much-anticipated under-construction and planned infrastructural investments are expected to revive the fading appeal of the huge business hub in the near future. “Within the next five years, Służewiec will definitely get a second lease on its office life,” Polkowski said. Both ul. Suwak and ul. Woronicza will be extended, which should improve transportation within Służewiec. For its part, ul. Marynarska, one of the most important roads there, will get a major makeover with a flyover planned for the intersection with ul. Postępu.

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Crucially, a new tramline is expected to connect the area with the Wilanowska subway stop.

Polkowski noted that the vacancy rate in buildings located in the eastern part of Służewiec, relatively close to the first subway line, is much lower than the rate for the entire office hub.

According to Polkowski, even though all of the mistakes made during the process of transforming Służewiec into a business location cannot be rectified quickly, the completion of new infrastructural projects will certainly make the area increase in value.

INCREASING DIVERSIFICATION

Meanwhile, Służewiec has increasingly been attracting non-office projects. The area has in recent years become a popular residential location, which means that it will keep turning into a livelier place after office hours and at weekends as new inhabitants move in. Bilski said that this part of the city will benefit from the addition of new functions that it has lacked for a long time.

“Thanks to the investments, we are now seeing a long-term transformation of Służewiec into a vi-

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There is a strong group of tenants who have taken to Służewiec as a business address

brant, multi-functional urban space,” he argued.

Mokotów has long been viewed by residential developers and apartment buyers alike as one of the most attractive districts of Warsaw. Both groups are now increasingly turning their eyes towards the huge business area in the district.

For one thing, Służewiec still offers large postindustrial sites able to house multi-phased residential schemes. New developments have already sprung up across the area, with experts expecting the investment wave to continue in the coming years.

Additionally, much of the demand in Służewiec is currently being generated by those working in the numerous office buildings of the area. New apartments have also proved to be popular with individual investors who acquire them for rental purposes. According to redNet Property Group data, in 2016 developers put a combined almost 1,050 housing units up for sale in Służewiec with the figure for the first quarter of this year standing at 145.

Maximilian Mendel, a partner, transaction advisory, at REAS, said that the first residential

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LOKALE IMMOBILIA | OFFICE

projects appeared in Służewiec around 2007.

Within less than ten years, developers have completed more than 5,000 apartments and this is not, by any means, the end. In the pipeline (including both ongoing and planned schemes) are over 40 project phases. “The competition between residential and commercial developers for building sites in the area has become fiercer,” Mendel said.

The area is also expected to see the development of a number of hotel schemes in the coming years. Perhaps a bit surprisingly for a major office location that has attracted many international companies, no modern hotel projects have been built in Służewiec to date. Back in 2012, hotel real estate consultancy Hotel Professionals estimated the minimum number of hotel rooms that need to be developed in Służewiec at 500.

Today the company’s experts claim the area needs around 1,000 rooms in order to grow in a sustainable way.

Already announced developments that are scheduled to be completed in Służewiec within the next few years include Four Points by

Sheraton, Hampton by Hilton, Holiday Inn Express Mokotów, Moxy and Residence Inn and Focus Hotel Premium hotels. In total, this will mean a supply of approximately 1,000-1,100 hotel rooms by 2020. “From 2025, we expect demand for this kind of investment to rise again,” said Alex Kloszewski, the managing partner at Hotel Professionals.

WHAT NEXT?

What future awaits Warsaw’s largest business hub? The authors of the Savills report argued that in the most probable scenario the positive changes currently taking place in Służewiec are going to continue. The infrastructural investments planned in the area will be completed, which will make commuting easier for thousands of office workers. On the other hand, alternative means of transport – including public transport, carpooling and carsharing – will become more popular.

The rising demand for residential property in Służewiec will likely result in apartment prices going up. This will probably lead some developers to build residential projects on plots that they originally acquired with office schemes in mind. “A lower number of office investments will, in turn, result in the gradual absorption of the available space and in a decrease in the vacancy rate in the sector,” argued Wioleta Wojtczak, associate and head of research at Savills.

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LOKALE IMMOBILIA | INVESTMENT MARKET WBJ: You have recently strengthened your team, appointing two senior advisors – Del Chandler

and Alasdair Findlay-Shirras – for Poland and Romania.

What will this move mean for your operations in the CEE region?

Ben Habib: Del Chandler, who has broad CEE experience, is based in Warsaw and his mandate is to develop First Property business in Poland and Romania. He is based on the ground so he is a deal generator rather than a money generator. Alasdair Findlay-Shirras, who works for us in London, is a fundraiser by profession and his mandate is to raise a pool of cash to invest in Poland. It has to be remembered that as much as 90 percent of the commercial property investment market in Poland is dominated by foreign investors.

However, since the credit crunch it has been very hard to raise money for Poland from those UK institutions that I have contact with but which have become nervous about investing outside their borders. Meanwhile, Alasdair’s experience is much more with European institutions – he knows the Dutch and German insurance companies and pension funds much better than he knows those in the UK. I think that European institutions are more likely to invest in Poland.

WBJ talked to Ben Habib, the CEO at property fund manager and investor First Property Group, about the company’s plans to step up its investment activity in the CEE region INTERVIEW BY ADAM ZDRODOWSKI

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Central and Eastern Europe has been seeing the inflow of capital from new regions including South Africa and Asia. Are you also interested in attracting investors from those new sources?

Well, we are not, because we are a relatively small fund manager and we focus primarily on the sources of capital that we

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BRINGING TIRED BUILDINGS UP TO STANDARD

Why do you want to step up your fundraising activity right now?

We have always believed in Poland and we think that the country’s future is bright. Admittedly, we were slightly nervous when the new government was elected in October 2015. Some of the policies that the government suggested it would implement were worrying. They have implemented some of the policies, but the consequences of those policies have not been as bad as we thought they might be.

So, for example, the budget deficit has not grown dramatically as a result of welfare programs. They have also introduced the banking tax, which we thought might have a really bad effect on the banking sector, but the sector seems to have tolerated the tax quite well. Margins are up slightly, but still tolerable. And we have also seen the government reverse some of its more radical suggestions, including the introduction of a new tax on retail. That’s all very encouraging for us.

The government wants to introduce real estate investment trust (REIT) legislation in Poland, which I think would be very good for the property market. With these initiatives having taken place and with the political landscape now more settled in Poland and given the short to medium term growth prospects, it is a good time to be investing here.

We can buy some really good property with reasonably good yields, against borrowing costs that are much lower than those yields. The growth that we expect in Poland makes it a compelling investment proposition.

know and which we understand. However, we want to attract capital from new sources here in Europe. We are targeting some German institutions that have never invested in Poland before and with our credentials – we are the best-performing fund manager in CEE according to an index by Morgan Stanley – we hope to be able to raise money from them.

The other thing that we want to do in Poland, once the real estate investment trust legislation is introduced, is to launch our own REIT and to raise local money to invest in the market. For Poland’s sake, there is a need to develop a deep and broad local investor base that invests in its own property so that, in the event of a credit crunch, capital is not withdrawn from the country.

Do you have any specific investment volume targets for the next few years?

We do not have any concrete targets. We are an opportunistic investor so we will react to the opportunities which present themselves to us. But we expect to be investing more in the coming years than we did in the past and this is why we are making this extra push.

Which asset classes are you looking at in Poland?

We are typically investors in offices and retail, and that is where we will continue to concentrate. We have some logistics assets but this is not our area of specialty. It has to be a very good deal for us to invest in a logistics property – we understand the office and retail sectors much better. On the face of it, logistics seems to be a simple business because it is just a shed built next to a road, but it is actually quite complex and risky as the sheds are often built to suit the tenant’s needs and therefore may not suit others. And what might be the right location today may well not be seen as such in a few years’ time.

Which kind of office product are you interested in?

We are interested in existing, older, slightly tired buildings in really good locations that need a bit of capital expenditure to bring them up to standard. Buildings where the rents are typically lower than the rents in the brand-new, shiny buildings that the larger developers are building. We are not considering buying directly from developers – in our view the yield on those properties is too low, the prices are too high and those buildings will depreciate in value.

What about retail property?

We have a similar attitude to retail assets. We are looking for well-located assets with the potential to add value through repositioning the tenant mix and doing a bit of extension work. We have just bought a shopping center in Świnoujście in the north-western part of Poland.

How large is your Polish portfolio at the moment and will it grow further this year?

We have property worth about €300 million in Poland, about 20 properties altogether, 70 percent of which are offices. We are now looking at a number of properties in Poland and working on potential new acquisitions, but whether or not they come to fruition remains to be seen.

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LOKALE IMMOBILIA | LANDSCAPE DESIGN

THEY CAN’T ALL BE NEAR PARKS

Summer is coming to an end, but it doesn’t mean we’re going to stop spending time outdoors. Who doesn’t like to sit by an artfully lit fountain and grab a quick snack while listening to the leaves rustling in the wind? People are naturally drawn to green spaces. Since parks are not that common in business areas, developers take it upon themselves to create miniature gardens and playgrounds around their buildings. What do they get out of it? They don’t do it for the good PR alone. The value of office surroundings has been studied by academics for decades. Apart from the obvious rent determinants (distance from the city center, public transport and building quality), some of the variables they considered were a little more out there. They checked, for instance, whether an office building had an in-house restaurant or a landscaped terrace, some even included the prices of wheat beer and coffee within a 500-meter radius of the building. The bottom line is that the surroundings of an office scheme impact how much tenants are willing to pay for their offices. This shouldn’t be surprising.

Companies are fighting tooth and nail for employees these days and their offices play an important role in reeling in talented people. Young people, especially, like to spend time outdoors, and pay more attention to what their workplace offers in that regard. Here’s a roundup of some of the most cleverly designed public spaces near modern office schemes.

PROJECT NAME Warsaw Spire LOCATION Warsaw DEVELOPER Ghelamco Poland

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LOKALE IMMOBILIA | LANDSCAPE DESIGN

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PROJECT NAME (left) Business Garden Warszawa (below) Business Garden Wrocław (bottom) Business Garden Poznań DEVELOPER Vastint Poland

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LOKALE IMMOBILIA | LANDSCAPE DESIGN

PROJECT NAME: Royal Wilanรณw LOCATION: Warsaw DEVELOPER: Capital Park

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Fine Lebanese cusine

20 YEARS

Proudly Serving Warsaw

www.lecedre.pl

Le Cedre 61

(opposite the zoo) Al. Solidarności 61, Praga Tel 22 670 1166

Le Cedre Lounge (Centrum) Grzybowska 5A Tel 22 299 7299

Le Cedre 84

(opposite the court) Al. Solidarności 84 Tel 22 618 8999

Life + Style Coat, Vistula, PLN 1399.90

STYLE ICONS OF AUTUMN

Must-haves you can’t miss in the fall that add elegance and class, and satisfy your need for beauty

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Life+Style 01

Magdalena Iwańska Fashion editor, stylist, trendsetter.

Magda creates fashion and lifestyle magazines for Valkea Media and is often involved in Poland's biggest fashion events, co-operating with and helping style showbiz celebrities.

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06 1. Longines/W.Kruk, PLN 1,318 2. Max Mara, PLN 5,509 3. Max Mara, PLN 2,415 4. Pinko, 860 PLN 5. Bohoboco, PLN 390 6. Patrizia Pepe, PLN 1,804 7. Liu Jo, PLN 949 8. YSL/Sephora, PLN from 359 9. Vistula, PLN 1,799.90 10. Redwood/Apia, PLN 1,499 11. Tag Heuer/W.Kruk, PLN 19,320 12. Gino Rossi, PLN 899.90 13. Vistula, PLN 149.90

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THIS SEASON, THE STYLISH MAN WILL CHOOSE A BURGUNDY OR AUBERGINE COLORED COAT. IT’S A TIMELESS CLASSIC WITH A HINT OF NONCHALANCE. A DELICATE FLORAL PATTERN WILL ADD CHARM TO ANY MAN, REGARDLESS OF THE SEASON OR WILL LIVEN UP AN OUTFIT IN SHADES OF NOBLE GRAY. 09 08

Coat COS, PLN 1,000 Suit Boss Store, PLN 2,290 Shirt Emanuel Berg, PLN 459 Belt Boss Store, PLN 399 Shoes Boss Store, PLN 1,590

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Life+Style

Alex Webber

SERIOUS BUSINESS

Journalist

Based in the Polish capital since 2000, for the past six years Alex has served as the editor-in-chief of the Warsaw Insider lifestyle magazine. He regularly contributes to both domestic and international titles specializing in subjects ranging from business and real estate to culture and travel.

THE AMBER ROOM Al. Ujazdowskie 13, amber-room.pl The Amber Room remains a market leader when it comes to formal business dinners. Set in the pre-war Pałac Sobańskich, this pristine manor house is everything you expect: hushed, lavish, cultured and classy. The food fits the backdrop: devised by Robert Skubisz, the contemporary menu causes spontaneous outbreaks of collective joy. Maze-like in its layout, there’s enough nooks and secret rooms to make Amber Room the ideal address for VIP dining.

Back To Business

With the curtain drawn over the holiday season, Warsaw has again donned its business face – but with the gastronomic sector more competitive than ever, where should you pick for a working lunch or that seal the deal dinner?

CASUAL BUSINESS RUSIKO Al. Ujazdowskie 22, rusiko.pl For something a little less conventional, look to Rusiko. Fresh, simple and honest, the food here is representative of the people of Georgia. So too is the hospitality; a place of wine, soul, spirt(s) and song, it’s perfect for the more casual client dinner. If privacy is important, then the back room has an intimate atmosphere redolent of home – have no doubt, everyone will love it.

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ALL PHOTOS KEVIN DEMARIA EXCEPT TOP TWO THIS PAGECOURTESY OFNOLITA AND STIXX

LUNCH DEAL

SPLURGE

STIXX Pl. Europejski 4A, stixx.pl Despite the impossible diversity of the menu, the kitchen crew really make it come together; the lunch menu (PLN 29.90 for three courses) is one of the outstanding bargains in the city.

Enjoy it inside an interior that strikes a balance between slick corporate style and slinky cosmopolitan. With the Spire glimmering above, no other place captures the essence of Warsaw’s new CBD in quite the same way.

NOLITA ul. Wilcza 46, nolita.pl This is serious food for grown-ups who don’t muck about with anything but the best. Gimmicks be damned, Nolita’s menu is an extraordinarily balanced affair that’s reliant on beautiful combinations, dead-eyed precision and big bang tastes that leave you staggered. Despite the puzzling lack of Michelin recognition, most of Warsaw’s foodies recognize Nolita as the top restaurant in town.

Bills mount easily, but everyone leaves feeling quite special.

TO IMPRESS

CITY CLASSIC

CHŁODNA 15 ul. Chłodna 15, chlodna15.pl Show off your inside knowledge of Warsaw’s dining scene by booking a table at Chłodna 15. Opened just weeks ago, chef Arkadiusz Wilamowski is already being tipped for future Michelin glory. Despite the location on the ground floor of a 1960s housing block, the interiors are quietly luxurious and ideal for conspiratorial business dealings. With the restaurant still in its infant stages, Wilamowski’s classic French menu remains remarkably affordable (approx.

PLN 180 for the tasting menu).

BUTCHERY & WINE ul. Żurawia 22, butcheryandwine.pl In the six years since they opened, Butchery has evolved from being a trendsetting hit to a city institution. High on corporate masculinity, the consistency of this steakhouse is impossible to fault. Beyond the grilled animal aspect, Butchery ticks boxes for superb wines, exemplary service and an atmosphere that feels affluent and international. Missteps are unknown, making this an automatic favorite with Warsaw’s business community.

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BROUGHT TO YOU BY WWW.SUPERCARCLUB.PL

Just two amazing machines of Supercar Club Poland fleet.

More than 40 other you can find on www.supercarclub.pl and in Warsaw Hilton Hotel

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BROUGHT TO YOU BY WWW.SUPERCARCLUB.PL

A Passion For Cars

Those who are aware of the existence of Supercar Club Poland visit supercarclub.pl and feel as if they are backstage during a theater performance...

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rowsing the list of club cars, they wonder what the show, in which the vehicles star, is all about, and what roles they will play. Comparing engine power and performance numbers of the cars only introduces the false notion that they are similar. Yet while they can be compared and discussed, doing so is more akin to discussing the ingredients of the dishes served in a restaurant rather than their flavors and textures.

Those ready to take the big step forward cross the other side of the curtain and become members of Supercar Club Poland. They drive the club’s cars on an everyday basis and during group trips, compare the different characteristics and technical origins of our vehicles and learn more about the traditions of the Porsche, Aston Martin, Lamborghini, Ferrari and Maserati.

Our driving trips are the quintessence of the club, with our owner, rally driver Krzysztof Hołowczyc, counting them as one of the club’s standout attractions. While the cars’ engines cool down in the garage, drivers exchange opinions about their vehicles’ handling. This is when, behind the curtain, nobody quotes acceleration numbers anymore. Instead, the conversation is all about the different details of driving: about how technological and aerodynamic solutions, coupled with the exciting routes we take, create the complete sports car experience.

Each section of the journey – whether it’s down an Alpine pass, or along a Dinaric ridge or through the labyrinthine Apennine Hills – is like reading a novel, which is then later discussed with a cognac in hand.

A Supercar Club member is entitled to book one of several dozen cars and take an individual weekend or holiday trip in it. However, what makes the experience so unique is spending time together with other Club members and their vehicles and sharing your passion with them. These shared experiences manifest themselves in a sense of community that’s painfully rare on the roads today.

Mass-produced cars are similar to the food served in motorway service stations: uniform and bland. On the other hand, unique cars, such as those offered by the Supercar Club, are like traditional restaurants: run with passion. The journey of discovering and understanding them – which is more about art than technology – has bonded a growing number of enthusiasts for over six years now. Their mutual discovery of local cuisine, vineyards, museums and automotive plants, serves the purpose of instilling a sense of traditional culture into club members. And we hope to go even further, aiming to revive the ambitious social class that is re-emerging in Poland right now.

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EVENTS

Warsaw Business Journal relives the most important recent business and industry events

CHARITY REAL ESTATE BEACH VOLLEYBALL TOURNAMENT

A record-breaking PLN 379,210 was raised during the eighth edition of the Charity Real Estate Beach Volleyball Tournament organized by JLL. All of the tournament's proceeds have been donated to the Foundation of Fulfilled Dreams.The Polish Volleyball Federation (PZPS) was the honorary patron of the event. The MLP Group was this year’s winner.

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EVENTS

Warsaw Business Journal relives the most important recent business and industry events

ARABIAN SUMMER PUSTYNIA KAHILA BEST IN SHOW OF THE 4TH EDITION OF THE FESTIVAL. THE ENTIRE JUNIOR MARE PODIUM FOR MICHAŁÓW. BRITISH-BRED SS MOTHILL WINS THE AL KHALEDIAH POLAND CUP The most successful breeder at the 2017 Al Khalediah European Arabian Horse Festival was the Michałów Stud (Poland). They won two gold medals, one silver, one bronze and a title for Best in Show. The most spectacular result for the Michałów Stud came in the junior mares final when all three medals went to horses bred near Pińczów. Polish private breeders received one gold, three silver and three bronze medals. Foreign owners returned home with three golds, two silvers and two bronzes, with two of the winning horses being mares of Polish origin, born at Janów Podlaski.

In total we saw 91 horses in the arena (108 entries). The smaller breeders could certainly feel satisfied, due to this year’s change in the prize system. The prizes were more evenly awarded, with a smaller difference in prize money between various medalists: PLN 30,000 was awarded for gold medals (around €7,500), PLN 20,000 for silver (€5,000) and PLN 10,000 (around €2,500 euro) for bronze. There was also additional encouragement in the form of a reimbursement of the entry fee for horses that placed 6th and 7th in each class. The awards for the class top fives remained unchanged – PLN 4,000 each (around €1,000).

Poganinka (El Omari – Pentra/Poganin), Emanolla (Vitorio TO – Emandoria/Gazal AlShaqab) and Pontia (Equator – Polonica/Ekstern) took the top three spots in the junior mare championship: three Michałów mares on the podium! The latter was the only one that made the judges award unanimous top marks for movement: 4x20. All judges agreed that the Best in Show title should go to Pustynia Kahila (Kahil Al Shaqab – Pustynna Malwa/Ekstern). The Festival was held at Nowe Wrońska on August 18 and 19.

The jury panel consisted of Irina Stigler (Russia), Ahmed Hamza (Egypt), Gideon Reisel (the Netherlands), Tamas Rombauer (Hungary) and Fausto Scanzi (Italy). Serving as ringmaster was Waleed Al Haddadi (Saudi Arabia), while the disciplinary committee was made up of Dr. Katarzyna Szlęzak (Poland), Christine Keyser (Norway) and Gijs Eggink (Belgium).

The race for the Al Khalediah Poland Cup, which took place on August 19 during the Arabian Horse Day at Służewiec Race Track, is a part of the Festival and one of the most important events of that racing Sunday, besides of course the Europa Cup, which is part of the Sheikh Zayed Bin Sultan Al Nahyan world series. The Al Khalediah Poland Cup is an international race over 1,600 meters for four-year-old and older Arabian horses. The prize money this year amounted to PLN 59,500 (around €15,000). Eight horses competed in pouring rain for the prize – six foreign-bred stallions, one Polish and one German mare – all trained in Poland. It was the British-bred SS Mothill (Nizam – Boundless/Calin du Loup) that came out victorious, ridden and trained by Sergey Vasyutov.

II POLISH

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Warsaw 26-27 of September 2017

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