Doing Business in Poland

The Country Commercial Guide (CCG) presents a comprehensive look at Poland's commercial environment using economic, political, and market analysis. You will find Poland Country Commercial Guide 2011 in pdf format.

Market Overview
Market Challenges
Market Opportunities
Market Entry Strategy

Market Overview

Poland constitutes a market of over of 38 million people located in the heart of Central Europe, sharing borders with both “new” EU and “old” EU-15 countries, and markets to the east including Ukraine, Belarus and Russia (Kaliningrad oblast). Poland's integration into the European Union (EU) has been a gradual but steady process. Adoption of EU legislation allowed Poland to reform the way in which its economy is regulated and reduce government intervention in the private sector. Changes in areas such as financial markets, company and competition law, accounting, and intellectual property rights have created a better environment for business and have contributed to economic growth. Poland plans to eventually adopt the Euro currency which will further the integration process. Poland is an active member of NATO, upgrading its armed forces accordingly and participating in joint peacekeeping activities in the region and elsewhere. Poland has troops deployed in support of the NATO mission in Afghanistan.

The United States and Poland enjoy an extraordinarily close relationship, which has fostered strategic and commercial cooperation. U.S. companies are active in Poland, having invested heavily since the early 1990’s after the country’s transition from communism to democracy and the establishment of a market-driven economy. Abundant opportunities remain for U.S. firms in Poland. In addition to the size and location of the domestic market there is also the direct access it affords to the larger EU market. Poles continue to demonstrate a strong affinity for the United States and its products.

Poland’s GDP growth doubled in 2010 to reach 3.8%. Recent GDP projections for 2011 are for continued expansion of about 4.0%. Poland’s strong economic performance was fueled by high export output, individual consumption and increased business investment. Over the medium term, growth will be generated by domestic demand, infrastructure spending (with EU support), and capital investment.

On average, the United States claims roughly 2-3% of Poland’s annual import market. In 2008, the U.S. sold $4.1 billion worth of products and services but this fell to $2.3 billion in 2009 due to the global downturn. Defense products make up about a quarter of these totals.

During the first nine months of 2010, U.S. exports to Poland rebounded to $2.1 billion or a 34% increase over the same period in 2009. Dramatic increases were registered in such product categories as coking coal – up 325% to $294 million, civilian aircraft – up 38% to $278 million, computer equipment – up 131% to $85 million, medical equipment – up 15% to $85 million, and basic chemicals – up 338% to $63 million.

Overall, the Polish market can count on moderately increasing domestic demand and a general affinity for U.S. products. U.S. firms can increase their competitive edge by cultivating the market, establishing a local presence, committing to strong after-sales service and support and offering pricing and financial terms consistent with customer needs. U.S. exporters are encouraged to offer creative pricing and financing packages in order to win business from Polish buyers.

Sectors which offer particularly strong sales opportunities include nuclear power generation, shale gas exploration and production equipment and services, environmental technologies including renewable energies, medical equipment, defense equipment, IT products and services, and automotive after-market products. Poland continues to offer the benefits of a positive public attitude toward foreign investment, consistent economic growth rates, a well-regarded workforce, proximity to major markets and political stability.

The Polish Government plans to complete its first nuclear power plant by 2020. This is a massive undertaking which has created opportunities for reactor technology, engineering services, legal/regulatory services and training services.

U.S. energy companies such as ExxonMobil, Chevron, and Marathon are at the forefront of shale gas exploration activities in Poland. The exploration phase is expected to last another two years or so before the geology and local cost structure will determine if full field production is possible. Industry sources are cautiously optimistic that shale gas may eventually make a substantial contribution to Poland’s energy supply like it has in the United States.

Poland’s membership in the EU offers access to billions of structural and cohesion fund dollars to support infrastructure and environmental protection and remediation projects. From 2007 to 2015 Poland will be the EU’s largest recipient of funding, €67 billion ($90 billion) in total from the EU’s budget. Much work is planned in part because of Poland’s lead status on EURO 2012, a project in which Poland will co-host the European Cup Soccer Championships in 2012 with neighboring Ukraine. Extensive effort and investment is still required to upgrade and modernize Poland’s transportation infrastructure. The country’s airport network is in need of expansion and modernization. The expansion of airport terminals in Krakow, Poznan, Wroclaw and Gdansk are planned as well as modernization of taxiways, runways and construction of new aprons.

U.S. investors represent a wide range of industry sectors including automotive, aerospace, IT hardware and software, food products, transportation, pharmaceuticals, paper production, appliances and financial services. Poland has also emerged as a favorable location for business processing centers including call centers, back-office operations and research centers. U.S. companies such as IBM, 3M, McKinsey, Google, UTC, and Pittsburgh Glass Works all invested significantly in Poland in recent years creating thousands of new jobs.

CS Warsaw and the entire Embassy staff stand ready to assist U.S. firms in achieving success in the Polish market. We encourage you to contact us and explore the best way to partner together as you commence or expand your business activities here.

Market Challenges

Poland remains one of the EU’s lesser developed countries with limited individual purchasing capacity and domestic consumption. However, GDP per head jumped from 50% to 56% of the EU average in 2009.

Poland has made some progress in reducing bureaucratic obstacles to business. Its ranking in the latest World Bank Ease of Business Index was number 70, down two spots (lower is better.) In the 2010 Transparency International Corruption Perception Index, Poland ranked 40th out of 178 countries (again lower is better.)

Poland has not made much progress in modernizing their road, railway, and air transportation network. Their weak transportation infrastructure increases the cost of doing business for U.S. businesses by limiting ready access to all of the markets within Poland and diminishes the country’s potential as a regional distribution hub.

Market Opportunities

While the U.S. share of Poland’s import market remains small at approximately 3%, U.S. exporters have found considerable success targeting competitive niches, using effective market entry strategies and diligently following up with marketing and sales support. Sectors which offer particularly strong sales opportunities include power generation, environmental technologies including renewable energies, defense equipment, medical equipment, IT products and services, and automotive after-market products. Assuming Poland’s shale gas deposits transition into a production phase, this will produce a dramatic increase in the need for gas drilling rigs, gas field equipment, and services.

Much of the country’s road, rail, airport infrastructure, and tourism and athletic facilities need building or improvement, in preparation for the European Cup Soccer Championships in 2012.

With a talented labor force, wage rates among the lowest in the EU, excellent regional location and a sizeable market, Poland will continue to attract substantial new private investment for years to come. Due to the high education levels and language aptitude of its people, Poland has also emerged as a leading regional hub for business processing centers, including call centers, back-office hubs and tech and research centers. Incentives will continue to be offered at the national, municipal, and EU levels to stimulate inbound investment.

Market Entry Strategy

The Polish market is characterized by wide population dispersion with 25% living in rural areas and urban dwellers spread among a number of population centers including Warsaw and Lodz in the center of the country, Krakow in the south, Wroclaw and Poznan in the west, Gdansk and Szczecin in the north and Lublin in the southeast.

Urban consumers generally have greater purchasing power than their rural counterparts. Personal contact with the customer is critical and final purchasing decisions typically require a face-to-face meeting. Success in this market typically requires an in-country presence such as an agent, distributor or representative office.

Communication in Polish is recommended in order to elicit prompt responses to offers and inquiries and to facilitate negotiations. Poland’s communication network is relatively well developed and email communications and website offerings are an increasingly effective means of reaching local buyers.

Pricing remains the most critical factor in positioning a product or service for sale in Poland. Access to capital is difficult for most Polish firms and business transactions are typically self-financed. U.S. firms that can arrange financing will have a competitive edge. The global financial situation has underlined the need for U.S. exporters to develop a creative strategy for financing exports. In addition, currency fluctuations may continue in 2011, challenging even the most well-planned export strategy. Careful crafting of terms of sale including creative packaging of currency and pricing terms, will help the U.S. exporter gain long term advantage in the current Polish market.