Warsaw Business Journal Apr-May 2019 #51

WARSAW

BUSINESS JOURNAL S i n c e 1 9 9 4 Po l a n d â&#x20AC;&#x2122; s l e a d i n g

business magazine in English

APRIL/MAY 2019 ~ No. 04/05 (51)

For daily news visit us at wbj.pl

CEEQA 2019

ARTIFICIAL INTELLIGENCE CHANGING THE REAL ESTATE MARKET

HOW IS POLISH

E-COMMERCE PREPARING FOR A

REVOLUTION

WORK PRODUCTIVITY | GREEN INITIATIVES | GEN-Z RETAIL HABITS | TRANSPORT INDUSTRY

APRIL/MAY 2019 W B J

APRIL/MAY

IN REVIEW

News highlights from the previous month from wbj.pl

OPINION

Extra vacation as a benefit............................... 15 Tough times for the transport industry.......... 17 Gen-Z shopping habits....................................... 18 Interview: Władysław Teofil Bartoszewski.... 20 Interview: Marek Prawda.................................. 22

TECH INSIGHTS

Tech News............................................................ 41 Tech View: Expectations vs reality – what are VCs for?............................................... 45 Feature: Green browsers.................................. 46

In Focus: E-commerce and logistics Feature: Polish e-commerce faces sink-or-swim test 25 Feature: CEE on the radar for online retailers 30 Feature: Timing is everything 34

LOKALE IMMOBILIA

Real estate news................................................ 51 Flexible offices ................................................... 58 Large residential projects................................. 62 Hospitality market growth................................ 66 Luxury residential.............................................. 70

75 78

LIFE + STYLE

Best of Warsaw exclusive................................. 75

EVENTS

25th anniversary of CCIFP................................ 78 European Congress for Local Governments....................................................... 79 Innovation Forum................................................ 79

LAST WORD

What do Poles fear?........................................... 80

FEATURE

Boosting work productivity 36

* CEEQA 2019 Report inside

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FROM OUR EDITOR

Future Awaits

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

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

azdrodowski@wbj.pl

SOMETIMES WHEN I USE MY SURNAME in Poland when ordering a taxi or meeting someone new, they mistake Lindholm for Lincoln, due to the fact, I suppose, that he may be a little better known, being an historic figure and all. But I don’t mind, because it gives me the opportunity to cite one of Abraham Lincoln’s most famous and inspiring quotes: “In order to predict the future, you need to create it.” Lately I have been asking myself the question, “Is it getting easier or tougher to create the future?” We live in times that can be described most aptly as a time of disruption. When I moved to Poland 20 years ago I brought with me my CD collection of 500 discs, because I couldn’t imagine living without them. Now, what used to fill five boxes easily fits into my phone, with room to spare. A couple of years before that, while living in London, I used to subscribe to a weekly Danish paper summarizing key news in the country. When I tell my kids that story, they look at me as if I were an alien. “Why didn’t you just log on to the internet and check the news as it was happening?” Technology has made so many things in our lives so much simpler and accessible, but does it in fact make it easier to create the future? At this year’s MIPIM real estate fair, where thousands of experts discussed housing, retail and office and pondered on the future of the way we live, work and shop, the most commonly uttered buzzwords were “sustainability,” “green,” and “convenience.” Attending the panel on the Biodiversity movement, it was great to hear about the initiatives being taken to bring nature back into the real estate projects of the future. Though some would pointedly ask whether it is realistic that the trend will continue regardless of where the economy is. Once the period of currently “normal” economic growth of 2-5 percent a year comes to an end, will companies and clients still be willing to pay a premium for sustainability? As important as it is to create the future, securing it is even more so. Despite growing divisions in the world on that and other subjects, we are becoming more connected than ever. We buy, eat and experience the same things wherever we live. That is particularly true for the youngest generations, who are truly global, equally immersed in both the real and the digital world. Learning how they think, what motivates them at work and in their leisure time is the key to winning their hearts. In this issue my team also focused on the ongoing e-commerce boom in the country, examining whether domestic retailers are ready to compete with the looming threat from global giants. They discuss the new and exciting opportunities for the e-commerce industry abroad as well as the pressures on logistics and the technological novelties companies are introducing to keep up with ever-increasing customer expectations. Enjoy the read. MORTEN LINDHOLM

Kevin Demaria Art Director

Michael Evans Copy Editor

Contributors

Ewa Boniecka Marcel Płoszczyński Anna Rzhevkina Alex Webber Sales

Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com PR & Marketing

Agata Wolny awolny@valkea.com Book of Lists

Monika Rozner mrozner@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

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@wbjpl

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

Copyright © 2018 by Valkea Media SA All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permissionof the publisher. Published by

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APRIL/MAY 2019 W B J

Get Polish business news, key country insights and views from thought leaders Go to wbj.pl â&#x20AC;&#x201C; full access for less than PLN 9 daily

NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

Introducing the euro a ‘terrible idea’ Adopting the euro in Poland is a “terrible, catastrophic idea,” Member of the European Parliament Ryszard Czarnecki said. He added that all the countries where the euro has been introduced recorded significant price increases. “According to expert reports, only the richest countries benefited from becoming a part of the eurozone. Germany and the Netherlands were a beneficiary, while all the southern European countries, including France, lost in the process,” he warned.

Tusk summoned by Polish parliament’s VAT investigation committee The President of the European Council, Donald Tusk, has been summoned to appear as a witness before the Polish parliament’s VAT investigation committee on May 29, Marcin Horała, the head of the committee, announced. Horała argued that while serving as Poland’s prime minister, Tusk decided about how to deal with VAT gap-related issues. “For this reason, he is an extremely important witness,” he stressed.

PLN 6.49 million of consolidated net profit attributable to shareholders of the parent company in the first quarter of 2019 against PLN 4.51 million profit a year earlier, the company informed. Consolidated sales revenues reached PLN 606.69 million in Q1 2019, compared to PLN 604.45 million in the previous year. Taking into account the seasonality of the beer industry, the first quarter has the least impact on the overall results on an annual basis. ECONOMY

BUSINESS

Good industry results in March – GUS

Beer producer Żywiec Group recorded

According to the latest statistics data from the Central Statistical Office (GUS), construction and assembly production in

Grupa Żywiec with PLN 6.49 mln net profit in Q1 2019

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March 2019 increased by 10.8 percent y/y (a 27.2 percent increase m/m). New orders in industry in March 2019 increased by 11 percent, after an increase of 11.9 percent y/y in February 2019. New orders in industry for export increased by 9.6 percent over the same period, after an increase of 4.4 percent. INTERNATIONAL

Support for Poland’s EU membership highest in history – CBOS As much as 91 percent of Poles support the country’s membership in the EU, which is the highest level in history, according a survey by CBOS. “Since 2014, support for membership has not dropped in CBOS surveys below 80 percent. In March this year, the acceptance of the country’s pres-

>>>

SHUTTERSTOCK, PAP

POLITICS

ence in the EU reached a record high level,” CBOS said in a report. Currently, only 5 percent of Poles are against EU membership. ECONOMY

Moody’s keeps Poland’s rating at A2 with stable perspective

INTERNATIONAL

Boeing completes trial flights with updated anti-stall software Aircraft manufacturer Boeing completed the internal trial of the updated anti-stall software of the 737 MAX jets. “We’re making steady progress toward certification,” the Chief Executive Dennis Muilenburg said in a video released by the company. The previous version of the software controlling this system was most likely the cause of two tragic crashes of 737 MAX aircraft in Indonesia and Ethiopia. The upgrade is designed to make the anti-stall system less aggressive and prevent the repeated nose-down commands that overwhelmed flight crews for Lion Air and Ethiopian Airlines. All 737 MAX aircraft owned by airlines around the world have been halted until a new certificate allowing them to fly with passengers is obtained. DOMESTIC

Almost 5,000 electric cars registered in Poland The electromobility counter registered 4,987 electric cars and 646 charging stations at the end of March. The electromobility counter was launched by the Polish Alternative Fuels Association (PSPA) and the Polish Automotive Industry Association (PZPM). Out of all registered cars, 3,163 were fully electric, the remaining were plug-in hybrids.

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DOMESTIC

MSZ: Moral and legal grounds to talk about war reparations from Germany According to Szymon Szynkowski aka Sęk, the deputy head of the Ministry of Foreign Affairs (MSZ), Poland has until today not received adequate reparations from Germany for damage done during the Second World War. “We have moral and legal grounds to talk about war reparations … this is a huge and unhealed wound of the Polish nation,” he emphasized. The Greek parliament has recently decided that Greece will officially demand reparations from Germany for the destruction caused and war crimes committed during World War II. According to a Greek expert committee, those reparations will be estimated at a minimum of €290 billion. The head of the Polish parliamentary reparations team, Arkadiusz Mularczyk (Law and Justice – PiS) told PAP that a report on Poland’s losses during WWII will be ready for September 1, 2019. He added that this will perhaps be the right moment to pass it on to the German side. Mularczyk revealed that Poland’s losses had been estimated at over $850 billion. However, according to Bundestag experts, Polish reparation claims are unjustified. The Polish authorities in 1953, and later in 2004, renounced claims against Germany and no change in the government’s position has taken place since then.

Apart from passenger cars, there were also 278 electric delivery vehicles, 198 e-buses, and 3,445 electric scooters and motorcycles registered. DOMESTIC

MF establishes Financial Education Council Initiated by the Ministry of Finance (MF), the Financial Education Council was established on April 17. The Council is to build awareness of public finances and to disseminate knowledge about broadly understood finances. The Ministry has explained that the goal of the newly created Council is to popularize financial issues, as well as to answer the question of how such issues can be made more understandable and more attractive to the public. The Council is comprised of 12 members representing financial sector institutions.

INTERNATIONAL

Poland-Denmark Gas connection and LNG terminal co-financed The contract for co-financing the extension of the LNG terminal was signed in mid-April in Świnoujście (Zachodniopomorskie). “Poland will soon be sovereign in gas supplies,” said President Andrzej Duda during the ceremony. He recalled the meeting of the National Security Council in 2006, during which ex-President Lech Kaczyński “presented his idea of creating conditions to provide Poland with truly energy sovereignty in the field of gas supply.” As he pointed out, one of them was the LNG terminal. Despite this political framework, it remains a fact that Poland is trying to expand the “infrastructure of broadly understood energy security” also with the

>>>

SHUTTERSTOCK

Ratings agency Moody’s has maintained Poland’s long- and short-term rating at A2 level with a stable perspective, both in domestic and in foreign currency. According to Moody’s, planned fiscal spending should not affect the stability of the government’s debt. While concerned with the weakening of legal institutions, the agency said that the country has seen uninterrupted economic growth for nearly 30 years, because it is slightly less open and susceptible to fluctuations in foreign demand. One of the biggest challenges for the country is its worsening demographics.

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WBJ

In Review neighboring countries in mind. Gaz-System has also signed an agreement with the EU Executive Agency for Innovation and Networks (INEA) for co-financing construction works for Baltic Pipe as part of the Connecting Europe Facility, the company said. The maximum amount of financial support for the project is close to €215 million. The funds will be allocated to the construction works for both the offshore gas pipeline, connecting transmission systems of Poland and Denmark, as well as for the expansion and modernization of the Polish natural gas pipeline. Baltic Pipe is a strategic infrastructure project aimed at creating a new gas supply corridor on the European market. It will enable the transmission of gas directly from deposits located in Norway to markets in Denmark and Poland, as well as to recipients in neighboring countries. According to GazSystem, the transmission capacity of the new pipeline is to set at 10 billion cubic meters annually. BUSINESS

KNF: Banks want to earn over 11% more than in 2018 Commercial banks estimate that in 2019 their net profits will increase by 11.4 percent, according to a report published by the Polish Financial Supervision Authority (KNF). In order to achieve this goal, banks are planning, among other things, to intensively develop the portfolio of consumer loans. The KNF has explained that the report was prepared on the basis of the financial plans of commercial banks for the year 2019. The analysis takes into account the responses of banks whose total share in the sector’s assets amounted to 88.9 percent at the end of last year. FINANCE

Europa Group: Poles spend PLN 100-200 per year on home insurance The vast majority of Poles (nearly 80 percent) buy real estate insurance. They usually spend between PLN 100 and PLN 200 per year to buy a home insurance policy, according to a report by Europa Group. Over half of the respondents surveyed admitted that their residential property had been insured for at least eight years. As much as 74 percent of property owners buy one-year insurance policies. Monika Ziółkowska, a real estate insurance expert at Europa

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TRENDING STATS

Group, said that those holding house or flat insurance policies most often report damage caused by flooding or by strong hurricane winds, the incidence of which is increasing in Poland.

PLN

BUSINESS

Coca-Cola wants to invest over PLN 500 mln in Poland

5,164.53

Beverage producer Coca-Cola plans to invest over PLN 500 million in expanding its operations in Poland in 2017-2020, Jaak Mikkel, the president of Coca-Cola HBC Poland, has said. The company is planning new investments, including at its plant in Staniątki in the Małopolska region. According to Mikkel, in 2012-2016 alone the value of Coca-Cola’s investments in Poland amounted to PLN 435 million.

Average salary in the business sector in March 2019 (GUS)

+5.7%

Average salary increase in the business sector in March 2019 (y/y, GUS)

DOMESTIC

+3.0%

Environment Minister: Bill on duty on packaging no earlier than in 2020 A bill that will require producers to pay for the packaging they introduce to the market will be ready no earlier than in 2020, Environment Minister Henryk Kowalczyk stated. According to Kowalczyk, the price of recycled materials is too low to make reclaiming packages (such as foil, boxes, PET bottles, cardboard and glass) economically feasible. According to the Waste Management Forum (FGO), even adding PLN 0.02 to the price of each item of packaging could bring in PLN 2 billon that could be used to cover some of the costs of waste collection and management.

Employment increase in the business sector in March 2019 (y/y, GUS)

5.9%

Unemployment rate in March 2019 (6.1% in Feb) (GUS)

+5.1% GDP growth in 2018 (GUS)

INTERNATIONAL

Trade between the US and Poland at record high in 2018 – Mosbacher

+1.7%

Trade between the US and Poland reached $13.4 billion. This is the highest result in history, US Ambassador to Poland Georgette Mosbacher has said. She assessed both the trade and economic relations between the two countries as solid and developing well. According to the Central Statistical Office (GUS), exports from Poland to the US in 2018 amounted to about $7.2 billion, and imports from the US stood at $7.6 billion. In turn, in Q1, the value of exports to the US was $600 million, and imports amounted to $500 million.

Inflation in March 2019 (y/y, GUS)

285

Bankruptcies recorded in Q1 2019 (Euler Hermes)

1.5%

S&P confirms Poland’s rating

of GDP

S&P rating agency decided to maintain Poland’s rating at A- /A-2 for long- and short-

in 2019 (S&P)

ECONOMY

Expected government deficit

>>>

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In Review term foreign currency liabilities and A / A-1 for long- and short-term liabilities in the national currency, the Ministry of Finance said. The rating outlook remained stable. S&P referred to a diversified economy, qualified employees, a balanced level of public and private debt and membership in the EU as a basis for maintaining the rating. The agency drew attention to the good fiscal situation of the state budget in 2018 and significant progress in reducing the VAT gap. “S&P forecasts the general government deficit to GDP in 2019-2022 below 3 percent, at 1.5 percent in 2019 and 2.6 percent in subsequent years,” the statement said. DOMESTIC

Over 40% Poles claim to work overtime for free Nearly 43 percent of Polish employees said they sometimes work outside standard hours with no remuneration, the report “Workforce View in Europe 2019” revealed. Poles work for free on average 3.5 hours extra compared to the standard 40 hours per week. About 8.5 percent claimed to work more than 10 extra hours for free. In the whole of Europe, as much as 60 percent of employees declare that they do not receive overtime pay. “The problem is common especially in Germany (71.1 percent), Spain (66.9 percent) and the UK (65.9 percent),” the report said. Employees in the IT and telecommunications services sector and financial sector are often among those who work over 10 extra hours per week. BUSINESS

UOKiK agrees Germany will take control of Totolotek German betting operator Merkur Sportwetten GmbH has received the consent of the Office of Competition and Consumer Protection (UOKiK) to take control of Totolotek S.A., UOKiK reported on Twitter. Merkur consolidates the activities of the

QUOTE OF THE MONTH

Gauselmann group companies in the field of sports betting in Germany and abroad. Totolotek is a licensed mutual betting operator in Poland providing services online and in stationary points. Totolotek had been controlled by Intralot S.A., a Greek company listed on the Athens Stock Exchange. BUSINESS

Number of single-person companies grows – report According to the study “Entrepreneurship Index Tax Care 2019,” an average of 916 single-person companies are created every day in Poland. This means 130 more new business ideas per day than five years ago. The percentage of people forced into selfemployment is negligible, the study said. “REGON data for the second half of 2018 shows that twice as many new microenterprises are opened in Poland as are closed. The ratio has never been so high since the electronic version of the REGON register was published in 2012,” the authors of the study stressed. INTERNATIONAL

PwC: European stock exchanges do not attract debuts The Value of initial public offerings (IPOs) conducted on European exchanges in the first quarter of 2019 amounted to a record low of €700 million – a decrease of 95 percent per annum (€13.1 billion). Only three IPOs were recorded in Warsaw; all on the alternative NewConnect market, their total value amounted to €3 million. This means the second quarter in a row without a debut on the main market of the WSE, according to the report “IPO Watch Europe” prepared by the consulting company PwC. “Political uncertainty, connected not only with Brexit, but also with a global dimension, undoubtedly significantly affects the markets in Europe. Many potential debutants temporarily suspend planned IPOs, waiting for the situation in the com-

ing months to develop,” Tomasz Konieczny, the leader of the capital markets team at PwC, said. FINANCE

Rzeczpospolita: Enactment of ‘Swiss Franc Act’ may be delayed Political differences between Poland’s president and the ruling PiS party, as well as potential lawsuits of bank shareholders have slowed down legislators’ work on the so-called “Swiss Franc Act,” according to Rzeczpospolita. The newspaper reported that in February the embassies of Germany, Austria, Spain and Portugal – the countries from which the main shareholders of the banks that granted the most Swiss franc-denominated mortgage loans in the past – sent a letter to the head of the Public Finance Committee, Andrzej Szlachta, in which they argued that the law would violate EU principles. INTERNATIONAL

Warsaw Chopin Airport switches to ACDM for information exchange Warsaw Chopin Airport, as the first in Poland, started using the A-CDM (Airport - Collaborative Decision Making) system for information exchange. The new system improves flight services and ensures, among other things, punctuality of air operations. The A-CDM system was implemented on the basis of Eurocontrol (European Organization for the Safety of Air Navigation) guidelines and recommendations. Over 30 world airports use such a system. Thanks to the system, air traffic controllers can plan the work better and improve the smoothness of aircraft takeoffs and landings, while the ground handling agents can manage equipment and personnel more efficiently, which will improve the punctuality of performing air operations. Warsaw Chopin Airport is the largest airport in Poland. In 2018, it served 17.8 million passengers.

“We have a huge problem with the fact that GDPR provisions are considered to be so comical that they have become the subject of ridicule... This is a terrible situation,” Maciej Kawecki, director of the Data Management Department at the Digitization Ministry, said in response to accusations that his institution is usurping the competences of the Office for Personal Data Protection (UODO). He added that the Ministry of Digitization had simply reacted to “a huge number of absurd interpretations of GDPR which appeared in circulation.”

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Fujitsu World Tour 2019 The 6th of June Warsaw

I would like to cordially invite you to the Fujitsu World Tour 2019, which will take place in Warsaw on the 6th of June 2019. As in the previous editions, we will gather with both IT service providers and users to discuss the latest trends in the area of digital transformation and new ways to effectively use technology for business advantage. I trust that the conference agenda will fully reflect this year’s keynote. The idea of Driving a Trusted Future involves cooperation and building a future based on trust – which is a must in the process of selecting the right IT solutions and business partners. All FWT 2019 attendees will gain a unique opportunity to learn from the experts in the most vital IT management fields, but also exchange their experiences. We have assembled an interactive exhibition showcasing practical applications of the latest technological developments for diverse industries. During the workshops, our specialists will cover the most critical aspects of innovation in the fields, such as data protection and management, cloud migration, or the workplace of the future. I hope to see you at the Fujitsu World Tour 2019!

Dariusz Kwieciński Managing Director Fujitsu Poland

Human Centric Innovation

Driving a Trusted Future

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Opinion EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

Extra vacation as a benefit

As much as 90 percent of employees receive non-financial perks at work, according to this yearâ&#x20AC;&#x2122;s survey conducted by Hays Poland. Standard benefits include medical care, gym membership, company events and retreats. Employers are also increasingly interested in employee wellbeing. Extra days off and vacation are gaining in popularity. Thatâ&#x20AC;&#x2122;s because workers consider time spent on activities outside of work as one of the most important benefits, including those that cost much more >>>

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WBJ

Opinion EMPLOYMENT Considering the needs of the employed and the growing challenges in sourcing talent, more and more employers are adjusting their offer. Over 40 percent of companies offer flexible working conditions, be it in the form of a longer break during office hours for running personal errands, home office or flexible hours when their staff can start and finish work. One in ten employers also admitted that they offer more vacation days than the labor code dictates, particularly to strategic employees, who are under the most pressure at work. While unlimited paid vacation is still a novelty on the market, there are already some companies in Poland that offer it. Usually, employees need their entire team’s approval and strong performance records to take advantage of it. Offering unlimited vacation could become an increasingly popular practice among organizations with a certain type of corporate culture and structures, where employees are responsible for the results of their work and where smaller teams are seen by employees as if they were individual companies. Even though unlimited paid vacation seems a novel idea, some of the best US employers have been using it for quite some time, and with good results.

he trend to increase available vacation days has yet to make its mark on the Polish market. In many other European countries, however, employers have been offering extra vacation days for years. The number of vacation days is becoming a point in negotiations between a candidate and their potential employer. In Poland, pay remains the main and most frequently negotiated aspect. VACATION DUE The labor code dictates that a person with less than 10 years’ work history receives 20 workdays of paid vacation a year. More than 10 years entitles an employee to 26 days of vacation. Work history also encompasses some parts of education, including vocational, higher etc. What is noteworthy is that the labor code only determines the minimum number of vacation days, while the upper limit is unspecified. The Polish labor code therefore offers more attractive conditions compared to e.g. the US, where the law does not guar-

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antee any paid vacation. Meanwhile, the French receive 2.5 days for every month they’ve worked, which translates into 30 days a year. The global record-holder is Kuwait with 43 vacation days. TIME OVER MONEY For employees, particularly the youngest generation on the labor market, free time is very valuable. One out of three employees consider extra days off as the most important benefit, making it the highest ranking perk in Hays Poland’s recent survey. Flexible work also ranks high. Additional vacation days are appreciated not only by the youngest employees, who spend them following their passions outside of work. Working parents, who claim to have difficulties balancing work and personal life, are particularly happy about extra days off they can use when they want to participate in their child’s important moments. More free time is also important for people who want to focus on their professional development and whose work does not allow them enough time to learn new skills.

BEFORE A HOLIDAY As much as 10 percent of employers also stated that they offer all their employees additional days off, usually before major public holidays, on company anniversaries, as well as e.g. on employees’ birthdays etc. Half-day Fridays are also becoming increasingly common, in some companies all year round, in others on special occasions, such as before Easter. Regardless of what type of time off a company offers its employees, rules need to be set and followed. An extra paid vacation can be a strong bargaining chip during negotiations. Offering days off to all staff can also build a positive employer image and help a company stand out, which is increasingly important given the growing recruitment challenges.

Agnieszka Czarnecka expert at Hays Poland

WBJ

Opinion TRANSPORT

Tough times for the transport industry

Entrepreneurs in the transport industry are in for a rough ride. They’ve lost one of their key advantages over their western competitors – cheap labor. Besides legal costs and adjusting to the realities of working in another country, maintaining liquidity is also an important issue. In the first quarter of 2019, the transport industry recorded a 67 percent increase in the number of insolvencies compared to Q1 2018

A SHUTTERSTOCK (2)

ccording to recent data, a driver with a C+E category driving license in 2017 earned an average of PLN 6,200 gross in domestic traffic. The earnings in international traffic look even better, with the median wage at PLN 8,600 gross. Wages in the country are high, but in comparison to drivers employed abroad it is still a modest salary. Relatively low wages translate into lower operating costs and lower rates for services – the main strength of Polish enterprises. Polish transport companies now have to fight for employees. Under current market conditions, it is important for entrepreneurs from the transport industry to ensure stable cash inflows so as not to lose employees. At Finiata, we have spent the last 12 months talking to clients and have we created a solution for them: Flex Capital, fast and flexible access to financing that can be used for any purpose, depending on the company’s needs. NEW EU REGULATIONS Polish companies account for 25 percent of the EU transport market and there has been a constant struggle for this piece of cake for years. Germany and France’s lobbing led to EU ministers approving the directive on posted workers in June last year. The directive is extremely unfavorable for Polish firms. It limits the period

of posting workers abroad to 12 months, with an option to extend by another six months provided the employer gives a valid reason to the host country. The regulations may force many companies to close their businesses or move to a country where they used to delegate employees. These changes will involve major additional costs, including legal advice and adjusting to operating in another country, as well as ensuring the company’s financial liquidity. Current regulations state that the posted worker should receive at least the minimum wage of the host country, but pay all social contributions in the country of origin. Salaries are to be paid on the same principles as for local employees. The regulations are to enter into force in mid-2020. Several member states opposed the regulations. However, despite the provisions on transport being put to separate discussion, the problem remained unsolved. New findings show that if a driver is transporting goods from the country where their company is headquartered to another country, they will be excluded from the provisions on posted workers. However, on the way to the destination country, the driver will be allowed to perform one additional loading or unloading, which will also not be subject to the provisions on posting. Similarly, one loading and unloading can be carried out on the return journey. Another option, which the new regulations allow, is

making two loading or unloading stops on the way back, provided no such operations occurred on the way to the destination. The problem is that it will not be possible to carry out cabotage operations, (i.e. delivering goods from one place to another within the host country) because that will trigger the provisions on posted workers. In addition, tachographs must be installed in all vehicles, which will monitor whether transport is carried out in accordance with EU law. TRANSPORT INDUSTRY AND FINANCIAL STRIFE In 2018, the indebtedness of Polish carriers reached PLN 925 million. According to analysts, the problems of the Polish transport sector are associated with high price competition, and an increase in fuel costs and operating costs. This state of affairs may affect the financial liquidity of Polish enterprises in the transport industry, especially those from the SME sector, which will have to resort to additional financing to avoid profitability loss. Unfortunately, banks do not take into account all the needs of entrepreneurs, require them to collect a lot of documents, while also making them wait a long time for a decision. Meanwhile, time and freedom to make decisions on how to spend money are what matter the most to entrepreneurs. They need to pay wages, taxes and lease installments. Poland’s SMEs are to a large extent the backbone of our economy. Despite this, many companies face barriers that impede their business, particularly so in the transport industry. The frequent changes in the law and insufficient access to financing for employing more qualified employees are some of the factors that negatively affect these companies. But the largest of their problems, particularly for small companies employing up to 49 people, is untimely payments and problems with collecting receivables from contractors (20.5 percent). This is what affects their financial liquidity the most.

Alexander Beresford CMO Finiata.pl

W B J APRIL/MAY 2019

WBJ

Opinion RETAIL MARKET

A generation without borders – how is Gen-Z changing the market?

Gen-Z is eager to follow the influence of celebrities and friends, but at the same time they want to exert influence on their peer groups in order to accentuate their individualism. The driving force behind these seemingly contradictory attitudes is the unquestionable influence of social media and the latest technologies

eneration Z, or people born after 1998, already makes up 30 percent of the world’s population, and in some regions of Africa up to 50 percent. Its oldest representatives are just entering adulthood and the labor market, becoming fully independent consumers. Moreover, in just over a decade, Gen Z will account for 33 percent of all consumers around the world. Awareness of the needs and values o f these young people is already crucial for business, especially for brands and retailers who are thinking long-term. Generation Z on the one hand continues and develops certain trends initiated by Millennials, such as social responsibility or putting experience ahead of the need to own things, but on the other hand, it is shaping completely new patterns and attitudes. The differences in Gen-Z attitudes between countries are becoming increasingly blurred. They are more similar to each other than any other generation before them. The similarity is clear mainly in how they spend money, as well as in their political views and outlook for the future. Gen-Z is a social group shaped in times of global recession, war and terrorism, and at the same time in the era of unprecedented technological changes. When

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planning their future, they value security and stability. The study showed that, unlike the flexible and carefree Millennials, it is a generation that makes decisions based on common sense. Over 35 percent of them set aside funds for large expenses, and 12 percent already are already saving for retirement. It does not mean, of course, that they don’t like spending money. With an amount of $3.4 trillion, this group generates over 7 percent of total household expenses, despite the fact that most of them are teenagers and even children. How does Gen-Z make purchasing decisions and what factors can affect them? Price and quality are still the most important selection criteria. In contrast to older generations, Gen-Z buyers appreciate style, ecology, uniqueness or flexibility much more, and pay way more attention to the ethical aspects of the brand. It is impossible not to notice that the global turmoil they have witnessed has shaped their attitudes, including their shopping habits. The OC&C Strategy Consultants survey “Generation without borders” shows a strong influence of social responsibility, equality and diversity on Gen-Z’s purchasing decisions. They choose brands that represent a value system closer to their own. Unlike older generations, Gen-Z is definitely more susceptible to the influence exerted not only by celebrities, but also by friends or even by family. This translates into the way they discover new brands. Young people are moving away from traditional sources of brand discovery. Over one-third of respondents declared that they learn about new brands from friends, while only 8 percent of this group of consumers comes into contact with brands directly in stores.

Growing up with Facebook, YouTube and WhatsApp, they are truly digital and social media natives and are skilled at using such tools. Thus, they know how to influence other market users, discover brands, new concepts and even earn money. Generation Z is more likely to follow brands and retail networks on social media, share their content and publish reviews online than any of the previous generations. In addition, younger consumers are much more likely to go directly to online brand channels to find information and the best prices before purchasing a product or service. Thus, they rely less on broad search channels, such as search engines or multi-brand platforms. The combination of a wider range of shopping criteria with a more targeted search of product information before making a purchase indicates a potentially better informed and more demanding consumer. This is particularly important information for brands looking to reach the youngest consumers today, especially when determining their marketing mix. Young consumers are very direct with what they expect from brands: to expand their offer and facilitate searching for products they are interested in. Brands should not remain indifferent to this expectation. Members of Gen-Z want to stand out and feel special. This is another need that should be addressed by brands and retail chains. No other generation has shown so much interest in products made to order or in limited editions. This growing demand for uniqueness is particularly evident in the clothing and cosmetics segment. In addition, Gen-Z also expresses much greater interest in unusual and exotic products than other generations. This does not mean, however, that they completely reject mainstream brands. From all four generations examined, it was the youngest consumers who expressed the greatest desire to purchase products of well-known brands and to wear products clearly marked with the brand’s logo.

Marek Zdziech Managing Partner, Warsaw office OC&C Strategy Consultants

Opinion POLITICS

WIKICOMMONS

WBJ

‘It pays to be decent’

Władysław Teofil Bartoszewski is an academic, cochairman of W. Bartoszewski Chair at Collegium Civitas, former management consultant and a banker with considerable international experience. The son of Władysław Bartoszewski, an eminent Polish politician (who died in 2015), talks to WBJ about entering politics as a candidate for the European Coalition (with the support of the Polish People’s Party – PSL) in the European Parliament elections

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WBJ:

Why did you decide to join PSL and run in the European parliamentary elections? Władysław Teofil Bartoszewski: I am a supporter and not a member of PSL. I took this decision after witnessing almost four years of total incompetence from the current government. Also, because many Polish citizens do not realize how many issues affecting them are decided in Brussels. If we are to protect our interests effectively, we need to rely on people with knowledge and experience, which is sadly lacking among Law and Justice (PiS) party members. At the moment, our rulers do not have the required savvy and do not understand – or they ignore – how the EU works. This puts

INTERVIEW BY EWA BONIECKA

Poland at a disadvantage. At the same time, the pseudo-reform of the Polish judiciary is in reality an attack on the separation of powers principle that is enshrined in the constitutions of all democratic countries, and it is something that is not acceptable to other EU countries. Over the last four years the government has done everything possible to create conflict between Poland and the key states in the EU, in particular with Germany and France, and it intends to continue this policy. We need to take care of Poland’s interests in the EU Parliament, but in accordance with European values. In order to achieve this, we need to be skilled in negotiations, understand the merits of the subjects up for debate, and know foreign languages to be able to communicate with our partners without the need of translators. That is why I accepted the offer of Władyslaw Kosiniak-Kamysz, the leader of PSL, to run as his party’s candidate on the list of the European Coalition. What is the biggest strength of PSL in the European parliamentary elections? For me, PSL is a party that invokes the Polish People’s Party of Stanisław Mikołajczyk that existed between 1945 and 1948. At the time it was the only democratic party in the Polish parliament, but it was destroyed by the communists and Mikołajczyk had to flee abroad to save his life. My father, Władysław Bartoszewski, joined Mikołajczyk’s PSL and always considered this to be an important period of his life and we talked about it a lot. During World War II my father was a prisoner at Auschwitz, joined the underground home army, co-organized the efforts to help Jews on behalf of the Polish Government in Exile and participated in the Warsaw Uprising in 1944. Later he wrote many books about Poles, Germans and Jewish people. After 1990 he became an ambassador and Polish Foreign Minister (twice). I will always remember the theme that guided him in his decisions: “warto być przyzwoitym” which may be loosely translated as “it pays to be decent.” PSL has a long and at times tragic history and now is a moderately conservative Christian party. It tries to bring

together various parts of Polish society and, being a very pro-European party, it wants to see Poland being strong and just. European agricultural regions have changed, and we hope that in Poland the economic differences between the cities and the countryside will keep diminishing. PSL is not a trade union of farm workers, but it does care a lot about the people who live and work in the countryside. We notice and remember how PiS has attacked PSL over the years. PiS is not interested in rural regions, apart from during election time. It has never had any policies that have helped farmers, nor any eminent politicians that understand the aspirations and ambitions of people living in the countryside. Dur-

Any attempt to create a federal Europe is ‘wishful thinking’ and is going to fail

ing this election campaign PiS has falsely presented itself as a champion of farmers and is trying to denigrate our activities and achievements. PSL, however, remains important for the Polish voters who care about the countryside and want to preserve good relations with the EU. What are the main items on the agenda to be discussed by MEPs from the European Coalition once elected? There will be the issues of the EU budget for 2021-2027, funds for Poland and our agricultural regions, innovation and technology, climate change, immigration, free trade, education, diminishing the economic disparity between EU countries and the basic problem of our common security. If elected, I would like to participate in discussions about security and energy issues, including the change towards green energy and energy security, as I have been involved in this field while working in

the private sector in many countries. Our activity should help to end the isolation of Poland in Brussels due to the current government’s abuse of European standards. What external policy issues do you think will be a priority? There will be heated debates about the role of the EU in the ever-changing world, the relationship with China, Russia, Asia, the Middle East and the UK after Brexit, should it finally happen. It is very difficult to strengthen the EU’s foreign policy, but the EU will remain a significant player on the world stage. On the other hand, any attempt to create a federal Europe is “wishful thinking” and is going to fail. Foreign policy should be more coordinated, but it is very difficult to achieve as the member states conduct their own policies, and consensus in this sphere is often elusive. Some nationalist, populist and antiEuropean parties have managed to gain popularity in many European countries. Many of them will see some representation in the European Parliament. How will that affect its future work? PSL and Civic Platform (PO) belong to the biggest center faction in the European Parliament, the EPP, a coalition of liberal conservatives and Christian democrats. In this parliament it cooperated with the second largest group, the Social Democrats, and it is likely that this state of affairs will continue, as both parties care about democratic values and the future development of the EU. We will never approve of any nationalistic or populist groups, be it extreme left, or extreme right-wing parties taking money from Russia and wishing to dismember the EU from within. These parties may be able to form some groups in the new European Parliament, but they will not dominate it. The elections to the European Parliament are very important and all European voters should realize this. There is a lot at stake. The EU has always had various problems with change, the need to reform and expand, but historically it has always managed to reach a compromise acceptable to all members and I believe it will do so again this time.

W B J APRIL/MAY 2019

WBJ

Opinion POLITICS

were perceived as warnings that we may not have noticed certain problems. Now the question is where to go and how. The present crises raise a lot of doubt as to what remedy should be used to correct the situation. This is the main reason why these elections will show where we stand and whether we have a good offer for a majority of EU citizens that will be the best way to go forward. Populist and anti-European nationalist parties will designate their candidates for the election to the EU Parliament. Yes. However, at the same time, we are observing a pro-European awakening. When talking about anti-European trends, we must not forget all those who loudly and openly try to defend European values. There are two opposite tendencies now. We do have some citizens disappointed with Brussels, which is seen as the center of EU structures, but we have to remember that public opinion polls show overwhelming support for EU values. My opinion and observation is that there are few voters in Europe who do not want the EU to remain strong and to develop.

The elections that will shape the future of Europe

Marek Prawda, Head of the Representation of the European Commission in Poland and former Polish ambassador to Sweden, Germany and the EU, talked to WBJ about the upcoming European Parliament elections scheduled for May 26, pointing out that the results will be crucial in shaping the future of the EU

WBJ:

Stagnation in the EU and the rise of populist and anti-European parties in many member states, whose candidates are running in the EU elections, have provoked heated discussion over the future shape of the European Parliament and the development of the whole European Community. How do you see this situation?

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Marek Prawda: Without any doubt, these elections will be of the utmost importance not just because they will rearrange forces between parties in the new European Parliament but also because they will shape the future of the EU at a very crucial moment. In recent years, the union has struggled to recover its sense of direction. Previous crises

What will Europe look like after the parliamentary elections? Will membership in the EP fractions change and will the whole union be closer to people and their aspirations or will new forces emerge to destroy the union from within? I think that the first change which may be seen is that the two biggest political groups in the EU Parliament – the Christian Democrats and the Socialists – who now have a majority and cooperate with each other, will be weakened. They will no longer hold half of the total number of seats. But if the liberals join this group, it will help strengthen democracy, as well as European legislation, citizens’ freedom and common security. Green parties could also join this pro-European and pro-integration coalition to oppose anti-European groups. If populists win more seats in the EP, they will try to redirect this institution in their own way. The deputies chosen in Poland from

INTERVIEW BY EWA BONIECKA

among the European Coalition will have to join pan-European coalitions – those from the Civic Platform and PSL will join the centrist group of Christian Democrats, while others, including those from Nowoczesna, SLD and the Green Party, will join other factions, but also strongly pro-European ones. Will this strengthen the EU? Yes, if deputies from other member states make a similar move of joining the pro-European fractions, it will lower the threat posed by populist and nationalist parties, which will establish fractions strongly opposed to democratic reforms in the EU. These are parties that aim to stop any progress in European integration and want to drastically cut the EU budget, and they often do not understand the need to defend freedom east of Poland and – at least some of them – wish to destroy the EU from the inside. I want to stress that the role of the EP is very important because, along with the European Council and the European Commission, it participates in the process of making decisions regarding EU activities. Essentially, the Parliament, together with the EU Council, are responsible for adopting the EU budget. They have the power to reject it, causing the budgetary debate to start again. The European Parliament also holds democratic control over the European Commission. That is why participation in the EU elections should grow – including in Poland – and people should understand who they support. I would like to emphasize that the proEuropean factions have programs which are consistent with Poland’s interests. We need a democratic, just and tolerant union that respects the rule of law and citizens’ freedoms, one which has a common defense policy, coordinates economic policies and bridges the gap between the poor and the rich member states. Will the problem of immigration from Africa, the Middle East and other countries be resolved? I think that the new European Commission will return to the issue of a new asylum policy, because it has not been

If populists win more seats in the EP, they will try to redirect this institution in their own way

settled. Member states have different views on the subject. Solving this problem is crucial and the European Parliament should deal with it. We should protect external borders, but at the same time we must not refuse to help those who arrive in the EU under extremely difficult circumstances. What influence will the results of the elections to the EU Parliament have on the global and transatlantic policy, on EU relations with the US, as well as on Russia and other countries? The EU has been a peace project designed to establish political and economic relations between countries to minimize the threat of international conflict. This goal has been largely achieved and this is an undeniable accomplishment of integration. We are the first generations with no war experience. But the world has changed and peace in Europe increasingly depends on what is going on outside our continent. This change requires the EU to become more involved in foreign policy. Until now, the EU has been focused on economic and social issues. But this may be a good tactic for a sunny day; when the weather turns bad, you need to have an umbrella. The EU does not have the luxury of relying on any external support. In transatlantic relations, there has always been a division of tasks. For example, the US expends more on arms, while the EU spends more on providing assistance to other continents to mitigate the risk of conflict. So, the EU and the new Parliament must take much more time and effort to ensure the security of the continent. In Europe, we all want good transatlan-

tic relations, but they should relate to a new situation in the world. After the US elections [in 2016] we observed a very strong tendency to undermine the idea of international structures giving way to big powers that should secure interests of various countries through bilateral relations. I am just touching upon the issue, but for the new European Parliament such a debate will be a matter of great importance. The EU has to defend its values. We don’t want to accept the supremacy of the stronger players, nor do we approve of a protectionist approach to solving international problems. So, with the world changing and given the divisible aspirations of big powers, should the EU go further in developing its common foreign policy? Yes, and that means more integration within the EU and enhancing the role of the EU High Representative for Foreign Affairs and Security Policy. Finally, there will be one phone number in Europe for all world leaders. The High Representative will be the common voice of the reformed and democratic union that stands close to its citizens. That person will represent all member states, whether big or small, developed and still developing, acting for their rights, prosperity and security. A more integrated union will be treated as a strong power, co-shaping international policy, economy, defending peace and democratic standards. Your job also entails meeting with regular Poles. What does membership in the EU mean to them? As so many generations of Poles lived under pressure and in division between the East and the West, our membership of the EU is a secure anchor of stability and civilization. We know that being in the union we can live as we like to live, respecting our national identity and enjoying free movement of people, while our economy and trade relations are improving. I think there is a growing understanding in Poland that the EU may not be a paradise on earth, but it surely a safe shelter in restless times.

W B J APRIL/MAY 2019

SOCIAL MEDIA

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E-COMMERCE & LOGISTICS

POLISH E-COMMERCE FACES SINK-OR-SWIM TEST

Amazon takes no prisoners. If the company were to cross the Polish border soon, domestic e-commerce would face serious consequences. The American giant is cornering more and more markets, devouring local companies, from small fish to major players. Domestic competition has precious little time to regroup. How are retailers preparing for the revolution?

BY MARCEL PŁOSZCZYŃSKI & BEATA SOCHA

>>> W B J APRIL/MAY 2019

f Amazon were to open a Polish branch, it would have a sizable base clientele – each month, close to a million Poles visit the British or German store of the American giant. One thing is certain: Amazon would easily win on price. Reports say that its margins are around 1.3 percent in the global market, which is much lower than in Polish e-stores. Small players would fold pretty quickly, unable to compete on price and delivery times, leaving the market divided between major domestic companies and the US colossus. It stands to reason that Amazon might be interested in some acquisitions. Until recently, Empik Media & Fashion, which cooperated with Amazon on Kindle sales, was a potential candidate for a takeover. Today, Empik is gearing up: it’s launched a new website, a mobile app, the “Mój Empik” (My Empik) program and the express clickand-collect system. It seems that the company’s board has seen the writing on the wall and is doing everything to be able to hold its own in the ensuing battle. It’s almost as if they knew something that others didn’t.

JOIN IN OR PERISH

The more of the market Amazon takes for itself, the less room there will be for others – both brick-andmortar and online retailers. Many are doomed to follow the path of cult toy retail chain Toys R Us, which decided to close all its US and UK stores – 900 outlets altogether. In 2017, when its debts rose to $5.2 billion, the company filed for bankruptcy. The common belief is that one of the main reasons behind

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the spectacular defeat of Toys R Us was client migration to e-commerce, particularly Amazon. Retailers worldwide have learnt their lesson and more and more of them are flocking to Amazon, aware that it is the place to be if they want to survive. But offering your products with Amazon can be a double-edged sword. The giant has some of the most sophisticated analytics software keeping track of what buyers are interested in. This means they probably know more about what a retailer’s clientele is looking for than the store owners do. Once they figure out which products are worth pursuing, it doesn’t take a genius to copy them, lower the price and force the competition out of business. Amazon has been accused of such practices for years. Another sketchy tactic often attributed to Amazon is forcing its third-party retailers to keep prices at zero or even negative profitability level, all the while collecting fees from them for advertising and allowing them to be on Amazon in the first place.

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IN FOCUS E-COMMERCE & LOGISTICS

Third-party sellers account for as much as 58 percent of all sales on Amazon, according to the latest reports released by the US giant. In the fourth quarter of 2018, Amazon’s revenue from third-party sellers totaled a whopping $13.4 billion, accounting for a fifth of its entire revenue. That included marketplace and fulfillment fees, which have a high profit margin of up to 20 percent. If anyone was wondering how Amazon makes money being such a famously unprofitable retailer, the secret is out.

SMALL UPGRADE, BIG DIFFERENCE

To show how much homework Polish online retailers have to do to prepare for the revolution, let’s look at the recently introduced solution provided by Shoper software, on which several thousand Polish e-commerce firms are running. In March of this year, the software provider introduced an upgrade to its search tool. It now offers a dynamically updated list of best-fitting hits to the query that a client enters.

“ Offering your products with Amazon can be a doubleedged sword. The giant has some of the most sophisticated analytics software keeping track of what buyers are interested in.

W B J APRIL/MAY 2019

IN FOCUS E-COMMERCE & LOGISTICS

APRIL/MAY 2019 W B J

“ Polish e-commerce busi-

nesses cannot do it all on their own, particularly when it comes to logistics services. items on offer, old-fashioned browsing is no longer an option. “There are stores where the search tool plays a very important role. In one of our stores with phone accessories, every fourth client finds a gadget through the search tool, while in another – a fashion store – as much as 43 percent of users start shopping with the search field,” Becla explained. Naturally, search engines embedded in online stores rely heavily on the content retailers provide.

SHUTTERSTOCK

Shoppers no longer need to enter a complete product name; in many cases a few letters will suffice to see a whole list with miniature pictures, prices and links to specific products. The implementation of the upgraded search tool algorithm has resulted in an increase in transaction numbers of over 30 percent, the company stated. It goes even higher on mobile devices, where website navigation is more difficult. “Our analysis shows that a session on a store’s website lasts 2.5 minutes on average. That’s not a lot of time. That’s why retailers need to make it easy for clients to find what they need,” said Jan Becla, e-commerce marketing coordinator at Shoper. Thirteen years ago, when Shoper was starting out as a solutions provider for small e-commerce businesses, it may have been reasonable to allow the client to browse through the store’s entire product catalogue, but now – when a quarter of all stores running on Shoper software have over a 1,000

and founder of Omnipack, one of the market leaders in fulfillment services and e-commerce logistics. Poland’s top auction and e-commerce platform, Allegro, offers its retailers this the type of assistance by specifying the minimum layout resolution, file size and a list of accepted tags. Another trick Allegro has picked up from Amazon is the Shop in Shop service. In short, Polish firms are becoming increasingly aware that it makes sense to offer their products in the Brand Zone, which allows clients to browse through various retailers’ offer in one place. It stands to reason that when facing a behemoth of a challenger on the market, safety in numbers is the right tactic.

TIME IS OF THE ESSENCE

“It’s worth focusing on optimizing product descriptions for search engines, or in fact for buyers by trying to guess how they think,” he added. To optimize content production, the software provider offers its premium clients a thesaurus and typo correction.

THE ARMS RACE HAS BEGUN

Website accessibility and rich content, (i.e. extensive and rich descriptions on product cards, which Amazon calls detailed product pages), are some of the areas where Polish e-stores could take a page out of Amazon’s book. The method of publishing and delivering e-content itself is what for a long time distinguished Jeff Bezos’s company. “Until recently, companies determined their rich content individually. There were no official specifications and guidelines were scarce. Today, in order to increase standardization, companies develop guides, thus limiting the scope of web developer involvement to a minimum,” said Tomasz Kasperski, CEO

An important lesson that Polish e-commerce businesses have yet to learn is that they cannot do it all on their own, particularly when it comes to logistics services. Many Polish e-stores still handle it on their own, and that seldom works for small and midsized companies. And no matter how hard they try, they will never be able to match Amazon Prime’s standards. According to ResearchAndMarkets analysts, providing high-quality fulfillment is one of the greatest challenges internet stores are facing today. Storage and preparing orders for shipment, not to mention handing returns, takes so much time and effort that many companies are spread too thin, with insufficient human resources to focus on business development. As a result, they offer a mediocre service at best, while other areas of their business suffer and remain underfunded. And if they don’t grow, their chances of holding their own when new competition arrives are slim. “Some companies invest in their own warehousing, while others opt for fulfillment services to meet all their logistics needs without major capital investments. A lot of our clients have decided to outsource their logistics processes to be able to fight for a stronger position on the market,” said Kasperski. So, either by copying their best selling products, by driving up the fees retailers pay to be on Amazon, or by simply offering faster and better deliveries, the giant will likely tighten the screw on Polish e-commerce businesses if and when it makes its way here. As always, it’s going to be a “survival of the fittest” test, which Polish firms have yet to prepare for.

W B J APRIL/MAY 2019

IN FOCUS E-COMMERCE & LOGISTICS

APRIL/MAY 2019 W B J

CEE ON THE RADAR FOR POLISH ONLINE RETAILERS While the majority of Polish online retailers focus on Western European markets, opportunities abound much closer to home BY BEATA SOCHA

he volume of parcels exported from Poland is growing very quickly, fueled by the success of the country’s e-commerce industry. “Interestingly, the majority of parcels are sent to private individuals. This goes to show that Polish online stores are also strengthening their position abroad,” said Tomasz Kroll, managing director at GLS Poland. It’s hardly surprising that Poland’s biggest transborder e-commerce partners are Germany and the UK. “Germany is our top destination, but the volume of parcels sent to Central and Eastern European countries is also increasing. Another important market for Poland is Romania,” he stated. Europe’s two largest economies dominate not only in the transaction volume, but also in terms of value. The UK and Germany together account for 35 percent of all e-commerce exports, while Poland’s other neighbors make up only 7 percent, according to data collected by PayU.

W B J APRIL/MAY 2019

IN FOCUS E-COMMERCE & LOGISTICS

A SIZABLE CAKE

Still, with 80 million people and €12 billion spent on e-commerce (data for 2017), CEE and Romania should not be overlooked, particularly given how quickly their online shopping market is growing. And while western economies seem to have reached a natural limit to the size of their e-commerce industries (both in the UK and in Germany the market’s growth is negligible or even slightly negative), CEE is still on the rise. Between 2017 and 2021 online spending in these markets is expected to grow by over 50 percent, in Romania even by up to 96 percent. Low saturation of online retailers in these markets (with the exception of the Czech Republic) should be of particular interest to Polish e-commerce businesses. Even more so now, before major global giants decide to make their mark there. In Hungary and Romania there are four times fewer internet stores than in Germany or the UK. “In the coming years we will see e-commerce duking it out for nearly 40 million people who are still not buying on the internet, including consumers in Poland, the Czech Republic, Romania, Slovakia and Hungary. Polish e-commerce, with its excellent technological base and many mature online stores, is well equipped to fill this niche,” said Joanna Pieńkowska-Olczak, country manager of PayU in Poland.

“ In the coming years we will see

e-commerce duking it out for nearly 40 million people who are still not buying on the internet

COME RAIN OR SHINE

Given the current trends, Poland’s e-commerce is bound to continue its rapid growth. Payment security, data protection and reliable and expedient logistics will therefore become even more important for online retailers eyeing foreign markets. And client expectations keep growing as well. “Every day the entire transport chain has to operate like a well-oiled machine, regardless of whether we have particularly large parcel volumes on some routes or if weather conditions make our work harder,” said Kroll. In the case of international shipments, this chain has a few more links that you need to consider when optimizing transport. Efficient and systematic cooperation between countries is crucial, as it allows to create new connections and solutions. “If the number of shipments to a particular country is very big, we organize direct connections without additional reloading, sorting etc., which simplifies and speeds up the process,” he added.

DOORSTEP DELIVERY

MORE EXTRAVAGANT

Despite having less developed e-commerce markets, other CEE countries are more prone to “splashing out” while internet shopping. While the average size of a single online purchase in Poland is around €32, Hungarians, Romanians and Slovakians tend to spend even 40 percent more – €54 on average, according to PayU.

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Once your parcel arrives in the destination city, there is still the last mile problem to solve. And while each country has its own specific demands and limitations, including legal ones, the trend to expect flexible and speedy delivery is becoming universal. Customers across Europe expect the process to go smoothly and expect the courier to adjust to their schedule rather than vice versa. The option to change delivery date and address while the parcel is on route is becoming

more and more common. GLS has recently launched its FlexDeliveryService in Finland, Portugal and Italy, bringing the total number of markets where clients can switch dates, addresses or pick up their parcel from a ParcelShop, to a total of 20. The list also includes Romania, Slovakia, the Czech Republic and Hungary. “Friendly Logistics solutions are wind in the sails of transborder online retail,” concluded Kroll. As the number of parcels continues to grow, it makes sense to invest in specialist real estate to help facilitate the shipment process. DHL Express has recently opened a new logistics center in Kraków with the capacity to service 400,000 parcels per year. It serves as a service center, designed to handle international courier shipments. It will be able to handle up to 1,500 parcels per hour. The construction of the Kraków terminal is part of the largest global investment program run by DHL Express. Within its framework, in recent years, several new centers have opened, including in Katowice, Wrocław, Warsaw, Lublin, Rzeszów, Toruń, Łódź and Gdańsk. In fact, Poland has one of the fastest-growing courier shipments industry in the world. The country ranked 24th out of 169 countries examined in DHL Express’ “Global Connectedness Index 2018” report, which examines globalization in terms of information exchange, investment, travel as well as trade. This bodes well also for the future of Poland’s e-commerce industry, which is poised to take advantage of all opportunities, both in the west and in its own backyard.

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IN FOCUS E-COMMERCE & LOGISTICS

Timing is everything

Retailers expect their logistics partners to be accurate and reliable at all times. From warehousing to doorstep delivery, operators are under increasing pressure to provide error-free services and the best possible delivery times. Information about precise delivery times seems to be the next big thing BY KRZYSZTOF MACIEJEWSKI

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“ The robotization and automation entering the logistics processes is a fact

lmost every retailer has faced some backlash from unsatisfied customers for an untimely or failed delivery. They are well aware that their choice of logistics provider reflects directly on their own reputation. And while logistics companies have had to struggle with labor shortages and fierce price competition (even forcing some to resort to only a single delivery attempt), others have turned to technology to provide an even better service. “The robotization and automation entering the logistics processes is a fact,” said Waldemar Osmólski, Ph.D., from the Institute of Logistics and Warehousing (ILiM), a state-owned R&D institute with focus on logistics, e-business and standardization. According to Osmólski, the industry is embracing automation and robotics to reduce costs and increase efficiency. “This also applies to mobile solutions in which data is downloaded and transmitted in real time from devices to information systems (e.g. ERP, WMS, TMS),” he stated. Upgrading warehousing technology, e.g. by introducing portable printers and automated bar-code tagging and parcel registration has almost eradicated the problem of human error, fundamentally improving the speed and accuracy of logistics processes. “As a result, we can eliminate the need to manually enter data into the IT system, streamline the process while increasing control and improving the quality of services,” Osmólski added. One area that still has room for improvement is the last leg of the delivery process. Traffic jams, changing routes and other unforeseen events all affect operations and efficiency, both on the side of the logistics provider and the client. Some restaurants already provide a countdown clock to when your food is due to arrive at your doorstep. But for parcel delivery, that level of dependability has proven elusive. Currently, the industry standard is the delivery notification system based on historical data. The best most of them can do is offer e.g. a six-hour window when delivery can be expected. But there are those who are trying to do better. At the beginning of January 2019, Raben Group provided its clients with a tool enabling them to track a shipment in real time, aptly dubbed ETA. “We are not saying that traffic jams or random situations do not happen. We are not miracle workers,” said Marcin Sobczyński, head of marketing at Raben

Group. In his opinion though, the company is obliged to provide reliable information so that customers can have better control over their own time.

REAL-TIME TRACKING

The term ETA (estimated time of arrival) means the time when the delivery is expected to reach its destination. Raben Group has developed a system for monitoring shipments based on the ETA parameter. It uses information about the current position of the driver based on the GPS location provided by their mobile device. “With a GPS position transferred to the Raben Group’s information systems every five minutes, we are able to calculate with a high degree of accuracy the expected time of arrival of the shipment to the recipient. We work with data in real time, and this significantly increases both the accuracy of the calculation and the quality of the final information,” Bartosz Kolasiński, project manager from Raben Group, explained. The system also takes into account all current road conditions, updating the estimated delivery time on an ongoing basis. Customers can monitor the delivery in real time on the platform myRaben.com. In case of emergencies resulting from road blocks, accidents etc., the system automatically updates the estimated delivery time and sends updates to the platform. The customer can also activate email and text notifications for the current estimated delivery time. “We see that progressively more customers, instead of reaching for the phone and calling customer service, are eager to use IT solutions,” said Sobczyński. Mobile devices also support the company’s drivers in their daily work. The terminals are used for navigation and communication between the driver and the dispatcher. As a result, the driver is in contact with the company at all times. The company is rolling out the new solution (developed in cooperation with logistics software providers TIS Gmbh and PTV) in all its 11 European markets. “At the moment, our drivers already use more than 5,000 devices, and the implementation of the next ones is planned in the coming months. We have over 70 percent of shipments covered by ETA. The numbers increase every day,” Sobczyński said. As we all know, the client is king, and that is even more true when you have to satisfy both the endcustomer and the retailer that has entrusted you with their business.

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FEATURE | WORK PRODUCTIVITY

WORK LESS,

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DO MORE

What could be more counterproductive than an employee struggling to stay awake at their desk? With technological progress and a growing competition for talent, the nine-to-five working day is slowly giving way to flexible working hours, remote working and other incentives to raise morale. Top companies are experimenting with even more unconventional ways of boosting productivity. An extra day off, a nap after lunch, or a pet in the office are just some options employers are toying with BY ANNA RZHEVKINA

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FEATURE | WORK PRODUCTIVITY

ong working hours may be overwhelming and counterproductive, and Poland – with an average 41.1-hour week – is among the top five EU countries in terms of the number of working hours per week. The UK tops the ranking with 42.3 hours per week, followed by Cyprus and Austria. Denmark (37.8), Italy (38.8) and the Netherlands (39.0) on the other hand have the shortest working week. British Trade Union Congress (TUC) has called on new technology, such as automation and robotics, to cut the working hours. Unions have even suggested that the UK should move to a four-day week. In other words, people would work one day less, but get paid the same. London-based medical communication agency Synergy Vision has been one of the pioneers to introduce a shorter week. Since December staff moved to working 36 hours over four days instead of the previous 40-hour requirement. This means working one hour longer during the week to have a three-day weekend. “We think clients will benefit too, with longer working days increasing the time that teams are available,” the company said, emphasizing that the solution is a “win-win” situation. The trial, which gave employees some more spare time to buy Christmas gifts, will last for six months. During this period, the company plans to measure employees’ happiness and satisfaction. In Poland, several companies, mainly international ones, have introduced half-day Fridays. At Viacom’s Warsaw office, for example, employees can put in an extra hour of work from Monday to Thursday during the summer and are then able to leave early on Friday and beat the weekend traffic. Still, a four-day week has raised many employers’ concerns about getting work done. However, recent research by Hitachi Capital revealed that about 75 percent of British employees engage in nonwork-related activities at work to make the day go faster. When tasks and deadlines are clearly set, a shorter week does not mean less work but better efficiency. In addition, more private time may help in coming up with fresh ideas. “Presenteeism is good for nothing and nobody, and I’ve long thought that overworking and unrealistic expectations on staff time runs counter to results,” founder of Radioactive PR Rich Leigh said. The company gives a regular free Friday to its 10 employees to improve mental resilience and productivity.

of the body with some space for the user to stretch out their legs. During a session, users may listen to some calming music. Even though sleeping in front of colleagues who are going about their daily tasks may seem controversial at first glance, a 20-minute nap proved to have a positive impact on concentration, mood and creativity. Nap pods now feature at Google’s headquarters, but the tech giant is not the only company with designated sleeping areas for its employees. Arianna Huffington, co-founder of the Huffington Post, once collapsed from exhaustion at her workplace. After the incident she wrote a book: “The Sleep Revolution,” describing how a lack of sleep may affect our health, work and personal life. Arianna also emphasizes that addiction to technology disrupts sleeping patterns. Unsurprisingly, Huffington Post journalists are encouraged to take daily rest, as are the employees of athletics giant Nike, online shoe retailer Zappos and ice-cream maker Ben&Jerry’s. In Finland, a co-working space Sofia Future Farm even hired a specialist to help its employees switch of from their daily tasks through simple exercises followed by a short snooze. “People are so happy after their nap. When it’s not too long, it is really refreshing,” instructor Mariko Pajalahti told News Now Finland.

“When tasks and deadlines are clearly set, a shorter week does not mean less work but better efficiency

BRING YOUR PET TO WORK It is no secret that happy people are more efficient. Amazon, which has a smile on its logo, offered employees the chance to come to work accompanied by their pets. Every day is bringyour-dog-to-work day, Amazon wrote in its blog. The tradition started with a dog called Rufus, who became a surprisingly productive part of the team. Employees would use Rufus’ paw to click the computer mouse and open links to websites. “Our employees love bringing their dogs to work and love meeting their coworkers’ dogs,” Amazon “Woof Pack” Manager Lara Hirschfield said. In total there are over 6,000 dogs “working” in Amazon offices. Whenever a customer lands on a 404 error page (the page cannot be found) it features a photo of a puppy suggesting a meeting with some of the company’s four-legged friends. Furry employees get access to snacks, and together with their owners, take part in corporate events such as Barktoberfest or a doggie Halloween contest. A pet-friendly environment improves collaboration between employees and makes work more fun. Moving from a factory-like workday to a more autonomous working style with a focus on well-being is a challenge all businesses face. Almost two-thirds of employees believe flexible and remote ‘THE SLEEP REVOLUTION’ working would increase their output, according to the State of MetroNaps, a producer of chairs designed for napping at work, Workplace Productivity Report. However, how fast the trend will came up with the idea after seeing people falling asleep everywhere. evolve depends, among other things, on employers’ readiness to The company’s hemisphere-shaped nap pod covers the upper part trust their staff to manage their own time.

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DIGITAL We design a complex brand presence on the internet. We specialize both in creative and technological solutions. We know how to realize web design so that it is impressive and effective. We create and optimize product sites, both for brand image and e-commerce purposes, as well as complex internet services. See our projects at www.valkea.com/projekty/digital

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TECH i n s i g h t s

TECH NEWS

Half of Poles do regular online shopping

Nearly half of all Poles (49 percent) do online shopping regularly, according to Ecommerce Europe and SAP. At the same time, just as many Poles want to continue to test products offline. “We are seeing a growing popularity of e-commerce… However, it is combined with a need for brick-and-mortar stores, which makes Poland stand out compared to other European countries,” said Tomasz Niebylski, sales development director at SAS.

>>>

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TECH

Movie Games enters strategic partnership with Discovery Huawei reaches 44.6% share of Polish tablet market Huawei’s share in the tablet market in Poland grew in March by 8 percentage points y/y to 44.6 percent in terms of volume, the company said. The share of Huawei’s tablets with ten-inch screens rose to 49 percent in March from 37.7 percent a year earlier. On the other hand, the share of eight-inch screens declined to 35 percent from 40.6 percent y/y. The most advanced models in the company’s portfolio are the Huawei MediaPad M5 series, which has been available for sale for almost a year.

Forever Entertainment pipelines games to improve results Games producer Forever Entertainment expects that the 50 new releases the company has scheduled for 2019, which is twice the number released in 2018, will translate accordingly in this year’s results. According to President Zbigniew Debicki, the company will focus on Nintendo Switch. The company is the third largest publisher in the world for this platform. “We know from experience that 1-1.5 releases on average per week for various platforms works, and we are financing them from current operations,” he added. Last year the company generated PLN 9.8 million of revenue and PLN 3.3 million of net profit.

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focused on profit, but selling to a large industry player, said Łukasz Rey, Director of Boston Consulting Group (BCG). The examples of the takeovers of Care by Uber and the absorption of Souq by Amazon have influenced the imagination of start-up creators. It is worth remembering that both technology giants operate in Poland. At the same time, large Polish companies are still not mature enough to use the potential of start-ups effectively, Rey added.

BCG: Dominant model of startups in Poland not focused on profit The dominant business model of startups in Poland and the region is not

7Levels records losses in 2018 Game developer for Nintendo consoles 7Levels recorded a PLN 1.06 million net loss in 2018 compared to PLN 1.19 million loss a year earlier, the company said

CLOCKWISE FROM LEFT; FLICKR, PRESS MATERIAL, MAXPIXEL (2)

Polish computer games producer Movie Games has entered into a strategic cooperation with Discovery and started creating games licensed by the American giant. As a result of the agreement, players all over the world will be able to play the role in the legendary game “Mythbusters,” or be a truck driver in “Alaskan Truck Simulator.” Games created together with Discovery Licensing will not only be directed to existing players but also to fans of the television programs on which the productions are based.

TECH NEWS

in a report. Revenues from sales reached PLN 0.65 million in 2018 compared to PLN 0.16 million a year earlier. “The company was mainly involved in the creation and production of its own games for the Nintendo Switch … Therefore, the company incurred significant costs,” the report read.

2019, the company said. The estimates of revenues are PLN 1.42 million in the same period, while the gross profit reach PLN 0.71 million. The presented figures are only estimates and are subject to change.

Art Games Studio hopes to debut on NewConnect in May Producer and publisher of video games Art Games Studio expects to be listed on the NewConnect market in May this year. The company is now awaiting approval of documents which it submitted to the Warsaw Stock Exchange on March 8, 2019. Art Games Studio is currently working on eight projects. In March, the company signed a cooperation agreement with Russia’s WallRus, which will help it create a game called “When I Was Young.”

Ultimate Games records estimated PLN 0.67 mln net profit in Q1 2019 Producer of video games Ultimate Games recorded an estimated net profit of PLN 0.67 million in the first quarter of

Orange Polska offers cloud services together with Google Telco services provider Orange Polska and its subsidiary Integrated Solutions have signed a cooperation agreement with Google, offering a full range of cloud services, Orange said. The cooperation between Orange Polska and Google Cloud began in 2017 with G-Suite solutions. Currently, the potential of Google Cloud Platform will provide support in areas such as big data, analytics, machine learning, artificial intelligence (AI), internet of things (IoT), process automation (RPA) as well as internet and mobile applications.

BCG: Number of start-up projects with human touch increases On the start-up market, projects with a human factor are beginning to play an increasingly important role, Julia Maciejewska, consultant at Boston Consulting Group (BCG) said. “We are dealing with companies that seek value, synergy and their niche at the interface of emerging technologies, like Blockchain and IoT with human influence on these aspects,” Maciejewska explained. The most interesting examples of the above trend were a platform for the automated sale of unnecessary domestic items developed in the Baltic States, and a system of automatic communication between cars.

The contract is for a period of 48 months. The network will connect 4,794 Poczta Polska branches, and in each of them two data transmission ports will be set up.

Netia to build transmission network for Poczta Polska

WSE could get PLN 30 mln in funding for new platform

Netia has signed an agreement with Poczta Polska for the construction and maintenance of a data transmission network. The contract value is nearly PLN 72 million gross. “The network will be created using innovative technology of intelligent aggregation of various types of access links, which will be the first implementation of such a large-scale (nearly 10,000 ports) in Poland,” Netia said.

Warsaw Stock Exchange has received an approval for its application to receive PLN 30.28 million in funding for a new transactional platform from the National Research & Development Center NCBiR, the bourse announced. The entire investment has been valued at PLN 53.7 million. WSE is considering several options, including purchasing a new transactional platform from an outside provider, outsourcing it or building it on its own.

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TECH

Microsoft has unveiled its Microsoft Store of the Future 2.0 retail space in Warsaw’s Grochów neighborhood. The store showcases more than 30 digital solutions for the retail industry that are offered or used by the company’s partners, including both technology companies and such retailers as PepsiCo, L’Oréal and BSH. The main purpose is not to present the technologies themselves, but rather to present ready-made scenarios leading to the change of key processes in a company, explained Jarosław Sokolnicki, head of industry solutions, retail and consumer goods, at Microsoft.

Facebook to create its own voice assistant

WIG.GAMES-based certificates debut on WSE

Legimi extends public issue of series G shares until May 13

The Warsaw Stock Exchange has introduced the first structured certificates on the new WIG.GAMES index. The issuer is Austrian Raiffeisen Centrobank (RCB). Two FAKTOR 3 and 4 long-structured certificates were introduced to trading. RCB also introduced certificates based on the mWIG40 Index. A total of over 1,200 structured products are listed on the WSE.

Online e-books and e-reader seller Legimi is extending subscriptions for the public issue of G series shares until May 13, the company said. So far, the company has obtained funds that will allow the finalization of its most important objective – the takeover of the German company Readfy. Investors taking part in the Legimi share offering can get additional bonuses in the formula known from equity crowdfunding. “At the moment, we have obtained an amount that is fully sufficient to take over the German company Readfy, which

AmRest cooperates with Microsoft on digital transformation AmRest, which owns gastronomic brands including KFC, Pizza Hut, Burger

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will translate into the sale of our flagship services on the German market. We are extending the subscriptions, because we want to take full advantage of investors’ interest and obtain financial resources that will allow for the fastest development in this market,” company CEO Mikołaj Małaczyński said.

Facebook is working on creating its own voice assistant. It would compete with such players as Alexa from Amazon, Siri from Apple, or Google Assistant. For now, it is not clear how Facebook plans to use the assistant. Potentially, it can be used for video chat on the site. The assistant can also appear in Oculus headsets or other future Facebook projects. The American firm Zion Market Research estimated that in 2018 the virtual assistant market was worth $2.3 billion globally. According to the research company, by 2025 this market is to reach up to $19.6 billion, growing at an average annual rate of 35.4 percent. So far, only Google Assistant has a Polish version. It has been working in the local language since January this year. In April, the company established cooperation with Pyszne.pl and Flixbus to offer access to some of their services.

FROM LEFT; FLICKR, PIXBAY, MAXPIXEL

Microsoft opens ‘store of the future’ in Warsaw

King and Starbucks, has started cooperation with Microsoft on its digital transformation. The company aims to create “a restaurant without paper.” It plans, among others, to implement advanced data analytics systems based on Microsoft’s Azure cloud. “We are exploring digital channels to reach clients,” Adam Sawicki, a new member of the AmRest management board for digitization said. The changes will be also implemented in internal processes and work culture. For example, the company wants to use the Team application that serves to manage the work of a team remotely.

T E C H V I E W | V E N T U R E C A P I TA L

EXPERT OPINION

MICHAŁ ROKOSZ Partner Inovo Venture Partners

Expectations vs reality – what are VCs for? While global venture capital investments grew 40 percent y/y in 2018, the Polish market saw dramatic drops. What changed were the expectations start-ups have in cooperation with funds. There are some major disparities between what start-ups expect from VCs and their actual role The role of VCs is growing steadily. Last year their investment worldwide came in at $190 billion and was 40 percent higher than in 2017 ($137 billion). But in contrast to the global market, Poland saw a dramatic decrease of 45 percent year-on-year, from PLN 384 million to PLN 213 million. Despite the decline, the role of funds remains the same: financing, knowledge and experience transfer through matching company founders with entrepreneurs who have traveled the same road and faced similar challenges. Investors also advise on organizational matters and help prepare a company to scale up. In a survey we carried out together with Market One Capital called “Expectations vs reality – start-ups and VC funds,” resolving conflicts between founders was considered the least expected type of help from VCs. Interestingly, this point was added to the survey based on experience of companies where top US investors are involved. Founders often do not realize that such conflicts are bound to occur and are a potential threat for the company’s development. Our own experience shows that over half of companies in Inovo’s portfolio have experienced such conflicts. START-UP EXPECTATIONS The survey we carried out showed that start-ups’ top expectations from VCs are: help in finding investors for further financing rounds (67 percent), building an equity story and receiving feedback from potential funds for another investment round

(49 percent), and consulting and expert support (41 percent). Another important aspect raised in the survey was introducing the start-up to new clients and providing them with sales support (38 percent). Importantly, this point was raised mainly by limited-scale companies experiencing slow growth. Our analysis showed that only 25 percent of those polled consider legal support as a very important role of VCs. It is not the role of a fund to do the work of running a business for the entrepreneur. Our role is to support them in reaching their goals more quickly. We usually use our own experiences, market acumen and access to client networks. But we cannot help all companies to the same extent. We accept the fact that there will be obstacles while a start-up develops. We focus on companies where we see that our support will help remove these obstacles and the company will be able to return to its path of rapid growth. Fewer than 50 percent of companies examined can double their revenue each year. And this is the growth rate that sets start-ups apart from established corporations and that’s the reason why VCs invest in them. Each round of financing requires meeting several conditions and implementing specific improvements in how a company is run. “Seed” is where a good idea is key, but for a “series A” a company needs to show at least 100 percent annual growth to attract VCs. Meanwhile, only 30 percent of companies grow at that rate. The next step is building a team which includes a person with experience in rapid scale-up. VC funds can provide start-ups not only with capital, but also with assistance in reaching specific scale-up milestones. Only carefully considered cooperation and clear scope of activities can help create another unicorn.

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TECH

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G R E E N I N I T I AT I V E S

PLANTING TREES BY BROWSING THE WEB

THE INTERNET’S ENORMOUS ENERGY CONSUMPTION IS OFTEN OVERLOOKED. BUT THERE IS MOUNTING PRESSURE ON IT COMPANIES TO GO GREEN. SOME SEARCH ENGINES HAVE EVEN GONE AS FAR AS TO ACTIVELY SCRUB CO2 FROM THE ATMOSPHERE BY ANNA RZHEVKINA

f the internet were a country it would be in third place in terms of electricity use after China and the US, a Greenpeace report has revealed. The IT sector’s energy footprint is growing constantly and, according to a peer-reviewed study, by 2025 the ICT industry could be responsible for consumption of 20 percent of all electricity and for 5.5 percent of the world’s carbon emissions. In response, top companies like Google have committed to switching to renewable energy sources. German start-up Ecosia has gone one step further – the company created a search engine aimed at removing CO2 from the atmosphere. Ecosia donates about 80 percent of its profits to finance planting trees around the world. After a user installs the search engine, an icon with a tree appears in the top right corner. This is a counter showing how many trees that person has helped to plant by browsing the web. In some ways,

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TECH POWER HOG Electricity consumption (in TWh per year) Source: Greenpeace CHINA 6,300

US 3,900

THE INTERNET (APPROX. 2,000)

INDIA 1,400

the project is similar to “Pajacyk” organized by Polish Humanitarian Action, where every user that clicks on a wooden toy on the website generates support for children in need. Like any other search engine, Ecosia makes money from clicks on advertisements. On average, one search generates a few cents, and it takes about 50 searches to finance one tree. With the growing number of users, the company now plants a new tree nearly every second, while back in 2014 it took one minute. The reforestation projects are spread across the globe. Ecosia plants fruit and nut trees along a river in Ghana to restore water levels. It has a project in Uganda to rescue chimpanzees’ habitats. In Burkina Faso the new trees improve soil fertility and turn the desert green. Last year, Ecosia launched its first project in Europe; it supports a group of farmers and

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entrepreneurs in Spain who work on restoring landscapes and biodiversity. The search engine is advertised as being well suited for, among others, coffee and chocolate lovers. Ecosia plants coffee trees in areas damaged by the narcotics trade and helps cocoa farmers in Peru. The search engine is also privacy-friendly: it does not collect users’ personal data and keeps search results for only seven days. “Ecosia is a tiny step each individual can make in the face of a seemingly overwhelming problem,” said the company, which now has over 7 million users. However, would Ecosia meet the needs of users in Poland, where Google has over 95 percent of the market? Ecosia search results are powered by Bing, the secondlargest search engine in the US after Google. The simple test search “What

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

RUSSIA 1,100

to do in Warsaw” written in Polish, however, gave different results for Google and Ecosia. Both found popular webpages, but the market leader had a bigger list of relevant links for those who want to discover the city. Other searches led to a similar outcome. Even though Google beats Ecosia in terms of search variety, the green search engine appeals to users by using 100 percent renewable energy and it makes the very convincing argument that each search request removes about 1kg of CO2 from the atmosphere.

Global versus local

Ecosia is eyeing international expansion in various markets. In the UK, for example, some universities are adopting Ecosia as the default search engine for their students and professors. To do the same in Poland, Ecosia would have to overcome a very

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G R E E N I N I T I AT I V E S

strong loyalty to Google. The situation is different in Russia where there is fierce competition between Google and Yandex, and in China local search engine Baidu dominates the market, whereas in Poland Google’s leadership has never been seriously challenged. The first Polish multi-search engine, Emulti, was launched in 1991 and was active until 2005. Emulti aggregated the search outcomes from several global and Polish websites such as Yahoo!, Interia.pl or Wirtualna Polska. Some other Polish search engines that took on the challenge and failed were Netoskop, Sieciowid and NetSprint. NetSprint managed to get almost 20 percent of the market in 2004. However, when eight years later Wirtualna Polska chose collaboration with Google over NetSprint, the latter was doomed. The Institute of Computer Sciences (Polish Academy of Sciences)

made a recent attempt to create a Polish search engine called Nekst. Researchers created a system that went beyond simple key word searches by also analyzing sentence structure and synonyms. The Institute created a database with about 800 million documents. Ultimately, the idea for a new search engine was abandoned and the creators altered their project to support antiplagiarism systems, where it is now used. “We did not want to compete with the world giants but to generate some added value,” said Jacek Koronacki, Director of the Institute. Ecosia will in all likelihood remain a niche product in Poland rather than an actual rival to Google. But with the rising pressures of climate change and youth protests unfolding across Europe, interest in eco search engines is growing.

ECOSIA DONATES ABOUT 80 PERCENT OF ITS PROFITS TO FINANCE PLANTING TREES AROUND THE WORLD

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Latest news in the retail, logistics and office sectors

Flexible office space

Large-scale residential projects

Development boom in hotel sector

Investment market

Luxury residential real estate market

GLOBALWORTH spends €170 mln on office acquisitions in Warsaw, Kraków Investor Globalworth has acquired the Warsaw Trade Tower (WTT) office building in the Polish capital and the Rondo Business Park office complex in Kraków for a total of approximately €170 million. As a result of the transactions, the Polish portfolio of the company now comprises almost 500,000 sqm of leasable space in office and mixed-use properties. Anchored by AXA, the WTT building is located in the Wola district of Warsaw and accommodates 45,400 sqm of GLA. The Rondo Business Park complex is located in the northern part of Kraków and offers 17,800 sqm of leasable area with its main tenants including Capgemini. >>>

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LOKALE IMMOBILIA | NEWS

Investment market (continued) BRIEFS YAREAL SELLS LIXA OFFICE BUILDINGS IN WARSAW

Developer Yareal and investor Commerz Real (acting on behalf of South Korea’s Hana Investment fund) have signed an agreement for the forward sale of two buildings of the LIXA underconstruction office complex in Warsaw. The value of the transaction has not been revealed. The properties in question total 28,700 sqm of office space and are currently almost 80 percent leased out, with bank BGŻ BNP Paribas as the anchor tenant. The entire LIXA complex, which is being developed in the Wola district of the Polish capital, will offer 65,000 sqm of office area at full build-out. It is expected to be certified in the BREEAM system at the “Excellent” level.

GENERALI BUYS WARSAW’S PIĘKNA 2.0 OFFICES

Investor Generali Real Estate (acting on behalf of the Generali Europe Investments Holding fund) has acquired the Piękna 2.0 office building in downtown Warsaw from a fund advised by Griffin Real Estate. The value of the transaction, which was brokered by JLL (representing the buyer), has not been revealed. The Piękna 2.0 building offers around 15,800 sqm of office space and has recently been thoroughly modernized. In Central and Eastern Europe, Generali Real Estate currently manages a portfolio valued at approximately €1 billion. The company’s other Warsaw office assets include KróLEWska, Senatorska 18 (Pałac Jabłonowskich) and Plac Małachowskiego.

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WBJ met up with Bogdan Zasada, managing director Poland at Strabag Real Estate, during the hectic days of MIPIM 2019 in Cannes, France. Interview by Morten Lindholm

WBJ: Can you give us a short description of Strabag RE in Poland, as Strabag is mostly known in the country as a construction company. Bogdan Zasada: Strabag RE opened its office in Poland in 2014. We are part of Strabag SE construction company, which has been present in Poland for over 30 years already, so we are perceived as such by the market. Our first major project was the development of Astoria Premium Offices in downtown Warsaw. The scheme was completed in July 2016 and was successfully commercialized. At the moment, the company is finishing works on the hotel development in the center of the Polish capital – on ul. Tamka (first Motel One hotel in Poland, with 333 rooms) and we are starting works on another hotel development project near Warsaw’s Old Town. What are your plans for the coming years?

We have just announced the acquisition of the Atrium International office building in central Warsaw. This project will be our flagship investment in Poland and will be one of the most modern and exciting mixed-use projects in the Polish capital. It will comprise over 40,000 sqm of office space (with a hotel element). We are aware that the investment should be prepared carefully, and it is a process, so in the meantime we are managing the current Atrium building with full commitment and thinking of making the place more vibrant and useful for Warsaw’s community and neighbors. Will you hold onto your assets or are you selling now when the market is hot? We will soon communicate the sale of one of our buildings, so yes, we are not interested in keeping our assets long term. However, as a huge European group we are not under pressure to offload our assets in a hurry. Like all developers, our business model is to sell but only if the right offer comes at the right time. We believe we will see good times in the coming years, so we are optimistic about our existing and planned projects. Thank you for the update. We look forward to hearing more about the latest acquisition and the planned sale.

Warsaw’s Atrium International changes hands Patrizia Immobilien has finalized the sale of the Atrium International office building in downtown Warsaw to Strabag Real Estate. The value of the transaction, which was brokered by JLL, has not been revealed. The six-floor property is located on Al. Jana Pawła II, near the Rondo ONZ subway stop, and comprises more than 12,000 sqm of leasable space. The site has major redevelopment potential with the local zoning plan allowing for an even 135-meter-tall office building there.

Office

380,000

BRIEFS sqm

the amount of office space leased in 2018 in Poland by tenants from the business services (BPO/SSC) sector Source: JLL

WARSAW THE FASTEST GROWING FLEX SPACE MARKET IN EUROPE

There is already a total of 3.5 million sqm of flexible space in Europe’s 20 largest office markets, a volume that could grow to even 10 million sqm within the next five years, according to JLL. Warsaw has the ninth biggest flexible office space stock on the continent and last year saw the fastest new flex space supply growth of all the analyzed European markets, the company said. The city accounts for 76 percent of the aggregate Polish flexible office space volume, which currently amounts to more than 250,000 sqm (including 166,000 sqm in already opened location and 87,000 sqm covered by newly signed lease deals). The most flexible office space in Europe is located in London, Amsterdam and Paris.

PHN LOOKING FOR INTRACO PRIME CONTRACTOR

Warsaw’s Mennica Legacy Tower topped out A topping-out ceremony has been held at the construction site of the Mennica Legacy Tower office project, which investors Golub GetHouse and Mennica Polska are now developing in the Wola district of Warsaw. Comprised of a 140-meter skyscraper and a neighboring 43-meter building, the scheme will accommodate a total of over 65,600 sqm of office area that has already been fully commercialized with its anchor tenants including mBank and WeWork. The development is being built by Warbud and is to be completed in the autumn of this year.

State majority-owned, Warsaw Stock Exchange-listed commercial real estate investor Polski Holding Nieruchomości (PHN) has started the procedure of selecting a general contractor for its planned Intraco Prime office project in Warsaw. The scheme will be built on ul. Stawki in the northern part of the Śródmieście district of the Polish capital, on the site of a parking lot located in front on the existing Intraco office building. The eight-floor development will offer 14,000 sqm of GLA with construction work scheduled to launch later this year.

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LOKALE IMMOBILIA | NEWS

Retail

Cornerstone laid for Chełm shopping mall A cornerstone-laying ceremony has recently been held at the construction site of the Galeria Chełm shopping center project, which investors Acteeum Group and Equilis Europe are developing in Chełm in eastern Poland. The scheme, which is being built by general contractor Karmar, will comprise 17,500 sqm of space and accommodate 55 stores and points of service. The development is scheduled to be completed in the first quarter of 2020 and is now almost 80 percent leased out. The value of the investment amounts to about €30 million.

BRIEFS GHELAMCO BUILDING PROCHOWNIA ŁOMIANKI RETAIL PARK

Developer Ghelamco Poland has launched construction work on its Prochownia Łomianki retail park project in Łomianki near Warsaw. The scheme will comprise approximately 5,300 sqm of leasable space, which is being commercialized by JLL, and will include a parking lot with spaces for 150 cars. Anchor tenants of the development will include a grocery retailer that will occupy around 2,200 sqm. The Pro-

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chownia Łomianki investment is scheduled to be completed in December this year.

SILESIA OUTLET WELCOMES FIRST VISITORS

Investor 6B47 has opened for business the first phase of its Silesia Outlet shopping center in Gliwice. The outlet center, which has been commercialized by BOIG The Blue Ocean Investment Group and is managed by Neinver, currently comprises 12,000 sqm of leasable space and accommodates over 60 ten-

ants. A further 8,000 sqm of GLA is to be built in the planned second phase of the development. The first phase of Silesia Outlet was designed by the IMB Asymetria architectural studio and built by construction company Erbud.

POLAND’S RETAIL PARK MARKET KEEPS GROWING – REPORT

Retail parks are strengthening their position on the retail property map of Poland with the country’s total volume of retail park space currently

standing at almost 1.52 million sqm, according to a report by CBRE and Trei Real Estate. A further 170,000 sqm is scheduled to be completed by the end of this year (the 2018 supply amounted to approximately 110,000 sqm) with the new supply planned for 2020 expected to reach at least 120,000 sqm. The most ongoing retail park projects are located in smaller cities with populations of less than 100,000.

LOKALE IMMOBILIA | NEWS

Logistics BRIEFS SEGRO BUILDING OVER 12,000SQM BTS PROJECT IN ŁÓDŹ

Industrial space developer SEGRO has launched construction work on a 12,200sqm build-to-suit project for AQ Wiring Systems within its SEGRO Logistics Park Łódź complex. The transaction between the two companies was brokered by Cushman & Wakefield. The scheme will comprise over 9,600 sqm of warehouse and production space and almost 2,700 sqm of office area. In the future, it might be extended by a further 5,000 sqm. The development, which will be certified in the BREEAM system, is scheduled to be completed in the second quarter of this year. AQ Wiring Systems currently occupies more than 8,800 sqm in an existing building within the SEGRO Logistics Park Łódź complex.

7R, INSITE WITH R&D CENTER PROJECT IN KRAKÓW

7R and InSite Real Estate have launched construction work on an R&D center project for BWI Group, a global producer of car suspension systems. Located on ul. Medweckiego in Kraków, the build-to-suit scheme will comprise 11,000 sqm, including 6,000 sqm of laboratory space and 5,000 sqm of office area. It is scheduled to be completed in December this year. The transaction between 7R and InSite Real Estate (for which the Kraków development is the first joint investment), and BWI Group was brokered by CBRE.

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Panattoni to build more logistics space for Amazon Industrial space developer Panattoni Europe will develop an almost 45,000sqm logistics project for Amazon near Łódź. The scheme is scheduled to be completed towards the end of this year and is expected to be certified in the BREEAM system at the “Very Good” level. The Łódź investment will be Panattoni Europe’s sixth development for this client. To date, the company has completed a total of 685,500 sqm for Amazon in the Poznań, Szczecin, Wrocław, Sosnowiec and Prague areas. Meanwhile, the developer has recently also announced several other large logistics projects across Poland. In Silesia, the company has launched construction work on Panattoni Park Sosnowiec II logistics, which will consist of two buildings offering a total of almost 80,000 sqm. In the Warsaw area, Panattoni Europe will build Panattoni Park Warsaw South Janki, a complex comprising two buildings offering 55,000 sqm and 20,000 sqm of space. The developer will also develop its first distribution center in the Gdynia area. Called Panattoni Park Tricity North, it will comprise 45,000 sqm of warehouse space in a single building.

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Global real estate investors head to Warsaw for CEE GRI 2019 WHAT ARE the implications of a global economic slowdown for CEE countries? That’s the vital question which Peter Brezinschek, global head of research at Raiffeisen Bank International, will be answering in his keynote address that kicks off CEE GRI 2019. GRI Club is present around the world and this is its flagship event in CEE. Taking place on Tuesday May 14 and Wednesday May 15 at the Bellotto Hotel in Warsaw, Poland, CEE GRI 2019 is where global and local investors, lenders, developers and operators will be gathering to discuss trends and opportunities in CEE real estate. Is CEE retail impervious to e-commerce global woes or will it be the next to suffer? Is new-build student housing cycle-proof or unbankable in a downturn? And are offices undergoing a deep transformation or just shallow fad adjustments? These and other questions will be the subject of a series of tailored, closed-door discussions. GRI is a unique format which has no speakers and no presentations. Instead,

everyone is encouraged to participate, creating a dynamic environment and a fluid exchange of ideas, all in an informal and collegial setting. Participants at CEE GRI 2019 include Philip Wood (Head of CEE at GLL RE Partners), Robert Martin (Founding Partner at Europa Capital), Hadley Dean (CEO at EPP), Chris Zeuner (Head of Europe, Amstar), Michael Abel (Partner, TPG Capital), Patrick Zehetmayr (Managing Director at Erste Group Bank), Gabor Voros (Head of CEE RE Financing at UniCredit Bank), Noah Steinberg (Chairman and CEO at WING), Paul Betts (Head of CEE at M7), Dorota Latkowska (Co-Founder and Managing Partner at REINO Partners), Lila Pateraki (CIO at Zeus Capital), Nebil Senman (Managing Partner at Griffin RE) and Won-Joon Park (Head of AM at Hana Asset Management) to name but a few. “CEE and SEE economies are still growing at a healthy rate, the region is relatively stable, and it’s no wonder that global investors find the CEE/SEE story very attractive. The increasing number

of participants that we have attending CEE GRI 2019 is testament to the dynamic real estate markets here, and the growing interest in CEE GRI Club. It’s an honor for me to advocate for the region and to contribute to the higher prominence of CEE as the destination for investments for our global real estate community. I hope to see the CEE and SEE regions continuing to prosper and flourish,” said Svetlana Fedosova, Senior Director and Head of CEE at GRI Club. CEE GRI 2019 will also be attended by senior representatives and board-level directors of 7R, ADD Value Partners, Alpha RE Management & Investment, Amrest Holdings, Amstar, Arco Capital, Atrium European Real Estate, Benson Elliot Capital Management, BLD Homes, Bluehouse Capital, BPI Real Estate Poland, CA Immo, Centrice Real Estate, Cerberus Global Investments, Colliers International, Confluence Property Management, Considero Investments, Cordia Management, Corestate Capital Partners, CPI Property Group, Crom-

well Property Group, Delta Real Estate, Deutsche Asset & Wealth Management, ECE Projektmanagement Polska, Echo Polska Properties, Erste Group Bank, Europa Capital, First Title, Galaxy Investment Group, GLL Real Estate Partners, Golden Star Group, Golub GetHouse, Griffin Real Estate, Helske, HIH Real Estate, Hypo Noe Landesbank für Niederösterreich, IGD SIIQ, Indotek, Integrated Finance Group, International Campus Group, Invel Real Estate, Kulczyk Silverstein Properties, Lion’s Head, Layetana Real Estate, M7 Real Estate, Milestone, Napollo Group, P3 Logistics Parks, PKO Bank Poland, Property Market RE, Reino Partners, Round Hill Capital, Savills Investment Management, Skanska Property, Soravia Real Estate Development, Strabag Poland, TPG, TREI, Tristan Capital Partners, Upside Property, Value One Holding, Wolf Theiss, WP Carey, WeWork, Yosh.AI and Zeus Capital Management among others. The complete CEE GRI 2019 program can be found at www.ceegri.org.

Svetlana Fedosova

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LOKALE IMMOBILIA | OFFICE

THE FLEX REVOLUTION

Co-working and serviced office space has been getting more and more popular with tenants in Poland in recent years, with 2018 having seen a massive increase in take-up levels. The entire office sector is being transformed by the phenomenon BY ADAM ZDRODOWSKI

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According to a report published by JLL in November, the flexible office space (including serviced, co-working and hybrid space) sector in Europe has more than doubled since 2014 and is likely to grow by up to 30 percent annually over the next five years. The company’s forecast was based on an analysis of the 20 biggest European markets, including Warsaw. JLL data shows that the total volume of flex space in those 20 markets grew by around one million sqm in 2017. Another seven million sqm could be added by 2023.

RAPIDLY GROWING MARKET

ngoing dramatic changes in the way people work have been exerting a tremendous impact on the global office real estate market, with today’s tenants expecting more flexible space arrangements and leasing terms than ever before. Flexible space operators are responding to the demand by providing areas that take into account the various functions and functionalities of the modern office and are, in effect, “lifespaces” rather than mere “workspaces.”

Poland’s flexible office space market until recently grew by approximately 30-40 percent annually, while over the last year the growth rate has increased dramatically, to around 100 percent. Towards the end of 2018, the total stock of such space stood at more than 220,000 sqm. Warsaw accounted for some 75 percent of that volume. In the first three quarters of last year, flexible space operators leased as much as 91,000 sqm in the city (in the center their share of the total take-up has recently reached 25 percent), becoming an important driver of demand. Interestingly, according to Savills data, in the Q1-Q3 2018 period Warsaw came second in Europe in terms of the volume of leased flexible office space. London was the leader, with its flexible space take-up having stood at more than 104,000 sqm. Notably, some of the biggest office lease transactions closed in Poland last year involved flexible space operators. They included the lease by WeWork of 14,200 sqm at the Mennica Legacy Tower project, which is now under construction in the Polish capital. Flexible space today accounts for about 2 percent of the aggregate modern office stock in Poland, but as the sector gets more popular and operators keep expanding the figure could go up to some 5-6 percent in a few years, said Mateusz Polkowski, head of research and consulting at JLL. In Polkowski’s opinion, more brands are likely to debut in Poland in the near future. The country is becoming more and more attractive for flexible space operators from abroad due to its growing number of start-ups and the expansion of big international companies. Over the last two years, co-working and serviced office space operators such as BOBO Coworking, New Work Offices, Spaces and WeWork have entered the Polish market, joining the likes of Business Link and Regus. Many operators active in Poland have expansion plans. Yotam Alroy, co-founder and chief business officer at Mindspace – an Israeli operator who entered Poland over a year ago – said that he sees great potential for the further growth of the company’s offer in the country. Following the success of its first Polish location at Hala Koszyki in downtown Warsaw, Mindscape has recently decided to take up additional space at a

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LOKALE IMMOBILIA | OFFICE

WORKSPACE INTO LIFESPACE

The rapid growth of the flex sector has been driven by the new global trends in the labor market. According to Alroy, flexible office space has become a great response to the changing needs of employees, and the evolution or even revolution of our working style. “Today, people are more and more often looking for creative spaces available per hour, which boost cooperation and are a natural source of new business relationships and everyday inspiration,” he said. Of a similar opinion was Eyal Litwin, the CEO of Adgar Poland, a company that apart from traditional space also offers two flexible leasing concepts – Brain Embassy and Beyourself – in its Warsaw buildings. “There are really many benefits of working in a co-working office operated by professionals. Our experience shows that people who have tried working in a co-creating space do not want to come back to a traditional, often monotonous office,” he stressed. Litwin noted that the owners of traditional office space recognize that the requirements of tenants and employees are changing, which is evidenced by the more and more interesting designs of their buildings. However, according to Litwin, seldom is a tenant of traditional office space able to divide the area they occupy into as many creative and functional zones, responding to the various human needs, as a tenant of co-working office space is. In the latter case, the various zones are already provided for at the design stage and a workspace becomes, in effect, a “lifespace.” Indeed, the growing popularity of flex offices with both small tenants and big corporate clients seems to corroborate their advantages. Contrary to common belief, it is not only start-ups and freelancers, but also big companies that use co-working and serviced office space, said Karol Wyka, leasing director at HB Reavis Poland, a developer who is also developing his own co-working concept; HubHub.

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86,979

Flexible office space take-up in Warsaw (sqm) 31, 365

Source: Savills

neighboring office building and thus expand the coworking area it offers in the city to a total of almost 5,500 sqm. The newly added area is dedicated to teams comprising from 12 to 50 people. “We have noticed a growing interest in co-working spaces from larger companies and organizations,” Alroy explained. Demand is also on the rise in the largest regional markets and operators will likely keep growing there in the coming years, too. According to Polkowski, Kraków and Wrocław – the two biggest office markets outside Warsaw – will be the main expansion targets. Hubert Abt, the CEO at New Work Offices, said that his company will this year open locations in Łódź, Kraków, Wrocław and Poznań, where it plans to take up a total of 25,000 sqm. In Warsaw, the operator wants to expand by 20,000 sqm in 2019.

17, 169 8,335

9,010

7,838

2013

2014

2015

2016

NO GOING BACK

2017

2018 (Q1-Q3)

It is not yet clear exactly what the flex revolution will mean for the office property market. Will the level of demand for flexible space that is seen today be sustained in the long run and if so, how will the owners of traditional office space respond to that? Some of the operators who have announced new locations in recent months have leased space in buildings which will be delivered in one or even two years. “It is then that the moment of truth will come,” said Jarosław Pilch, head of tenant representation, office agency, at Savills. He added that one could then possibly witness a consolidation of the market or a decrease in rental levels. However, “there will be no going back to the pre-coworking revolution era,” Pilch maintained. Indeed, there are already signs that some of the solutions found in flex offices are being or will soon be adopted by landlords and tenants of “regular” office areas. Expenditure on office fit-out, for one, will likely go up if traditional offices are to remain competitive. In the opinion of Savills experts, one can already witness competition for tenants between flexible space operators and owners and developers of traditional space. The latter have started offering more flexible leasing terms and developing their own coworking brands. Additionally, inspired by co-working space operators, office building owners are now increasingly considering hiring community managers to boost building users’ satisfaction and to retain tenants. Thus, the flex revolution is significantly changing traditional offices, too. “The distinction between regular office space and flexible office areas is increasingly being blurred,” Wyka claimed. According to him, the market for traditional space will be evolving towards greater flexibility. The option to sign shorter lease agreements and take up additional space if need be are seen as huge assets by today’s tenants. There will be demand for efficient, well-designed areas that can be shaped and developed more freely by those occupying them than before, Wyka argued.

Clockwise from above. Mindspace in Hala Koszyki, Brain Embassy in Mokotów and BE Yourself in Adgar Park West

CO-WORKING AT MALLS Apart from office buildings, flexible office space has also been appearing in shopping centers in recent years. This phenomenon is another aspect of the trend that has seen malls increasingly becoming leisure and meeting (rather than just shopping) destinations. Examples of major shopping centers in Poland where free co-working areas have been arranged include Wola Park in Warsaw, Galeria Bronowice in Kraków, Sukcesja in Łódź, Posnania in Poznań and Tarasy Zamkowe in Lublin. However, real estate market experts stress that flex areas located in shopping centers do not compete with flex areas located in office buildings, but rather complement and diversify the offer of flexible space operators. This is basically because they are targeted at different users. While shopping center locations are most often chosen by freelancers, those in office buildings are also – if not predominantly – aimed at start-ups and large corporations, Polkowski pointed out.

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LOKALE IMMOBILIA | RESIDENTIAL

Pro Urba's 19. Dzielnica

THE BENEFITS OF SCALE

The number of huge residential projects comprising even several thousand apartments when fully developed is on the rise in Poland. Schemes of this kind are now better thought-out than in the past BY ADAM ZDRODOWSKI

arsaw Stock Exchange-listed developer Ronson Development has recently launched sales in its planned Ursus Centralny residential project in the Polish capital. The development will comprise approximately 1,600 apartments and will be the biggest scheme in the company’s history. The developer is marketing the scheme as a self-sufficient estate exemplifying the concept of “a city within a city.” Besides housing units, Ursus Centralny is also to include numerous commercial units, recreational space and a school complex. Ronson Development’s latest investment is just one of a constantly increasing number of ongoing housing projects that will by themselves create new residential neighborhoods and which will accommodate populations comparable with those of many Polish towns. According to REAS|JLL Residential Advisory, there are now a total of around 25-30

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Buyers like huge residential projects, because of the broad range of apartments on offer

projects under construction in Poland’s six largest housing markets which will – after completion – consist of 2,000 or more apartments (which translates into around 5,000 inhabitants). The company’s data shows that the most such schemes (five) were started in 2007. Soon after the outbreak of the global financial crisis, just one or two such developments were launched annually, while in recent years the number has increased and stands at between two and four. Kazimierz Kirejczyk, vice president of the management board at JLL Poland, noted that the growth of the country’s residential market is one of the reasons for the rising number of large-scale housing investments. Over the last six years, the number of new apartments built by developers annually has doubled, Kirejczyk noted. He expects more multi-phase projects to be started in the near future as big listed developers try to keep their turnover volumes at

steady levels. Those companies will continue to look for large residential sites. Additionally, several huge residential schemes could be developed within the government’s Mieszkanie Plus program. Such developments have already been announced in cities such as Warsaw and Kraków.

COMPLEMENTARY FUNCTIONS

Crucially, buyers like huge residential projects, because of the broad range of apartments on offer. Kazanelson noted that big multi-phase schemes allow the developer to offer units in several types of buildings and to appeal to more potential clients. Besides, such developments always accommoLOWER COSTS date numerous commercial units, thus providing There are several factors that make large-scale their inhabitants with easy access to basic services housing investments popular with developers. For and amenities – including grocery stores, bakeries, one thing, their size means that the cost of buildcafés and pharmacies – that directly influence the ing one apartment is often relatively lower than in comfort of one’s daily life. smaller projects, Kirejczyk said. This is because A report published by JLL last October put the the estimated the price of one sqm of a large site is lower than number of commercial units in the Miasteczko number of the price of one sqm of a smaller plot of land. Also, Wilanów neighborhood in the Wilanów district of ongoing residendesign and marketing costs – which a developer Warsaw – one of the biggest new residential areas tial projects in needs to bear anyway – are lower when they can be in the city – at almost 460 and their total space Poland’s six spread between a larger number of units. largest housing at around 37,000 sqm. This is the equivalent of a In a similar vein, the cost of providing additional medium-sized shopping mall. Miasteczko Wilanów markets, which infrastructure – for example a local road – may get may be a unique case in that it is being developed will comprise 2,000 or more smaller as the scale of a project grows, although by a number of developers, but many other largesmall infill schemes usually require less new infra- apartments at full scale housing investments also include sizable retail build-out structure. Large developments offer more flexibility areas. when it comes to tailoring the supply of units to the Meanwhile, according to Marzec, this matters, as Source: REAS|JLL Residential Advisory current demand. Admittedly, developers planning apartment buyers today are more and more conmulti-phase residential investments often face a scious and demanding clients. Developers, too, recnumber of major challenges, including the process ognize the need to deliver complementary non-resof obtaining administrative permits. idential functions within big residential projects. The process is often lengthy in a situation when “Commercial units undoubtedly add value to and many parts of large Polish cities are not covered by significantly increase the attractiveness of a resizoning plans. Also, cooperation with local authorities dential project,” argued Katarzyna Kajak, the sales on the delivery of roads and public transport infraand marketing director at Pro Urba, the developer structure, as well as schools and kindergartens, tends to be difficult. The acquisition of a site for a develRonson Development's opment of this scale is usually not Ursus Centralny easy. The availability of such sites in big cities – especially in attractive locations that are popular with apartment buyers – is now limited, pointed out Wojciech Marzec, an analyst at redNet Property Group. Some of the available sites require additional work. Oscar Kazanelson, supervisory board president at Robyg, said that the developer needed to revitalize a post-industrial area in Warsaw’s Ursus district where it has two projects comprising a total of over 3,000 apartments. Nevertheless, he stressed that the creation of entire neighborhoods is part of the company’s philosophy. Robyg’s portfolio includes several large investments, such as Modern City and Young City in Warsaw’s Bemowo district (almost 2,000 and over 1,700 units respectively).

2530

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LOKALE IMMOBILIA | RESIDENTIAL of the 19. Dzielnica housing scheme in Warsaw. Bordering the quickly growing office hub in the Rondo Daszyńskiego area of the Wola district of the city, the development is one of the biggest new residential investments located in the center of the Polish capital. It will comprise over 1,700 apartments at full build-out. Kajak claimed that commercial units in her company’s project are popular with both retailers and investors who buy and subsequently lease them to their end users. However, she admitted that such units take longer to commercialize than apartments.

BETTER DESIGNS

By and large, big multi-phase housing schemes are today better designed than one or two decades ago. With their street patterns and blocks, bus or even

Robyg's Stacja Nowy Ursus

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Large developments offer more flexibility when it comes to tailoring the supply of units to the current demand

railway stops, some indeed resemble small towns, even if education infrastructure is often missing from the picture. Notably, unlike some controversial developments in the past, such investments are now rarely gated and usually include a significant amount of publicly accessible space. Many of them feature squares and boulevards, fountains, attractive green areas or even small ponds. Kirejczyk said that thanks to developers’ and local authorities’ growing experience with regard to the construction of large residential projects, buyers’ rising expectations and intense competition in the housing market, the urban planning quality of such schemes has improved. There is still room for improvement, but the final effect – the quality of public space and infrastructure – does not depend on developers only. “Local authorities have a huge role to play here, too,” he stressed.

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LOKALE IMMOBILIA | HOSPITALITY Hotel Warszawa

ROOM FOR GROWTH

Polandâ&#x20AC;&#x2122;s hospitality sector has been experiencing a development boom. The number of new hotel openings in the country is expected to increase significantly over the next two years, which should please real estate investors BY ADAM ZDRODOWSKI

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Raffles Europejski Warsaw

he hotel property market in Poland has seen a lot of new project announcements of late, with many of the leading international chains continuing to expand across the country. A number of chains until recently absent from the Polish market have made their debuts over the last year. More entries can be expected in the near future. Poland is attracting the interest of hotel brands from such markets as Germany, the UK, Scandinavia and Spain, revealed Katarzyna Tencza, associate director, hospitality department, at Walter Herz. According to Cushman & Wakefield data, 78 hotels with a total of approximately 10,500 rooms have opened across Poland over the last five years. The most rooms were added in Warsaw, followed by Kraków, Gdańsk, Wrocław and Poznań. Over the last two years alone, 30 hotels offering a total of around 5,000 rooms were added, mainly in Warsaw, Gdańsk, Poznań and Kraków. In the Polish capital, eight major hotels, with a combined 1,300 rooms, opened for business in the period.

EVER MORE SUPPLY

Going forward, the opening of hotels is expected to accelerate, with a combined more than 7,000 rooms in 52 hotels planned to be completed in 2019 and 2020, said Borivoj Vokrinek, partner – strategic advisory and head of hospitality research EMEA at Cushman & Wakefield. Warsaw, in particular, will see intense hotel development activity in the near future. An additional 3,000 rooms in 16 hotels are scheduled to be completed in the city within the next two years. “This represents a notable supply growth of about 20 percent and is likely to have some impact on hotel performance in the short term,” Vokrinek said. Other big Polish cities with major hotel pipelines include Gdańsk, Kraków, Poznań, Szczecin and Łódź. Despite its growing supply, Warsaw has continued to have a relatively healthy occupancy level, which can be attributed to the strong economy of the city and ability to attract business travelers. Still, there is room for improvement when it comes to meetings, incentives, conventions and exhibitions (MICE) and leisure tourism. Kraków and Gdańsk remain attractive markets with their good balance of business and leisure demand. According to Tencza, Katowice in Silesia currently needs a number of hotels, but the new supply already planned for the city will soon change the market. In her opinion, there is also a shortage of modern hotel infrastructure in many regional cities with populations of between 100,000 and 200,000, where the existing facilities are often outdated and do not meet today’s standards.

FOCUS ON AFFORDABILITY

Affordably priced hotels are expected to dominate the opening scene going forward

There has been a clear trend towards the development of moderately priced hotels. Experts from Cushman & Wakefield estimate that midscale and upper-midscale hotels accounted for nearly 60 percent of the new hotel stock delivered in Poland over the last five years. This is not going to change. “Affordably priced hotels are expected to dominate the opening scene going forward, representing over 60 percent of the pipeline to be completed over the next two years,” Vokrinek said. The bulk of the under-construction and planned hotels in both large cities and holiday destinations are three- and four-star facilities. The fastest-growing brands in these segments include Ibis Styles, Holiday Inn/Holiday Inn Express and Hampton by Hilton. Poland’s luxury hotel segment, by contrast, has witnessed relatively little growth in recent years. Admittedly, the Polish capital saw the opening of the Raffles Europejski Warsaw hotel last year, but its impact on the market is yet to be seen. Experts claim that further openings in this segment might be challenging in the near future. The recently announced 120-room Nobu hotel, which is scheduled to open for business next year, is expected to add even more pressure within the sector. There may be room for a luxury hotel in the center of Kraków, which lacks internationally branded properties in this market segment. Also, Poland seems to present good opportunities for the development of lifestyle hotels offering so-called affordable luxury product.

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LOKALE IMMOBILIA | HOSPITALITY

3,000 the number of new hotel rooms to be opened in Warsaw within the next two years Source: Cushman & Wakefield

NEW MARKET ENTRANTS

The hotel development boom has been defined by the expansion in Poland of leading global hospitality companies. Hilton Worldwide, AccorHotels, Radisson and Marriott International are among the players that have opened the most rooms in the country in recent years. The giants are going to continue to expand in the Polish market, with AccorHotels/Orbis Hotel Group, InterContinental Hotels Group (IHG), Marriott International and Hilton Worldwide set to open the largest number of rooms over the next two years. Meanwhile, new chains have been announcing their plans to enter Poland. In Warsaw alone, A&O, Motel One and Nobu Hotels are all planning to debut soon. The chains already present in the country are introducing new brands here. A NYX hotel by Leonardo Hotels is coming to Warsaw, while a Curio Collection by Hilton hotel is planned in Kraków. Autograph Collection by Marriott hotels are expected to open in both cities. For its part, AccorHotels wants to launch a Jo&Joe hotel in Kraków.

DELIVERING INVESTMENT PRODUCT

The large development pipeline is good news for property buyers. Real estate investors continue to be interested in hotel acquisition opportunities in Poland, but the shortage of available product has been a major challenge of late. Also, the often divergent price expectations of sellers and potential buyers are a problem that seriously hinders transactions. “These are the primary reasons for the notable decline in hotel investment activity in Poland in 2018,” Vokrinek argued. Cushman & Wakefield data shows that only seven hotel deals, valued at a total of around €120 million, were closed in the country last year. By comparison, 2017 saw the finalization of 17 hotel investment agreements with an aggregate value of about €410 million. The most significant 2018 deal in Poland’s hotel sector was the forward purchase by Union Investment of the 240-room Holiday Inn Gdańsk City Centre hotel from UBM Development for approximately €38 million. The same German investor also acquired the 152room Park Inn by Radisson Kraków hotel, which was completed in 2009, from a joint venture created by subsidiaries of UBM Development and Lindorcenia. Here the investment value amounted to about €26 million. “The outlook for transaction activity in 2019 looks promising,” Vokrinek said. Several hotel properties in Warsaw alone are currently on offer. An agreement regarding the sale of the city’s Sheraton Warsaw Hotel, for one, is now at an advanced negotiation stage, he revealed.

Best Western Premier Navy Hotel in Świnoujście

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THROUGH FOREIGN EYES Poland remains an attractive market to expand in for international hotel chains. “We see a significant growth potential in Poland for our preferred brands, both in key and regional Polish cities,” said Miguel Martins, development director Poland and Eastern Europe at IHG. He pointed to Poland’s stable GDP growth, growing disposable income, strong domestic demand, touristic attractiveness, improving infrastructure, strong investor sentiment towards well-located, branded hotels and professionalization of the hotel sector. Saija Kekkonen, managing director for Finland, the Baltics, Poland and Russia at Best Western Hotels & Resorts, said that the Polish market is defined by the strong presence of independent, quality hotels, many of which want to team up with an international brand. She added that until recently such individuall owned but internationally branded hotels were much smaller than hotels built by international hotel chains themselves. This is now changing, which is a positive thing.

In the coming years, the chain is going to open such hotels in Poland as Edison Park Hotel, BW Premier Collection and Sure Hotel by Best Western in Poznań, and Best Western Premier Navy Hotel in Świnoujście. IHG is focused on the opening of two hotels in Poland per year. Asked about major challenges in the country’s hotel property market today, both Kekkonen and Martins mentioned the limited availability of qualified workers. However, Kekkonen claimed that internationally branded hotels cope with the situation better than other hotels.

800

The Tri-City

240

Poznań

1,300 Warsaw

430

Wrocław

400

Kraków

Approximate number of hotel rooms planned to be opened in major Polish cities in 2019 Source: Walter Herz

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LOKALE IMMOBILIA | RESIDENTIAL

Amstar's and BBI Development's Złota 44

HIGH END’S ENDLESS GROWTH

The market for the most prestigious and the most expensive residential properties has been witnessing continued growth in recent years. The sector has positive development prospects as the number of affluent Poles rises

he premium residential market in Poland grew by 9 percent in 2018, according to the latest report by High Level Sales & Marketing (HLSM), a brand owned by investor Tacit Investment. The sector should again grow by from 8 to 10 percent this year, the study said. HLSM data shows that the total value of the premium residential market in the country (calculated through multiplying the number of sold apartments by their average price and average size) reached PLN 1.345 billion in 2018, compared to PLN 1.24 billion in 2017.

DOMINANT WARSAW

HLSM looked at luxury residen-

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tial properties in the seven biggest markets: Warsaw, Kraków, the Tri-City, Wrocław, Poznań, Katowice and Łódź. Over 700 premium apartments were offloaded there last year, 19 percent more than in 2017, when nearly 600 such units were sold. Warsaw – by far the biggest luxury housing market in Poland (2018 market value: PLN 694 million, up 8 percent y/y) – accounted for approximately onefourth of the combined number of sold apartments. More than 180 premium units were sold in the Polish capital last year. The city features the highest entry threshold (the minimum price per sqm that one needs to pay to buy a premium property) at almost PLN 25,000, and the highest aver-

Yareal's Rezydencja Łazienki Park

age price per sqm, which stands at more than PLN 31,000. However, in the opinion of HLSM experts, it is in some of the regional cities that the growth dynamics – in terms of the number of transactions – is the most impressive. In Łódź, for instance, the number of sold premium units increased from 32 in 2017 to 90 in 2018. As there is no single definition of what can be classified as luxury residential property, the methodologies of the companies analyzing the high-end segment of the housing market differ, but their data all tends to show that 2018 was a good year for the sector. Barbara Bugaj, a senior analyst at Cenatorium, said that the total value of transactions involving the

sale of premium properties (both apartments and houses) priced PLN 1 million or more reached around PLN 3 billion last year and was similar to the volume seen in 2017.

BIG TRANSACTIONS

In her opinion, prices have remained rather stable. The most prestigious apartments are priced from about PLN 30,000 per sqm, while the prices of houses vary a lot depending on factors such as the size of the plot and the residence itself and can even reach over PLN 20 million. For his part, Paweł Łączyński, managing director at Poland Sotheby’s International Realty, claimed that there has been an upward pressure

on prices, which results from an increase in demand and a decrease in the amount of available attractive land in large cities. Besides, just like in the other residential market segments, developers have been faced with the rising costs of building materials and construction services. However, Łączyński stressed that in the luxury sector, price is often a The luxury less important factor than location residential and standard. Buyers are intermarket will ested in various types of luxury continue to grow steadily product: residential towers, new boutique apartment buildings and renovated historic tenement houses. Very large transactions involving the sale of units in each of these types of projects were signed in Warsaw last year.

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LOKALE IMMOBILIA | RESIDENTIAL

Over 180 the number of premium apartments sold in Warsaw in 2018 Source: High Level Sales & Marketing

Ghelamco Poland's Foksal 13/15

An over 240-sqm apartment in Amstar’s and BBI Development’s Złota 44 skyscraper was sold for some PLN 11 million, while two units (covering a combined 470 sqm, bought by one buyer) in Ghelamco’s Foksal 13/15 (a renovation scheme) went for over PLN 17 million. A unit in Tacit Investment’s Park Lane (a modern apartment building) was offloaded for PLN 14.5 million. According to the HLSM report, this is the most expensive premium apartment to have been sold in Poland in 2018.

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POSITIVE PROSPECTS

Warsaw has the biggest supply of luxury apartments, with the TriCity being the largest regional premium apartment market. Outside of the biggest cities, the market is rather small, although luxury units can be found in a number of popular holiday resorts. Premium apartments in holiday destinations are bought as both second homes and short-term rental units, Bugaj said. She also pointed to the market for luxury residential properties in the suburbs of the biggest

Polish urban centers. In this case, transactions usually involve the sale of very large houses – sometimes even sized from 700 sqm to 1,000 sqm – or old villas. In the Warsaw agglomeration, for instance, deals of this kind take place in such prime locations as Konstancin-Jeziorna and Podkowa Leśna. In the biggest cities, buyers usually acquire premium apartments for their own use. The luxury rental market in Poland is still much less developed than in Western Europe, Łączyński said. Due to such factors as Poland’s fast economic growth and Poles’ increasing purchasing power, the prospects for the high-end sector’s further development are very positive. As the pool of prospective buyers grows, so does the potential for new high-value transactions. “The luxury residential market will continue to grow steadily,” Bugaj claimed. Poles are getting richer and foreigners are becoming increasingly interested in the sector. Many affluent foreign buyers see Polish properties as relatively cheap, yet of good quality, she maintained.

The Best Of Warsaw!

Despite our regular monthly mag first hitting kiosks in 1996, it was another two years before the decision was taken to round up the best Warsaw offered. This wasn’t due to an editorial oversight, rather because back in those days there just wasn’t much to honor: a case in point? Thumbing through that first Best of Warsaw edition, shout-outs went to “someone’s grandmother” (for Best Pierogi), and a club called Planeta on account of having a rottweiler called Tyson guarding the door. Skip forward a few years, and by 2004 the city had developed to the stage where our winners were winning because they offered something good. Well, why not throw a party to celebrate reasoned our publisher. That tradition has carried on to this day, with our 15th gala evening proving the most successful yet. Yep, three day hangovers really can happen. To our sponsors, patrons, guests and winners, we can but say thank you.

2019

KEY JURIED CATEGORIES The Nominees...

Casual Dining Kromki Mięsny MOD Mokolove Supperlardo Ethnic Dining Cumin Ceviche Bar La Sirena Kanapa Tahina Neo-Bistro Ale Wino Bez Gwiazdek Dyletanci Rozbrat 20 Kieliszki na Hożej

2019

Newcomer Europejski Grill Restauracja Warszawska Supperlardo White One Zoni

THE NEW CUTTING EDGE

Modern Polish Bazar Kocha Bez Gwiazdek Polana Smaków Zielony Niedźwiedź Zoni

The people and places that have carved their place in the city of tomorrow

REVEALED INSIDE

Warsaw’s top chefs, restaurants, bars, clubs and buzzes as chosen by the Insider and its jury!

PLUS:

Price: zł. 30 ANNUAL EDITION 2019

Vegan food, ethnic restaurants, timeless local classics and all the nightlife you can shake a stick at!

Bow_2018_Cover-FINAL.indd 1

See the results on bestofwarsaw.warsawinsider.pl

15/04/2019 3:09 pm

Best Chef Robert Trzópek (Bez Gwiazdek) Bartosz Szymczak (Rozbrat 20) Aleksander Baron (Zoni) Sebastian Welpa (Ale Wino) Rafał Hreczaniuk (Dyletanci) Rising Star Damian Wajda

Life + Style BACK TO THE FUTURE

As featured in the BEST OF WARSAW 2019

Inspired by the glam interbellum, Atelier 1925 (ul. Polna 18/20, 1925.eu) provides furniture pieces that will sweep your dining room (and beyond) back to the age of Lindbergh and Lempicka. Produced in Poland using traditional techniques, the firm’s small series products, furnishings and lamps will give your dining time the sophisticated signature of the Art Deco period. Slotting in perfectly with the atmosphere of their items, extraordinarily crafted porcelain manufactured in Germany by Fürstenberg, a firm with a heritage dating to the mid-18th century, will complete the vintage look. BY ALEX WEBBER

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Life+Style ON A PLATE

Whether it’s a statement piece for your kitchen shelves, or a gift with a difference, Porcelanowa have become the city’s go-to answer for your porcelain problems…

roudly Polish in their pitch, Porcelanowa (porcelanowa.com) specialize in limited edition porcelain from renowned domestic design studios such as Ćmielów and Kristoff. In particular, pride of place is awarded to the Huta Julia collection, but beyond the big guns, they’re equally renowned for promoting rising stars of local design such as Ende Ceramics, Mosko Ceramics, Aoomi, Hadaki, Kalva and August. Fully in tune with the latest trends, a visit is a must if you’re pimping your pantry.

Clockwide from top left: crystal glass from the"Polish Table" collection by Pietkiewicz for Julia Huta, ENDE Ceramics "Mobius Cup," Marek Cecuła Limbo teapot for Ćmielów

We are delighted to welcome you to a new gastronomic point inspired by our travels to Paris, Berlin, Dubai, Istanbul and New York. Our restaurant offers its guests the most exciting culinary adventure in Warsaw with delicious Mediterranean cuisine pitted against the memorable flavors of Asia. In addition, we also serve the perfect steaks made just how you like them. We cordially invite you to visit our exquisite world of Mediterranean, Italian and Asian tastes. Al. Krakowsa 248, tel. 575 468 685 instagram.com/perarestauracja facebook.com/perarestauracja

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BROUGHT TO YOU BY SENSES

and heads for Kolbuszowa (Podkarpackie region), where his parents-inlaw live. Because Andrea not only fell in love with Poland, but also with a Polish woman. There, Andrea helps with farm work. “Yesterday I was all dirty, and today, I’m in a clean apron, I’m preparing an artistic and fragrant dessert. That’s inspiring,” he says. In Kolbuszowa, where the restaurant’s produce is sourced, you can find feral hogs being bred, as well as fallow deer, poultry and lamb. There are also vegetables and fruit grown in a traditional way, which, along with the best products from around the world, form the basis of Senses cuisine. And it's a unique one at that! Andrea is passionate about his work and completely devoted to his restaurant. As he admits: “I work 14-16 hours a day, I often do not know what is going on outside!” In addition to his title as of one of the top 100 best chefs in the world according to Le Chef magazine in 2019, he has also been recognized SENSES is sort of a culinary window to the world. It’s here, as “Chef of the Year North England,” day after day, where a culinary spectacle entitled “A Feast for “Chef of the Future 2015,” and “Chef the Senses” is staged, directed by Andrea Camastra, who fol- of the Year 2017,” according to the Gault & Millau guidebook. Andrea’s lows his unwavering passion. unique talent and courage in crossing conventional borders was appreciated by Hervé This (originator and father of molecular cuisine), who during his stay in Poland appointed him ambassador of the “note-by-note” method t is a unique place on the culinary ed. Only here will you try original flaand called him the successor of the world map. The restaurant is the vor combinations of the most exclusive legendary Ferran Adria. most successful culinary spot in products from around the world. Your Andrea cooks using the latest culiPoland. Since 2016, it has consistently sense of smell will be pampered by nary techniques, while not forgetting had one Michelin star. It also achieved selected and distinguished fragrances, about tradition. “I grew up surrounded the best result in the Gault & Milwhich you would never expect on a by Italian cuisine. That’s where my lau guidebook for two years in a row plate. Using a variety of textures will love and great respect for the natu(2018 and 2019 – 18.5 points and 4 not only let you hear the sounds of ral products comes from.” He comes caps). It was the first restaurant from food, but you will also have the oppor- from Bari, the city of Queen Bona, who this part of Europe to be recognized tunity to use your sense of touch. And taught Poles culinary curiosity and by the jury of The World’s 50 Best everything will be complemented by the taste of new vegetables, including Restaurants and it was included in the an artistic presentation on handmade tomatoes, eggplants and artichokes. prestigious list of The Diners Club® 50 plates produced according to Andrea’s Andrea, despite many years of expeBest Discovery Series. Andrea himself designs. The impeccable service and rience, never stops learning and is was chosen as one of the 100 best wine pairing perfectly selected by constantly searching for the latest inchefs in the world by Le Chef magathe sommeliers will make your visit novations. He is the winner of numerzine. The Senses restaurant is also the the best three hours ever spent in a ous awards and distinctions, but he is winner of many national prizes and restaurant. still aware that there is a long way to distinctions. Andrea Camastra is a unique chef! go before reaching perfection. “Every The name of the restaurant is no ac- Energetic, full of passion, with an unchef has to start somewhere. Just like cident. When you visit the restaurant, usual approach to cooking. Whenever a child learns to walk before running,” expect all your senses to be stimulat- he has a moment, he leaves Warsaw says Andrea.

SENSUAL CUISINE COMES FROM LOVE

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EVENTS

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

CEREMONIAL GALA COMMEMORATING THE 25TH ANNIVERSARY OF THE FRENCHPOLISH CHAMBER OF COMMERCE More than 500 guests representing the largest French and Polish investors, as well as politicians, culture and media people, participated in the jubilee Gala of the French-Polish Chamber of Commerce (CCIFP), which took place in February at the Sofitel Warsaw Victoria hotel. The event, culminating in a dinner prepared by Alain Passard, a three-star chef from Paris, kicked off the celebration of the 25th anniversary of the CCIFP. The French-Polish Chamber of Commerce is an employers’ organization associating over 450 Polish and French companies, established exactly 25 years ago. At that time, the Chamber focused on providing knowledge and substantive support to French companies that were taking their first steps on the Polish market. A lot has changed since then, both in the Polish economic reality and in the operation of the Chamber itself. As shown by the February Gala, which opened the official celebrations of the jubilee, the CCIFP is first of all a meeting place that enables the establishing of relations between representatives of Polish and French businesses. More than 500 people, mainly presidents of the largest French and Polish companies, enjoyed an exceptional menu composed

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for the occasion by three chefs: Maciej Majewski, chef of La Brasserie Moderne restaurant; Dawid Makurat, pastry chef of the Lourse confectionery at the Raffles Europejski Hotel; and Alain Passard, who boasts three Michelin stars and is chef of the Parisian Arpèges restaurant. The dinner ended with a joint toast by the Board of Directors and former Presidents and Directors of the Chamber. The February Gala was the opening event of the year-long celebration of the 25th anniversary of the CCIFP. For the occasion, the Chamber prepared a new version of its logotype and presented a special film summarizing 25 years of its activity against the background of the development of French investments in Poland. In April, a report on French investors will be published showing their involvement in the development of the Polish economy, as well as featuring opinions on running a business and plans for the coming years. In May, the Royal Castle will once again host Warsaw meetings – Prime Minister Mateusz Morawiecki participated in last year’s event. This time, discussions will concern the role of women in business, society and politics. Find more information at www.ccifp.pl

KRAKÓW ONCE AGAIN THE SELFGOVERNMENT CAPITAL OF EUROPE

Once a year, all local government roads on the Old Continent lead to Kraków. The European Congress for Local Governments is an extraordinary platform for the exchange of ideas and a meeting place for local leaders, regional elites with representatives of state administration, non-governmental organizations and business. The fifth edition was held under the motto “Local Government – together for the future.” For local authorities, this is the first opportunity to summarize their work following the autumn local government elections. Some of the authorities of cities and municipalities came to Kraków to convince leaders to continue their vision of self-government. Those who have just begun emphasized that this is a great place to learn. “There are many things that still require new solutions, or at least improvement. These are problems that we have known about for years: infrastructure, acquiring investors, which affects new jobs, communication exclusion, access to healthcare or a particularly hot topic today – education. It is the self-governments that bear the burden of responsibility for these areas to a large extent. Perhaps that is why local politicians talk so loudly about the need for help from the government. Good cooperation between government and local government, as well as between local government and business, can only help improve the standard of living of every Pole,” said the chairman of the Program Board of the Economic Forum in Krynica, and the originator of the Kraków conference, Zygmunt Berdychowski. The second Financial Ranking of the Local Government was also presented in Kraków. Prepared in cooperation with a team of scientists headed by prof. Krzysztof Surówka, it is the most comprehensive document showing the financial status of all municipalities, counties and cities in Poland. The gala, during which local government officials received distinctions, was attended by around 1,000 guests. Among them were Deputy Prime Minister for Social Affairs Beata Szydło; Minister of Infrastructure Andrzej Adamczyk; Lesser Poland Governor Piotr Ćwik; and the Marshal of the Małopolskie Voivodship Witold Kozłowski. The best rural municipality was Dobra Szczecińska, urban-rural – Konstancin-Jeziorna, and city with county rights – Warsaw. Among the counties, Poznań county turned out to be unrivaled, and Podkowa Leśna among cities. The full ranking can be found at www. forum-ekonomiczne.pl The strategic partner of the fifth European Congress for Local Governments was Veolia Poland, while the partner of the gala was TUW Polski Zakład Ubezpieczeń Wzajemnych.

THE HEART OF INNOVATION BEATS IN TARNÓW Start-ups have mastered the collective imagination of business circles with the impetus of the revolution, and this revolution has lasted several years. For young entrepreneurs, start-ups are a chance for spectacular success, investors see them as an explosion of initiative and creativity that can be turned into profit, and state administration consider them to be one of the pillars of the innovative economy. To function properly and be successful, start-ups need a special environment: other start-ups, investors, large companies, support institutions, research and scientific centers. There is no better time to talk about young Polish inventors and their creative ideas than during the Innovation Forum in Tarnów. A recently published report from the Association of Leaders of the ABSL Business Services Sector Network showed that the city is the second best place in Poland to invest in new technologies. Although new companies appear every day on the business scene, their products are often secondary. Labor costs have gone up in recent years, and thus there is a fight for clients, especially from abroad. This is certainly not easy, because when it comes to research spending, the latest Eurostat report shows that Poland is in 24th position in Europe in this case. This is not going to change soon, because as deputy Jerzy Meysztowicz pointed out in Tarnów, Poland has reduced the share of expenditure on seeking innovation in the budget to 0.97 percent of GDP. But there is help for our country, and all countries of the "New EU" benefit from similar solutions. There is money from the Community or business incubators that allows the promotion of new companies outside of Poland. During the Innovation Forum, much was said about the future – in both the short and long term. Some said that soon we will have to part with traditional thinking about the production of many goods or even healthcare. Doctors will be replaced by robots, whose diagnosis will be based on scanning a patient’s body, and drones will supply artificial blood to their homes. Regardless of the future, you need to invest in an innovative economy, because only in this way can you think about the country’s development and economic growth. Conferences such as this in Tarnów give the opportunity to exchange views and highlight the most important challenges. “In the nearly 30-year history of the Economic Forum, we have seen very different economic trends. Our task was to capture those that were to become important components of the Polish and global economic landscape and include them for discussion on the Forum platform. Currently, this trend is the concept of innovation and start-ups. We want to support them: we not only give them the opportunity to show themselves to investors, big business and public administration, but also distinguish the best ideas, including large financial prizes,” said Zygmunt Berdychowski, originator of the Innovation Forum and chairman of the program board of the Economic Forum in Krynica. The best innovators left Tarnów with prizes. From among over 100 start-ups that presented their ideas during the Forum, most appreciation and PLN 80,000 was gained by STEC ROBOTICS, which deals in the automation and robotization of production processes. An interesting initiative was Hackathon Program Tarnów, during which 10 teams struggled for 36 hours to create an application or a mobile game to help the inhabitants of Tarnów. PWSZ was deemed to have the best idea; an app that informs residents about free parking spaces using the municipal monitoring network.

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LAST WORD benefits, such as the “500+” program, which the ruling party plans to expand to also include the first child in every family from July this year.

CLIMATE CHANGE-RELATED DISASTERS, terrorist attacks and hackers, or perhaps Russia’s influence – Poles’ map of fears is far more aligned with that of the US than other European countries Many Europeans picture a natural disaster caused by climate change when they think of what scares them the most. Some see the threat of an ISIS terrorist attack as their biggest fear, while others think of cyberattacks threatening national security, an American Pew Research Center found out. Poles seem to have a different map of fears. Poland turned out to be the only country in a 26-nation survey that named Russia’s power and influence as a top threat. While Poland’s relationship with its eastern neighbor has been complex for decades, the crisis in Ukraine has increased tensions. Over 40 percent of Poles are afraid that Russia may attack; however, fear persists mostly among the less educated respondents with low incomes, a Newsweek survey showed. Immigrants coming to Poland, material issues, and the uncertain future for family and children are among other common fears. With the next parliamentary elections coming closer, some have expressed their apprehension towards the Law and Justice (PiS) party remaining in power. Contrarily, others are afraid that Civic Platform (PO) will be back and that it could cut some social

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What about climate? In this collage of fears, climate change, seen as the top global threat by most EU countries, remains somewhere in the background for Poles. Even the Ministry of Environment announced its ecological policy listing the positive sides of climate change, such as a longer tourist season and a shorter period when central heating is needed. After an optimistic opening, though, it raised some concerns about the risk of drought in some regions, (e.g. Łódź Voivodship), floods in others, and heavy winds, which may affect transport and energy infrastructure. Surprisingly for climate experts, the Ministry’s solutions did not mention wind and solar energy, neither did it signal any withdrawal from the country’s dependence on coal. On top of that, President Andrzej Duda’s words left environmentalists staggered when he claimed that “Using coal and building energy security on it does not … interfere with environmental protection.” The scientific portal Naukaoklimacie chose the statement for the “Climate nonsense of the year” award as an obvious and well-documented contradiction, citing the report of global climate change watchdog IPCC. Poland’s vision of global threats deviates from the other European countries. Interestingly, in some respects it is similar to the US, which also put ISIS and climate change in second and third places respectively. – Anna Rzhevkina

SHUTTERSTOCK

What do Poles fear?

Threats in the job market Entrepreneurs have their own fears. Store owners are afraid that the Sunday trade ban will further push their profits down. In March over 500 small and medium stores signed a petition pointing out the negative effects of the ban and asking for its abolishment. The Prime Minister admitted that the ban’s outcome was different than expected, but he refrained from commenting on any possible solutions. Regular workers, in turn, are afraid that robots will take their jobs within the next decade. Nearly 20 percent of Poles are worried that their workplace will disappear due to technology development. Still, relatively few employees are willing to improve their skills, according to Deloitte. Finally, as the Brexit deal is left hanging in the air, a small group of Poles fear the collapse of the EU, while a larger group is scared that the country will switch to the euro. Fortunately for the latter, Monitory Policy Council member Eryk Łon claimed that Poland should never change its currency and has even encouraged other countries to adopt the złoty instead.

The largest economic event in Central Europe

The 11th European Economic Congress

13-15 May 2019 Katowice, The ICC and Spodek Arena

Key topics: New Union, young Union. We choose Europe Robots among us. Technologies and the society Succession and family businesses Cities, metropolises, regions. Dilemmas of sustainable growth Power and power generation â&#x20AC;&#x201C; revolution, regulations, market Digitisation, Cyber hazards, AI

www.eecpoland.eu 46

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@EECKatowice

/EECKatowice

/EECPoland

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