Poland:
Emerging
into a New Era
By
Jennifer Kane
U.S.
Commercial Service
Poland's
star is on the rise in
European and world
markets. Since 1989,
Poland has shed
socialism and joined
the WTO, OECD, and
NATO. With accession
into the European
Union in May 2004 and
an expected GDP growth
rate for 2004 of 4
percent, Poland's
economy is moving in
the right direction
and holds many good
opportunities for U.S.
firms.
This is a good time
for U.S. Secretary of
Commerce Donald Evans
to encourage America's
strong political ties
with the government of
Poland as well as
expand the U.S.-Polish
trade relationship.
His visit in December
2003 did just that.
Acknowledging Poland's
role in the Iraq war
coalition, Secretary
Evans also worked to
advance commercial
relations. Evans even
attended a business
summit with U.S. and
Polish companies. This
event resulted in
recommendations on how
to improve bilateral
trade.
A
NEW PLAYER
Poland's entry into
the European Union
will make it the
sixth-largest country
by population in the
expanded union. Poland
represents half the
geography and
population as well as
half the economic
output of all 10
countries set to join
the European Union in
May.
For Poland, EU
membership means
furthering the
structural
transformation of the
economy, harmonizing
its administrative and
regulatory systems
with those of the
common body of EU law,
and taking advantage
of billions of euros
in additional
resources for
infrastructure
development and
agricultural reforms.
While Poland has done
a remarkable job of
putting in place
legislation to support
fair and free markets,
harmonization with EU
rules will make Poland
one of the easiest
markets in which to do
business, outside of
North America, for
U.S. firms.
It is no wonder the
United States is one
of the most active
countries in Poland,
with more than $8
billion invested in
and $687 billion
exported to Poland in
2002. Edgar Fulton of
the U.S. Commercial
Service in Warsaw sees
a bright future:
"We expect U.S.
trade with Poland to
triple by 2010. U.S.
exporters who value
European market share
have no choice—they
must have a strategy
for developing sales
in Poland."
A
WELCOME RECEPTION
The Poles are so
interested in working
with foreign companies
that they are
improving their
business environment.
The corporate tax rate
will drop from 27 to
19 percent, and there
has been a sharp fall
in interest rates.
Both these factors
will create a stronger
competitive position
with regard to Europe.
Over the past decade,
Poland has made
remarkable progress in
transforming itself
into a market-based
economy. In mid-2003,
Poland completed the
privatization of more
than 8,500 individual
state-owned companies.
Meanwhile, federal and
local Polish
governments realize
there is a need to
give stronger support
to businesses,
especially investors,
to help create jobs
for a highly skilled
work force.
BEST
PROSPECTS FOR U.S.
COMPANIES
U.S. goods and
services enjoy a very
good reputation in the
Polish market.
Opportunities for U.S.
firms exist across a
broad spectrum of
sectors. Computers,
national defense,
automotive parts, and
water and wastewater
treatment and
equipment are among
the best prospects.
Poland also remains
ripe for the continued
growth of franchising.
For additional
information on these
and other prospects,
check the Country
Commercial Guide,
listed at the end of
this article.
Computers,
Software, and Services
The total information
technology market has
grown phenomenally in
recent years. Hardware
is nearly half of the
total IT market.
Foreign suppliers
dominate the notebook
and high-end computer
market segments.
Demand for software is
also on the rise due
to the need for more
database management
systems, networking
and tools software,
and security software,
as well as the
government's plan to
reduce software
piracy. Computer
services have solid
prospects for the next
several years because
Poland has to fulfill
EU obligations, which
involve several IT
projects as tools to
support public
administration
programs. The
best prospects for
computer services
include training,
consulting, hardware
maintenance and
services, and data
processing.
Defense
Industry
The Polish government,
the Military Property
Agency, and privatized
defense companies have
allocated nearly $4
billion for defense
expenditures.
Opportunities for
American firms exist
mainly in investment,
technology transfer,
and joint ventures. In
April 2003, Lockheed
Martin signed an
agreement with the
Polish government to
supply 48 fighter
aircraft to the Polish
armed forces. This
deal is expected to
increase opportunities
for both U.S. and
Polish companies in
the defense sector. Nearly
70 percent of
modernization spending
is allocated for
implementation of NATO
force goals.
Automotive
Parts
The need for
automotive parts
continues to grow
significantly as the
number of cars
registered in Poland
multiplies. Half
of these cars rolled
off assembly lines
more than six years
ago. This translates
into significant
market potential for
replacement parts over
the next five to seven
years. American auto
parts and accessories
enjoy an excellent
reputation for
reliability and
quality in Poland.
Water
and Wastewater
Treatment
The Polish government
has negotiated a
transition period for
compliance with EU
standards within the
water and wastewater
sector until 2014. In
order to comply with
EU regulations over
the next 10 years,
Poland will have to
spend more money on
the improvement,
expansion, and
-replacement of its
sewer and wastewater
treatment facilities
than on all other
environmental areas
combined. Access to EU
funding may be subject
to EU content
criteria, which may
require U.S. suppliers
to find local partners
or act as
subcontractors.
Franchising
There are more than
120 franchise systems
operating in Poland,
almost half of which
are foreign
franchising systems.
Financing is the most
critical element for
successful market
entry by U.S.
franchisers. The best
franchising prospects
are in retail trade,
services (automotive,
maid, and personal
services; commercial
cleaning, laundry, and
dry cleaning),
mid-range and low-end
hotels and motels, and
fast-food chains.
Business services,
currently not
represented within the
franchising sector in
Poland, hold great
potential.
BECOMING A LOYAL
PARTNER
Companies should think
about starting small
and finding good local
partners. Most
companies make sales
within the first year
of their initial
marketing effort. But
once that occurs,
companies need to gear
up quickly to
demonstrate loyalty to
the market. If the aim
is to build a
long-term customer
base, it is essential
to avoid the
perception of being
distant and not
available to service
clients on a daily
basis.
To become a long-term
player and gain market
share, most companies
find they need to
invest in local talent
and sales teams.
Ultimately, they take
advantage of lower
costs to assemble and
even produce some of
their lines in Poland.
Remember, starting in
May 2004, American
businesses in Poland
will also gain access
to the single market
of the European Union.
Competition in the
consumer goods sector,
particularly
non-durable consumer
goods, is intense in
Poland. Small U.S.
companies usually
enter the Polish
market by partnering
with small, regional
distributors and then
developing networks
from there. Large
firms may initially
establish regional
warehouse systems with
fleets of trucks and
teams of distributors
in order to branch out
to various markets
across Poland. This
requires significant
initial investment.
Polish companies tend
to act as distributors
(importing, taking
possession of, and
reselling goods)
rather than as agents.
Expensive equipment is
an exception to this,
since many Polish
companies do not have
the financial
capability to make
such purchases. Also,
heavy industrial
equipment tends to be
sold directly to end
users due to the
inability of most
distributors to
purchase the equipment
prior to reselling it
to end users.
Many U.S. businesses
in Poland take the
form of joint
ventures, with Polish
companies set up to
handle sales in the
market. Joint ventures
are an excellent way
to facilitate export
sales to the Polish
market.
DOING
BUSINESS THE RIGHT WAY
Poles are very well
informed about America
and hold U.S. values
in high esteem. Many
young people have
learned English and
are eager to develop
business ties with
American companies.
While U.S. firms often
have more experience
in marketing and
state-of-the-art
-technologies, it is
important not to
project an overly
aggressive or
patronizing style.
Poles frequently find
Americans' lack of
knowledge about their
country disappointing.
Poles are very proud
of their history.
Learning a little bit
about Poland's history
is a great way to earn
respect and trust.
In business, be aware
that the country has
changed rapidly in
recent years, but some
businesspeople may be
stuck in old ways.
Watch out for those
who have not developed
business ethics as we
understand them. There
are plenty of Polish
businesspeople who
could be good
partners.
This
article was compiled
with assistance from
Edgar Fulton, senior
commercial officer,
and the U.S.
Commercial Service
staff in Warsaw,
Poland.
Date Updated: March 27, 2007
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