foto

Why Poland?

If you are an international firm, based in the UK and doing good business in continental Europe but have yet to enter the Polish market – either as an exporter or investor – this is for you.

Poland is a low-risk, high-opportunity market. Growth is far higher than in western Europe (GDP, consumer spending, corporate investment), yet risk (political, economic, systemic) is far lower than in eastern Europe.

Key facts:

Market size: 38.2 million people of whom nearly half live within the largest ten agglomerations/conurbations.

Member of European Union, NATO, Schengen Group (passport-free zone within continental EU).

Economic growth:

Poland has been in catch-up mode since the political and economic transformation of the early 1990s. Since 1992, GDP has grown by an average rate of 4.5% a year; Poland was the only EU member state not to slip into recession in 2009. This robust performance is based on political and economic stability. Over that same period, the UK’s economy grew at less than half that pace – an annualised growth rate of 2.2%. According to an HSBC forecast, its economy is expected to grow by an average of 3.9% a year every year until 2050, whereas the UK’s economy is expected to grow by an average of 1.7% annually over the same 40 year period. This suggests a period of six decades during which Poland will have been growing at double the pace of the UK; this signals many business opportunities for decades to come.

Sustainable growth:

A key reason why Poland avoided recession was the strength and conservatism of its financial services sector. Poland being relatively under-banked compared to western Europe and the US, there was no need for financial services

companies to invest in complex (and toxic) financial instruments nor to lend to sub-prime consumers – growth could be achieved through more traditional and better-grounded products. Similarly Poland’s lack of modern infrastructure and its consumers’ desire for ever-better products (from cheap and basic to those more akin to what western consumers enjoy) mean there’s still plenty of upside in the growth story.

The consumer market and the ‘missing middle’:

There is a noticeable lack of – and hunger for – middle-market consumer products, whether it be FMCG, durables or electronics. The ‘savings’ end of the market is well-catered for with competitively-priced products from the Far East. The luxury goods market is represented in the largest Polish cities, but prices are generally higher than in the west. Poland’s burgeoning middle classes are keen on branded products but as yet choice and accessibility is poor compared to what’s on offer in western Europe and the US. Demand and expectation of this group of consumers is rapidly rising in line with their wealth and disposable income.

UK-Polish trade

Over the past 15 years, bilateral trade has soared, in particular in the years since Poland’s EU accession. Having said that, what used to be a UK trade deficit has turned into a L2 billion deficit. From the Polish perspective, its trade surplus with the UK is higher than with any other trading partner. Given that 55% of Poland’s imports come from the eurozone, there are plenty of opportunities for British exporters in the Polish market.

People:

UK employers in Poland and the UK have been impressed with the quality of their Polish employees, in particular their high levels of motivation, skills and willingness to learn. Poland’s largest age group demographically is in its late 20s; without being able to fall back on the capital accumulated by their parents, young Poles are far more motivated to achieve than their age cohort in the UK which is cosseted by the twin safety nets of generous social security benefits and inheritance of property and capital. Poland’s demographic Achilles heel is its low birth-rates since the late 1980s. By 2050, according to HSBC, Poland’s working age population will be proportionately the second lowest of any of the world’s largest economies. In terms of skills, however, 44% of young Poles go on to tertiary education, with a strong focus on science, maths, languages and other ‘hard’ subjects sought after by employers.

Getting started:

As in other countries in continental Europe, Poland’s legal system is code-based rather than common-law; this makes life more difficult for the owner-manager. Setting up a limited liability company (sp. z o.o.) is time-consuming (it is handled by Poland’s legal system, a judge decides in a court, signatures need to be notarised etc). However, there are many ways that new market entrants can avoid unnecessary bureaucratic hurdles. The BPCC has many members in the B2B advisory sector with relevant experience in areas from company formation, partner search, recruitment, finding premises, accounting, auditing etc; solutions such as licensing, outsourcing, franchising, contract distribution can all help limit a newcomer’s exposure to red tape and frustration.