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Polish Businesses Go Global

Wyślij Print Pobierz added: Anna Woińska | 2016-06-06 15:53:25
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Polish companies are increasingly keen to do business abroad.

Polish companies are increasingly keen to do business abroad and are vigorously eyeing markets beyond Europe, according to a new survey by Poland, Go Global!, a Warsaw think tank that seeks to encourage Polish businesses and institutions to go international.

The survey findings are contained in a report entitled Polish Companies on the Global Scene, which was discussed at a conference in Warsaw in late November.

The report shows that most Polish businesses with a presence abroad export rather than import goods and services. There are three times more exporters among them than there are importers.

Polish exports grow every year. In 2015, they were 8 percent higher than in 2014. This year, a further 9- to 10-percent increase is expected. Customers abroad spent an estimated 152 billion euros on Polish goods and services last year, and Polish exporters additionally benefited from a depreciating zloty.

Companies that plan to expand abroad are no longer solely focused on European markets, the survey shows. Last year, Polish businesses were increasingly targeting markets in Asia. In the wake of sanctions imposed by Russia, they successfully entered new markets, which boosted their self-confidence and gave them experience and keenness to win over even more markets in remote locations such as Iran, according to the participants of the Warsaw conference.

According to Paweł Borys, a director at PKO Bank Polski, the unstable financial situation of China, Brazil, Russia and the Middle East is a key factor that may affect the global economy this year. “What poses the main threat to Polish exporters is strong exchange rate fluctuations,” Borys said at the conference, which was held by Poland, Go Global! together with the Polish Press Agency (PAP).

Borys mentioned some new expansion opportunities opened by the recent lifting of international sanctions against Iran. For the time being, transactions with Iran are difficult, he said, because most major financial institutions in that country are still subject to U.S. restrictions, but eventually Iran could become an attractive new destination for Polish companies.

According to Borys, Polish enterprises should not hesitate to expand abroad. They should invest in innovation, merge and consolidate. “Polish businesses are quite small compared with their counterparts on global markets” and so they have less capital and fewer opportunities to invest, but “they should not be afraid to acquire other companies,” Borys said.

Arkadiusz Zabłoński of Bank Gospodarstwa Krajowego (BGK) said his bank was ready to support Polish businesses in their expansion abroad. This also applies to mergers and acquisitions, Zabłoński said.

New destinations

Almost 90 percent of the Polish companies that have gone international do business in Europe, the survey shows. Polish products are sold mainly in central and southern Europe, while Polish services are especially popular in the western part of the continent.

Meanwhile, only 56 percent of the businesses surveyed by Poland, Go Global! this year said they were planning to expand within Europe. This is a third less than last year (89 percent). Asia is seen as an increasingly attractive destination: 23 percent of the companies surveyed, up from just 3 percent last year, mentioned plans to expand into Asia.

According to Łukasz Karpiesiuk, a tax advisor at law firm Baker&McKenzie, it is only natural that in the initial stages of their international expansion Polish companies focused on European markets with similar business systems and regulations. However, once the first step has been made and the first lessons learned, Karpiesiuk said, Polish businessmen would find it worthwhile to set their sights on more far-flung markets, including those in Africa and South America. First, however, they should conduct thorough feasibility studies and carve out market niches for themselves, Karpiesiuk added. The bottom-line is “to make sure that higher risks bring higher returns,” he said.

Jakub Kompa, head of the Poland, Go Global! think tank who moderated the conference debates, said that many Polish businessmen were planning to expand into China but “have been discouraged by complicated regulations and protracted licensing procedures, which can take up to 18 months.” The good news is that “Polish products, food in particular, have a very good reputation in China,” Kompa said.

Despite these setbacks, conference participants agreed that China is an attractive destination for Polish businesses as they seek to expand their presence abroad. “You cannot give up on markets such as China,” said PKO Bank Polski’s Borys. “The country’s potential is close to that of the United

States, though admittedly, this is a tough market, especially in terms of the law.” Companies entering China sometimes have to wait a long time before contracts are executed and they also need to be prepared for poor ownership protection standards, Borys added.

According to Jacek Stryczyński, CEO of Lionbridge Poland, low ownership protection standards are a major problem for smaller companies. “They should perhaps join forces, work together and have a single representative in China,” said Stryczyński. He added that finding the right business partner in China is usually easier for those who speak some Chinese, but learning the language is no mean feat for a European. Moreover, signing a contract as such is not a guarantee of business success, Stryczyński said, because “in China, you don’t start talking real business until after the contract has been signed.” Lionbridge is a U.S.-based multinational company that provides translation, online marketing and global content management services.

According to Bank Gospodarstwa Krajowego’s Arkadiusz Zabłoński, Polish businessmen investing in Europe do not generally expect government support to expand internationally, but on some markets such support is indispensable. For example, few Polish entrepreneurs investing in Angola would probably be ready to take out trade credit in that country or wait for 90-100 days to receive payment from local business partners, Zabłoński said. “Here is where institutions like BGK and the Export Credit Insurance Corporation (KUKE) step in, providing financing for projects and removing the risk for Polish exporters in case of payment problems.”

Barriers to expansion

Polish businessmen with experience in international expansion say the main obstacles that have to be overcome in the process include stiff competition, wobbly economies and unstable exchange rates, and the inability to check the trustworthiness of future business partners.

“On a highly competitive market, you don’t have the time to learn from your own mistakes,” said Baker&McKenzie’s Karpiesiuk. “As you make expansion plans, it is vital that you take into account the experience of local experts.”

According to Karpiesiuk, the main problem is insufficient information about markets and their intricacies; one example is patent lawsuits and the exorbitant costs of copyright protection in the United States.

Karpiesiuk noted that Polish exporters can obtain special subsidies for professional assistance related to patent protection under the European Union’s Smart Growth Operational Program. The program enables them to insure themselves against potential patent lawsuits and helps them use their own ideas to devise active expansion strategies.

Surveyed companies with no experience on foreign markets listed insufficient capital as another major barrier to expanding abroad. However, PKO Bank Polski’s Borys told the conference that “a World Bank league table shows Poland to be among the world’s top countries in terms of the availability of funds for small and medium-sized enterprises.” There are also many institutions that provide consulting services to businessmen on issues such as mergers and acquisitions and the creditworthiness of foreign partners, Borys said.

On the other hand, “Polish companies receive comparatively little support in terms of being kept informed about remote markets, including local rules for bidding procedures and administrative risks,” he said, adding that such information could be provided by banks that deal with foreign trade.

According to BGK’s Zabłoński, Polish diplomatic missions abroad could help “generate transactions,” match business partners, and identify sectors and market niches where Polish companies could secure competitive advantages for themselves.

Borys mentioned a plan by Poland’s new conservative government—announced by Deputy Prime Minister and Development Minister Mateusz Morawiecki on Dec. 12—to establish a new powerful agency to support Polish exporters that would take over the responsibilities of the Polish Information and Foreign Investment Agency (PAIiIZ), Bank Gospodarstwa Krajowego (BGK), the Export Credit Insurance Corporation (KUKE), the Polish Agency for Enterprise Development (PARP), the Industrial Development Agency (ARP), and Polish Investments for Development (PIR), a state-owned company that seeks to boost infrastructure investment throughout the country.

Success abroad

For years, Polish businessmen have named finding the right business partner as the key to success on a foreign market. Other key factors they have listed include innovative products and good ideas combined with strategic marketing and advertising. Compared with a previous Poland, Go Global! survey, fewer companies mentioned the expansion of distribution networks and more businesses mentioned the role of experienced staff.

According to Lionbridge Poland’s Stryczyński, “not even the biggest money can replace top-notch business practices.”

“You can run a small business and have little money, but you can still succeed if you enter the market with a good idea,” Styrczyński said.

Baker&McKenzie’s Karpiesiuk said that examples of companies that have been successful abroad encourage more Polish businesses to go international. Such success stories are likely to convince those who are still in doubt and lack self-confidence, Karpiesiuk said.

According to Stryczyński, Poland has an “open business culture” that is a mixture of Western and Eastern European influences as well as those of the United States and the Far East. “This makes us naturally capable of winning over … new markets.” Stryczyński said that a well-planned international expansion program backed by politicians was “half the battle.” In this context, he mentioned Polish President Andrzej Duda’s recent visit to China as an example of how Poland could be promoted abroad. “As far as China is concerned, a political opening like this is very important, but the question is what we do next, and this is a challenge for entrepreneurs,” Stryczyński said.

The Poland, Go Global! think tank is a joint initiative by Polish copper giant KGHM Polska Miedê and ICAN Institute, the publisher of the Polish edition of the Harvard Business Review.

Source: The Warsaw Voice.