So, can Poland & CEE be the buckle on the Belt & Road?

Belt and Road conference Warsaw
Leaders in global transport and logistics, policy and legal advisors, infrastructure managers, investors, embassy representatives, and think tanks gathered for the first time in Warsaw to find out how the CEE region can play a stronger role in the industry via the Belt & Road Initiative.

A healthy level of curiosity preceded the first ‘Poland & CEE: Co-building the Belt and Road’ conference in Warsaw, which was co-organized by Poland Today and conference creator Frank Schuhholz, CEO of FMS Advisers and a foremost expert on global transport and logistics. The $900bn Belt and Road Initiative (BRI) has become an enigma of sorts. Wolfgang Lehmacher, Global Supply Chain Evangelist and  former Head of Supply Chain & Transport Industries, World Economic Forum, summed it up best in his keynote address, suggesting that the sheer magnitude of the initiative naturally attracts uncertainty and sometimes fear. “I have hardly been on panels that were as emotional as Belt and Road panels.”

There was also a certain level of nervous excitement about the conference itself, given that it was the first independent, international, English-language C-level event of its kind in the region. It was a charged atmosphere in which Richard Stephens, Founder & Editor of Poland Today, and Frank Schuhholz opened the conference. With more than 35 expert speakers from 13 countries, Schuhholz was no doubt buoyed by the size and diversity of the gathering when he said: “We’re not only talking about rail, which the BRI is so far mostly known for in Europe. We’re also not only talking about sea freight, but we’re talking here about all transport sectors as well as the infrastructure, financing and even legal elements of this Initiative.”

Frank Schuhholz, Founder & CEO, FMS ADVISERS B.V. (conference co-host)
Bananas and history: BRI in a CEE context

Frank Schuhholz set the scene for this first-time event by providing a quick history lesson on the development of the CEE region, making reference to the EU enlargement process towards Central Europe in 2004 which was followed by massive infrastructure investments within the entire CEE region, thereby enhancing connectivity. Within this time frame, the BRI is relatively new as the Initiative was officially started by the Chinese President only in 2013 but has since gained considerable speed, making its impact felt amongst others in the CEE region. The BRI does not only involve railway connections from China into Europe and vice versa, as it is mostly known for by the wider public. He explained many of the aspects connected to the project, including the involvement planned and existing of Chinese companies in maritime ports across the world including projects along the entire coastline of Southern, Western and Northern Europe. Due to the potentially immense economic gains, many countries are eager to participate in the BRI, whilst there is also skepticism beginning to be raised in certain parts of Europe about the consequences of this initiative.

“When talking about the CEE region, Poland definitely plays a key role in connecting China via Kazakhstan, Russia, Belarus and into the European Union. And it is not an exaggeration to say that more than 90% of the trains which we see coming from China are already running through Poland,” said Schuhholz. However, existing infrastructure needs to be upgraded and procedures need to be improved to prevent bottlenecks as currently seen, amongst others, on the Poland-Belarus border, which is motivating neighbouring countries such as Slovakia, Hungary, and Ukraine to also provide competitive gateways into Europe. Similar activities can be seen in the Northern part of Europe with the Baltic States and Finland creating the required infrastructure to benefit from the opportunities of growing rail freight traffic. 

The big question at the conference this year was: ‘Can the Central and Eastern European countries be the buckle on the Belt and Road?’ In other words, can the CEE be the connecting element? According to Schuhholz, the CEE region has done quite a lot already in terms of infrastructure investment supported by considerable amounts of EU funds granted since the beginning of the millennium, developments which are not always recognized in other parts of Europe. But the region definitely has many opportunities to further improve its position when connecting Asia with Europe and vice versa. As an example, Schuhholz compared the current airport situation in CEE with Western Europe, outlining that there is still a need for more air traffic-related infrastructure investments which will contribute to the region’s positioning as an important player in this global initiative and with that, he opened the conference.

Day 1
Wolfgang Lehmacher
Wolfgang Lehmacher is a Global Supply Chain Evangelist. Until recently, he was the Head of Supply Chain and Transport Industries for the Geneva-based World Economic Forum.

Wolfgang Lehmacher, the former Head of Supply Chain and Transport Industries for the World Economic Forum and a consultant to Fortune-500 companies, unpacked the BRI into three key boxes: opportunities, concerns, and considerations.

As the steam train for the Industrial Revolution, Lehmacher sees the BRI as a facilitator of what he calls ‘connectivity’ and ‘community’. Following the construction of transport infrastructure between countries, he explained, comes an exchange of ideas and funds, such as technology transfer, investment, co-financing opportunities, and new business relationships. The BRI also offers developed countries an opportunity to maintain and enhance their existing transport and digital infrastructure – he estimated the maintenance cost worldwide to be around $2.7tn. But the emerging economies in the east will receive the biggest boost in the form of development aid.

Lehmacher then turned to the many concerns that have been raised since the launch of the initiative. “The Belt and Road is not only an economic initiative,” he said. “It’s a political initiative. It’s a foreign policy initiative. And it is also a security initiative. And whatever side of the table you sit, you see that in a different way.”

Apart from the well-publicised threats of political manipulation, cyber espionage and issues of debt trap that have stalked the Chinese around the world, Lehmacher warned of the potential for discord among EU states. That is why, he emphasised, negotiations with the Chinese need to be conducted on an EU-wide basis, not just for the sake of cohesion, but power. It is hard to argue with a voice of 500 million backed by the second biggest economy (collectively) in the world, even if you are China.   

Dr. Lúcio Vinhas de Souza
Dr. Lúcio Vinhas de Souza is the Head of the Economics Team for the European Commission and has been a visiting researcher and visiting fellow at a number of institutions.

Dr. Lucio Vinhas de Souza, Head of the Economics Team for the European Commission, doubled down on Lehmacher’s call for cohesion among EU member states. He reminded the audience of the economic might and significance of an integrated, peaceful and transparent EU. “We have some of the largest, deepest, most diversified financial markets on planet Earth,”  he said. Whether it be private or public, the resources and frameworks for financing are already freely accessible on the ground in the EU, he continued. What’s more, the funds come with the added political security of transparency and accountability. The narrative is solid for the EU, he urged – the message is just being lost along the way. “We should not be bashful about saying that Europe has a great story.”

But at the same time, there is a good reason why the recent EU strategy is called ‘Connecting Europe & Asia’. “Eurasia as an economic integrated space,” he said. “That’s the idea behind our connecting Europe and Asia strategy … Eurasia is and will be the economic centre of the world.” It would be unwise to disregard this fact and not further consolidate economic ties. “By definition, Europe is open for business with everybody,” he concluded. “But this should be done in terms that reflect both our values and legal frameworks.”

Yao Dongye, Deputy Chief of Mission at the Chinese Embassy
Yao Dongye, Deputy Chief of Mission at the Chinese Embassy in Poland, talked about cooperation between Poland and China, strengthening relationships between government officials and companies, and exploring all potential opportunities for investment.

Poland has been involved with the Belt and Road Initiative since 2015 and continues to be a major player in the scheme, emphasized Yao Dongye, Deputy Chief of Mission of the Chinese Embassy in Poland. He said that Poland is along the Belt and Road route and there are big possibilities for development between the two countries. “Poland has become the real gate to Europe but we still have to work together. Of course, the Chinese government is ready to cooperate with the Polish government,” said Dongye. He then talked about three major aspects which are crucial: strengthening strategic connections, development and openness, and – lastly – further communication. 

“From the point of view of the scale of the Chinese and Polish economy, there are still many more opportunities for growth in two-way trade and investments,” said Dongye.

“The relationship between China and Poland is deep but there are problems when it comes to understanding systems and culture. There need to be consultations,” he added.  

Left to right: Dr. Lúcio Vinhas de Souza, European Commission; Dr. Christian Kuhn, Kazakhstan Temir Zholy (KTZ); Steffen Bobsien, DB Cargo Polska; Dr. Krzysztof Senger, PAIH; Wolfgang Lehmacher (moderator)

The big railway undertakings from DB Cargo and Kazakhstan Temir Zholy (KTZ) took a seat next to representatives from the European Commission and the Polish Investment and Trade Agency (PAiH).

Dr. Christian Kuhn, Chairman of the Board of Directors of KTZ, made the frank observation that the shape of the ‘New Silk Road’ will be determined by shippers and not by any governmental institution. It all comes down to a simple equation of cost, and the corridor offering the best price will always win. For Steffen Bobsien, CEO of DB Cargo Polska, transparency of the movement goods was all-important, as customers need to know where their goods are at any given time. 

But as  Dr. Krzysztof Senger, Executive Vice President of PAiH, pointed out, gateway countries like Poland can make one corridor more attractive than another by increasing the efficiency of border transfers and customs. If Poland is to become a true node and the EU is to benefit as a whole, he urged, it needs to work with the EU to invest in infrastructure at the border to increase frequency.

Steffen Bobsien, CEO of DB Cargo Polska, elaborated further on the transparency and visibility topic by adding that this could only be achieved by closer collaboration between all players involved along the chain. Whilst he acknowledged that partners in the East have already taken steps towards linking their production and IT systems in order to create a better flow of cargo and information, he called for mutual action where all members along this transport corridor can work closer together to accomplish the necessary steps for a seamless (paperless) transport flow. With regard to Poland, he added that he could very well foresee that the country has the potential to play a major role as a HUB and entry gate for the European markets, but he also pointed out that Poland cannot take its position for granted as other countries are also stepping up their efforts to attract more west and eastbound trains by ramping up their infrastructure. 

Patrycja Pendrakowska, President of the Board, Boym Institute

Patrycja Pendrakowska, President of the Board of the Boym Institute For Asian and Global Studies, talked about the impact of adding Greece to the 16+1 CEE-China trade initiative. It was no coincidence that the development came with the rapid rise of the Port of Piraeus, which is owned by the China Ocean Shipping Company (COSCO), she stated. The addition of Greece has not only provided further weight to the trade initiative but also fuelled the progress of the North-South logistics corridor that runs from Lithuania through CEE to Greece.

Pendrakowska suggested that Chinese investment has left the CE region for the more flexible and China-friendly regimes in Southern Europe, such as Serbia. The move is also in line with China’s strategy of placing a wedge between Russia and the region. Pendrakowska urged that 17+1 will only work if the North-South rail infrastructure improves and the member countries abandon their current unilateral course for greater cooperation. 

Left to right: Robert Dobrzycki, Panattoni Europe; Dr. Wulf Meinel, Fraser Property Europe; Dr. Carsten Hinne, DB Cargo AG; Radosław Pacewicz, The Office of Rail Transport (UTK); Andrew Wrobel, Emerging Europe (moderator)

The collegial atmosphere was put to the test on the next panel, moderated by Andrew Wrobel of Emerging Europe, a panel which was split evenly between experts from Poland and Germany. The main question at the heart of the debate was whether the entire region can benefit from the BRI, or will certain countries advance their own interests at the expense of others?

It was quickly established that there is no escaping the fact that certain countries will benefit more due to their geographical location. In this regard, Poland is in the box seat due to its location on East-West and North-South routes. Robert Dobrzycki, CEO of warehouse developer Panattoni Europe, added that the CEE has become a dynamic location, regardless of the BRI. “The CEE has a historical disadvantage compared to Western Europe, which in these days could be seen as an advantage: it is more competitive in terms of costs and efficiency.” However, his company has yet to see any direct benefits through added warehouse tenants associated with the BRI.

Radosław Pacewicz, the Vice President of the Office of Rail Transport (UTK), emphasised that 55% of the westbound traffic through the intermodal terminal of Małaszewicze on the Polish-Belarusian border travels directly to Duisburg or Hamburg in Germany.  In terms of North-South route, less than 1% of Polish rollingstock leaves the borders of Poland via this route.“They are transit sites,” he said. “And those transit points are not making much money.”

Dr. Carsten Hinne, CEO of DB Cargo Eurasia, countered with the argument that the business model is not based on train traffic per se but TEUs and frequency. If the frequency increases and a train crosses Poland’s border every 15 minutes as forecasted, then Poland’s stake will grow exponentially, whether through carriage or customs. With rail cargo only amounting to 1.5% of the overall freight mix, the pie is bound to increase – DB plans to grow from 85,000 TEUs in 2019 to 100,000 TEUs in 2020. And if the whole system becomes more efficient, then each piece of the pie will also grow larger. It makes sense then to work together in an ordered and strategic fashion, he said.

Left to right: Adam Czerniak, Polityka Insight (moderator); Rafał Milczarski, LOT Polish Airlines; Piotr Malepszak, Centralny Port Komunikacyjny (CPK); Marta Fredrych, Baker McKenzie

The Solidarity Transport Hub Poland (CPK) has generated a lot of attention since it was approved in November 2017. But it’s only when you hear from those charged with its construction and operation that you begin to appreciate its importance not just for Poland but for the whole CEE region as well. Piotr Malepszak, Acting President of CPK, was joined by Marta Fredrych, Associate at Baker McKenzie, and by the energetic CEO of LOT Polish Airlines, Rafał Milczarski, on a panel led by Adam Czerniak, Chief Economist and Director for Research at Polityka Insight, to share the finer details. In due course, Milczarski said, they hope the airport will rival the most efficient example in the world, Seoul Incheon International Airport. “The best airports never lose any luggage,” Milczarski offered as a benchmark and to show that the details are crucial.

Intended to become the largest transportation hub in the CEE region, the 40-55 million capacity passenger airport (with the possible extension to 100 million passengers) will be connected by a cross-section of motorways, regional trains and high-speed rail running east-west and north-south, connecting all major cities and several regional cities in Poland. The rail element of the scheme is often overlooked, with most attention focused on the airport, but the plans envision a complete transformation of the country’s rail network, slashing travel times across the nation. Malepszak revealed that the €7.5bn high-speed line (350km/h), which is expected to transport passengers to and from Warsaw in 15 minutes, has made the official trans-European network list with connections through Łódź to Poznań and Wrocław. 

But the elephant in the room quickly revealed itself in the discussion, which of course was the question of financing. Marta Fredrych was at the ready to detail a potential Private-Public Partnership (PPP) model, where the financial risk would be split according to each partner’s competencies. In particular, the government would take care of the riskiest element: building approval. This, it has to be stressed, was just a proposal, and not a decided policy.

Warsaw Chopin Airport, Milczarski argued, is already at capacity and if the CPK is to serve the region, the total amount of passenger and freight traffic will only increase. In that case, the CPK’s intermodal model is the most efficient solution to cater to the increased traffic at comparative lower Co2 emissions.

Prof. Grzegorz W. Kołodko, Polish economist, Poland’s former Deputy Prime Minister (1994-97) and Minister of Finance (2002-03) was the gala dinner keynote speaker.

Economists refrain from using words like ‘miracles’, yet it is hard to deny that something special happened in Poland from the 1990s into the 2000s. At the gala dinner to celebrate 30 years since the former Soviet bloc’s first semi-democratic parliamentary elections, Prof. Grzegorz W. Kołodko, Polish economist, Poland’s former Deputy Prime Minister & Minister of Finance (1994-97) and Minister of Finance (2002-03), spoke about what it took to drag Poland out of the mess left after communism into the successful country it is today, also outlining some of the challenges that lie ahead. 

He opened his speech with an old Polish joke. “It’s possible to convert a stallion into a gelding but not the other way around – yet we did it. We converted the underperforming, miserable economy of state socialism into a competitive, open, prosperous market economy.” Although the Polish economy experienced what he called “shock without therapy” in the 1990s, meaning there were too many unnecessary shocks and not enough remedies and therapy, the transition was unavoidable. 

Prof. Kołodko also mentioned the round table talks which led to democracy and economic freedom, politics, irreversible globalisation, avoiding recession and catching up to big players in terms of GDP. With great confidence, he concluded by saying that in 2039, on the 50th anniversary of launching the great transition to market and democracy, Poland will be even more successful than it is now. 

Robert Dobrzycki, CEO Europe, Panattoni Europe

In order to also bring in a business person’s perspective on the last 30 years, Robert Dobryczki of Panattoni was asked a few questions. He was at school in 1989 and was excited by the changes, but he had no idea what they meant for him, nor did he know what his future career would be. He studied accounting at university in Warsaw and got his first job as a junior accountant in an American warehouse development company. To cut a long story short, he now runs Panattoni in Europe and has overseen its expansion across the CEE region, in Germany and into the UK market, and as such is a living embodiment of what the changes have meant for Polish business.

Day 2
Left to right: Carsten Pottharst, InterRail Europe; Michał Grochowski, LOT Cargo; József Kossuth, Budapest Airport Zrt; Thomas Kowitzki, DHL Global Forwarding; Philip Evans, The European Freight & Logistics Leaders’ Forum; Frank Schuhholz, FMS ADVISERS B.V. (moderator)

On the second day the air of curiosity continued, but a degree of clarity and resolve was added. As the panel of the morning’s first session – ‘Multimodal dimensions of the Belt & Road’  – suggested, the speakers came from diverse backgrounds, covering rail, air, forwarding, sea and airports. Except for one or two speakers, they technically represented competing modes of freight transport. And yet they were all largely in accord on the main issues associated with the BRI and logistics in general.

The collective message seemed to be that logistics is not a one-size-fits-all industry with each mode playing its own niche part in global supply chains. It all boils down to cost-effectiveness and in the case of forwarding, it’s the customer that ultimately determines the mode. “Rail is now coming in,” said Thomas Kowitzki, Head of China Rail Multimodal/Europe at DHL Global Forwarding. “Customers love it. They would like to have two options …. And that’s the big value proposition.” There is hope that rail could one day become a cheaper alternative to air when customers hit supply emergencies and require last-minute shipping.

Led by Michał Grochowski, Cargo Director of LOT Polish Airlines, the panel turned its aim to mutual issues, such as the exponential growth of individual e-commerce packages and the resulting custom delays. Grochowski, in particular, was not afraid to call a spade a spade. He asked why Alibaba chose Belgium as a hub and not Poland? Why did Huawei choose the Netherlands? The short answer, he said, was the flexible VAT regimes in each of the other two locations. He suggested that customs and VAT reform is essential if Polish companies are to compete for FDI.

Jozsef Kossuth, Senior Cargo Manager at Budapest Airport Zth, indicated how important China is for his airport by saying he had lost count of the number of times he had travelled there, and added that traffic through the cargo side of airport activity had increased 60% in three years. Philip Evans, Secretary General of the UK-based European Freight & Logistics Leaders’ Forum provided a more ‘outsider’ perspective when he revealed that – by and large – the members of his organization did not know the CEE region so well, and would need to see the value in going through the region. “They take the best value option, as long as it’s stable. They all talk about innovation and new ideas, but at the end of the day they fall back on what they know.”

Carsten Pottharst, Managing Director of InterRail Europe, reminded conference participants that the project of connecting China with Europe and vice versa by rail has seen a variety of quality levels when it comes to punctuality. Back in 2017, when the number of trains was at a lower level than today, transit times were stable at around 15 – 17 days, depending on the regions. In 2019 railway providers struggle with a lack of infrastructure at border crossing points and terminals which creates challenges for railway undertakings to keep up with lead times promised to customers. Asked about the ongoing e-commerce boom and which role railway undertakings could play in this, Pottharst revealed that the customs clearance at this stage would not be a very difficult task for all rail operators to accomplish based on the fact that every single parcel would have to be customs-cleared separately, with up to 5000 such parcels packed into one container. Pottharst also elaborated on the opportunities the CEE region could benefit from if they offer a joint approach towards Chinese partners, concerning logistics centres in the region which could serve as logistic HUBs for distribution and collection of cargoes.  

Peter Vesterbacka, Co-Founder, FinEstBay Area Development Oy

Peter Vesterbacka, Co-Founder of the FinEst Bay Area project, was introduced by Frank Schuhholz as a ‘boring visionary’ with his tongue firmly in his cheek. Vesterbacka attracts a number of adjectives and superlatives, but boring is certainly not one. The moniker simply plays on the English homonym of ‘bore’, meaning to drill, and the fact that Vesterbacka and partner Kustaa Valtonen plan to construct the longest undersea tunnel in the world by connecting Helsinki with Tallinn.

Vesterbacka held the audience in awe as he explained the inception, progress and details of the mega infrastructure project with the precision of an expert engineer – which he is not, by the way. A detailed profile of the project can be found here. In addition to the tunnel, the plan includes a blueprint for an artificial self-sustainable island with hotels, housing developments and a convention centre. Another major draw will be cooperation with universities from around the world that will open campuses in the new city. 

Given this context, the two 103-km parallel tunnels were presented rather as details. As Vesterbacka explained: every euro invested in the underground infrastructure creates 10 euros of investment above ground – meaning that the entire project will total EUR 15 billion underground and EUR 150 billion above ground. 

Vesterbacka called for more collaboration on such large-scale infrastructure projects and encouraged the European institutions to join in so that it would not stay a China-only financed project. 

The conference divided into separate rooms to allow greater discussion between the participants on the topics and issues surrounding the Belt & Road Initiative – from their perspective.

There are many links within the Belt and Road Initiative and not all of them were mentioned during the panels and presentations, so the breakout sessions gave participants a chance to ask expert speakers additional questions and raise topics or issues that they wanted to be discussed. 

In the ‘Transport & Supply Chain’ session, led by Wolfgang Lehmacher, many issues were raised, including the following: China’s methodical planning, Warsaw’s lack of preparedness for freighters and planes, challenges on the market and the strategies of logistics companies, the need to have a joint and simple message from the CEE region, the need to stop putting up barriers to transport and trade in the EU, and the imperative to establish greater benchmarking so competitors can learn from each other instead of only seeing others as competitors. 

In the ‘Infrastructure & Investments’ session led by Frank Schuhholz, Peter Vesterbacka and partner Kustaa Valtonen naturally stole the spotlight. Here was a chance for everyone to ask: how did they do it? How did they secure an MoU with €15bn in financing from the Chinese? Jakub Jakóbowski, Senior Fellow of the China-EU Programme at the Centre for Eastern Studies (OSW), finished up by noting that the FinEst Bay Area project has provided Poland and CEE with a new financing model for engaging with Chinese capital. Local interests can be protected and promoted through an equity-loan partnership – with partnership being the operative word. By the end of the session, it appeared that Vesterbacka had sniffed out a potential new deal.

Left to right: Prof. Jana Pieriegud, SGH Warsaw School of Economics; Bartek Pastwa, Port of Rijeka; Peter Vesterbacka, FinEstBay Area Development Oy; Renata Osiecka, AXI IMMO; Frank Schuhholz, FMS ADVISERS B.V.; Richard Stephens, Poland Today (moderator)

In the final panel we came full circle back to locations within the CEE region. In the Eurasian context, Prof. Jana Pieriegud, from the Warsaw School of Economics (SGH), mapped out all the so-called ‘logistics bananas’ – the transport corridors that fan out in the shape of bananas throughout Europe. She then talked about connectivity in terms of the global value chain and it was no surprise that mega-exporters Germany and China were the best-connected economies in the world. But within the BRI framework, Poland and Russia are rated as the highest. 

Bartek Pastwa, Board Member of Port of Rijeka in Croatia, which is co-owned by OT Logistics, led by saying that instead of talking about winners and losers, the BRI offered a historic opportunity for everyone, and that cooperation would result in wins all round. 

Peter Vesterbacka emphasised that his undersea tunnel project was not just about connecting two relatively small European countries, but with Finland acting as a major access point to Europe from Asia, it was actually about connecting two continents in a more efficient way. 

Frank Schuhholz reminded the room that by 2030, 30% of cargo transport above 300 km is supposed to be transported by rail, rising to 50% by 2050. “GIven the fact that EU infrastructure funds dedicated to the ‘new’ member states will be considerably less after 2023 we definitely have to think of new models on how to finance the needs for further enhancing connectivity within but also beyond the CEE region,” he concluded. 

Renata Osiecka, Managing Partner of AXI IMMO, capped off the panel with a call to action, exhorting her colleagues to turn all the talk and ideas into a form of joint action. A buzz of conversation quickly followed. Participants began to plan the next opportunity to meet. 

Having mapped out the BRI in Europe over the two days, a consensus seemed to be reached: with such a large challenge and opportunity ahead, the CEE region – together with the rest of Europe – must present a unified front, one built on cooperation and transparency in order to benefit best from this global initiative. 

“The conference was an undisputed success,” said Richard Stephens. “The feedback we have received has been extremely positive, with people commenting particularly on the number and diversity of the C-level speakers and participants – 13 countries were represented at the conference – and on the fresh and independent nature of the topics and discussions. This will be an annual event and next year’s conference will take place on 2nd & 3rd June, once again in Warsaw.”

Richard Stephens, session moderator, asked the panellists if the Belt & Road was a zero sum game in terms of locations – if some hubs or locations ‘win’ by attracting most cargo, do others by necessity ‘lose’? 

Left to right: Dr. Chen Chen, Baker McKenzie; Bartosz Komasa, Bank of China; Kustaa Valtonen, FinEstBay Area Development Oy; Volker Friedrich, GBP International; Dr. Andrzej Juchniewicz, PAIH; Wolfgang Lehmacher (moderator)

This panel was designated to financing, but it had it all, including elephants, tigers and monkeys. Berlin & Malaysia-based Volker Friedrich, Founder & CEO of GBP International, offered a maxim from South-east Asia to describe the current trade tensions between the US and China. “When elephants fight, it is the grass that suffers.” Not to be outdone, Bartosz Komasa, Head of Corporate Relations of Bank of China, plucked a line from China: “When two tigers fight, the monkeys observe from the trees.” But the panel was in agreement in terms of the moral of the story: everyone loses from a trade war and if there has to be one, Europe would be wise to remain neutral.

Dr. Chen Chen, Budapest-based China Special Advisor at Baker McKenzie, made a salient point by noting that the BRI does not equate to implementation. It is just an ‘initiative’ and therefore each country, region or economic block can interpret and receive the BRI upon their own legal and economic terms.

Kustaa Valtonen, co-founder of the FinEstBay Area project and partner of Peter Vesterbacka, made the audience laugh when he relayed his account of being told by Peter that they were going to build a tunnel. “What do you need from me?” recounted Kustaa. “EUR 15 bln” said Peter. “Give me a few days,” was his reply. Kustaa related how on the following Monday he called up the hotline of the European Investment Bank and, to the young operator at the other end, asked about the procedure for borrowing hundreds of millions of euro.  Asked by Wolfgang Lehmacher, the moderator, if they eventually did borrow money from the EIB, Kustaa replied: “No, we thought it was too slow a process, so we turned to private financing.”

Dr Andrzej Juchniewicz, Chief Representative of the Shanghai office for PAIH, put the whole BRI in perspective when he pointed out that the initiative is a 50-year project which is only in its 5th year. He also reminded the audience that dealing with the Chinese is completely different to dealing with western business people or companies, and vice versa. The Chinese have been surprised that doing business in CEE is completely different to doing business in Africa or SouthEast Asia, and western business people are surprised when they find out that the Chinese like to agree huge deals over dinner. Nothing new to those who do business with the Chinese, but hard to believe for those who haven’t had this experience. 

Volker Friedrich rounded off the discussion with one often-overlooked truism: “Apart from their need to save face, the Chinese also like to ask: how do I make more money?”

Komasa elaborated on Dr. Chen Chen’s idea by revealing that Chinese companies have learned from their mistakes of the past and have now taken a new approach to ‘implementation’ in Poland. When operating in Poland, the first thing that they do now is seek out a local partner to cover the legals and PR.

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