WBJ Observer #4 May 2014

may 2014

Number 04

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

Poland’s first decade in the EU > 22

For daily news visit us at

wbj.pl

Pat Cox on europe’s problem with russia >16

Infrastructure update The state of Polish highways > 32

Dice+ The first Polish

product to hit Apple Stores > 40

3:26 PM

Staying healthy How Poles are becoming obsessed with fitness > 36

20 PAGES

OF REAL ESTATE N EWS

WITH

20 PAGES

REAL EST A NEWS TE

ean-13_9772353371403_04.pdf

Kulczyk talks global business

4/25/14

interview

CMY

• We G i r l s • C o c k t a i l b a rs • S e le n a • C o m m e n t a r y • N ew s

may 2014

als o in this issu e : C

European Economic Congress 2014

An expedition to conquer new territories requires a reliable team. We are experienced merger and acquisition advisors, operating in Poland and around the world.

Financial audit • Tax advisory • Accounting Legal advisory • Due diligence • Mergers & Aquisitions

RSM Poland employs more than 110 professionals in Warsaw and Poznań. RSM has over 33 thousand professionals worldwide.

lll IN THIS ISSUE Try these:

lll news

4-6 In Review Latest news 7 Who’s News Appointments 8 Facts and Figures Economy 9 Infographic Browsing the net 10 Time Machine 10 Calendar

lll commentary

12-13 Politics Putin’s scare tactics 14-15 Media Is print dead?

22-26

lll features

poland’s decade in the eu 53-73

lokale immobilia

28-31

jan kulczyk interview

32-34 Infrastructure Polish highways 36-38 Health Staying fit

lll entrepreneurs

40-42 Dice+ Reinventing the dice 44-46 Selena Chemical giant 47-49 WeGirls Toy story 50-51 Management corner Persuading others 74-75 Cityscape Szczecin 76-77 Ranking Business Consulting Companies 78-83 Events

lll lifestyle

16-20

84-85 Gadgets 86 Cocktail bars 87 Hotels 88 On a final note

43-44

pat cox interview

WB J OBSERVER • m a y 2 0 1 4

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

made in poland

investing in poland

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

book of lists

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

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

Targeted at: Foreign investors

Distribution: 15,000 copies to magazine subscribers, conferences, trade fairs

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

Next edition: Q4 2014

Next edition: September 2014

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m a y 2 0 1 4 • WB J OB S E R V E R

lll INREVIEW News highlights of the past month

Govt. adopts renewable energy draft bill A new bill introduces an auction system aimed at supporting and increasing the Polish production of renewable energy. The government hopes that it will result in at least 15 percent of the country’s energy mix coming from renewables in 2020. According to government data, the new support system will cost PLN 3.7-3.8 billion in 2015 and PLN 4-4.3 billion in 2020, compared to PLN 4.6-6.2 billion in 2015 and PLN 7.5-11.5 in 2020 which the current system would cost.

Tusk calls for energy union within the EU

an article published in the Financial Times, Poland’s Prime Minister Donald Tusk proposed the creation of an energy union after Russia’s recent activity in the Ukraine. “Regardless of how the stand-off over Ukraine develops, one lesson is clear: excessive dependence on Russian energy makes Europe weak,” Tusk wrote in the article. Poland’s PM argues that since the EU is already creating a banking union and is jointly buying uranium for its nuclear power plants, a common gas-buying policy should be the next step. “I therefore propose an energy union. It will return the European Community to its roots,” he wrote. Such a union should be based on several elements, he said, the first of which would be the creation of a single European body that would buy gas for the whole bloc. The share of Russian gas rose to around 30 percent from 22 percent in 2010, while Russia’s oil imports accounted for around 35 percent of EU use.

m a y 2 0 1 4 • WB J OB S E R V E R

French-based Total has decided against renewing its license in Poland and will cease shale gas exploration in the country when it comes to shale gas exploration, a representative from the Polish environment ministry confirmed with the Polish Press Agency. Total held a license in Chełm, eastern Poland. “There wasn’t much there,” an anonymous source told PAP, adding that Total wasn’t very active in exploiting the license. “They used the site as a piece of real estate, something they could show their investors to prove they have a Polish license, not to actually look for shale gas,” the source added.

Images: Shutterstock, DPD, FIAT, M Śmiarowski/KPRM

France’s Total dumps shale gas exploration in Poland

n ew s

Shorts

>> hp up to no good

PZU acquires RSA assets

Hewlett-Packard

admits to corruption in Poland DPD to buy Siódemka DPD Polska, a subsidiary of French postal operator La Poste, will buy a 100 percent stake in courier delivery company Siódemka from private equity fund Abris Capital Partners. It services some 12,000 companies and had PLN 336 million revenue last year. Siódemka and DPD Polska combined will control over 20 percent of the Polish market.

Worldwide IT giant Hewlett-Packard (HP) admitted that it had been involved in bribery cases through its offices in Russia, Poland and Mexico. In Poland, a company from the HP group provided more than $600,000 worth of gifts and cash to be able to get contracts from the Police. Polish prosecutors had earlier said that an HP executive was found to have given bribes. The company will pay $108 million to the US Department of Justice and Securities and Exchange Commission. Polish officials said dozens of people had been charged as part of an industry-wide investigation of corruption dating from 2007 to 2009, among them representatives of major information technology companies, government officials and former police officers.

Poland catching up with West in terms of wealth

Fiat to produce new model in Tychy Fiat Auto Poland will produce a new car model in its Tychy plant in southern Poland, Deputy Prime Minister Janusz Piechociński said. The company should officially announce this in early May, he added. “I have met Fiat representatives. They will announce good news at the beginning of May, not only for employees at Tychy, but also for the whole sector,” Piechociński said. In 2013, Fiat Auto Poland had a net profit of PLN 291.3 million, the best result in several years. The profit grew despite a decline in car sales, which amounted to 295,700, 15 percent less than in 2012.

Poland’s largest insurer, PZU, purchased the Polish unit of Link 4, as well as four companies in Lithuania, Latvia and Estonia, all owned by British RSA. The deal value totals €360 million. Thanks to the transaction, PZU will become the market leader in Latvia and Lithuania and thirdbiggest insurer in Estonia. The deals are expected to be completed before the end of this year, pending regulatory approval.

on the rocks

26.7 mln bottles

of Scotch whisky were exported to Poland in 2013, representing 39 percent growth year-on-year.

Poland’s GDP per capita is to reach 74 percent of the EU average by 2017, according to a plan prepared by the country’s finance ministry and cited by the Polish Press Agency. In 2008, GDP per capita in Poland was 56 percent that of the EU average, rising to 67 percent by 2012.

WB J OBSERVER • m a y 2 0 1 4

news

Polish Defense Minister, in an interview with Reuters.

>> domestic

Smolensk disaster continues to divide Poles

huge rift in Polish society surfaced once again on the fourth anniversary of the Smolensk catastrophe in which 96 people died, including President Lech Kaczyński and his wife Maria. Two separate ceremonies were held on the day, April 10. The official one was attended by officials, while at the same time Jarosław Kaczyński, leader of the Law and Justice opposition party and identical twin brother of the late president, attended mass at a church in Warsaw and then gathered with supporters

outside the Presidential Palace to pay their respects to the dead. Kaczyński has rejected official explanations of the cause of the Smolensk air disaster, subscribing to the version of events presented by his ally, Antoni Macierewicz, whose latest theory is that there was an explosion on board the plane. An opinion poll for the Gazeta Wyborcza daily by the Millward Brown pollster found that almost one-in-four (23 percent) of respondents believe that the death of President Kaczyński was the result of an “assassination.”

was finished, the project is 91-percent complete. Deputy CEO Jarosław Romanowski said that the company expects to launch production in the Sierra Gorda mine within the next few months. The launch will be followed by a ramp-up period, which will last throughout the second half of 2014.

NATO to increase its presence in Eastern Europe NATO will deploy more forces to Eastern Europe as the tension between Ukraine and Russia continues to escalate. “Today we have agreed a package of military measures. ... Our defense plans will be revised and strengthened,” NATO head Anders Fogh Rasmussen said after a meeting of all 28 members of the transatlantic alliance. Rasmussen did not specify how many troops will be deployed and where exactly, but said that the alliance will increase its presence in the Baltic Sea region and in eastern Mediterranean.

PLN 12.5 billion is the value of confectionery products sold in poland last year.

may 2014 • WBJ OBSERVER

Images: Shutterstock, KPRM, KGHM

Tomasz Siemoniak,

“To be effective, KGHM’s Sierra Gorda NATO needs to have project 91% complete the capacity. It Poland’s copper and silver mining giant needs to have it KGHM has announced the completion of also in eastern a new stage of its Sierra Gorda project in Europe. Chile. The company said that after pre-stripping

n ew s / app o int m ents

Who’s News Alez Remez was appointed General Manager and Chairman of the Board of Xerox Poland. “I am honored to be appointed General Manager of Xerox Poland. I will undertake this challenge with huge commitment, using the experience I gained while working at Xerox,” he said. Before his appointment he worked for the company branches in Israel and Ukraine. He succeeded Kinga Piecuch, who was Chairman of the Board and GM of Xerox Poland in 2013. Piotr Kaczmarek will take over the Getin Holding CEO spot starting from June 2014. Kaczmarek will replace Rafał Juszczak who has stepped down from his post and will become the holding’s deputy CEO. Kaczmarek has worked for Getin Service Provider, Europa Życie and Lukas Bank. Recently he was a board member at Alfa Bank in Ukraine. Paulina Koperska was named the new CEO of Krynica Vitamine, a private label beverages producer. She will replace Konrad Subda in that role. Previously, Koperska worked for Danone and played a key role in the group’s acquisition of Żywiec Zdrój. PwC has expanded its team by 19 new employees who previously worked at the Polish branch of Roland Berger. Among them are Krzysztof Badowski and Maciej Korzeniowski who have joined the consultancy as partners. Additionally, Badowski will helm the consumer goods & retail CEE / CIS department.

•

WB J OBSERVER • m a y 2 0 1 4

n ew s / ec o n o m y

facts and figures Data overview

WARSAW STOCK EXCHANGE IN MARCH 2013

450 450 450

DataData overview overview

0.7%

WARSAW STOCK EXCHANGE WARSAW STOCK EXCHANGE Number of listed companies IN MARCH 2013 IN MARCH 2013

was Poland’s CPI inflation in March.

0.7% 0.7% was Poland’s CPI CPI was Poland’s inflation in March. inflation in March. €31.3 million

Trade volumes

NumberNumber of listedof companies listed companies

13.5% 13.5% 13.5%

UNEMPLOYMENT (March)

Shares Shares Bonds

PLN PLN 62.91 billion billion PLN62.91 278 million

UNEMPLOYMENT UNEMPLOYMENT (March) (March)

2.5% 2.5% 2.5%

remains the National Bank of Poland’s reference remains the remains the interest rate. National Bank Bank National of Poland’s reference of Poland’s reference interest rate. interest rate. Better perspectives for job market?

Bonds

PLN PLN 278 278 million PLNmillion 3.05 billion

Futures Futures Growth of main index (WIG), ytd

PLN PLN 3.05 billion 3.05 billion 2.12% Growth ofGrowth main index (WIG), ytd(WIG), ytd of main index

2.12% 2.12%

PLN 4,017.75 PLN PLN 4,017.75 4,017.75

For the first time since the pre-crisis year 2008, Poland’s registered unemployment rate declined in February, by 0.1 percentage points month-on-month, to 13.9 percent. It then dropped further, to 13.5 percent in March. The Labor Ministry is even more optimistic when it comes to the coming months. Deputy Minister Jacek Męcina has said that the jobless rate could decline to 13.2 percent in April. Meanwhile, the average monthly salary has surpassed PLN 4,000 for the first time, growing by 4.8 percent yearon-year in March. Employment grew by 0.5 percent y/y.

was the average salary in the Polish enterprise sector in March.

was the was average salary insalary in the average the Polish theenterprise Polish enterprise sector insector March. in March.

Towards rebound

m a y 2 0 1 4 • WB J OB S E R V E R

Jan. '14

Feb. '14 Mar. '14

Mar. '14

Dec. '13

Oct. '13

Nov. '13

Mar. '13 '14 Nov.

Dec. '13

Jan. '14

Sep. '13

Feb. '14

Jul. '13

Aug. '13

Feb. '14 Oct. '13

Jun. '13 Nov. '13 Jul. '13

Jan. '13 '14 Sep.

Apr. '13

May '13 Oct. '13 '13 Jun.

Dec. '13 '13 Aug.

Mar. '13

Sep. '13 May '13

Jul. '13 '13 Mar.

May '13

Jun. '13

Feb. '14

3 8 2 7 1 6 0 5 -1 4 -2 3 -3 2 1 0 -1 -2 -3

Mar. '14 Apr. '13

8 7 6 5 4 3 2 1 0 -1 -2 -3

Mar. '14 Mar. '13

Dec. ‘13

Jan. '14

Feb. '14

Oct. '13

Nov. '13

Sep. '13

Jul. '13

Aug. '13

Jun. '13

Apr. '13

May '13

Mar. '13

Jan. '13

Feb. '13

Dec. '12

Oct. '12

Nov. '12

Sep. '12

Jul. '12

Aug. '12

Jun. '12

Apr. '12

May '12

Jun. '12 Mar. '12 Jul. '12 Apr. '12 Aug. '12 May '12 Sep. '12 Jun. '12 Oct. '12 Jul. '12 Nov. '12 Aug. '12 Dec. '12 Sep. '12 Jan. '13 Oct. '12 Feb. '13 Nov. '12 Mar. '13 Dec. '12 Apr. '13 Jan. '13 May '13 Feb. '13 Jun. '13 Mar. '13 Jul. '13 Apr. '13 Aug. '13 May '13 Sep. '13 Jun. '13 Oct. '13 Jul. '13 Nov. '13 Aug. '13 Dec. ‘13 Sep. '13 Jan. '14 Oct. '13 Feb. '14 Nov. '13 Mar. '14 Dec. ‘13

Apr. '12

May '12

Mar. '12

Year-on-year CPI inflation in Poland, March 2012–March 2014

Aug. '13 Apr. '13

8 Year-on-year growth of industrial 7 6 output in Poland, March 2013– 5 March 2014 4

Still low

Bonds Futures

“It seems that the trend has been permanently reversed and that the decline will continue in the coming months.” Labor Minister Władysław Kosiniak-Kamysz on the perspectives for Poland’s registered unemployment figures.

Data source: Warsaw Stock Exchange, Central Statistical Office

€31.3 million €31.3 million

Trade volumes Trade volumes PLN 62.91 billion

Image: The Ministry of Labor and Social Policy

was Poland’s foreign trade surplus in was Poland’s was Poland’s January-February. foreignforeign trade trade surplussurplus in in January-February. January-February.

n ew s / inf o graphic

Browsing the web

ver wondered what people look for on the internet in various CEE countries? As you can see, answers wildly differ not only depending on the country, but also according to gender. While men are mostly consistent in their interests, women’s priorities are different in each of the polled countries (except Moldova and Turkey).

WHAT IS THE MOST POPULAR ONLINE CONTENT AMONG WOMEN?*

WHAT IS THE MOST POPULAR ONLINE CONTENT AMONG MEN?*

TOP 3 CATEGORIES OF WEBSITES WHICH ARE THE MOST POPULAR AMONG WOMEN

TOP 3 CATEGORIES OF WEBSITES WHICH ARE THE MOST POPULAR AMONG MEN

THE CZECH REPUBLIC***

POLAND

62%

MOLDOVA

UKRAINE

63%

Pregnancy & Motherhood

62%

Life Style

Health, Home & Family

PRODUCERS

62%Sony

56%Sony Ericcson

Nokia

MOST IMPORTANT EVENTS ON PORTABLE DEVICES MARKETS

Apple

Samsung

57%

others

Clothing

Health

iPad*

iPhone*

Galaxy S*

Asus Google Nexus 7

* ALL MODELS

62%

56%

73%

62%

64%

61%

56%

70%

VII

Hobby 39%

20%

21%

40%

60%

Greeting 9% 1% 20% cards 80% online

60%

56%

60%

51%

65%

MARKET SHARE

53%

66%

69%

64%

74%

48%

64%

59%

62%

72%

47%

62%

56%

55%

70%

Erotica

Sport

News

Computer games

Company websites

V 2010

52%

iPad 1 users go online

Employment

Search Engines

100%

VI 2010

TIME LINE

53%

Automotive

GoClever*

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

NOTE!

UKRAINE

67%

Women

Social Network

DEVICES

MOLDOVA

Health

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

POLAND

IT & GSM

Men

Automotive

Entertainment

VI 2010

release of Samsung Galaxy S

release of iPhone 4

VIII IX X XI

34%

XII

24%

17%

14%

13%

0,6%

I 2011

XII 2010

percentage of online trafﬁc generated by portable devices

II III IV V

VI 2011

Apple catches up with Nokia

VI VII

iPad catches up with iPhone

X 2011

VIII

release of iPhone 4 S

X 2011

Steve Jobs dies

XI XII

19%

29%

22%

10%

20%

12%

0,3%

2,4

XII 2011

percentage of online trafﬁc

I 2012

Samsung catches up with Nokia

II III

Sony Ericsson taken over by Sony

III 2012

third generation iPad debuts

IV V

V 2012

release of Samsung Galaxy S III

VI VII VIII

IX 2012

56%

26%

34%

release

59%

Women & Mothers

XI XII

I 2012

of iPhone 5 64%

Luxury 26%

13%

Culinary XII 2012

4,2

13%

I 2013 II III

percentage of online trafﬁc

Sony catches up with Nokia

56%

61%

53%

55%

60% IX 2013

Family

Automotive

Erotica

Sport

I 2013

56% Health

Life Style

Health

VII 2013 Samsung Galaxy S 4 enters the market

Social Network

IT & GSM

Photography

Automotive

Maps

V VI VII

Employment & Education

VIII IX

SLOVAKIA**** X

Culinary

HUNGARY

Women

release of iPhone 5 S

BULGARIA

9,3

XI 2013

iPad Air launched on the market

TURKEY**

Video

Sport

SLOVAKIA****

Online dating

HUNGARY

IT & GSM

BULGARIA

Automotive

TURKEY**

Source: gemiusAudience, December 2013 XII 2013 * XII Analysis in which29% the study9% conducted of webpages 23%includes 8% 1% into 0,2%account the categorization 31%countries 11% by Gemius 10% takes percentage of ** IAB Turkey Internet Audience Measurement Study, October 2013 online trafﬁc ***I 2014 NetMonitor – SPIR – Gemius and Mediaresearch **** AIMmonitor – IAB Slovakia – Gemius and Mediaresearch II

I 2014

31%

29%

12%

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

Samsung catches up with Apple

Source:

WB J OBSERVER • m a y 2 0 1 4

TIMEMACHINE From our pages . . . 15 years ago

10 years ago

5 years ago

May 1999 Franchising is becoming increasingly popular in Poland. “The period of unrestricted economic growth is over, I’m afraid,” said Maciej Grabowski, a researcher with the Gdańsk-based Institute of Market Economics. “In the early ‘90s, the risk of running a business was extremely low. Now the situation is changing. … And that’s why franchising is so attractive. It means being connected to a strong brand and know-how. Thus it provides stability.”

May 2004 As of May 1, six of the European Union’s ten poorest regions now lie in Poland. In two of these regions at least – Lublin and Podlasie – their problems have been immediately compounded by accession and the creation of a new EU border on Poland’s eastern flank. Cross-border trade conducted by SMEs which provides the bulk of employment in these regions, is set to be cut short too, with visa and trade restrictions.

April 2009 With the Twitter phenomenon exploding around the globe, Polish micro-blogging sites are looking to get a piece of the action. Blip (blip.pl), which is owned by instant-messaging service Gadu-Gadu, is the biggest Polish Twitter equivalent. Internet portal Onet.pl and daily newspaper Życie Warszawy have accounts on the site. “Blip is aimed particularly at the Polish community … Twitter was just an inspiration for us and we did not copy it. These are not the same services,” said Marcin Jagodziński, co-creator and architect of Blip.

May 1999 The sale of a 55 percent stake in Bank Pekao to a consortium comprising Unicredito Italiano and German insurer Allianz is likely to be completed by the end of June. Both companies were chosen over Citibank. Under the terms of their offer, UniCredito would purchase 50.1 percent of Pekao and Allianz would take 2 percent. The bid also includes an investment program. u

May 2004 GlaxoSmithKline sued Poland at the European Tribunal of Human Rights, which could mean fines of around PLN 27.2 million. The claim regards the involvement of a judge in its case at the Supreme Administration Court regarding the alleged inflation of GSK’s custom duties. The company claims the judge was not impartial as she previously held the position of vice-president of the Customs Office. u

April 2009 LOT was near bankruptcy after the company reportedly lost PLN 700 million in 2008, with misguided hedging on fuel prices alone accounting for PLN 300 million in losses. The firm is apparently also unable to pay invoices because it has no money and is being refused a bank loan, according to daily Rzeczpospolita. u

CALENDAR

MAY EUROPEAN ECONOMIC CONGRESS

MAY

7-9

INWESTOR 2014

MAY

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

21-22

FACILITY MANAGEMENT & PROPERTY FORUM

MAY

22-23 10

Event: Over 20 sector panel discussions with the special emphasis on energy from prosumers to renewables. The event will be accompanied by the FM & PM Awards agala. Location: Novotel Airport Hotel, Warsaw Web: powermeetings.eu/

m a y 2 0 1 4 • WB J OB S E R V E R

ABSL CONFERENCE

MAY

22-23

Event: Local authorities and special economic zones will present their real estate offer and other incentives. Location: Expo Silesia, Sosnowiec Web: exposilesia.pl/inwestor/pl/

Event: “Poland - taking on the world” is the main theme of the conference, with special guest, former US Secretary of State, Madeleine Albright. For the fifth year it’s Europe’s most important business services sector event. Location: Poznań Congress Center Web: absl.pl/conference-2014

Cee Trade Fair For Retail Investment

May 28-29, 2014

NATIoNAl STAdIum, wARSAw, PolANd

are you ReDI? CEE TRaDE FaIR FoR ReTAIl INVeSTmeNT

Retailers – developers – Cities

European Meeting Point

Cee retailers, developers, managers and city representatives International Franchise Centre high Street development Centre

Organizer

1200+ PARTICIPANTS 120+ exhIbIToRS 400+ ReTAIl NeTwoRkS

redi.org.pl

Media patron

commentary / politics

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

Poles shouldn’t let Putin scare them More Poles fear their country could lose its independence then at any time since the end of communism

may 2014 • WBJ OBSERVER

safer than it is today, while Kaczyński and PiS say while a few Poles have gotten rich in the free market, most live from hand to mouth, with the resulting income inequality being a grave danger to social cohesion. They also contest that Poland today is a safe country and have, for years, warned that the country’s former enemies, especially Russia, still have their sights set on dominating Warsaw. Taking into consideration the fact that Tusk’s party has won six out of the last six elections in Poland, including parliamentary polls in 2007 and 2011, as well as a presidential election in 2010, it seemed safe to assume that there were more Poles in the happy camp than in the angry (and fearful) camp. Enter Vladimir Putin The Russian strongman’s recent actions in Ukraine have shaken Poles. An April CBOS poll revealed that 47 percent of them now think the country’s independence is at risk with 4 in 5 Poles pointing specifically to Russia as the main threat. This has been the highest level of concern for the country’s independence since the survey was first carried out in 1991. In comparison, when the poll was taken in December last year, only 1 in 7 Poles thought Poland’s independence was under any threat. This is a radical shift in mood and will likely have political consequences. So far, while Putin’s actions would seem to have validated Kaczyński’s position, PiS has not yet derived any political benefit from the Ukrainian crisis. On the contrary, Tusk’s popularity has increased as he appears to

Images: Shutterstock

2014

was supposed to be a year of joyous anniversaries in Poland. In the space of 12 months, the country was supposed to celebrate its 10th anniversary as an EU member, its 15th year as a NATO member, as well as the 25th anniversary of the first partially-free elections in Poland, which effectively ended almost half a century of communism. The political debate this year was supposed to be centered around how far the country had come since the collapse of communism, with the dividing line being between those who believe the last quarter of a century has been the best period in Polish history and those who believe it has been more or less of an unmitigated disaster. Of course, many Poles tend to take a more nuanced view of things, but politically, most of them are either firmly in one camp or the other. The “happy camp” let’s call them, is represented by the country’s ruling party Civic Platform (PO) and its skillful prime minister Donald Tusk, while the “angry camp” is led by Law and Justice (PiS) and its radical leader Jarosław Kaczyński. Tusk and his party say Poland has never been richer or

commentary / politics

be handling the situation relatively calmly. But as we ready for European parliamentary elections this month, Poles are openly asking for more NATO involvement in the country. The CBOS poll showed 64 percent would like a bigger NATO presence in Poland and Tusk and his government have echoed this opinion. Yeah, those biceps are big. But not that big It is understandable that Poles have become concerned as Putin flouts international law after international law with seeming impunity. It is even more understandable when one takes into account history and the number of times the Kremlin has meddled in Poland’s affairs. But it would be a mistake for Poles to buy into Kaczyński’s negative vision of Poland being an unsuccessful country which could be conquered and colonized at a moment’s notice. This is not a true version of reality. While Putin has undoubtedly raised the stakes, there is absolutely no indication he would be foolhardy enough to even attempt what he is now doing in Ukraine in Poland. Poland is both an EU and a NATO member. Encroaching on Poland’s territory would amount to a declaration of war on the West. While Putin can flex his muscles in Eastern Europe and even raise fears elsewhere with his sizeable army and nuclear weapons, he knows very well that Russia is no match for the

West (which in this case would be both the EU and the US) both militarily and economically. The EU’s economy is roughly 8 times bigger than Russia’s while the US defense budget is also roughly 15 times that of Moscow’s. So let’s keep things in perspective here. Putin is not a modern-day Adolf Hitler with a grand vision for taking over the world. He is simply a dictator who, as all dictators, is most terrified of being perceived as weak by his people and by those around him, envious of his power. The dictator’s logic thus left him with little choice but to at least try and get back some of the territory which he once controlled. Let’s not forget, Putin was more or less the behind-thescenes master of all of Ukraine when Viktor Yanukovych was the country’s president. Today, he is fighting for control over some parts of eastern Ukraine while seeming to have resigned himself to the fact that the western parts of the country are lost to him for the foreseeable future. The worst thing Poles could do now would be to turn to the populist, Russia-bashing, fear-mongering politics that Kaczyński and his party delight in. It is heartening to see that they seem not to be going that way, at least for now. Putin might have the power to ruin Poles’ anniversary year, but they should never give him the power to strike fear into their hearts. u

WBJ OBSERVER • may 2014

c o m m e n t a r y / m edia

john beauchamp John Beauchamp is managing editor of wbj.pl and formerly head of Polish Radio’s English Section

Death throes for print? Daily print newspapers are feeling the pinch, yet their online editions are hardly making up for lost sales

or the media industry, plummeting newspaper sales have become a hard-hitting fact of life. The majority of media houses are still on their quest for the supreme business model when it comes to print and online media, with the latter still proving a tough nut to crack. Spiraling print sales When checking up on newspaper sales in Poland, it is obvious to see that print is feeling the pinch. Looking at recent figures from ZKDP (Poland’s Audit Bureau of Circulations) and Wirtulanemedia.pl, of the nine biggest newspapers in the country, only two managed to generate greater year-on-year sales in February 2014: the Przegląd Sportowy sporting daily and the bourse-oriented Parkiet, with 0.6 percent and 16.9 percent growth respectively. For the rest, the past year has been a downward spiral. Quality daily heavyweights Dziennik Gazeta Prawna and Rzeczpospolita noted a drop in sales of 9.5 percent and 8.8 percent respectively, while sales of Poland’s number one broadsheet Gazeta Wyborcza plunged as much as 22.1 percent. Meanwhile, Poland’s biggest-selling daily, the tabloid Fakt, posted a drop of 6.2 percent. The actual figures look more daunting, however. For Fakt, for instance, this meant a drop in average daily sales of 360,389 in February 2013 to

339,103 a year later. When looking at Gazeta Wyborcza, the numbers are more striking, as they fall from 213,335 to 174,707. And time is fast running out for the majority of publishers who are now faced with massive problems, both in terms of falling readership and a decline in advertizing sales: by as much as 14.9 percent this year, one media house estimated in April. Enter the e-daily So while sales are falling for daily print newspapers, publishers have made a concerted effort to get their titles on the web with dedicated online editions. And I’m not talking about internet sites which may be run by the same title, such as Gazeta.pl, but an e-edition of the printed paper. Sales in e-newspapers managed to increase pretty much across the board between February 2013 and February 2014, although here too a few papers did lose out. Here, the biggest gain in terms of sales was made by Dziennik Gazeta Prawna, which noted growth of 13.6 percent: from 8,170 e-newspapers sold in February 2013 to 9,280 a year later. Rzeczpospolita isn’t doing too badly either, with growth amounting to 72.4 percent: from 4,423 to 7,623 in the aforementioned period. The biggest winner, however, was Przegląd Sportowy, with a whopping 210.1 percent growth, even though

“To try and make up for losses, many media outlets started to put up paywalls around their content, to mixed reactions.

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c o m m e n t a r y / m edia

the actual number of online sales rose from 129 in February 2013 to 400 in February 2014. Now, considering sales of the print edition of Przegląd Sportowy stood at 38,168 in February 2014, 400 is merely a fraction of total sales. Admittedly, the latest sales figures of Polish e-dailies generally make up a higher percentage of total sales numbers, yet they in no way make up for the losses which are being generated from a drop in print revenue. Paywall dilemma The problem is that the majority of people who turn to the web for their news don’t particularly feel like

paying for the privilege. To try and make up for losses, many media outlets started to put up paywalls around their content, to mixed reactions. The worst hit have been sites which used to be completely free and then found themselves having to charge for access. There is a lot to be said about charging for online content, for obvious reasons: it keeps media in business. But the advent of online editions of daily newspapers has encroached onto the territory of web news publishing which can otherwise be accessed for free somewhere else. As such, I suspect that the dailies won’t be recuperating their print losses anytime soon, and the business model conundrum continues while media 2.0 continues to evolve. u

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IN T E RVI E W / pat c o x

Europe’s game plan

“The EU is going through a big test” Pat Cox, a former president of the European Parliament and a recent EU Special Envoy to Ukraine, discusses the face-off the West is now having with Russia over Kiev’s future, the radicalization of the political climate in Europe in the context of upcoming EP elections and whether the euro zone crisis is truly over

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

What were your first impressions upon arriving in Ukraine for your mission? Myself and former Polish president Aleksander Kwaśniewski arrived in Ukraine for our mission pre-Maidan. The mission was the result of a meeting between former Ukrainian prime minister Mykola Azarov and the president of the European Parliament Martin Schulz in Brussels. At the time, Ukraine was completely isolated because of the selective justice applied in the Yulia Tymoshenko case. It was decided the EU should choose people who would visit Ukraine, follow the case, meet prisoners, prosecutors and politicians. And so Kwaśniewki and myself spent 80 days on 27 different trips to Ukraine. We met the prime minister each time we were there and we met then-president Viktor Yanukovych during at least half our visits. However, the mission later morphed into something much larger as we became a key point of exchange between not only Brussels and Kiev, but also between the Ukrainian government and the opposition, who basically were not speaking to each other at the time but would each speak to us. Just before the Vilnius summit last year, President Yanukovych informed us he was pressing the pause button on Ukraine’s Association Agreement with the EU. Then came the Vilnius summit at which nothing was signed and then Maidan started. It did not start with fascists and anti-Semites as the Russian side is now claiming, but with ordinary Ukrainians who simply said “no more.” People were first annoyed with their government for not signing the agreement with the EU, and then later grew increasingly furious with their own polity and its actions in recent years. Whether this would have lasted long I don’t know, but Yanukovych made some bad decisions to have people beaten up and the situation went from a contained non-aggressive mass protest into a revolution. Ukraine has a very weakened economy, a fragile state and it will need tender loving care for rather a long time. Does the economic and political situation risk getting much worse in Ukraine before it potentially gets any better? Yes, it does. We are seeing an increasingly hard-line energy policy from Moscow, meaning higher gas prices. Ukraine does some 40 percent of its trade with Russia. Moreover, it has no economic buffers per se, such as sizeable foreign reserves, nor does it have a strong currency. When people start having to pay more for gas or food, those who feel they’re losing will blame the new government headed by Prime MinisterArseniuk. Add to that the situation whereby for the first time since Saddam Hussein invaded Kuwait in 1990, one UN member has annexed the territory of another UN member. This despite the fact that when you join the UN, one of

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Image: Wikimedia

IN T E RVI E W / pat c o x

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IN T E RVI E W / pat c o x

the first things you agree to do is respect other members’ territorial integrity. Then you have some 40,000 soldiers on the border with Ukraine, yet Russia says they are not there to invade; well I tell you, they are hardly there to reassure either. This reminds me of Bismarck’s saying that something is a political fact only after it has been officially denied. At a minimum, Russia wants to destabilize Ukraine; at a maximum force federalization on the country.

You’re of course correct about the conditionality of any funds received, especially from the IMF. Sometimes we take medicine: we don’t like it, but if it cures us, then it’s better than the disease. Let me give you an example: Ukraine has one of worst ratios of energy efficiency in the world. Its energy consumption is a disaster. Ukraine consumes gas like a junkie does heroin. And that’s a place you don’t want to be, especially when you are currently paying one of the highest prices for gas in Europe. When our mission was there, we had a lot of dealings with Andriy Kluyev, who at the time was head of national security. Curiously enough, he was also the one who decided when the government would switch on the heating. Most government offices have no thermostat, so it’s all on or all off. One week we were there and the weather was summer-like, boys were in Tshirts, girls were wearing sum-

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“Ukraine consumes gas like a junkie does heroin. And that’s a place you don’t want to be, especially when you are currently paying one of the highest prices for gas in Europe.

mer dresses. But the heating was switched on all over the city. We went to Kluyev’s office, it was too warm, the windows were open to release the heat while the air conditioner was straining itself to work within the excessive heat and open windows. This is a serious waste of energy and this has to stop. It is in Ukraine’s own interest to stop this kind of practice and collective failure to do so has proven to be a disaster. So yes, there is danger of another revolution. The Russian revolution came in two parts, first in March then in November. So could we have a March bourgeois revolution and then an November proletariat revolution? Anything is possible, but the EU now understands that Ukraine needs some quick transfusions of money. Do you see any potential long-term solution to the Ukraine crisis? Ukraine should be discussed as a bridge between East and West and not as a border between East and West. This should be working to its advantage. We could look at other models like we have in Austria or Finland. In these cases, the non-involvement of the Soviet Union in their affairs was connected to non-alignment in the two states. Austria and Finland are in the EU but not in NATO. But you cannot have such a discussion when someone is standing over you with a big stick and threatening to beat you. So right now, the preconditions do not exist for such a solution. Even though all the other options are suboptimal, you work with what you have. This seems to be a conflict between values and brutal economic reality. Russia is willing to pay an economic price for a political victory. What price is Europe’s elite ready to pay to defend its professed values? The honest answer is an educated “don’t know.” But doing nothing is not an option. The person who asserts values but then stands

Images: European Executive Forum

All these factors you mentioned, plus the inevitably painful economic reforms the West will demand from Ukraine before loaning it money, seem the perfect storm to usher in a counterrevolution in Kiev in the near future. What do EU leaders have in mind to prevent such a scenario?

IN T E RVI E W / pat c o x

An Irishman in Europe Pat Cox was born in 1952 and first came to prominence as a television journalist in Ireland where he presented a popular current affairs program. He was initially elected MEP in 1989 and spent fifteen years in the European Parliament serving as its president from 2002 to 2004. In 2004 he was awarded the Charlemagne Prize for his achievments with regards to the Eastward expansion of the European Union. In 2009 Cox co-founded the European Privacy Association.

for everything, stands for nothing. This is a big question you ask, not a little one, and it is a big testing moment for the EU, not a little one. Words of solidarity are important but second to acts of solidarity. Action speaks louder than words. Timing is also key. With Europe’s storage facilities currently full of gas, it is now easier to plan what to do next than, say, next November when it’ll be cold. I was a journalist when British labor unionist Arthur Scargill took on Thatcher in the coal strikes. The odd thing is, he took her on in the springtime, whereas the UK would

only run out of energy supplies in the winter. Thatcher had six months to lock him down, lock him out and knock him out. And she did just that. The Russian budget receives some 28 percent of its revenue from taxes on energy sales. If it’s not selling, it’s not getting revenue and hitting its own budget. What goes around comes around, in every direction in this case. This month will see elections to the European Parliament. How do you think the rising popularity of antiimmigrant, euro-skeptic and, in some cases, far-right parties in countries like France, the UK, and the Netherlands will help shape out the pan-European polity in the coming years? Such parties exist, including in Poland: they are not new. The difference is we are after several years of a great recession. We have seen a rise in unemployment, a fall in investment, limited access to credit for SMEs, growing income inequality, growing numbers at risk of poverty and a growing distrust of banks and politicians. If ever there were fertile ground for such parties, it is now. Having looked at some election simulations, I believe the number of radical MEPs will be much higher after this month’s poll but not as high as some seem to expect. The non-attached group, which includes most euroskeptics, could grow from 30 to 90 MEPs. The British UKIP

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IN T E RVI E W / pat c o x

You are a former journalist yourself, so how do you think we went from headlines proclaiming bankers had caused the crisis to “oh it’s the fault of the immigrants and all those bureaucrats in Brussels”? Regarding immigrants, it is a classic general rule that when people are down, they look for someone to kick lower down the food chain. If you can’t get an immigrant then you get a dog. Regarding bankers they were in the target-line in 2009 and 2010, and a lot has been done to address problematic issues in their industry. Regarding why the blame shifted to Brussels, it all first started in Europe with the Greek crisis, then the peripheral countries came into play, then we started wondering if the core wouldn’t be affected as well, countries like Italy. And so the problems seemed to emanate from the euro zone itself. However, we shouldn’t forget that it was the euro zone member countries which decided they wanted one currency but no singular

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“yes, there is danger of another revolution. The Russian revolution came in two parts, first in March then in november. So could we have a March bourgeois revolution and then an October proletariat revolution? Anything is possible.

fiscal policy. We created a big bird with one strong wing and one weak wing, and then we crash landed on the weak one. Has the euro zone crisis been resolved? The euro zone crisis has been contained but not resolved. We are still facing discussions over whether to introduce Quantitative Easing in the EU and if yes, what kind. One thing we can’t afford is to avoid structural reform. OECD studies show that if the EU were to adopt labor taxes at the lowest level in the G20 states, the EU as a whole could add 3.5 percent to its GDP. If you took best practice from EU countries which have adopted them, and apply across the board, you would add 6 percent to the euro zone’s output over a decade. Then there are the potential benefits of an EU-US trade agreement being reached. The way to grow is more likely in structural reform, QE is not sustainable. What we need are short to medium term lifts that are sustainable in the way pumping money is not. There is a schizophrenic attitude towards the EU in Europe. On the one hand, Europeans want it to act fast and decisively during a crisis. On the other hand, they do not want to give its institutions the powers it would need to do so. How does one resolve this paradox? That’s a very interesting point. Also when things go wrong in particular countries, national politicians blame it on Brussels, but when something works, then it’s a result of their native genius. But European institutions are only allowed to do what treaties agreed upon have given them power to do. u

Image: European Executive Forum

will not be in that group nor will the British Tories or MEPs from Poland’s Law and Justice, who are all quite critical of Brussels. In effect, the squeezed middle will shrink from more than 80 percent to some 70 percent of the EP. And this 70 percent will somehow have to find it in itself to provide a qualified majority, meaning 50 percent plus 1 vote, on several major issues. Now while this 70 percent is broadly pro-European, there are differences between left and right. So after the elections, the challenge will be to mobilize a steady majority or settle for one legislation by legislation. We are definitely entering an intensely political period with intense bargaining, unchartered territory in a sense.

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b y r e m i a d e koya

Poland’s first decade in the EU

Images: Shutterstock

As Poles get ready to vote in the European Parliament elections this month, it seems a good time to ask how the country has benefited from membership in the European Union

before & after

$ 217 billion

$ 513 billion

was poland’s gdp in 2003,the year before it joined the EU

was the value of poland’s gdp in 2013

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Most of the memorable dates in Polish history have been tragic ones. Whether we are talking about September 1, 1939, when Germany invaded Poland and started the Second World War, August 1, 1944, when inhabitants of the countryâ&#x20AC;&#x2122;s capital initiated the Warsaw Uprising leading to the death of some 200,000 civilians, or December 13, 1981, when the

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But with the country gearing up for the European Parliament elections at the end of this month, one date at least was definitely worth celebrating. Poland has now been a member of the European Union for a full decade, having joined the economic and political bloc on May 1, 2004. That decade has ushered in breath-taking development in Central and Eastern Europe’s biggest economy. In the year before

Poland acceded to the EU, its economy generated a GDP of $217 billion. By 2013, that figure had rocketed to $513 billion. GDP per capita has risen from about 50 percent of the EU average to more than 65 percent. During the past decade Poland has received roughly €70 billion in EU

funds, one of the largest wealth transfers between nations in recent history. By the time you add the roughly €73 billion earmarked in cohesion funds for Poland in the budget years 2014-2020, the country will have received a windfall significantly larger than the value of the Marshall Plan calculated in today’s prices. And this does not take into account the tens of billions of euros that Polish farmers continue to receive in agricultural subsidies from the EU. Poland has also emerged as a stabilizing factor in Europe, being the only EU member state to avoid recession in 2009. In fact, in the crisis years of 2008-2011,

Poles have quickly mastered the modern art of consumption

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Images: Shutterstock, Maspex, Healthy Marketing Team

communist dictator Wojciech Jaruzelski declared martial law in Poland – Poles rarely have much to cheer about on anniversaries.

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the country saw cumulative GDP growth of nearly 16 percent – twice as much as its nearest EU competitor – while the EU economy as a whole shrank by half a percent. Young cosmopolitans But apart from the headline macro-economic figures, Poland and Poles themselves have changed as a result of EU membership. Young Poles today travel and study all over Europe, taking part in exchange programs or just simply packing up their bags and heading for the nearest airport. This of course has changed the country’s demographics significantly. Poland’s central statistics office estimates that 2.1 million Poles now live abroad, mostly within Europe. That figure peaked at 2.3 million in 2007, after which some people started to move back, albeit not in large numbers. The country’s population has thus shrunk from over 38 million to just over 36 million people. Meanwhile, hundreds of kilometers

of highways, expressways, bicycle and tourist paths have all been built with EU money. So have sports facilities for youth as well as kindergartens and pre-schools. It is difficult to find a large new construction project without a notice board in front of it highlighting the role of EU funds.

“Poland is no longer the eternal victim, consumed by self-pity.

Today, a trip through Warsaw, the country’s capital is like a journey in fast motion, full of people who have some catching up to do and are not willing to be deterred in their race to the top. Poland is no longer the eternal victim consumed by self-pity, as its citizens often used to view it in the past. A collective inferiority complex, shaped historically by the loss of independence and foreign oppression, has been transformed into a new sense of self-worth and burning, sometimes ruthless, ambition. Poland has strengthened its diplomatic position in the world mainly by strengthening its position within the EU since it joined. The country has likewise enjoyed

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The EU accession of Poland and seven other CEE countries in 2004 also made the EU a more credible pan-European bloc rather than merely a gathering of Western European countries with a smattering of their southern neighbors. So what next? This is not to say that Poland has overnight become a land of milk and honey for everyone. Unemployment remains stubbornly high at almost 14 percent. And this

despite the fact that so many young Poles have emigrated. In a recent interview, WBJ Observer asked Leszek Balcerowicz, who as a former finance minister, deputy PM and president of Poland’s central bank is widely regarded as the architect of Poland’s economic transformation from communism to a free-market economy, what eventual dangers still lie ahead for Poland. “Without additional reforms, demographic changes will lead us to a situation where

Young Poles today travel and study all over Europe

by 2020, we will lose a million people from our workforce. Secondly, we have the lowest private investment rate in the region,” said Balcerowicz. “And lastly, the biggest engine of Poland’s development, namely the quick tempo at which our productivity improves, is increasing more slowly now. We must employ tools to counter each of these dangers,” he added. Balcerowicz said there were still serious barriers to doing business in Poland and that deregulation had to pick up at a faster pace. Join the euro zone Poland needs to integrate even further with the European Union. It should join the euro zone for that is the absolute core of Europe. The only reason Greece is not bankrupt today is because it adopted the common currency. Should – knock on wood – any more historical catastrophes be lying in wait for Poland, it would serve it well to face them while a member of the world’s richest club. Poland’s EU accession would not have been possible without broad public consensus. Both political elites and Polish society supported the idea of reintegration with Europe. The determination to fulfill the criteria necessary to join the EU translated into a steadfast pursuit of EU-membership-oriented policies which ultimately helped modernize the country and its institutions. This same broad consensus will be needed in order to convince the public, who want Western European standards of living but not Western European prices, that joining the euro zone is in Poland’s strategic interest, both politically and economically. Without that, Poland will not be able to claim to be in Europe’s inner circle.

“Poland needs to join the euro zone for that is the absolute core of Europe.

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Regarding policy at home, as Leszek Balcerowicz said, “There is still space for a lot of reform in Poland. If we can force those through, then Poland will continue to catch up to the West at a good pace.” This newspaper certainly agrees with that. Here’s to the next decade of Poland’s EU membership being as successful as the first. u

All images: Shutterstock

political stability in the past decade. Prime Minister Donald Tusk has been in office for seven years now, making him one of the longest-serving European leaders around.

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i n te r v i ew / jan k ulc z y k

in t e r v i e w b y b e ata s o c h a & r e m i a d e koya

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i n te r v i ew / jan k ulc z y k

Poland’s richest man Jan Kulczyk, talks to WBJ Observer about his business plans for the future, his investments in Africa, Europe’s economic perspectives and what advice he would give foreign entrepreneurs who want to invest in Poland

WBJ Observer: Your investments in African countries such as Nigeria, Tunisia, Morocco and Mozambique have grabbed a lot of attention lately. Polish investors see Africa as a continent of possibilities but also as one which involves significant risk. What are the greatest challenges for investors who want to function in Africa? Jan Kulczyk: Risk is always calculated in an investment process. The point is to minimalize it by, for example, sector and geographical diversification. My companies are involved in projects in 30 countries on four continents. However, I don’t have any particular concerns regarding my African investments. Quite the opposite. I started investing in Africa in 2006. The next year saw the financial crisis erupt in the US. In the following years, southern European countries almost went bankrupt and the European Union became mired in recession. So you tell me, is Africa less predictable than well-developed economies? It definitely has a brighter future. In the next decade, Africa will be one of the fastest-developing regions in the world. According to the IMF, 10 out of the 20 countries with the highest GDP growth in the next five years will be in Sub-Saharan Africa. Africa is currently in an economic situation similar to the one in our region 25 years ago. Before it lies a great civilizational leap and an increase in its speed of transformation. But it cannot go it alone because it lacks the needed infrastructure, technology and know-how. That is why it needs partners to help it in its development while also benefiting from it. However, it needs partners it can trust. And this is where Poland’s advantage comes in. It has very good experience in economic transformation without any of the historical anchors that some other European countries have with the continent. For years, I have been trying to convince Polish and European entrepreneurs that Africa is a big opportunity for Europe to develop. Today, interest in the African market is growing and an increasing number of firms are investing there. It is just a pity they waited so long, because right now the biggest economic powers are waiting in line to enter African markets.

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i n te r v i ew / jan k ulc z y k

Europe still has huge economic potential based on its well-developed infrastructure, advanced technology and developed industry. But to exploit this, we have to start thinking globally. The biggest challenge is international competition. The financial crisis showed that Europe is not self-sufficient and must seek new markets to develop further. That is why I so often point to Africa. For the EU it is one of the most important destinations for expansion. It needs to be well-prepared, however. A good example is the EU’s energy policy, which results in very high energy prices, so European producers have a tough position compared to their competitors in the US and Asia who pay less for energy. Putting it simply, in today’s world, an economy which has access to cheaper energy is by definition more competitive. In Poland, you are involved in many sectors: energy, infrastructure and real estate. These sectors were hit hard by the crisis. Which of them is currently the best placed to win back the confidence of investors? There was no economic crisis in Poland. There was a slowdown, but no crisis. The crisis affected Greece and Spain, where unemployment is over 26 percent. So we can’t talk of winning back confidence in Poland. For investors, an economic slowdown is an opportunity to buy at a good price. Does Poland have the chance to achieve “energy safety”? Is it at risk of an energy shortage in the short term (for example due to the Ukraine crisis), or in the long run due to higher energy demand and the long-drawn out process of Poland’s nuclear energy project? All of Europe is facing an energy challenge. The EU will not be com-

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petitive, having energy prices twice as high as in the US or Asia. That is why, thinking about energy policy we must take into consideration cost as well as ecology. There is no ideal solution for all countries, as geographical and geopolitical considerations must always be taken into account. From Poland’s point of view, what is most important is the most effective exploitation of its own resources. That’s why the Polish energy mix should be based on coal, wind and gas. Let’s talk about real estate. In the past decade, several million square meters of office and retail space have been built. Where do you see opportunities for investors and are you not worried about oversupply in Poland’s major cities? Even if oversupply becomes a problem, it will not affect the best locations offering the highest quality. There is always only a limited supply of such real estate in every big city. And it is in these types of projects that KSP, which I founded with Larry Silverstein, invest. Buildings like Ufficio Primo or Ethos in Warsaw will not have much competition, no matter how many office buildings are built. You are the first Pole who made it onto the Forbes World’s 500-richest list. Do you think Polish entrepreneurs and investors are too risk-averse and lack courage when making business decisions? I have a very good opinion about Polish entrepreneurship. I believe we are a hardworking, talented and determined nation. SMEs are much more important for the economy than the wealthiest people. A bigger problem is the fact that it is still not easy to use one’s potential in Poland. The think tank I created – the CEED Institute – just published a report on economic migration in the EU. Almost 2 million Poles are currently in the countries of “old” Europe. The Polish economy needs those young people who want to, and are able to, work hard. That is why we have to find a way to encourage them to return to Poland. You are a Polish businessman who invests abroad. What advice do you have for foreign businessmen who would like to invest in Poland? Is investing in Poland a good idea? Poland is still an emerging economy with good potential for growth. It is the leader in its region and wants to play an increasing role in the European Union. The problem is that there is still too much bureaucracy and an imperfect and unstable law. But it is still a good place for investment, although as with other countries in the region, one has to know the local reality. When I invest in foreign markets, I always try to secure a local partner who helps me understand the specifics of a certain country. I recommend foreign investors this model of action. What advice would you give a young Polish entrepreneur who has already made his first million and has the ambition of becoming the next Rockerfeller or Warren Buffet? The road to success in business is similar to that in sports. You need talent, a lot of hard work, determination and a bit of luck. If someone asked me for a quick and simple tip, I would recommend he invest in my companies. This is the best advice I can give. Since I invest in them myself, it means I believe in their potential. u

Images: Kulczyk Investments Press Service

So how do you see Europe’s perspectives for growth in the next 5-10 years?

i n te r v i ew / jan k ulc z y k

“In the next decade, Africa will be one of the fastestdeveloping regions in the world. WB J OBSERVER • m a y 2 0 1 4

fe a t u r e / r o ad infrastructure

By John Beauchamp

Poland’s highway overhaul Despite the huge amounts of money spent on Polish roads over the past few years, the country’s high-speed road infrastructure is still patchy at best, although the new EU budget for 2014-2020 promises to change this

m a y 2 0 1 4 • WB J OB S E R V E R

Images: Shutterstock

en years ago, traveling across Poland by car was the stuff of nightmares. Major east-west routes were single-lane in each direction and invariably rutted, with traffic made that much more dangerous with the presence of juggernauts carrying their cargo at breakneck speeds. While admittedly there are still some roads like this in Poland, the situation is now adversely different. Poland’s major road overhaul went into overdrive as the country geared up to host the Euro 2012 soccer championship along with Ukraine. Prime Minister Donald Tusk promised hundreds of kilometers of new highways and expressways.

fe a t u r e / r o ad infrastructure

With such a tight deadline, it’s understandable that not all the promised roads were in fact completed. However, the major A2-E30 highway, which links Poland’s western border in Świecko (and Berlin) with Warsaw, was completed with under 48 hours to go before the first kick-off of the championship, and the A4-E40 highway from Zgorzelec to Kraków was also delivered on time. All that needs to be done now is extend the roads to the borders with Belarus and Ukraine respectively. But even with all these new highways, the European Commission still lambasted Poland at the end of 2013 by saying that the country’s road (and

“Poland’s major road overhaul started as the country geared up to host the Euro 2012 soccer championships along with ukraine.

rail) infrastructure still leaves a lot to be desired. More cars, less investment Nevertheless, a report released by consultants EY in February this year shows that the infrastructure construction sector in Poland between 2010-2012 accounted for over 13 percent of Poland’s GDP. Until 2011, it grew much faster than Poland’s economy as a whole. In many ways, the fact that Poland did not suffer as much during the financial crisis is due to the strong position of construction firms which were building the infrastructure that the country desperately needed, and still does.

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fe a t u r e / r o ad infrastructure

Source: Media Planet

Planned expenditure on Poland’s expressways in 2014-2018 Year 2014 2015 2016 2017 2018

Amount (PLN billion) 4.7 11 11.5 4.3 “Between 2004-2011, the share of public investments in terms of GDP grew 0.7

“At the end of 2011, Poland’s Directorate for National Roads and Motorways (GDDKiA) branded 42.2 percent of the roads under its remit as unsatisfactory or in poor condition – a combined total of 3,250 kilometers. 34

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from 3.4 to 5.7 percent,” Marek Rozkrut, EY’s chief economist said, adding that, “a considerable portion of these investments were infrastructure projects co-financed by the EU.” Indeed, between 2008 and end-2011 the construction sector grew by 55.4 percent. Poland’s road capacity has also been stretched to the limit, as between 20002005 the number of cars increased by 22 percent, and then between 20052009 by 33.7 percent. At the end of 2012, there were 18.8 million registered passenger cars in Poland, according to figures from Poland’s Central Statistical Office. EU budget to the rescue However, the good times for the infrastructure sector came to an abrupt end in early 2012. From the beginning of 2012 to the third quarter of 2013 it shrunk by almost 40 percent. This was accompanied by hundreds of bankruptcies in the sector. With such a drop in infrastructure investment, it looks as if Poland lost steam as far as building roads goes. At the end of 2011, Poland’s Directorate for National Roads and Motorways (GDDKiA) branded 42.2 percent of the roads under its remit as unsatisfactory or in poor condition – a combined total of 3,250 kilometers. However, the EU’s new budget for 2014-2020 is expected to change all that. Poland is expected to receive €73 billion

over the coming years, and while not all of it will be spent on building or modernizing new roads, a fair chunk will go into carrying out much needed infrastructure investments. Eyes on the ball To get the ball rolling, the GDDKiA announced tenders for the construction of segments of seven new expressways across the country, and spending on new expressways until the end of 2018 is expected to reach as much as PLN 32.1 billion (see figures). Furthermore, tenders for the construction of eleven belt roads are to be announced in due course, with PLN 4.7 billion earmarked for the purpose in 2014 and 2015. However, with the new EU budget comes greater responsibility. All eyes will be on the transparency of the tenders, especially since the European Commission found a high risk of corruption in Poland, with 32 percent of tenders in Poland involving bribery. It isn’t all bad news, however. Poland’s roads are becoming better, and despite the constant grumbling that they could be improved, the highways which are built are of the latest spec and conform to the latest regulations, unlike much of the outdated road infrastructure in Western Europe. Indeed, as a result, Poland’s new highways were deemed so good that from the beginning of 2011, Poland became one of a handful of European countries where the speed limit on highways was lifted to 140 kph. Only Germany can beat that. u

fe a t u r e / health & fitness

Fit to grow BIG NUMBERS

46%

is how may Poles pursue some kind of physical activity.

PLN 1 billion is the estimated value of Poland’s fitness and sports market.

PLN 17.59 billion

was the value of the health and wellness packaged food segment in Poland in 2013.

€4

is how much the average Pole spends on organic food annually.

m a y 2 0 1 4 • WB J OB S E R V E R

Spring is in full bloom and the streets of Warsaw are full of cyclists and joggers. The city’s dwellers flock to organic food markets. And WBJ Observer investigates the perspectives of the health and fitness market in Poland

oles are not exactly a nation of athletes, but a growing group of mostly young people is becoming physically active. Data from Eurobarometer show that 5 percent of the country’s population regularly pursues a sport or fitness activity, while 23 percent do so “with some regularity.” Meanwhile, as many as 52 percent of the respondents said they never exercise or play sports. Those who do engage in physical activity usually do so outdoors (35 percent) or at home (37 percent). Only some go to a fitness center (9 percent), sports center (6 percent) or a sports club (5 percent). Still, the money they leave there and in related outlets is not insignificant. Last year’s Eurobarometer estimated the market value at more than PLN 1 billion. What’s more, physical activity is becoming increasingly popular and the trend is expected to continue. Working out is in “We can say that a healthy lifestyle is in fashion and that includes fitness,” said Tomasz Józefacki, CEO of Benefit Systems, a company that offers access to various sports and fitness facilities thanks to its membership card. “Our experience and available data show that it is 20-40-year-olds who are most engaged in sports and fitness activities, but older people, even the elderly, are also interested.” People go to fitness clubs for various reasons. Some simply want to stay fit, others plan to lose weight and some are curious about new sports disciplines. Then there is also the need to meet other people and to motivate one another, Józefacki explained. In 2013, Benefit Systems recorded more than 450,000 users of its membership cards. Data collected by pollster Gf K

Image: Shutterstock

b y k a m i l a wa j s z c z u k

fe a t u r e / health & fitness

Polonia for the company showed that in 2011, 71 percent of the users were newcomers to regular fitness activity. “So we are convinced that there is still a lot of potential in the sports and recreation market and that it will continue to gradually expand,” Józefacki said. You are what you eat Anyone who pursues a healthy lifestyle knows that physical activity is just one of the elements. A growing number of Poles are paying attention to what they eat as well. While some choose improved versions of regular products, others will look for certified organic food. With a total value of PLN 17.59 billion, the health and wellness food and beverages segment stood for 21.2 percent of the total Polish packaged food and beverages market in 2013, according to data from Euromonitor International. This value includes several types of food and drink. The “naturally healthy” sub-segment, which includes such products as high-fiber food, 100-percent fruit juice and herbal tea, accounted for PLN 8.44 billion in 2013. Euromonitor expects this part of the market to grow by 1.54 percent in 2014 and by 1.55 percent in 2015. The organic packaged food subsegment is much smaller, but with more dynamic expected growth. In 2013, it was worth PLN 247.8 million, while in 2014 and 2015 it is expected to grow by 4.2 percent and 4.4 percent respectively. Euromonitor analysts see potential in the health and wellness segment in Poland. Despite a difficult year in the country’s economy, the consumer base increased, fueling growth of healthy food sales. “More Poles are becoming interested inleading healthier lifestyles, paying special attention to daily diets, regular ex-

{

We can say that a healthy lifestyle is in fashion and that includes fitness.”

Tomasz Józefacki, CEO of Benefit Systems

WB J OBSERVER • m a y 2 0 1 4

fe a t u r e / health & fitness

The health and fitness market is a small but growing part of Poland’s economy. As consumer sentiment improves, it will likely expand further

ercise and proper relaxation. As a result, they are more inclined to enrich their diets with health and wellness positioned products that offer health benefits and contribute to overall well-being,” Euromonitor International said. Stores for health As Euromonitor analysts remarked, the majority of health food sales in Poland take place in specialized stores, which benefit from an expert image and the capacity to provide advice to shoppers. They can also offer a wider product portfolio, including smaller, niche brands. A major player on this highly fragmented market is Organic Farma Zdrowia, which manages a network of more than twenty stores offering organic food and beverages in the largest Polish cities plus an e-commerce outlet. The company estimates the total organic food retail market (both packaged and non-packaged) in Poland at PLN 700 million, just 0.25 percent of the food retail market. The average Pole spends just €4 annually on organic food, while in neighboring Germany the figure is €86. This gives room for growth and Organic Farma Zdrowia predicts the market’s expansion at 15 percent annually over the next ten years plus. “Poles are still not aware that healthy nutrition is a very basic thing,” the company’s chief executive Sławomir Chłoń recently told the Newseria information service. “They are increasingly inclined to go to fitness clubs, they ride bicycles, go skiing, jogging, play sports. That is fantastic, but we must be aware that even if we exercise five times a week, it will not bring effects with poor nutrition.” Chłoń is optimistic about the change of attitudes and the resulting sales growth. In his opinion, Poland may follow the example of the Czech Republic, where the organic food segment has already expanded to 1 percent of the total food retail market. “Customers are getting more access to healthy products, so they can try them

m a y 2 0 1 4 • WB J OB S E R V E R

out and as a result they show a growing interest in them. We are convinced that the Polish organic food market will only grow over the next three to four decades,” Chłoń said. The consumers For now, growth trends are more visible in large cities. Residents of smaller towns are not so inclined to follow healthy lifestyle trends, the CEO said. That is why his company has no plans to launch stores in such locations. Future trends on both the fitness and the health food market will, however, depend not only on attitudes and what is upscale, but also on general consumer sentiment. The past years were a period of slow economic growth for Poland and consumption has only started to pick up after the crisis. Organic food is still visibly more expensive than its non-organic equivalents, so price-conscious buyers may avoid such shopping. Similarly, Poles who choose to be physically active may prefer jogging in the park to working out in the gym. Nevertheless, a growing demand for all that is healthy may lead to lower prices in the future, thus triggering further sales volume expansion. u

{

Customers are getting more access to healthy products, so they can try them out.

Sławomir Chłoń, CEO of Organic Farma Zdrowia

e n t r e p r e n e u r s / dice +

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

Reinventing the dice

How two Poles brought a 5,000-year-old home entertainment system into the digital age ice have been around for as long as history remembers. The oldest known set dates back to 5,000 years ago. For centuries they were used by people to entertain themselves, and some call dice the first game controller or even game console. With its design not really changing over the years, redesigning it seemed like something impossible and even unnecessary. Enter Patryk Strzelewicz and Michał Bąk, co-creators of Dice+. Strzelewicz is a board game enthusiast whose company, Q-Workshop, sells designer dice. Bąk is an IT specialist. Together they decided to bring the concept of dice into the digital age and so became the first Poles whose products started being sold in Apple Stores.

“We don’t intend to copy existing games and just add a rolling dice feature to them. Dice+ is much more than that and convincing others to spend $40 on a device that is just for rolling would be foolish on our part.

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Digitizing board gaming “When we looked at various forms of home entertainment, from TV to reading, we saw that the only one that had not been digitized yet was board gaming. That’s how we found our niche,” said Krzysztof Papliński, vice president of Game Technologies, the company behind Dice+. The market is already there. Most board game producers have also decided to seize this opportunity and released digital versions of their games. However, such titles have a virtual dice feature implemented (the result of the roll is determined with the use of a computer algorithm), so Dice+ is unnecessary here. “We don’t intend to copy existing games and just add a rolling dice

e n t r e p r e n e u r s / dice +

Images: Shutterstock, Dice+

feature to them. Dice+ is much more than that and convincing others to spend $40 on a device that is just for rolling would be foolish on our part,” Papliński explained. That’s why the company is focusing on developing new titles that could fully make use of the controller (see box p. 42). Following Nintendo’s path Papliński cites Nintendo as an example they are trying to emulate. The Japanese videogame giant released its Wii game console back in the mid-2000s, and while some of the product’s specs were inferior to its competitors – Microsoft Xbox 360 and Sony’s Playstation 3 – Nintendo targeted casual gamers and families as their core audience, with games and motion controllers tailored specifically for them. The games were simpler and kid-friendly, but the customer base was much bigger. This all helped Wii become the best selling console of its generation. “Families with children are our core target, with kids between 3-12 years old as the group we try to reach with our games,” Papliński said. We’re trying to show them a social gaming experience that they can achieve using Dice+ and its motion sensor abilities, similar to what Nintendo did with its Wii,” he added. Game Technologies has its own subsidiary, Synergy IT, which is developing

new games for the Dice+. The company is also cooperating with third-party software developers to expand the games library, which currently encompasses some 20 titles with, 2-3 new ones being added each month, mainly simple titles for younger players. With a classic game of Ludo (known in the US as Parcheesi) having been played for nearly 2,000 years and probably the easiest board game you can ever imagine, you can clearly understand why the firm has chosen such an approach. Demanding group The lack of more mature content is also understandable when you take into an account Dice+ creators’ business activity. Strzelewicz knows hardcore gamers like no one else. His beautifully designed traditional dice are well known and liked in the hardcore gamers circle. That’s why he knows that it’s not that easy to please them. “This is a very demanding group of customers. Developing products for them is very difficult and time consuming. We would have to create a completely separate project just for them, which we don’t currently have the manpower to do,” Papliński explains. In the case of more complex titles there are also other barriers preventing them from being compatible with Dice+. Strategic and role-playing games usually require more than one dice to play and usually

Evolution of dice

he oldest know dice is 5,000 years old. They were a part of a backgammon set found in Iran. Dice are mentioned in several ancient texts including the Bible and Hindu epics. They were used in ancient Greece, Rome, Egypt and Asia. Dice were originally made from the talus of hoofed animals. For centuries its concept has not changed one bit – small cubes with facets numbered from one to six are the dice that were used 5,000 years ago and are used now. The first dice with more than six sides, appeared in the 13th century when seven- and eight-sided dice were used to speed up play in chess variants. In the last 50 years, with the growing popularity of role playing games, dice with more than six-sides have become a staple. Noncubical dice with up to 20 faces are commonly used. Although variations with up to 100 faces are manufactured, they’re more of a novelty item.

WB J OBSERVER • m a y 2 0 1 4

e n t r e p r e n e u r s / dice +

Image: Dice+

This relatively small (a 1” cube) device is packed with the The question of electronic latest technology. It can be used not only as a dice, but as a cigarettes remains ill-defined in many game controller as well. Its walls can be clicked on just like aspects gamepad’s buttons, it can detect motion and measure its speed. The dice is properly weighted and has built-in cheating detection.

these dice have more than six sides. But some more adult-oriented titles are in the works, as Game Technologies is apparently working on bringing The Witcher and Talisman to the platform. It is also working on securing some licensed properties such as Hello Kitty and Judge Dredd. A plethora of devices Dice+ works with tablets, smartphones and smart TVs. Set-top boxes, such as Roku and Amazon Fire TV, are also in

m a y 2 0 1 4 • WB J OB S E R V E R

the company’s plans. Tablets are however the firm’s main focus. They have their disadvantages such as smaller screens, but what they lack in that sphere they make up for in their availability. Just in 2013, 195 million of these devices were sold, with the majority of them supporting Dice+. They also have other features, like a touch screen, which smart TVs lack. The device was launched last year in August and sales figures are not available yet. However, the company has already

decided to scale down its plans to ship millions of units annually. “We decided on the soft-launch approach, to make the product available in a limited number of markets and places. To launch a product globally and make it available everywhere we would need resources available to such giants like Sony and Microsoft, which we simply do not have, that’s why we lowered our initial targets,” explained Papliński, without giving any numbers. u

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e n t r e p r e n e u r s / selena

}

The world isn’t flat K b y s e r g i u s z p r o k u r at

“You really need to be ready before you start expanding outside Europe. 44

m a y 2 0 1 4 • WB J OB S E R V E R

rzysztof Domarecki studied law and philosophy some 30 years ago. In late 1980s he worked at Wrocław University, where he dedicated his time mostly to constitutional court rulings. But that was never enough for him, so after a couple of years, he ditched his academic career and went to India to seek inspiration. He came back with a business idea in the early 1990s, when Poland was experiencing rapid transformation. After trying his luck selling computers, Domarecki quickly swapped them for industrial foam. He saw how badly needed construction chemicals were in a country that was headed for major redevelopment.

The bar was set very high: the firm aimed to join the international big league almost from the get go. A network of foreign trading companies was created, followed by the company’s own production overseas. In 2011, the firm started production in Nontong, China. In the same year, Selena purchased the remaining 49 percent stake in a Spanish manufacturer and distributor of construction chemicals, Industrias Quimicas Löwenberg (Quilosa), becoming its sole shareholder. New acquisitions and production plants are usually aimed at one thing: conquering new markets. In 2012, the company did just that: it managed to become one of the largest adhesive and plaster manufacturers in the Romanian market.

Around the world in 20 years In 1992 he created Grupa Selena, a trading company specializing in construction products such as polyurethane adhesive foam and silicon sealing. After just three years, Selena was number one in the Polish foam market. Wanting to grow further still, the company started looking for new opportunities, and so its international expansion began.

Major leagues Selena currently has a dozen factories located on four continents: in Poland, Brazil, Korea, China, the US, Turkey and Spain. Its trading activities are handled by commercial firms which in total serve over 70 countries. The factories abroad are run both by Poles (e.g. the Chinese, Kazakh and Ukrainian markets), and local market managers (the US and Brazil).

Image: Shutterstock

Selena defies those who say Polish companies don’t have what it takes to become global players. Over its 20-year history the firm rose from local construction foam retailer to the world’s third largest manufacturer of chemical adhesives

}

e n t r e p r e n e u r s / selena

Polyurethane

universal adhesive

Polyurethane is a polymer composed of a chain of organic units joined by carbamate (urethane) links. It is durable, flexible and can be molded in any shape so it can be even used instead of concrete to build entire structures. Polyurethane resin was used to hold together the Metropol Parasol (pictured) in Sevilla, Spain, the biggest wooden structure in the world.

WB J OBSERVER â&#x20AC;˘ m a y 2 0 1 4

challenge. After all, most Polish companies make money importing from China. Meanwhile, Selena wants to make a mark in Asia, despite the difficulty of competing with the Chinese. “China is the most competitive market and one of the most difficult ones. Additionally, competing there is difficult due to the state bureaucracy’s preference for local firms,” Domarecki said. Going local High-quality products such as Tytan, a high-end polyurethane foam, or Artelit,

“China is the most competitive market and one of the most difficult ones.

Krzysztof Domarecki Selena’s founder and chairman of the supervisory board

At present, the company is the third largest producer of construction polyurethane foams in the world. With employment at around 1,600 people, the group’s revenues for 2012 exceeded PLN 1 billion, with exports contributing 60 percent to the company’s overall sales. The money for international expansion was raised by Domarecki in the Warsaw Stock Exchange, where Selena has been traded since 2008. The China challenge Factories in various locations worldwide serve as production hubs. The company’s Polish factories serve Central and Eastern Europe, the Brazilian plant sells to Uruguay, Argentina and Chile, while Turkey’s area includes the Middle East. In the future, production in China will meet the needs of Southeast Asia. Domarecki treats China as a particular

m a y 2 0 1 4 • W B J O B SE R V E R

58 Domarecki’s position in the ranking of richest Poles

over PLN 1 billion selena’s 2012 revenue

1,600

the number of the firm’s employees worldwide

60%

of the company’s sales are exports

2008

is when Selena went public on the Warsaw Stock Exchange

a firm adhesive, were the first steps taken towards Selena’s global success. “The main element of the firm’s strategy has to be taking part in globalization, although understanding local markets is a must,” said Krzysztof Domarecki. “Thomas Friedman, a New York Times journalist, says that the world is flat. But it’s not. The world is, above all, very diverse. Countries are differentiated by climate, the ways people act and by companies’ organizational cultures,” he added. Selena’s products have different technical specifications and chemical characteristics depending on the market they are destined for. They take into account diverse climates and construction traditions, technical cultures and other local needs. For example, adhesive foams in China are different from those sold in Germany, and adhesives for Brazil differ from those sold in Russia. Simultaneously, these products are always high quality by local market standards. This has been Selena’s modus operandi since the start of its international expansion. Such a value offer is accompanied by an adequately adjusted marketing communication strategy, accounting for language, cultural and historical differences between markets. When Selena wants to communicate a message to clients, it customizes and adjusts it to the local needs of the geographical zone’s construction culture. Make sure you’re ready Domarecki still owns the enterprise but in 2011, he stepped down from being the firm’s chief executive officer and appointed a professional management team. He himself went on to become the chairman of Selena’s supervisory board. Despite working as Selena’s CEO for 20 years, Krzysztof Domarecki’s hierarchy of needs is still topped by the company’s development. Each year he climbs the ranks of the Forbes 100 Richest Poles list (he is currently ranked 58). Although Domarecki says “we aren’t a corporation,” Selena’s success can be a perfect example for aspiring Polish entrepreneurs. As for developing companies he has the following advice: “Concentrate on your presence in markets which are culturally and geographically close to Poland. Especially countries in Europe. You need to make sure you’re ready before you start expanding outside Europe.” u

Images: Selena, WeGirls

entrepreneurs / selena

e n t r e p r e n e u r s / w egirls

b y b e ata s o c h a

toy story

“The future doesn’t belong to the fainthearted; it belongs to the brave,” Ronald Reagan once said. As far as business ideas go, have you ever heard of anything bolder than a dollmaking start-up set up as a joint-stock company, manufacturing in Germany and opening its first store in one of Poland’s most expensive malls?

The

three partners: Anna Rutkowska, Alina Groblicka and Mira DeMartino are all Poles but they met in the US. They had different jobs but their plans and business ideas proved compatible enough to start a doll-making company together, called WeGirls (full name “We Girls of the World”). The firm was registered in 2013, with Rutkowska as the financial brain of the operation, Groblicka in charge of the production process, and DeMartino as the company’s creative soul. When they decided to go it on their own, they already had tons of business experience. Rutkowska, a financial analyst by profession, had worked in several corporations, including Motorola and Tyco for 15 years. “At one point, I was tired of it and decided to do something on my own. I always knew I wanted to do something for kids.” Apart from her day job she ran the non-profit Polish Learning Center in Trenton, New Jersey and that’s where she met both her partners.

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>> 47

Groblicka, who also has a financial background and was involved with a biotechnology firm for years, was very much into the fashion industry. She had the toy business in her sights for years, too. “In 1996 when I was doing my MBA in the US, I had an idea to bring Toys“R”Us to Poland. When I talked to them at the time, they said they had no such plans,” Groblicka said. Girls night out Their partnership started from a casual girls night out. “In March 2012 we met to go out to the movies and started talking. Anna told me about her idea which involved both toys and elements of fashion. When I heard that, I was all ears,” Groblicka said. The partners analyzed the market for a year. “After months of working on our business model we were stuck. We’d analyzed the business and financial aspect of the business back and forth, but we couldn’t get out of the creative rut. We needed a set of fresh eyes,” she added. That’s when they approached their third partner, Mira DeMartino. “We came to her twice with our idea. The first time around she was busy with her own projects,” Groblicka said. The second time around they put her up against the wall and told her to make up her mind. “Mira said she would need a week to decide. She

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“Mira said she would need a week to decide. She called me back 20 minutes later to say she was in. called me back 20 minutes later to say she was in,” Rutkowska recalled. DeMartino, an artist and passionate sculptor, with a lot of business experience in marketing and branding, created the visual side of WeGirls, such as the company logo, dolls’ faces, and she chose their collections of clothes and accessories. “She is the guardian of purity of the WeGirls brand,” Rutkowska said. Think big, now think bigger After the planning stage, the three partners cut straight to the chase. Ambition must be their middle name, because they didn’t launch their business just like any other run-of-the-mill start-up. For starters, they set up a joint-stock company, a bold choice for a start-up business. They got their financing from a Kraków-based seed fund and a venture capital fund, as well as some of their own. “You should always invest some of your own money, then investors look at you differently,” Rutkowska said. They also managed to secure some support from the

Polish Enterprise Development Agency (PARP), a government agency whose job is to assist and promote Polish companies. Manufacturing is a good example of their daring approach to business. While most toy brands ship their products from somewhere in Southeast Asia, WeGirls decided to look for their manufacturer in a country with several centuries-worth of tradition in doll-making – Germany. “It’s all about the quality,” Groblicka explained. They are, however, not excluding the possibility of expanding some manufacturing to Asia. “Our German producer may not be able to make, say, a million dolls if we needed that many. But we will always deliver quality,” Groblicka added. Building a ladder There is nothing small about the partners’ business model, but where they really topped themselves is with the venue. While most start-ups go for small, moderately priced space where they establish a foothold in the market, Rutkowska, Groblicka and DeMartino opened their first store in one of Warsaw’s largest shopping malls, Galeria Mokotów, right next to Poland’s market leader in toy retail – Smyk. “A lot of people told us: ‘You don’t stand a chance getting into Galeria Mokotów. You’re a start-up and they have a mile-long waiting list.’” Rutkowska said.

Image: WeGirls

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But determination is not something the three ladies are in short supply of. They managed to get hold of the phone number to the decision-makers and they made the call. “We convinced them that WeGirls was a good fit for the mall. And here we are two years later,” Rutkowska added. “It’s a mutually beneficial arrangement for both of us. They seek innovation, for a unique offer and that’s what we bring to the table,” Groblicka explained and added, “When we see the Great Wall of China, we don’t think of it as an obstacle, we start building a ladder.” The company is already preparing to open its second store – in one of Kraków’s top shopping centers, Galeria Krakowska, and are looking for ways of expanding abroad. The firm employs a variety of promotional tools, from TV spots, internet advertizing to a social media presence, with the company relying on endorsement from well-known Polish actresses, including Maja Hirsch, Katarzyna Bujakiewicz, Aneta Todorczuk-Perchuć and Barbara Kurdej-Szatan.

“A lot of people told us: ‘You don’t stand a chance getting into Galeria Mokotów. You’re a start-up and they have a mile-long waiting list.

The whole shebang WeGirls is more than just a doll brand. The firm’s product portfolio includes clothes and accessories (like matching outfits for girls and their dolls), internet games as well as books. “We see a great interest in our books. Our clients keep coming back for more, asking for further installments of the series. Books are at the core of our business,” Rutkowska said. There are already four book series available, and a fifth one is in the works. “We have a detective adventure series, self-help books dealing with a variety of

issues, from everyday problems to more serious issues like parents’ divorce, as well as books for the youngest girls, called ‘The Butterfly Club,’ and a travel series where our protagonists go to various countries, meet girls from all around the world, learn about different realities and cultures,” she added. There are plans to launch other merchandize as well. “We entered with over 50 products, and we might include backpacks, umbrellas as well as pets. We’ll add more as we keep an eye on what the market wants,” Groblicka said. Education and social activism are also very important aspects of the firm’s strategy. Apart from the retail company, the partners also established a charity foundation, called Fundacja Przyjaźni WeGirls (WeGirls Friendship Foundation), which encourages girls to donate their hair to make wigs for young chemotherapy patients. “We’re building our brand from scratch. We just opened our first store on March 8, so we’re still in our early stages but we think BIG,” Rutkowska added. u

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e n t r e p r e n e u r s / m anage m ent c o rner

How to effectively persuade others to your views b y S e r g i u s z P r o k u r at

Persuading others isn’t easy. Even more so if you assume that you know what is right and good for everyone. If you want to effectively persuade others you have to do so systematically

ichard Sharpe is the protagonist of the novel series by Bernard Cornwell. The series presents military duty in the times of the Napoleonic wars from the perspective of a professional British soldier. During a break from marching, an ordinary soldier, Sergeant Richard Sharpe, saves the life of Arthur Wellesley, the commander of the British army. This act gets him promoted to ensign. Hitherto such a rank was reserved for the nobility, so neither the officers nor ordinary soldiers are pleased with the sudden promotion of their comrade. In his first mission after the promotion his most difficult task proves to be asserting authority over his own soldiers, who don’t see him as a real officer, offending him and acting with insubordination and contempt. Sharpe has to prevail in managing his men and convince them to his views. Leaders and managers in organizations are faced with similar challenges. Unhealthy work relationships and rivalry can drain the energy out of anyone, lowering effectiveness and concentration, and in the worst cases even lead to intimidation and open hostility. If workers don’t trust their company and their superiors, they focus on gossip and dodging work instead of actually working, which negatively affects their productivity. Low work involvement is partly due to bad management and improper relations between people. Convincing others Creating relations based on mutual trust in a conflict situation requires more than adhering to your own moral norms. It requires negotiating abilities and the knowledge of how to build trust in the long term. This is easier when we define two types of trust:

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personal trust – direct interpersonal relations, e.g. the trust conferred by workers on their immediate superiors; strategic trust – workers’ trust enjoyed by the company and its management, which is present when employees consider that management is making the right decisions. Personal trust isn’t only based on emotions – conscious reasoning also plays a role. Yet if an interpersonal relation is riddled with negative emotions, the “rational” part of the brain doesn’t function properly and thus a conflicted co-worker won’t respond to reasonable arguments. In their research, Brian Uzzi (Northwestern University) and Shannon Dunlap suggest using a three-stage process, the so-called “3R” – redirection, reciprocity, rationality – to turn enemies into allies. Be positive The first step of the 3R process is redirection, whose goal is moving negative emotions away from us and the person we are conflicted with. When it was necessary Sharpe personally stood up for a soldier, who had previously insulted him, before his superiors, letting him know that he was aware of his worth. He also perceived admirable traits in his subordinates (one of the soldiers could read French, another could hit a bottle with a shotgun from 80 meters) and, what’s important here, he wasn’t afraid to show his admiration. Innocent flattery eliminates negative emotions and is a great tool for redirecting emotions. In business this can be, according to Uzzi and Dunlap, having lunch together and discussing what you and your coworker have in common. These tech-

10 rules of the art of effectively persuading others to your ideas: Timing is the decisive factor. If we already know how to convince people of our ideas, the rest depends on the moment we talk to them. It is best to persuade others when they are calm and relaxed. Remember to smile. Be polite, cheerful and charismatic. A good attitude will help you more than you think – people will be more eager to listen to what you have to say. Try to show all the positive sides of your ideas and, if it is possible, tell others how it will work for them. Prepare before the talk and have potential answers ready. Don’t let the talk show the contradictions in your idea. Don’t be afraid to agree with others Saying: “That’s fine, but...” or “Yes, it’s only that...” you don’t completely negate others’ ideas. You should hear what the other person has to say and adjust your idea “on the go.” Try finding out why the person you’re talking to is rejecting your idea. He might have an agenda he’s following. If you succeed, this gives you a tactical advantage.

When it was necessary Sharpe personally stood up for a soldier, who had previously insulted him, before his superiors, letting him know that he was aware of his worth.

niques draw the attention away from the conflict and prepare the recipient for the next stage of the 3R process. Giving credibility Reciprocity is the next step. In order for it to work, you have to follow a basic rule – offer something before you ask for something else. Sharpe proposed treating everyone in the same way, which also applied to him. Reciprocity is all about diminishing the problem which is the cause of the conflict, without excessive pressure and demands and fulfilling the needs of a co-worker. A good proposal is

something which has value here and now. Uzzi and Dunlap illustrate reciprocity with an example of inviting the worker we have a conflict with to board meetings, giving him credibility and making his knowledge available to others. The next step is rationality. When negative emotions have been redirected in the first two stages, you should set your expectations for this relationship and propose rational arguments, which should persuade your opponent to a reasonable reaction. Recipients who fully understand your expectations and the mutual benefits, simultaneously calculating the

If you realize you might be wrong in one aspect, and then you admit it, this will make you more credible than stubbornly sticking to your idea. Persuasion should be suggestive In fact, we are most persuasive when the people listening don’t know that we’re trying to convince them. It is worth noting what’s really important for us – this creates transparency in interpersonal relations. The most important consideration You have to know when to give up. Sometimes it is not worth the effort.

potentially lost possibilities, will choose cooperation based on good relations. Richard Sharpe asserted that anyone who diligently fulfills his responsibilities will receive respect in his ranks and should the whole company achieve a spectacular success, everyone (including himself) may be promoted. Uzzi and Dunlap call this seeing an ally in someone else. The 3R strategy can be helpful in solving personal conflicts, including those with your subordinates. When using it, however, you have to be careful not to use categorical statements which usually provoke emotional reactions. u

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May 2014

WITH

20 PAGES OF REAL ESTATE NEWS

High Streets: ul. marszałkowska Where the roads meet

72-73

the luxury conundrum Orco puts Złota 44 up for sale to avoid even further financial drain. Why do Poles spurn upscale apartments?

New logistic order Is the expanding e-commerce a game changer for logistics operators? 60-64

69-71

natural selection Scandinavian brands are exiting Poland while American retailers storm in

66-68

Rondo 1 sold �� 54 Panattoni’s speculative investment �� 56 Griffin buys office complex in Kraków ��57 W.P. Carey’s acquisition �� 58 GBC building B delivered �� 59

WBJ OBSERVER • may 2014

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> LO K ALE I MMOB I L I A

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Rondo 1 building sold

rondo 1 features 60,000 sqm of GLA

retail

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Tarasy Zamkowe to go on sale in 2017

roperty investor Immofinanz Group plans to open the Tarasy Zamkowe shopping mall in Lublin in Q1 2015. Within two years from completion the center may be sold, the company’s CEO Eduard Zehetner told ISBnews. Immofinanz aims to sell its asset when the optimal moment arrives, Zehetner said. Tarasy Zamkowe will have a total GLA of 38,000 sqm, out of which 5,300 sqm has been pre-leased to Inditex Group. Altogether it will house some 150 stores, three restaurants and other food outlets.u

13 million sqm is how much retail space poland will have by the end-2015, according to jll’s forecast.

talking point

Many of the larger cities across Central Europe are now reaching saturation point with the exception of Warsaw, where potential exists for new large-scale retail. James Chapman, head of Cushman & Wakefield’s Central European capital markets team, on retail space construction.

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Image: CBRE

lackrock Europe Property Fund II, part of BlackRock’s Real Estate, has sold the Rondo 1 office complex in Warsaw to two funds managed by Deutsche Asset & Wealth Management’s real estate business. The transaction price has not been disclosed. Rondo 1 provides 60,000 sqm of class-A office space in Warsaw’s city center. The asset is currently 95 percent leased. Its top tenants include EY, Allen & Overy, Baker & McKenzie, DZP, Frontex, Dentons and Volkswagen Bank. The BlackRock fund acquired a 50 percent stake in the newly delivered asset in 2006 before assuming full ownership in 2008. Rondo 1 was the largest asset of the BlackRock Europe Property Fund II portfolio and its sale is another step towards full divestment. “Since the acquisition we have increased occupancy from 50 percent to 95 percent, enabling the asset to be brought to market for sale. We remain an active player in the Polish real estate market and are considering other opportunities here and throughout the region,” said Marius Schoener, head of BlackRock’s German and Polish real estate business. u

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€4 billion is EY’s forecast for the value of commercial real estate transactions in Poland in 2014.

marynarska business park offers 43,000 sqm of office space

l office l Logistics

Panattoni to build speculative warehousing unit

anattoni Europe has announced the launch of construction at Panattoni Park Wrocław III in Bielany Wrocławskie, having finalized the land purchase. The building will be a speculative unit with 20,000 sqm of space. Upon completion, Panattoni Park Wrocław III will consist of two warehouse buildings, offering a total of 83,000 sqm of space. The complex is located near the Wrocław belt road and the A4 highway. u

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Penta makes first Polish property investment

entral European private equity fund Penta Investments announced the purchase of a plot in Warsaw’s Mokotów district, its first real estate investment in Poland. Total outlays for the project will amount to €45 million. The land is located at the intersection of ul. Domaniewska and ul. Postępu in the office hub of Mokotów. Penta plans to build an office building on the plot. The scheme will have a GLA of 24,500 sqm. Construction is scheduled to start in the autumn of 2015. It should be completed 18 months later. u

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Netia renews lease at Marynarska Business Park

oland’s second-largest telecommunications company, Netia, has extended its lease agreement for 13,000 sqm at the Marynarska Business Park office complex in Warsaw’s Mokotów district from Investment fund Heitman European Property Partners IV. Netia was advised by CBRE in the course of the deal. Heitman was advised by Cushman & Wakefield. “The refurbishment and upgrades of Marynarska Business Park to BREEAM standards convinced us that we should

remain in this location. Another reason was that this office complex in Warsaw’s Mokotów district is already associated with Netia thanks to excellent visibility of our logo and the name Netia Tower of our building,” said Anna Wilk, head of property and administration at Netia. Marynarska Business Park consists of four modern office buildings with some 43,000 sqm of total GLA. It is located on ul. Taśmowa in Służewiec Przemysłowy, Mokotów’s office hub. It was completed in 2008 and refurbished. u

340,000 sqm

is how much shopping center space was delivered in Poland in H2 2013, according to Cushman & Wakefield.

Echo Investment gets loan for A4 Business Park Property developer Echo Investment has secured an over €30 million loan from BNP Paribas Polska. The money is earmarked for the construction of two phases of the A4 Business Park in Katowice. A4 Business Park is a three-building office complex on ul. Francuska in Katowice. The construction of the first stage, which is fully leased to IBM, was completed in Q1 2014. The second stage is scheduled to be completed in Q4 this year. u

Images: Panattoni Europe, Cushman & Wakefield, Centrum Biurowe Lubicz

transactions

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Griffin Group buys Centrum Biurowe Lubicz

roperty investor Griffin Group has acquired two class-A office buildings in Kraków, Centrum Biurowe Lubicz I and Centrum Biurowe Lubicz II. The deal value was not disclosed. “The purchase of Centrum Biurowe Lubicz is a natural stage of the expansion of our office property portfolio,” said Przemysław Krych, CEO of Griffin Group. “The low level of vacancies in the Kraków market convinced us to carry out this investment.” In the course of the deal, Griffin was

advised by Colliers International, Greenberg Traurig Grzesiak sp. k. and MDDP Michalik Dłuska Dziedzic i Partnerzy. The Centrum Biurowe Lubicz complex has a total GLA of more than 21,000 sqm. It’s located in the center of Kraków, at the intersection of ul. Rakowicka and ul. Lubicz. Both buildings are almost fully leased, with tenants such as International Paper, Capita, Deutsche Bank, BNP Paribas, PWC, Lumesse, Infusion and BZ WBK. u

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Wirtualna Polska leases space in Oxygen Park Internet portal group Wirtualna Polska has leased some 2,400 sqm in Building B of the Oxygen Park office complex. It plans to move into the new office in June. Oxygen Park, which belongs to Yareal Polska, is a class-A office scheme, located near the intersection of Aleje Jerozolimskie and ul. Łopuszańska in the western part of Warsaw. It has a GLA of 18,400 sqm, 53 percent of which has already been leased.u

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Merlin.pl leases 13,000 sqm in Good Point Puławska

nline retailer Merlin.pl has signed a lease agreement for 13,000 sqm of warehouse space in the Good Point Puławska logistics center. Panattoni Europe is responsible for commercializing Good Point Puławska, comprising 43,500 sqm of leasable space (office and warehouse), located in Łubna, south of Warsaw. The park is owned by PBWII, which in turn is managed by investment fund AEW Europe. u

W.P. CAREY paid $158 million for the building

l OFF I CE

W.P. Carey buys Pekao headquarters

wo real estate investment trust (REIT) affiliates of W.P. Carey have acquired the headquarters of Poland’s second-largest lender Bank Pekao from CA Immo, the property investor said in a statement in early April. The deal value was approximately $158 million. The scheme was built by Hochtief in 2009. It is located on the route from the Warsaw Chopin Airport to the city cen-

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ter. W.P. Carey has also recently acquired H&M’s Distribution Center in Poznań, the company said. “The acquisition of Bank Pekao’s headquarters ... demonstrated our ability to provide a well-known institutional investor like CA Immo with a reliable, all-equity buyer and a fast and efficient closing process,” said Jeffrey Lefleur, managing director of W.P. Carey. u

Capital Park to buy properties worth PLN 200 million

roperty investor and developer Capital Park is in talks to acquire assets worth a total of some PLN 200 million. The properties are meant to be included in the portfolio of the firm’s high-street real estate investment fund. The fund already manages 39 properties worth a total of PLN 200 million. CFO Michał Koślacz said that Capital Park will spend some PLN 50-60 million of its own funds on the deals. The rest will come from outside financing. u

21 – 22 May 2014 SAMORZĄD SAMORZĄD

INWESTOR INWESTOR

Fair of Services for Local Self-Government Units

Regional Investment and Development Showroom

contact

venue

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

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

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

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w ho ’ s ne w s Joerg Kreindl has been appointed head of industrial and logistics at CBRE’s office for the Central and Eastern European region. He will supervise activities involving the expansion and relocation of large-scale industrial occupiers in CEE. “Joerg has been instrumental in establishing a cross-border agency platform in CEE over the last few years,” said Andreas Ridder, chairman, CEE, CBRE. For the past three years Kreindl coordinated the CEE Occupier Services business lines from the Warsaw office of CBRE. He earlier worked in the company’s corporate services office in Vienna and then established its Slovak office, where he worked for six years. u

GBC comprises 45,000 sqm of leasable space

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Phase one of Gdański Business Center nearing completion

Images: W.P. Carey, HB Reavis, PHN

eveloper HB Reavis has delivered building B of its Gdański Business Center office complex located on ul. Inflancka in Warsaw. The developer is finishing fitting out Building B of GBC, scheduled to be completed in July 2014. Altogether the

complex offers 45,000 sqm – 15,000 sqm within the eight-storey Building B and 30,000 sqm on the 16 floors of Building A. The two buildings are the first phase of the GBC development, with phase two set to be launched in the summer of 2014.

Katarzyna Dorocińska has been promoted to the position of director of the property marketing department at the Warsaw office of Colliers International. She will be responsible for the development of marketing services for office, retail, warehouse and other commercial real estate projects. The property marketing department provides services for companies cooperating with Colliers, such as assistance in preparing marketing brochures, creating logos and other visual materials for particular properties. Dorocińska has been with Colliers in Poland for a year. She has so far held the position of property marketing specialist. She had previously been responsible for property marketing at the London and Moscow offices of Colliers.u

PHN gets occupancy permit for Foksal City Real estate group Polski Holding Nieruchomości (PHN) has obtained an occupancy permit for its Foksal City office building. “Foksal City is one of our flagship projects,” Paweł Laskowski-Fabisiewicz, responsible for new investment projects at PHN, was quoted as saying. The scheme is located near ul. Nowy Świat, one of Warsaw’s high streets. The building offers 2,825 sqm of office space on five storeys. u

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lokale immobilia / LOGISTICS

New logistic order The times of high-volume distribution centers are coming to an end. With increasing pressure on same-day deliveries and the shipment costs, retailers will have to change the way they do business. And so will investors b y b e ata s o c h a

E-commerce still seems to be the song of the future in Poland, with only 2.8 percent of all shopping done online, according to Center for Retail Reseach RetailMeNot. By comparison, in the UK, e-commerce holds some 13.5 percent of the market, while in the US the number is 11.6 percent. However, with upcoming legislative changes allowing picky customers to return their purchases within two weeks of the transaction date, experts say Poland will see strong e-commerce growth this year. Amazonâ&#x20AC;&#x2122;s recent move involving opening three 100,000-sqm fulfillment centers in Poland, has already caused some stir in the market, with warehouse space operators wondering what the future of the industry will be like. Some say the biggest shift e-commerce has brought about is the change in the supply chain. Instead of large quantities

E-shoppers Poles are still trailing behind other nations

in terms of e-retail market share, but experts say they will catch up soon. Online retail share of total market (2014 estimate)

% of population that shops online

13.5 11.6

9.7

7.6

7.2

7.1

6.9 3.0

2.8

Poland

Spain

6 2.1

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Italy

France

Netherlands

European average

Sweden

Germany

71 67 55 52 51 Sweden

France

Poland

Images: Liebrecht & Wood, Emmerson Evaluation

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49 46 45 32 20 Netherlands

European average

Germany

Spain

Italy

Source: Centre for Retail Research / RetailMeNot

â&#x20AC;&#x153;E-commerce and its distribution channels will be among the growth engines in the logistics market. Poland is becoming the market leader in the region in parcel deliveries, due to our improving road infrastructure as well as the fact that we are a very large market with significant growth perspectives. Patrick Kurowski, head industrial & logistics, CBRE

Source: Centre for Retail Research / RetailMeNot

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lokale immobilia / LOGISTICS

Logistics operators are already moving closer to cities, creating demand for new classes of logistic assets stored in distribution centers, deliveries now go from the producer directly to the fulfillment center. It’s like cutting out the middle man – the fulfillment center has actually become the shop, accessible via the internet. Getting closer

Logistics operators are already increasingly interested in areas closer to the cities. “Customers don’t like to invest in the middle of nowhere where there are no consumers, so they tend to be closer to seaports, airports and to consumer cen-

ters and that’s where the strategy will be,” said Joseph Ghazal, managing director at Prologis, responsible for capital deployment in Europe. “That’s a huge shift. The old logistics buildings from the past were always close to a highway junction, there was not much requirement for people and it wasn’t close to the customer, it was rather far away from the customer,” said Raimund Paetzmann, Amazon’s director of real estate in the EMEA region. Amazon has 29 fulfillment centers in EMEA and four customer service centers.

Tom Listowski, head of industrial Poland & CEE Corporate Relations, Cushman & Wakefield

Germany’s supply base

oland recently witnessed the world’s largest e-commerce company Amazon, declaring it will launch three fulfillment centers in the country by the end of Q4 2014, with all three buildings totaling over 300,000 sqm in size. No other occupier currently located in Poland, including logistics companies, occupies that much space in such a small number of assets. Time will tell whether this is a game changer or if it is specific to Amazon’s business model. Interestingly, although these centers are located in Poland, the Polish market is not currently Amazon’s primary target, and these centers will initially serve Amazon’s German e-commerce platform. With time, they will be gradually integrated into the rest of the company’s network to serve other European sites. The fact that Amazon pin-pointed Poland as the best location to accommodate these large centers sends a positive message to other major retailers. It shows that Poland can provide certain fundamentals such as infrastructure, utilities and labor necessary to run such large-scale operations from Poland and, at the same time, service multiple markets, especially in Western Europe which are more mature in the e-commerce sector than CEE at present.

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Prologis Park Wrocław V covers 20 ha of land. Its four already completed units offer 90,000 sqm in total, with another, 27,000sqm unit, under construction

ATL Logistics Centre in Hong Kong comprises 836,000 sqm of space within two multi-storey buildings. The building made it into 1990 Guinness Book of Records as the world’s largest multi-level container freight station. The total roadway inside ATL is 27 km, while its “floating population” averages 20,000 people

lokale immobilia / LOGISTICS

The height issue The predominant standard in warehousing is a single-level facility. How is it that 120-140 years ago, when the first warehouses were being built, the industry wasn’t afraid of multi-level storage, even though there were no vertical transportation systems? “It’s quite amazing that now we think that a big 100,000 sqm warehouse is the only way to do it, while we have many more possibilities with vertical transportation,” Amazon’s Raimund Paetzmann said. Height will definitely be a topic in the future of logistics real estate. “I know that some people don’t like it and investors are still hesitant about this. But I’m 100 percent sure is that with the land constraints we have in Europe, the only way is to go into height,” Paetzmann said. “Maybe not as high as in Hong Kong but four or five levels will become the norm,” he added.

Images: Shutterstock, Prologis, Wikipedia

Packing and shipping warehouse built in 1906 for Lloyd’s Packing Warehouses Limited, Manchester, England

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Are XXL boxes a safe bet for investors? What can you do with a 100,000-sqm single-tenant warehouse once the tenant leaves?

It is now building three more in Poland (two in Wrocław and one in Poznań) and two in the Czech Republic (Prague and Brno). The three centers in Poland will offer a total of 300,000 sqm. The new norm

“No other tenant currently located in Poland, including logistics companies, occupies that much space in such a small number of assets. Time will tell whether this is a game changer or if it is specific to Amazon’s business model,” said Tom Listowski, partner at Cushman & Wakefield. There is no denying the fact that XXL fulfillment centers are a new asset class. “This is a very specific building, but this is a new standard also. If e-commerce is growing, this is going to increasingly be the norm,” said Robert Dobrzycki, managing partner at Panattoni Europe. Some experts do not share the view that changing buying habits will wipe out distribution centers entirely. Michael Kroeger,

head of international finance at Helaba, said that the new supply chain is specific to Amazon and there are very few platforms adopting a similar model. Meanwhile, “logistics and industrial is for the vast majority of everything else,” Kroeger said.

on the optimum store network, and needs will continue to evolve as retailers experiment – and landlords must adapt to that, be it owners of shopping centers, high street units or developers of warehouse and logistics properties,” said Listowski.

Retailers’ dilemma

A safe bet?

“We see two trends. There is a new demand from companies like Amazon, which are requiring large fulfillment centers, and some smaller cross-docks for transport companies that serve these fulfillment centers,” Dobrzycki explained. He added that many retailers switching to e-commerce are still operating out of regular warehouses and will likely continue to do that in the future. The question is if the approach is viable in the long-term. “They are trying to use the same resources. But at some point they could be looking for some additional efficiencies and could be following Amazon’s path,” he concluded. “Clearly, there is, as yet, no right answer

Surely, retailers will have to work out some sort of balance on how to handle showrooming and click-and-collect centers alongside their brick-and-mortar stores. For investors planning ahead, the real question is not only whether fulfillment centers will dominate the market, but whether the new XXL boxes are a safe bet in the long run. After all, what can you do with a fulfillment center once the main, or only, tenant moves out 10-15 years from now and the XXL model is no longer in demand? One way would be to turn them back into regular multi-tenant warehouses. “It is easier to turn this fulfillment center into multi-let building in 15 years’ time than the other way round. Obviously it would be capex intensive, but it’s possible,” Dobrzycki said. Still in demand

The entire clash between fulfillment and distribution centers might be an irrevelant one anyway, as Poland’s logistic market seems to be far from saturated, regardless of the asset class. “Everybody buys it, wants it, especially in growing economies, like the CEE,” Kroeger said. In fact, investors’ appetite for logistics space is increasing, and developers are not afraid to take risks. In April, Panattoni said it will build a 20,000-sqm warehouse unit in Wrocław. Prologis also recently announced the launch of two speculative warehouses, 18,000-sqm and 27,000-sqm ones, also in Wrocław. “The market, especially in Europe, is so under-served that the demand, even during the recession over the last three-four years, has consistently been strong. During the past three years the take-up in logistics has been at pre-crisis levels,” said Prologis’ Ghazal. u

M A Y 2 0 1 4 • WB J OB S E R V E R

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

b y b e ata s o c h a

Natural selection Reports abound that brands are exiting the Polish market, but a wave of newcomers is offsetting the loss

new international retailers entered the Polish market in 2013

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

Last year saw one of the biggest numbers of brands leaving the Polish market in years, particularly Scandinavian fashion brands. Danish retailer IC Companys decided to sell two of its brands, Cottenfield and Jackpot to another Danish group, COOP. The move was accompanied by the brands’ withdrawal from several countries, including Poland. Eight years after entering the market, Swiss clothing brand Charles Vögele also decided to leave Poland, as well as the Czech Republic and Hungary, and focus its activity on Western Europe. Meanwhile, Swedish KappAhl has dismissed rumors of its retreat from Poland and admitted only to streamlining its operations, closing some of its unprofitable stores. Polish retailers are also cutting their losses. Retail group Empik Media&Fashion recently announced it was retreating from the fashion segment and planning to close its stores, which include British brand River Island and the American GAP, with the former’s stores operating as a joint venture between the group and River Island Clothing Co Limited. The British retailer, however, has said that it will continue its operations in Poland, regardless of its partner’s decision. Experts say the exodus is the result of stiff competition and the fact that the brands’ offers don’t meet the demands of Polish consumers. Old brands out, new brands in

It’s not all doom and gloom, however. Last year also saw 23 new international retailers entering the Polish market. The fashion sector saw the highest number of new players (13 brands), including Karl Lagerfeld, H.E. by Mango, Hollister, Manila Grace and Armani Jeans. Another four new retailers represent the home accessories market: H&M Home, Ixina, Present Time and Laura Ashley. “In terms of the country of origin, six French tenants, three

American expansion

Top 10 Target Markets for American Retailers in 2014

40 30 20

Netherlands

Ireland

Poland

Turkey

Austria

France

Canada

Germany

Images: Shutterstock

Source: CBRE

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

550,000 sqm

of retail space is currently under construction across Poland Italian and two per each country: Denmark, Sweden, the UK and the US, entered Poland in 2013,” said Beata Kokeli, senior director at the retail department of CBRE Poland. And the prospects seem to be improving. With growth projected at some 3 percent this year, Poland continues to be an attractive destination for international brands. The country is the 13th (out of 60) most sought after market for international retailers, with as many as 14 percent of them planning on opening stores in Poland in 2014, according to a recent survey by advisory CBRE. “Over the past few years, a number of stores came to Poland in all areas of retail. TK Maxx is expanding, as is DIY store Jula, and New Look has reentered Poland,” said Szymon Łukasik, associate at retail department, Cushman & Wakefield. “There are also several newcomers: Hollister and American Eagle have opened their first stores, as well as some luxury brands, including Louis Vuitton. Meanwhile Warsaw’s Arkadia has recently seen the first Desigual store open,” Łukasik added. American storm

This year Poland will be particularly targeted by American retailers, which “have the most extensive large-scale expansion plans with almost half of those surveyed looking to open more than 40 stores each in 2014,” the CBRE report reads. Some 11 percent of American retailers planning such an expansion are looking to Poland, which makes the country the seventh top destination for retailers originating from the Americas, alongside Ireland, Turkey and the Netherlands. The countries that are higher on the list of priorities for American chains are: the US (43 percent), Germany (19 percent), Canada, the UK, France and Austria (14 percent each). .

Not enough

Will the expansion of existing chains and new entries be enough to fill the ever-increasing retail space though? Some 550,000 sqm of retail area is currently under construction across Poland, 87 percent

M A Y 2 0 1 4 • WB J OB S E R V E R

of which is within 20 new shopping centers and 8 mall expansions, according to a recent JLL report. In Q1 2014 alone, three shopping malls were completed, totaling 140,500 sqm of GLA: Atrium Felicity in Lublin, Galeria Amber in Kalisz and Galeria Siedlce in Siedlce. “Our market craves new brands in shopping windows, much more so than other markets, both in Western and Central Europe,” said Łukasik, adding that “New tenants are and will continue to enter the Polish market, however developer and consumer appetite will not be fully satisfied.” u

Barriers to entry

ew brands which are considering whether to enter Poland are carefully examining the situation, and until an opportunity arises that Szymon Łukasik, ensures their success, associate, Retail they won’t risk coming Department, in. Some of the biggest Cushman & Wakefield challenges new brands face are the specifics of the local market and all the procedures for doing business in Poland, even further increasing the risk, which is already high to begin with given existing competition. This is often a choice between opening the first store in an unknown market and store number 20 in a market that has already been verified and has proven to be profitable. Unfortunately for Poland, the choice is simple in some cases. The first stores a new brand opens are like litmus paper – their results are scrutinized before any further decisions are made.

l o k a l e i m m o b i l i a / re sidential

The luxury conundrum b y b e ata s o c h a

}

Image: Orco Property Group

A unique luxury residential project in the very heart of Warsaw designed by a renowned architect, with a marketing strategy developed by a world-class guru – what could possibly go wrong? Everything, apparently. Poles must not be as keen on ‘keeping up with the Joneses’ as you’d think

WB J OBSERVER • MAY 2 0 1 4

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

} T

he project was plagued from the get go. It was announced in 2007 as the pinnacle of luxury and prestige for Varsovians, designed by Polish-born American architect Daniel Liebeskind in the shape of a 192-meter tall glass sail. The scheme’s construction was halted in 2009, after reaching the 17th floor, mainly due to the developer’s financial difficulties related to the global crisis. On top of that, the company had problems with a court decision suspending the building permit for the skyscraper. The dispute ended favorably for the developer, and construction was re-launched in January 2011. A year later the tower reached its full height, but that’s where Orco seems to have run out of luck. “There were many reasons for Złota’s failure. When the investment was launched, the crisis followed soon after,” Bartosz Turek, an analyst from Lion’s Bank

M A Y 2 0 1 4 • WB J OB S E R V E R

explained. “Plus, unlike the Sky Tower and Cosmopolitan, the project was financed mainly on credit. There were problems with the contractor and administrative decisions. All of that created delays and incurred more costs,” he added. Pricy esteem The firm decided to re-market their apartments, hiring Roger Black as a consultant and creative director, a renowned British marketing consultant specializing in the premium residential segment. His strategy was to make the apartments even more expensive than they already were, rising their price from PLN 18,00040,000 per sqm up to 25,000-65,000 per sqm, a whopping 50 percent bump. The logic behind it was to appeal to the most well-off Poles by creating a “conspicuous consumption” effect, posited by economist Thorstein Veblen, who wrote in 1934 that “In order to gain and to hold the esteem of men it is not sufficient

merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence.” When asked about the risky strategy in July of last year, Roger Black told Lokale Immobilia that “Polish people are cosmopolitan people, they are educated and travel around the world and then take all that wealth and education back with them to Warsaw. This building is to start a new generation of buildings in Warsaw.” He wasn’t too wary of the nearby Cosmopolitan apartment building, saying that “There’s no competition between Złota 44 and Cosmopolitan. ... Buyer potential is infinite.” Apparently it wasn’t, and the unfinished project wasn’t selling well. Thus far, only about 25 percent of units have been purchased, despite launching three marketing suites on the tower’s top floor. “The minimum price in Złota 44 was PLN 24,000, while the average price in the Cosmopolitan building, only a stone’s

lokale immobilia / residential

meantime the prices went up,” Turek said. In December 2013, Orco terminated the agreement with the general contractor. It waited until the facade on the upper levels was finished, which left only the bottom two floors to complete, plus the entire interior to fit out. The developer claimed it would finish the construction on its own. But that was little more than wishful thinking.

In 2013, Orco generated a net loss of €227 million and an operating loss of €164.3 million, with the group’s revenue at €145.9 million.

Image: Orco Property Group

throw away was PLN 25,000. And these two projects were natural competitors,” said Turek. Bad timing Needless to say, the plan to turn Złota 44 into a status symbol for the most affluent Poles backfired. Some say it was the market – 2013 was still a year of cautious calculation and thrift in Poland, some say it’s not in Poles’ nature to go after goods that are arbitrarily priced well above their market value. After all, today’s Polish magnates rarely come from money – they had to earn their status and position, and squandering millions on overpriced apartments is not the way they did it. And then there was also the issue with the facade, which the developer decided to cover with laminate instead of glass, and Liebeskind’s “sail” increasingly became called a white-and-blue “zebra.” “The project’s prestige decreased, it was increasingly ridiculed, and in the

A cautionary tale

Sinking ship The investment was proving to be a giant financial sinkhole. Orco said that it 2009 had to set aside €193 million for impairConstruction ments and valuation adjustments in 2013, is halted, after with the Złota 44 project accounting for reaching the €122 million of that sum. 17th floor (out Finally, the developer decided to cut its of 54), due losses and put the entire unfinished project to the global up for sale. A purchase option was granted financial crisis to OTT Properties, a company related to and legal Orco’s management board. But that was issues not the end of Orco’s tribulations. Only five days after announcing the sale plans, Orco said it received notice on the termination of loans for the financing of Złota 44. The company had to pay back PLN 189.7 million within 30 days, a tall order for the loss-ridden developer. That’s when Orco Property Group came to the rescue of its subsidiary responsible for the Złota 44 debacle. “OPG will try and amass the funds July 2013 within the allotted time frame, mainly Sales are rethrough selling its liquid assets,” the launched with company wrote in a statement. Soon afprices 50 perterwards, OPG signed an agreement with cent higher than Bank Pekao to acquire loan receivables in 2012 and collateral from Orco, its subsidiary. A world of possibility What will now happen with the blueand-white high rise right smack in the center of the capital? Will it have to wait another few years before it is completed? “A new investor will come, finish the scheme, change its pricing policy and maybe also change its function. A part of the building could be used for hotels, and if the technical conditions allow it, it could also be used for offices, as there are few locations in the center with small units, say 50-100 sqm ones. Finally, some of the apartments could become condos,” Turek said. “There is demand for what can be done in this space. Look at the Cosmopolitan. It launched 2-3 years after Złota 44, finished earlier and has already sold some 50 percent of its total space,” he added. u

2007 The luxury apartment skyscraper is announced, construction launched in Q4

January 2011 Construction is re-launched February 2012 Building is topped-out

December 2013 Orco terminates the agreement with its general contractor claiming it will complete construction on its own

March 2014 Orco puts the unfinished Złota 44 up for sale

WBJ OBSERVER • MAY 2014

lokale immobilia / high streets

The High Streets: ul. Marszałkowska

Recently:

pa r t fo u r o f a s e r i e s

Ul.

Marszałkowska has a long tradition of being the main “marketplace” in Warsaw. It was Varsovians’ top shopping destination in the communist era, housing Warsaw’s biggest department store complex, the so-called “Eastern Wall,” built between 1962 and 1969. The “Eastern Wall” was built along ul. Marszałkowska’s eastern side in the Polish “modernist” style and comprises four retail buildings: Wars, Sawa (after the legendary founders of Warsaw), Junior and Sezam, the latter of which is about to be redeveloped by BBI Development. After the completion of the “Eastern Wall,” work commenced on a similar project called the “Western Wall,” but was abandoned in 1989.

The state-owned store continued to operate there throughout the 1990s. After being privatized in 1998, it changed its name to Galeria Centrum and was still one of the dominant shopping destinations in the city until it filed for bankruptcy in 2009. Due to its tradition and location along the subway line, ul. Marszałkowska is still the place where Varsovians flock to do their shopping. It currently features mostly mainstream brands, including Zara, H&M, M&S, Cropp, House, TKMaxx and C&A. The western side of the street is where the Palace of Culture and Science is located, next to an empty plot which the city has been trying to offload for some time, thus far without success. u

BBI is working on launching a 13-storey office/retail project at the intersection of ul. Marszałkowska and ul. Świętokrzyska. It will offer 10,000 sqm of office space and nearly 5,000 sqm of retail space, as well as 106 parking places.

Retail segment: Mainstream brands (national and international) and flagship stores

Top tenants: M&S Zara Cropp TK Maxx Sephora

Where the roads meet

– which involves the redevelopment of the current Sezam department store into an office/retail scheme. It will feature 13,500 sqm of GLA scheduled to be delivered in 2016. The second subway line will create even more opportunities for retail in the area, par-

Anna Wysocka, Head of Retail Agency Poland, JLL

such as Zara, H&M, Reserved/ Mohito, C&A, M&S, Camaieu and TK Maxx, as well as Empik, Home&You, Sephora and Rossmann. The offer is complemented by Carrefour. There are also a number of cafes and restaurants in the neighborhood. The offer of ul. Marszałkowska will be further expanded by a new project called Nowy Sezam

ticularly near the intersection of ul. Marszałkowska and ul. Świętokrzyska. Once the work is complete, ul. Świętokrzyska may well become a new retail destination, particularly the section between ul. Marszałkowska and ul. Nowy Świat. u

Shop till you drop Ul. Marszałkowska retail units by category 5%

Clothing, footwear and accessories

Gastronomy 41%

Health & beauty Multimedia Source: JLL, 2013

Ul. Marszałkowska is one of Warsaw’s ‘big five’ high streets. Its biggest advantage is great access to public transport, including two subway lines in the immediate vicinity, numerous tram lines and buses, as well as the central railway station nearby. It is also one of the city’s main thoroughfares. It attracts a lot of people with its varied offer, including clothes stores, health and beauty stores, housing accessories stores as well as cafes and restaurants. The street is dominated by large department stores: Wars, Sawa and Junior, together offering 28,000 sqm of retail space with large units for lease. The buildings, which used to house Domy Towarowe Centrum, were redeveloped in 1999. The location is favored by popular brands, both Polish and international, which opened their flagship stores there, including fashion brands

Services 32% Groceries

m a y 2 0 1 4 • W B J O B SER V ER

Groceries

l o k a l e i m m o b i l i a / high streets

The best location in Poland Planned to be redeveloped as Centrum Marszałkowska

Green Coffee

Rafał Szczepański, vice president of the management board at BBI Development

Marszałkowska

The investment ran into some problems during its initial stages. Some of the local residents protested against its construction. How did that end? Protesting is an indispensable part of an investment process and each investor has to deal with it. Everything has now been settled. The planning conditions have been adopted and all we’re waiting for is the building permit.

JUNIOR Zara Sephora Empik

The location of the scheme is its biggest asset, isn’t it? Our scheme, which will be erected in place of the old Sezam department store, will have the best location in Poland. It will be directly connected not to one, but to two subway lines. The new, second subway line [scheduled to be delivered in September 2014] will change the city fundamentally. It will be a historic change whose effects we will continue to consume for decades to come.

Empik Cafe Image: BBI Development

How is work progressing on your Centrum Marszałkowska project, at the intersection of ul. Marszałkowska and ul. Świętokrzyska? We have been working on the project for a few years now. We are now close to finishing the administrative paperwork, we’re just waiting for the final building permit and then we should be able to launch construction work at the end of 2014. Within the next two and a half years the building will be completed. It will combine retail and office functions, as well as a little square in front which will serve as a meeting place.

Cropp/ House

SAWA Camaieu iSpot

Marszałkowska

Rossmann (-1) Carrefour (-1) M&S Reserved/ Mohito/ Home&You/ ReKids

WARS

Constructing a building on top of a subway station can’t be easy. How far along are you with that? We’ve already completed the work allowing the building to be directly connected to the subway station. We’ve finished working on the subway exit on our end. Our building will be built directly above this exit. Our scheme will be the first commercial building in Warsaw with a direct passage to the metro. This is the norm in the UK or France, but in Poland this has not been done before. u

TKMaxx InMedio C&A H&M

Rondo Dmowskiego

PureJatomiFitness Pizza Hut BurgerKing KFC Starbucks

Centrum Marszałkowska 13 floors (10 above ground, 3 underground) retail – 4,848 sqm (3 levels) / office – 10,025 sqm (8 levels) 106 parking places

WB J OBSERVER • m a y 2 0 1 4

c i t y s c a p e / s z c z ecin

Did you know?

1729

Szczecin is the birthplace of Sophie Friederike Auguste von AnhaltZerbst-Dornburg, better known as Catherine the Great, Empress of Russia. Raised in the family of the governor of Stettin, she was later married to Peter III, Tsar of Russia. She became empress and autocrat after a coup d’etat that resulted in her husband’s death.

1873

This was the year that city authorities managed to push through the idea of bringing down local fortifications, no longer used for military purposes, and building a new city center. The “stellar” street structure, with tenement houses, public utility buildings and parks, was modeled after Paris. Local astronomers say that it resembles the Orion constellation.

zczecin is Poland’s seventh most populous city, located in the northwestern part of the country. Despite not being directly situated on the Baltic Sea coast, the city is a major marine port. This is possible thanks to a water transportation route connecting the Oder River with the Szczecin Lagoon. The first settlement in the area of modern-day Szczecin dates back to the sixth century BC and is attributed to the Lusatian Culture. The first documented stronghold was built there in the late eighth century AD, later expanded under Slavic rulers. It was the site of many battles, and in 1181 it became part of the German Empire with the settlement formally becoming a city in 1243. Most of its later history, under the name of Stettin, was associated with Germany, with its most prominent

m a y 2 0 1 4 • WB J OB S E R V E R

period in the nineteenth century. Szczecin became part of Poland after World War II, as a result of agreements signed by the Allies. The German population either fled or was expelled and Polish settlers were brought into the city. In the 1970s and 1980s the workers of Szczecin were engaged in some of the most prominent anti-communist protests. Today, Szczecin focuses on its role as a transportation hub, conveniently located on the crossroads of major European routes and close to the sea. This has proved an advantage both in terms of industry and tourism. Businesses currently based in and around Szczecin include sea transportation companies Unity Line and Polska Żegluga Morska, the Gryfia shipyard, chemical plant Zakłady Chemiczne Police and wind turbine firm kk-electronic.

Aneta Kręglicka She is the first and so far the only Pole to have won the Miss World title. Her triumph came in November 1989, shortly after the defeat of communism in the country. Born in 1965 in Szczecin, she studied economics in Gdańsk and Warsaw. Before entering the Miss Polonia 1989 contest, she was a member of the “Jump” academic contemporary dance group. In 1990-1991 she worked in New York. She then returned to Poland and established a foundation that promoted healthy lifestyles and later one of the first public relations companies in Poland. In 2002 she took on a new challenge and became the co-owner of a film studio.

Images: Szczecin City Hall, Apart

Between land and sea

Favorite daughter

London 1,017 km Paris 991 km Berlin 127 km

Moscow 1,503 km

Prague 373 km

Rome 1,293 km

Mayor: Piotr Krzystek area code: 91 Area: 300.55 sq km Nearest airport Solidarity szczecin-goleniów Airport

Population (dec. 2012) 408,913

Distance to the city center 45 km

highway A6

working-age Population (dec. 2012)

262,496

unemployment rate (DEC. 2013)

10.6% median pay (2012)

PLN 3,762 Modern office space 100,000 sqm office vacancy rate 15% prime headline rents €11-€15

number of universities

number of students

number of graduates a year

55,513

15,981

Percentage of city covered by zoning plans: 46% major inDUSTRIES: water transportation, ship building and repair, food, chemicals Recent major investors Mobica Genpact kk-electronic LM Wind Power Service&Logistics Sonion BLStream Nynas Kronospan Holdings Ltd. StanleyBlack&Decker ECE Projektmanagement Polska Special Economic Zone EURO-PARK Mielec Special Economic Zone Industrial and Technology Parks Technopark Pomerania technopark-pomerania.pl WB J OBSERVER • m a y 2 0 1 4

observer ranking

OBSERVER TOP 5 Business consulting companies 1PwC

Total revenue from business consulting (2013):

PLN 251.5 million

Supported industries: Energy and chemistry; financial sector; technology; media; communication and entertainment; private Polish companies; capital markets; real estate; health care and pharmacy; public sector. Strategic services: Financial advice; strategic advice for public and private sector; investment projects consulting; investment consulting; development management and strategy; transaction and crisis consulting; sustainable development consulting; economic inquiry and expertise; legal, tax and audit consulting. Selected clients: JSW; PZU; Poczta Polska; ZakĹ&#x201A;ady Azotowe PuĹ&#x201A;awy; HSBC; mBank; PGNIG; Gaz-System; Innova Capital; Graal; Grycan Total revenue (2013, PLN million): 543.3 Total number of consultants (2014): 501

2Deloitte

Total revenue from business consulting (2013):

PLN 142.7 million

Supported industries: Financial sector institutions; trade and distribution; energy; the public sector; technology; media and telecommunications. Strategic services: IT consulting and systems integration; actuarial and insurance solutions; services for the financial sector; strategies and business processes; SAP implementation; human resource management; price optimization; supply chain management. Selected clients: PZU; PGE; Raiffeisen Bank; Bank Millenium; Poczta Polska; Konsalnet; Dalkia Total revenue (2013, PLN million): 445 Total number of consultants (2014): 1,100

m a y 2 0 1 4 â&#x20AC;˘ WB J OB S E R V E R

observer ranking

3KPMG

Total revenue from business consulting (2013):

PLN 129.5 million

Supported industries: Banking and financial institutions; automotive; building and construction; market for consumer goods; energy; telecommunications; pharmaceuticals; chemicals; transport; public sector Strategic services: Cost and efficiency management; information risk management; company efficiency improvement; IT system selection, implementation and maintenance; IT system and process requirement analysis; general business advisory; corporate finance; transaction services; restructuring. Selected clients: WND Total revenue (2013, PLN million): 460 Total number of consultants (2014): 235

4WYG International Total revenue from business consulting (2013):

PLN 67 million

Supported industries: Cooperation with businesses across all industries and the public sector Strategic services: Investment advice; consultancy in the field of EU funds; operational and strategic advice; advisory services relating to the environment; consultancy in the field of HR. Selected clients: Ministry of Finance; Agency for Restructuring and Modernization of Agriculture; Voivodship marshal offices; Warsaw City Hall; Wojskowy Instytut Medycyny Lotniczej in Warsaw Total revenue (2013, PLN million): 74.5 Total number of consultants (2014): 124

NREY Polska

Total revenue from business consulting (2013):

WND

Supported industries: Motorization; governmental and public sectors; gas and oil; new technologies; clean technologies; healthcare; energy; telecommunications; finances; sports, media and entertainment; private equity funds; consumer products; mining and metallurgy; real estate; defense sector; airlines Strategic services: WND Selected clients: WND Total revenue (2013, PLN million): 583 Total number of consultants (2014): WND

Research for the list was conducted in April. NR: not ranked, WND: would not disclose. Data source: www. ey.com, Warsaw Business Journal Book of Lists; www.bookoflists.pl

WB J OBSERVER â&#x20AC;˘ m a y 2 0 1 4

e v e n t s / ceeqa gala

S Skanska’s deluge (L-R) Zoltán Linczmayer (managing director, Skanska Property Hungary); Marie Passburg (president of Skanska Property Czech Republic); Nicklas Lindberg (president of Skanska Commercial Development Europe); Katarzyna Zawodna (president of Skanska Property Poland); Karol Bartos (director at Tristan Capital Partners); Daniel Harris (managing director Europe and CE, Tristan Capital Partners)

Kim Wilde sang some of her greatest hits

m a y 2 0 1 4 • WB J OB S E R V E R

wedish real estate developer and construction firm Skanska dominated the annual industry awards for commercial real estate in New Europe, picking up five awards for the second year running at the 11th CEEQA Gala. More than 600 business leaders and senior industry professionals from more than 40 countries gathered in the SOHO factory in Warsaw to participate in the awards ceremony as well as take in the live entertainment provided by legendary singer Kim Wilde and young Polish star Natalia Sikora. Skanska Commercial Development Europe scooped the awards for Developer of the Year and Green Leadership for the second year in a row, as well as Overall Company of the Year and the award for Industry Professional of the Year for company president Nicklas Lindberg, while Skanska SA took home the award for Construction Company of the Year also for the second year in succession. The awards add to their two RealGreen Awards won at CEEQA@Mipim in March, making a total of seven CEEQA 2014 awards in one year. Industry all stars The 11th edition of the sector’s flagship event was attended by Paul Gheysens, founder and president of Belgian developer Ghelamco, who joined a long line of regional and international real estate legends in accepting the CEEQA award for Lifetime Achievement in Real Estate. The sector’s main industry awards are for business achievement across 18 countries in Central & Eastern Europe and Southeast Europe, and are organized by CEE Insight Forum in association with the Financial Times to recognize business excellence in commercial real estate investment and to showcase the achievements of the sector to the international investment arena. The awards are judged by a panel of senior representatives of market leading companies active across the New Europe arena. u

events / ceeqa gala

Award winners GRAND AWARDS Lifetime Achievement Award Winner Paul Gheysens, founder and president of Ghelamco Company of the Year – joint award Skanska Commercial Development Tristan Capital Partners Building of the Year CEE Galeria Katowicka, Katowice, Poland Building of the Year SEE Promenada in Floreasca City, Bucharest, Romania Industry Professional of the Year Nicklas Lindberg, president of Skanska Commercial Development Europe Green Leadership Award Skanska Commercial Development Europe Hadley Dean (holding the award statuette), CEO of Colliers, accepts the Hotel, Leisure & Residential Development of the Year Award from Jerry Kamecki, New Business director at Valkea Media (left). Richard Hallward (middle) and Monika Richardson hosted the event

BUILDING AWARDS Office Development of the Year – joint award Floreasca Park, Bucharest, Romania Florentinum, Prague, Czech Republic Retail Development of the Year Galeria Katowicka, Katowice, Poland Hotel, Leisure and Retail Development of the Year Hotel Bristol Odessa – Refurb, Odessa, Ukraine COMPANY AWARDS Developer of the Year Skanska Commercial Development Europe Industrial Developer of the Year Prologis

Images: CEEQA

Investor of the Year Tristan Capital Partners Lender of the Year Helaba Legal and Financial Consulting Company of the Year Dentons Development Services Company of the Year Arcadis EC Harris (L-R) Richard Hallward, Katarzyna Zawodna, Marcin Klammer (CEO of Arcadis EC Harris)

Construction Company of the Year Skanska SA Property Management Company of the Year ECE Projektmanagement Rising Star Balmain Asset Management

WBJ OBSERVER • may 2014

events / ceeqa gala

Award winners AGENT AWARDS Agent of the Year – office agency JLL Agent of the Year – retail & leisure agency Cushman & Wakefield Agent of the Year – industrial agency Colliers International Agent of the Year – capital markets JLL REALGREEN AWARDS RealGreen Building of the Year 2014 Malta House Skanska Commercial Development Europe RealGreen Developer of the Year 2014 Skanska Commercial Development Europe

Paul Gheysens, founder and president of Ghelamco accepting the Lifetime Achievement Award

RealGreen Investor of the Year 2014 Deka Immobilien RealGreen Services Provider of the Year 2014 Arup

Jonathan Hallett , head of Cushman & Wakefield Central Europe presents Marta Wybrańska, senior leasing manager at Neinver, with Building of the Year CEE Award

may 2014 • WBJ OBSERVER

e v e n t s / b an k ing and insurance f o ru m

big Banking

(L-R) Artur Olech, CEO of Generali Group in Poland between 2010-2014; Józef Wancer, CEO of BGŻ; Anna Włodarczyk-Moczkowska, CEO of Gothaer; Krzysztof Kalicki, CEO Deutsche Bank Polska; Wojciech Kwaśniak, Deputy CEO of Polish Financial Supervision Authority; Bożena Graczyk, Partner at KPMG

Images: CEEQA, MM Conferences

anking and insurance forums are the biggest events of their sectors in Poland. Organized twice a year, its first edition of 2014 was held in April in

Warsaw. All the major players took part in the conference. Top executives from the banking and insurance sector, government officials, economists and experts attended the two-day meeting. Panels during the first day included global factors influencing the Polish banking sector and the central bank’s role in building pension security. The day ended with the Grand Gala of Banking World Leaders with an awards ceremony awarding the best banks and managers. u

Award winners mBank

Most innovative bank Most interesting bank innovation

PKO BP – IKO

Fastest developing bank

BZ WBK

Best big bank

BZ WBK

Best small and medium bank Manager of the year Person of the year Social responsibility

Mariusz Grendowicz, CEO of Polskie Inwestycje Rozwojowe

Alior Mateusz Morawiecki (BZ WBK) Cezary Stypułkowski

Warsaw Banking Institute’s “Bakcyl” program

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e v e n t s / b an k ing and insurance f o ru m

Day two The second day featured even more panels and discussions, including ones on IT and new technologies, payments and innovation in the banking sector as well as the Insurance Forum. Overall, the event was attended by over 500 guests. Over 120 speakers took part in 17 panel discussions. The next edition of the Banking Forum and Insurance Forum will take place on October 22-23 in Warsaw.

(L-R) Piotr Siciak, director at KPMG; Małgorzata Zaleska, Member of the board at NBP; Piotr Czarnecki, CEO Raiffeisen Polbank

(L-R) Wojciech Bolanowski, director of electronic banking at PKO BP; Marcin Prell, Member of the board at BZ WBK; Krzysztof Czuba, Deputy CEO Alior Bank; Cezary Stypułkowski, CEO mBank; Andrzej Lech, CEO Warsaw Banking Institute

m a y 2 0 1 4 • WB J OB S E R V E R

e v e n t s / eur o pean executive f o ru m

Europe needs charismatic leaders

Images: MM Conferences, Executive Club

he second edition of the European Executive Forum attracted many top-notch speakers and attendees, including the former German and Polish Presidents Horst Koehler and Aleksander Kwaśniewski, former President of European Parliament Pat Cox (see interview p. 16), as well as the ex-chairman of NATO, General James L. Jones among them. The current situation in Ukraine dominated the discussion. “In a time of crisis, personalities and actions that can bring people together and give hope are needed,” said Kwaśniewski in his opening speech. In the business section of the forum, Professor Charles Handy from the London Business School gave advice on how to be a good leader. “Most companies are like Putin’s Russia more than Obama’s America. Form leaders, strength and focus on growth is expected,” he explained, adding that Poland is one of the few European countries which can be described as a place whose future looks better than its present and the past. “I don’t think we can call Europe a ‘museum,’ yet, but definitely Western Europe is in a state of siesta,” he added. Participants included the CEOs of PZU, PKO BP and Energa among others. The event was co-organized by the Executive Club, Amicus Europae Foundation and the CEED Institute. u

Charles Handy and Beata Radomska, Executive Club President

Jacek Socha (PwC), Francois Colombie (Auchan), Andrzej Klesyk (PZU), Andrzej Kozłowski (Orlen), Piotr Płoszajski (SGH), Juan de Porras (BZ WBK)

Daniel Vasella, ex-CEO of Swiss Novartis pharmaceuticals

Technology to make your life easier

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

3DR Iris drone

Gadgets

Drones can be used in many different ways, not only for military purposes. You can take aerial pictures and videos, spy on your next-door neighbors, or simply fly them around just for fun. 3DR Iris drone lets you do all of those things, and more! You can control it with your phone or tablet and it offers wireless, real-time data transmission. You can set the flight plan and just watch it fly, mount a Go Pro camera to capture HD-quality video (camera not included). You can even tell it to follow you thanks to its handy GPS antenna, just in case there are some birds that you need to scare off in your path. Price: $750

3drobotics.com

Panasonic Toughpad 4K tablet It’s probably the first tablet with 4K resolution on the market. With a 20’’ screen, it’s a perfect tool for professionals, such as graphic designers, video editors, photographers and architects alike. Its size and short-battery life (2 hours) limits its mobile use, but it can be mounted and used as a display in showrooms and galleries. Besides the 4K resolution it packs Intel’s i5 1.9GHz processor and runs on Windows 8. Price: $5,999

Panasonic.com

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Ever wanted to connect your plant to the internet? Now you can, sort of. Koubachi tracks your plant’s vital signs – soil moisture, lighting, temperature, and notifies you if you need to water your green friend or maybe move it to a better lit area. The device communicates with you via WiFi. Just stick it into the soil and set up the app and you’re done. The software has entries on over 500 types of different plants, so you should be covered. Price: €89

koubachi.com

Koubachi WiFi plant sensor

Set-top boxes are all the rage when it comes to watching TV. Streaming content you want to watch, when you want to watch it, is the future of television and Amazon wants in on the game. Its Fire TV device is, according to its creator, three-times faster than its main competitors – Apple TV, Roku and Chromecast. It also has a “voicecommand that actually works” feature. The number of third-party services that Fire TV supports is limited as of now, but since it’s based on Android expect more channels to be added at a fast pace. It also supports gaming, so now you’ll be able to play Minecraft on your huge flat screen TV.

Amazon.com

Price: $99

Panono

Amazon Fire TV

This device takes selfies to a whole new level. It’s basically a sphere packed with 36 3-megapixel image sensors. All you need to do is throw it in the air and you will get a unique 108 megapixel spherical panoramic image of you and your surroundings. There are only two setbacks. The picture has to be taken in daylight, as the darker it gets outside, the device would need more exposure time to capture a clear, blur-free image. You also have to remember to catch the falling Panono before it hits the ground. Price: €549

Panono.com

Images: 3drobotics, Panasonic, Koubachi, Amazon, Panono, Sleep Number

Sleep Number x12 bed

If you have a smart home, you really need a smart bed in it. And Sleep Number has the perfect one for you. It’s packed with sensors which monitor your sleep, movement, heart and breathing rate. It also has two independent sections which can be set differently. After learning your sleep habits it can suggest new settings so you’ll sleep even better. Besides standard features like voice command, it has an aptly titled Partner Snore function. Which allows the bed to raise your partner’s headrest when it detects a “hint of snoring.”. Price: $7,999

sleepnumber.com

>> WB J OBSERVER • m a y 2 0 1 4

l i fe s t y l e / restaurants

warsaw’s top sips Paparazzi

Warsaw’s never been one for cocktails, a point proved by the premature demise of Sense and its little brother Essence. But while the city has a new thirst for pubs and piwo, cocktail culture is also gradually being revived in the Polish capital...

Pies Czy Suka Locally speaking, most bars in this genre draw from a shallow pool of customers: expats, business bods and genetically modified bimbos. Pies Czy Suka is a little more diluted in this respect, with a customer base that encompasses, well, anyone looking for something off the mainstream. Innovative and edgy, they use mad scientist, molecular techniques to create inspired drinks that go beyond the novelty bracket. Highly impressive, and more so thanks to a restored courtyard setting and an interior that’s the epitome of cool.

There’s nothing to say about Paparazzi that hasn’t been said before: Warsaw’s cocktail culture started here. And while other outposts of this onetime chain have stalled and closed, the Warsaw operation goes from strength to strength. Catering to an audience that’s largely suited, booted and heavily scented, Paparazzi remains the source of peerless cocktails served in a slick interior consisting of glossy colors and over-sized images of silver screen stars. Better still, you can smoke practically everywhere – and still leave without smelling like a tramp. ul. Mazowiecka 12

ul. Szpitalna 8A.

Kita Koguta

Coctail Bar Max

Secado

Formerly the site of Colombia Bar & Café, KK is the brainchild of Colombia’s former bar-keeps. And that’s good news, because in the shape of Jakub and Adam you have two of the most talented cocktail maestros currently on the scene. Attracting a mixed crowd of city slickers and good lookers, Kita has a cool vibe that muddles neutral colors with pseudo industrial touches. But let the talk be about the drinks: beautifully fixed with a meticulous eye for quality and detail.

You either love it or you loathe it. Aside from getting the spelling wrong on cocktail, other irritants include drawn out waiting times and a crowd that embodies smug self-satisfaction. But those who turn on their heel are missing out on grand concoctions that frequently resemble a tropical rainforest in miniature. The cocktails are delicious, and for good reason many laud Max as the best cocktail in town. Adding to their armor is a separate whisky section that offers a staggering choice of over 500 bottles.

Most part restaurant, bit part bar, there’s a flexibility here that has turned it into one of those places where people meet, eat and generally hang out – not always in that order. And as for the drinks, they’re really very good. Using their own mixes, Secado presents a succinct list of must-try cocktails. Try their best seller, the Bloody Hell. Using Chopin vodka infused with horse radish, pirri pirri and basil, this pimped out version of the Bloody Mary incorporates chili syrup and wasabi in a high octane combo.

ul. Krucza 6/14

ul. Krucza 16/22

ul. Marszałkowska 66

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

Hotel Spotlight: h15 boutique apartments

Images: Shutterstock, Kita Koguta, Pies Czy Suka, Secado, H15 Boutique Apartments

“W

hen did all this happen?” So went the reaction of a friend of mine, a former expat revisiting Warsaw after ten years out-of-country. Specifically, he was referring to ul. Poznańska, a street recalled as a derelict, desolate wasteland of tumbledown tenements sheathed in shadow. How times change. If ever evidence was required of Warsaw’s coming of age, then this street is it. But if Poznańska is defined by its café culture and sense of exuberance, then its crowning glory is the H15. Is this Poland’s best hotel? Trip Advisor says yes: you probably will as well. From the outset H15 impresses, its pristine pearl white exteriors conjuring a sense of the pre-war high life: you expect Jeeves & Wooster to roll up outside. Loaned a time machine, however, you’d be more likely to see Molotov bowling in. Formerly the inter-bellum Soviet Embassy, socialist reliefs above the entrance hark to the times this was Espionage HQ. Revived in 2012 to serve as a hotel, having checked in, guests amble through the glass-covered atrium, a chess colored room sprinkled with orange trees and pod-like seats. Sensitively restored, the interior design was left to Mariola Tomczak and her talented eye is evidenced by the accommodation. Furnished with pieces by premium brands such as Pianka, Meridiani, Hayon and Serge, the apartments look original and well ex-

Take in the H15’s renovated charm

ecuted: clean lines, open spaces, and bold artwork above sparkling kitchenettes. It’s immaculate. Carefully thought out, even rooms facing the inner courtyard are bathed in light, while guests have the option of browsing the net using wireless keyboards connected to wall-mounted TVs: who said chic and functional can’t operate together? Yet as impressive as all this is, it’s the details that count: in H15 that means elements like a 110 year old Argentin-

Take it easy and put your legs up in chic surroundings

ian fussball table; five original Marilyn Monroe portraits shot by Milton Greene in the magnificent Signature restaurant; and restored Soviet friezes in what was once dubbed ‘The White Ballroom.’ Marketed as a ‘home away from home,’ H15 is nothing of the sort – it’s far better than that. u

H15 Boutique Apartments

Number of rooms: 28 Number of suites and apartments: 24 Distance from the airport: 9.1 km Distance from the train station: 1.2 km ul. Poznańska 15, Warsaw

www.h15boutiqueapartments.com

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

alex webber editor of the Warsaw Insider

Over the Rainbow Although Poland champions ten years in the EU in May, not everyone’s celebrating...

hey say a week’s a long time in politics, but it’s an even longer time in Poland. It feels like yesterday I was staring out at the gray wastes of Warsaw, yet within the wave of a wand, grim turned to green. Can that really happen in the space of a week? It appears so. And I’m fine with that – bring on the summer, I say. But first, there’s the matter of May. I like May, and as I pen this I’m particularly looking forward to celebrating ten years of Poland’s EU accession. Certainly, a party seems overdue. A decade back, when Poland first assumed membership, Warsaw didn’t celebrate. Not because it didn’t want to, you understand, but because it couldn’t. An international political conference ensured Warsaw went into lockdown as thousands of anarchists descended on town and threatened to wreak havoc. In the event, it all passed peacefully, but the upshot was there was limited carousing. Sure, the news relayed images of fireworks drizzling over the Palace of Culture, but it was hard to enjoy them from my cowering stance inside a barricaded bar. This time around, however, the city is going to make amends. I have it on good authority we’ll be celebrating with a great, big bonfire on Pl. Zbawiciela. Yes, the May 1 anniversary of EU enrollment has been picked as the date the area’s rainbow installation will make its reappearance. While the artist behind it claims it is a symbol of tolerance and unrelated to LGBT issues, both the church and far right strongly disagree. For them, they see it as a villainous threat to their sexual safety. For this reason it’s been torched half a dozen times. I don’t fancy its chances this time round, either, and if not May 1 then it’s only a matter of time. Personally, I say either ensure it’s protected by flamethrowers (facing out, not in), or simply outwit the extremists by replacing it with a Freddie Mercury statue. Try burning that, suckers. Instead though, we’re left with a ludicrous circle that gets more vicious with time. The whole saga has become a stubborn battle of wills defined by the poison of its rhetoric and pig-

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headed point scoring: it’s built, it’s burnt, and repeat from there on. No one wins, and everyone looks daft. The public, meanwhile, foots the bill. It’s not hard to outfox the tracksuited goons who persist in their arson, so I’m not sure why the city of Warsaw remains locked into a strategy that’s been proven to fail. There should be no kowtowing to the gurning mob, but there are better solutions than just hoping that the firebugs see sense. That’s cuckooland tactics. But I’ll leave that for City Hall to ponder. Instead, let us rejoice in ten years of Club EU. If a week’s a long time, then ten years feels like a century. A whole lot has changed in that time, and most of it for the better. Socio-economic issues aside, Poland is a different country from those distant days: and the changes have not been skin deep alone – they cannot be simply measured in terms of numbers and percentages. The growing bond with Western Europe has, for better or worse, trickled down in a growing adoption of trends, mannerisms and even etiquette. Nowadays, my inevitable Doomsday appointments with the ZUS office aren’t marked by jitters, but the knowledge that there’s a very good chance they’ll try and help me out of my calamitous misdealings. Historically defined by their charcoal hearts, the humanization of this lot has been a modern day triumph. And if nothing else, a clear sign there’s hope for us all – including the rainbow. Unfortunately, I wouldn’t base my game plan on hope… and neither should City Hall. v

“If a week’s a long time, then ten years feels like a century. A whole lot has changed in that time, and most of it for the better.

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