8 March 2016
Eastern Europe’s Road to Trade
With the Belt and Road Initiative in the international spotlight, Poland is among the countries looking to capitalise on the array of opportunities from the Chinese mainland's huge trade and development programme.
Addressing the Poland-China Trade Investment Forum in Shanghai late last year, Polish President Andrzej Duda said: "I am convinced that the directors of Chinese firms looking to invest in Europe will consider Poland as one of the first candidates."
Poland was among 16 European countries that took part in the China-Central and Eastern Europe Summit in Suzhou last year. The event saw President Duda lead an 80-member Polish business delegation to highlight its commitment to the Belt and Road Initiative.
Poland's closer cooperation with China has been in motion even before the Initiative’s official launch in 2014. The previous year saw the opening of a new railway line linking the Polish city of Lodz with Chengdu in the mainland, which has cut the freight rail time between the two cities to 14 days.
Many Polish companies, however, remain concerned about the trade imbalance between the two countries; the majority of the trains returning to China from Poland carry far lighter loads compared to those in the opposite direction. Principally, the rail route has only attracted a limited number of Polish export categories, notably fast-moving consumer goods, luxury goods and advanced electronic products. Exporters of the more durable goods inevitably still favour the slower, but cheaper, sea freight options.
Despite export growth to China, many businesses in Poland believe the country has yet to fully explore its export potential. At present, in value terms, Poland still imports 10 times as much from China as it exports.
In 2014, Poland's exports to the mainland were headed by copper products (valued at US$830 million) and mechanical appliances (US$563 million). The country is now looking to nurture industries that have the potential to successfully export to the mainland.
Among those accompanying President Duda to Shanghai were representatives from the construction chemicals group Selena FM, which has grown its mainland business by more than 40 per cent.
"We've gained a lot of experience by being present on the Chinese market over the last few years, but we still have a long way to go,” said Jaroslaw Michniuk, a Director of the company, which is based in Wroclaw, Poland’s largest western city. “Our priority now is to increase our market presence and nurture a higher demand for our products."
Poland's food industry also has high hopes of success in the mainland, as well as in other key export markets. The country has been participating in the Tastes of Europe campaign, an initiative to boost the global sales of EU agriproducts. With the programme set to run for three years, the promotion of Poland's food sector is backed by a US$6 million investment, with half of it coming from EU coffers.
As a key means of accessing the mainland – and the wider Asia market – many Polish food companies have looked to Hong Kong as the ideal platform to promote their produce. As a result, there has been a dramatic increase in the number of Polish companies exhibiting at the Hong Kong HKTDC Food Expo.
"For years now, Hong Kong has been the gateway to the Chinese market for our food industry,” said Lucjan Zwolak, Deputy President of Poland's Agricultural Market Agency. “Currently, our food exports to the mainland are valued at around US$76 million per annum, but we believe that our potential sales could be significantly higher."
But Radosław Pyffel, Director of the Centre for Poland-Asia studies, believes Poland needs to also develop a long-term strategic agenda if it is to find true success on the mainland, rather than relying on the momentum created by occasional trade visits. There are signs that this is being addressed, with several Polish government agencies now actively promoting and facilitating trade with the mainland. The country's Translation Bureau is also working with Polish businesses to produce promotional documents in Putonghua.
Ultimately, though, many Polish businesses are on the lookout for investors and partners who understand the demands of the Chinese market and its ways of doing business. Such developments are likely to be boosted by funding from the Asian Infrastructure Investment Bank (AIIB). As part of the Belt and Road Initiative, Poland is eligible for a share of the AIIB’s US$100 billion initial funding, with the Polish government already lobbying for support for several key projects.
For more market opportunities, please visit: http://research.hktdc.com/.