New trade frontiers
In 2015, Poland’s newly-installed government hatched a bold plan to become both an importer and exporter of capital. Poland Today spoke to one of the architects behind this new trade strategy: Krzysztof Senger, PhD, Executive Vice President of the Polish Investment and Trade Agency (PAIH).
From the first day Dr Krzysztof Senger joined PAIH in 2016, he had his work cut out for him. A new government had just been elected and wanted to change the country’s trade narrative, moving away from a developing country mainly focused on attracting foreign investment to an exporter of Polish investment and goods. A growing group of companies had already blazed a trail into foreign markets and made a strong case for a trade agency to assist both existing and upcoming export sectors. The Polish Information and Foreign Investment Agency (PAIiIZ) was replaced by the Polish Investment and Trade Agency (PAIH) with the operative word being ‘trade’. Dr Senger, a former senior manager at Deloitte and PwC, received a double-pronged assignment: expand Poland’s business presence around the world and increase inbound investment. This meant opening trade offices all around the world, from Helsinki to Santiago. And fast. “We established an entire global network of trade offices within two years,” Dr Senger told Richard Stephens, Editor of Poland Today, in a PT Live special on trade. “I think it’s a world record.”
After taking a hit during the global financial crisis followed by an about-turn in 2010 with an annual growth rate of 13.1%, the Polish export sector has since recorded steady growth rising from 4.6% in 2012 to 9.45% in 2017, before cooling down to a sustainable 6.3% in 2018 (OECD). Exports are expected to pick up again this year, considering that the first-quarter results (January-April) showed 3% year-on-year growth (Statistics Poland). While Polish brands have not quite become international household names, PAIH’s VP pointed out that there are a number of silent export champions driving this growth. The machinery, automotive parts and furniture sectors have received their fair share of press lately, but there are lesser-known product groups leading Europe in their respective fields – and in some cases, the world. For example, Poland is the largest exporter of small to midsize pleasure and sports watercraft in the EU with a mega 60% share of the EU export market. The next biggest is Finland at 9.1%. Internationally, local shipbuilders are only beaten by the USA in the nine-metre or under category. Last year, the country surpassed Germany to claim 2nd place in video game console exports. With 20% share of EU exports, Polish manufacturers trailed only the Netherlands (31.8%). There is still a lot of room for improvement in exports, according to Dr Senger. “We need to think in the long term and we still need time for building global brands, technology and innovation.”
He was quick to emphasise that PAIH has not lost sight of its original mandate of helping “foreign companies find the best locations in Poland” to invest, with the ultimate goals of job creation, innovation and technology transfer. It appears that the agency has been just as successful on this front. “2018 was PAIH’s best year in terms of investor support,” said Dr Senger. “Since 2015, total capital expenditure has increased from €500m to over €2bn. Last year, we exceeded all previous levels, both in the number of projects and the value generated. The following years could be even better.” Overall, total inbound FDI (stock) increased from $183.9bn in 2015 to $230.6bn in 2018 (OECD).
While PAIH is still actively courting foreign capital for the blue-chip sectors (e.g. manufacturing), they are eager to shepherd investment to other areas in the economy for a more diversified portfolio. “We are talking to new investors who are looking for new asset classes, such as real estate, both commercial and residential. And then there are investors looking for infrastructure assets, particularly from the Gulf region.” The best way to achieve this, he said, is through good old-fashioned marketing. “Our core business is to spread the word, not only through conventional channels to promote the Polish brand but also through ‘whisper marketing’ by our staff attending thousands of meetings around the world.”
PAIH’s role as a facilitator and disseminator of information is perhaps even more important in its export and trade operations. Polish companies are well accustomed to doing business in the EU, but the picture becomes a little more uncertain and complex as they travel further afield. “The challenge is a lack of information on a given market,” he said. “If we are talking about African countries or far East Asian countries, we deliver guidance to our clients on the business environment, the way of doing business and dealing with partners to lower the risk of entering new markets.”
Speed is the essence when it comes to penetrating a foreign market and achieving capacity. That is where PAIH tries to step in with the know-how to lubricate and expedite the transition. “We are helping companies to find the right business model for a specific market. How to enter, for example, the United States or China,” he said. “You need to understand how to build capacity locally, to be ready to sell those volumes and tweak your product to serve local customers and their different tastes. That all needs new investment in a company.”
He concluded by revealing a new initiative in the pipeline. “This summer we have been testing a new integrated system of servicing Polish clients in the US,” he said. “Within the tested model, a client is serviced by a dedicated PAIH US office specialising in a particular area of the business. For example, IT companies will be directed to our experts in San Francisco, while our office in Houston will look after energy and medical companies.”
During the PAIH Business Forum, held in Warsaw on 9 October, PAIH will introduce a new integrated model of assisting PAIH clients in all foreign markets. The forum is open for all companies who are interested in investing in Poland and/or expanding their business overseas. Poland Today is proud to support such an initiative which promotes foreign trade. More information: paihforumbiznesu.gov.pl