Poland: high-potential EU corridor between East and West
Poland’s transformation in the past quarter of a century has been astounding. But the country’s best days are ahead of it. Poland’s population is well educated, entrepreneurial, and more Europe-minded than many western Europeans. These factors, and the resilience of its economy, mean that Poland offers huge opportunities in agriculture, construction and other sectors, and is a fast-growing location for shared services. Read on to find out what makes Poland special.
Ten years after joining the European Union Poland is doing well economically. The Polish economy is the only one in the EU to have achieved constant growth despite the economic crisis. The Poles are modernising, without this being immediately obvious everywhere.
Paul Bekkers, ambassador of the Netherlands to Poland for six months now, was pleasantly surprised by the spirit and open attitude he has encountered in the country. He has also been drinking in the rich history and culture. He believes that other countries should be more aware of Poland’s potential. “Poland has only really existed as an independent nation since 1989. What they have achieved in just under a quarter of a century is admirable. But the country does still suffer from the ‘unknown is unloved’ syndrome. People in Western Europe know too little about Poland, about its history and culture as well as about its tremendous economic potential. That’s a shame. Because the more you know about a country, the sooner you can spot the opportunities.”
Diederik van Wassenaer, Global Head Network at ING Commercial Banking, visits Poland every year. This means he can see the country progressing step by step. He says this progress is evident not only in the street but also in the workplace. “Polish workers are increasingly highly educated, international and in step with the times.”
Joanna Erdman, vice-president of the board of ING Bank Śląski, would like to see Western Europeans learning more about the modern aspects of her homeland, citing as examples women taking up opportunities in business, the eagerness to embrace innovation and her people’s hunger to learn. “I would like our ambitions to enjoy greater visibility in the business world, while our history and culture also deserve more attention. The European football championships we co-hosted with Ukraine in 2012 boosted our confidence and enhanced our image. People saw Poland from a different angle.”
The European Championships gave Poland the opportunity to showcase its ability to organise a major event. In the same year the country took a major step towards shaking off its bureaucratic image, with the World Bank naming Poland ‘top performer in improving the business environment’.
Erdman can see bureaucracy diminishing: “The situation is certainly not perfect yet, but we are making progress. For example, it is now much easier to establish a company in our country.”
Bekkers: “The Poles are not only working on bureaucracy but also on improving tendering procedures. Until recently, too often Polish entrepreneurs went just for price, without looking at quality and the long term. Five of us ambassadors wrote a letter on this subject and subsequently discussed the matter with the minister of Economic Affairs and Polish companies. Suggestions by the ambassadors were taken on board.”
Bekkers: “People in Western Europe know too little about Poland, about its history and culture as well as about its tremendous economic potential.”
Fields of opportunity
Poland offers companies great opportunities. With a population of 38 million the country has a huge home market by European standards. In addition it is a stable hub for trade with other countries in the Central and Eastern Europe region. Poland is particularly popular as a location for shared services, as is evidenced by the presence of companies including Shell, Heineken, Volvo and IBM. The country owes this to a well-trained workforce combined with relatively low employment costs. The high unemployment rate of ca. 14 per cent ensures that those who do have a job are highly motivated.
Bekkers states that Poland is on its way to becoming a major economic player. “The country is claiming its position, for example as spokesman for all the new EU member states. On top of this the economy has been stable for years.”
According to Erdman both the track record and the prospects are good: “Our Gross Domestic Product (GDP) grew by no less than 18 per cent from 2008 to 2012, falling back slightly to 1.4 per cent in 2013. But I expect growth of around 3 per cent in the coming years. European funds also help, supporting new investments in our country. This year will see the launch of another new tranche of 70 billion euro up to 2020.”
Van Wassenaer sees great opportunities, thanks to the structural funds. “The broad business sector stands to benefit from these. Think of European construction firms currently coming to the country en masse. Poles are known for being skilled craftspeople but knowledge and expertise will often be ‘imported’. I can also see great opportunities in the agricultural sector. Think of suppliers of machines and fertilizers, or even complete farming businesses. Land is exceptionally cheap. What you pay for 100 hectares in the Netherlands will buy you 1,200 or 1,300 hectares in Poland.”
Bekkers also sees agriculture and food as a high-potential sector. “Of the 100 billion euro in EU subsidies, as much as 26 billion goes to the agriculture and food sector. Other highly interesting sectors include infrastructure, energy and transport and logistics. The European structural funds enable Poland to invest, innovate and become more sustainable. Poland still has a long way to go in terms of innovation. At present only 0.77 per cent of GDP is spent on innovation, compared to an EU average of 1.6 per cent. Western European companies can help with this. Poles are open to foreigners who have something to add.” Entrepreneurs who want to do business need to actively build contacts, says Bekkers, especially in the region where they operate. “Poland is traditionally organised along decentral lines. But if you take an interest in the country and invest the time, it can take you far. Raben, a transport company with Dutch origins, is a good example. Its CEO Ewald Raben won the Entrepreneur of the Year award in Poland in 2012.”
Van Wassenaer also praised Raben: “Originally from Winterswijk, the company is now based in Poznan. It has in fact changed from a Dutch company into a Polish one. They have adapted so well that Poles see it as a Polish company. The same really applies to ING Bank Śląski. Poles appreciate it when business people adapt, they value a ‘when in Rome, do as the Romans’ approach.” There is no shortage of examples of foreign companies that have been successful in Poland but the other way round it seems to be a different story. Van Wassenaer: “We see it in our customer base. We have many great Polish clients, but there are surprisingly few who do anything abroad.” According to Van Wassenaer, there are plenty of opportunities for Polish companies to leverage on export possibilities.
Erdman: “Polish companies have traditionally been very focused on the home market. That is understandable as our own market is large and still offers plenty of opportunities. Now we are slowly seeing a change. Some companies, for example Intercars, are opening their activities in other European countries such as the Czech Republic, Germany and Slovakia. The extensive European network of our bank can be useful in that respect. If the economy continues to grow, companies will increasingly test other markets.”
Van Wassenaer: “Polish workers are increasingly highly educated, international and in step with the times.”
Prospects for the future
The future of the Polish economy looks bright. Poland’s GDP has been growing for ten years. It is likely that this will continue, partly thanks to EU investment in the local economy. That is not to say that there are no concerns. Increasing tension between Russia and Europe could result in delays. Poland remains dependent on developments in East-West relations.
Bekkers expects that Poland will strengthen its ties with Europe come what may: “Poland is very Europe-minded, perhaps even more so than most Western European countries. This is because Europe is of existential importance to the country. All over Poland the impact of the European structural funds is already plain to see. The future of Poland is closely linked to the future of European cooperation.” A question of a different order is whether the country should join the euro, said Bekkers. “Opinion on this is still divided in Poland. Obviously there are some cold feet on account of the euro crisis. The president of the Polish central bank is in favour, but some politicians disagree. I’ll be interested to see how this discussion unfolds.”
Erdman: “Poland occupies an interesting geographical position. We form a high-potential corridor linking the west with countries in the east.”
Erdman stressed that stability is key. “A solid European equilibrium is good for Poland. Our country occupies an interesting geographical position. We form a high-potential corridor linking the West with countries in the East. We want to make the best possible use of that by enhancing our infrastructure and other improvements.” Poland increasingly is becoming an important player in the Central and Eastern European economy. A nice example is the Warsaw Stock Exchange, which is developing as the hub of the CEE region’s capital markets. Erdman also sees opportunities for more economic cooperation with countries outside the region, for example in the Far East. “For this, too, I believe that what we need is a stable and solid situation in the European economy,” she said.
Van Wassenaer said it is important for Poland to have good ties with both Europe and the former CIS countries. He believes that we are rapidly heading towards very far-reaching European political cooperation, with ever more intensive economic ties as well as the single currency pushing us in that direction. “The ‘United States of Europe’ is an enormous opportunity, but it’s quite a struggle for Poland. They’ve only really just gained their autonomy; to then become part of Europe straightaway, that’s quite a big deal. I think that Poland will continue to take an independent approach for the time being. The country has a long history of great uncertainty regarding its borders. It defines their national character: Poles attach great importance to their independence. Respect for this is appreciated.”