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 2012 in pdf format.
Poland has emerged as an important and dynamic market since the country began its transition to democracy and a market driven economy in 1989. With 38 million people, Poland is the largest market among the former Eastern European countries and shares borders with both “new” EU and “old” EU-15 countries. Poland became a member of the European Union (EU) in 2004 and held the presidency of the EU for the last 6 months of 2011. Poland’s adoption of EU legislation has led to wide ranging reforms in economic regulation, and reduced government intervention in the private sector. Reforms in areas such as financial markets, company and competition law, accounting, and intellectual property rights have improved the environment for private business and boosted economic growth. Poland’s plans to eventually adopt the Euro currency will further accelerate the countries integration with the EU. Poland is an active member of NATO, upgrading its armed forces accordingly and participating in joint peacekeeping activities in the region and elsewhere including Afghanistan.
The United States and Poland enjoy a very close bilateral relationship, which has fostered strategic and commercial cooperation. U.S. companies are active in Poland and have invested heavily since the late 1980s when the country began its transition from communism to democracy and a market-driven economy. Abundant opportunities remain for U.S. firms in Poland. In addition to its large and growing domestic market, the country also affords direct access to the EU and markets to the east. Poles continue to demonstrate a strong affinity for the United States and its products.
Poland’s GDP growth remained strong in 2011 at over 4% while the rest of Europe struggled with the global financial crisis. Total GDP growth from 2008 through 2011 reached 15.8%; the highest in the EU. Growing exports, household consumption and business investment fueled the country’s strong economic performance. Over the medium term, domestic demand, infrastructure spending (with EU support), and capital investment will drive growth. EU structural funds are scheduled to continue through 2015 or longer. Economists expect Poland’s GDP growth to slow in 2012 and 2013 as a result of the European debt crisis and Poland’s own fiscal consolidation efforts.
In 2011, the U.S. sold $3.1 billion worth of merchandise in Poland, up 4.93% from 2010. However, the trade imbalance widened as the Poles shipped 4.8 billion to the U.S.in 2011; an increase of 48% over 2010.
Agricultural products including aquaculture, wood products and beverages showed the largest increases in 2011. Other areas that saw substantial increases were transportation, (27%), chemicals (26%), metal manufacturing (27%) and machinery (17%).
U.S. firms interested in Poland can expect moderately increasing domestic demand and a general affinity for U.S. products. U.S. firms can increase their competitiveness by 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.
The Energy sector currently offers particularly strong sales opportunities for U.S. firms. The Polish Government plans to complete the country’s first nuclear power plant by 2020. Building the plant will be a massive undertaking that will create opportunities in the areas of reactor technology, engineering services, legal/regulatory services and training services. Currently, Poland generates 90% of its electricity via coal-fired plants, 44% of which are older than 30 years. Another 33% are between 20 and 30 years old. In order to meet EU emissions targets, Poland is focusing on increasing renewable sources of energy such as wind, biomass and biogas. The Government is also exploring clean coal and shale gas exploration and production as alternatives to the current energy technologies.
U.S. energy companies are at the forefront of shale gas exploration activities in Poland. Exploration is expected to last for another two years or so. Geology and local cost structures will strongly influence the feasibility of full field production. Industry sources are cautiously optimistic that the responsible development of shale gas may eventually make a substantial contribution to Poland’s energy supply.
This report discusses a number of other important sectors including Aviation and Airports, Cosmetics, Computer Technologies, Defense, Engineering and Green Build services, Medical, Machinery, Plastics and Waste Management.
The Polish public holds very positive attitudes toward foreign investment. U.S. investors represent a wide range of industry sectors including automotive, aerospace, information technologies- 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, shared services centers and research and development operations. U.S. companies have invested significantly in Poland in recent years. With its well-regarded workforce, proximity to major markets and political stability, it is an excellent choice for American firms wishing to expand their export markets.
Although Poland’s per capita GDP increased from 50 to 59 percent of the EU average from 2008-11, the country remains one of the EU’s less developed countries with limited individual purchasing capacity and domestic consumption. Poland has made great strides toward improving the commercial climate, but investors point to an inefficient commercial court system, a rigid labor code, bureaucratic red tape, and a burdensome tax system as challenges for foreign companies.
Poland has made some progress in reducing bureaucratic obstacles to business. Its ranking in the latest World Bank Ease of Business Index was number 62, down eight spots (lower is better) in the last year which was down 2 from the previous. In the 2010 Transparency International Corruption Perception Index, Poland ranked 41th out of 182 countries (again lower is better), a drop of one place from the previous year.
Although many infrastructure projects are underway, Poland still has much work to do to modernize its road, railway, and air transportation network. 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.
Poland’s membership in the EU offers access to billions of Euros in structural and cohesion funds to support infrastructure development, environmental protection and environmental remediation projects. Between 2007 and 2015, Poland will be the EU’s largest recipient of funding, receiving €67 billion ($90 billion) in total from the EU’s budget. The country’s highway and aviation network are in need of expansion and modernization. Airports in Krakow, Poznan, Wroclaw, Gdansk and Warsaw have proposed or began work on projects for modernization of taxiways, runways and construction of new aprons. Further infrastructure development in the area of environmental protection is expected as Poland races to meet deadlines for complying with EU low carbon economy requirements. As landfills close across the country, experts expect Polish cities to develop new waste stream models including waste to energy.
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. 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.
The Euro Cup tournament to be held in Poland and Ukraine in June 2012 has driven many infrastructure projects. Work is expected to continue even after the games are over. Projects such as the expansion of the Metro line in Warsaw, the building of the east-west highway between Germany and Ukraine, and the continued modernization and expansion of regional airports will continue over the next few years. The need for premium office space and the expansion of the retail sector present opportunities for engineering and green building services. Other important sectors are niche retailing and consumer goods such as cosmetics where an American label is still a symbol of prestige and high quality. Sectors that continue to perform well and show signs of growth are computer technologies, defense, medical, machinery, plastics and waste management.
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.
While the number of English speakers in Poland is rising, particularly in urban areas, 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 effects of the global financial crisis have underlined the need for U.S. exporters to develop a creative strategy for financing exports. Using Ex-Im Bank programs is a recommended option. In addition, currency fluctuations may continue in 2012, 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.
The U.S. Embassy in Poland, led by the Commercial Service team in Warsaw, stands 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.