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EU Russian Boycott Sees Polish Food Producers Targetting Asia

With the European Union now banning exports of many items to Russia, in light of the continuing crisis in Ukraine, many Polish food companies have turned to Hong Kong, as the conduit to Asia, in order to help make up the shortfall.

Photo: Polish apples: A core export product.
Polish apples: A core export product.
Photo: Polish apples: A core export product.
Polish apples: A core export product.

With many Polish food producers banned from exporting to Russia – traditionally one of the country's key markets – in line with EU sanctions, a number of them are now targetting Southeast Asian consumers in order to make up the shortfall. This has seen Hong Kong emerge as the key conduit for such traders.

Traditionally, Polish exports to Russia exceed US$1 billion annually, ensuring that EU sanctions have had a decided impact, particularly in the fruit and fresh produce sector. One of the top apple producers in the world, last year Poland exported 56% of its apple harvest to Russia, along with sizeable volumes of vegetables and dairy products.

One company now looking to the Southeast Asian market is Makarony Polskie. Based in southeast Poland, this pasta company sees China and Vietnam, in particular, as providing significant alternatives to Ukraine and Russia. Over the past year, the company's pastas, sauces and jellies have been available in Hong Kong and the mainland through Tesco China and other local chain stores.

Their success, however, is said to have been hard won. According to Zenon Danilowski, President of Makarony Polskie, entering the Chinese market was a long and complex process. It required substantial know-how and considerable resources to identify a reliable business partner and comply with local certification procedures.

Today, accessing the Asian market is also proving important for Polish meat producers. China opened its market to Polish pork in 2012. Prior to that, pork was exported to China through Hong Kong, with a similar requirement for poultry. In mid-February 2014, however, after African swine fever was detected in Poland, China banned direct imports of Polish pork.

Since then, Polish meat companies have, once again, had to channel their products through Hong Kong. The costs of importing via Hong Kong, however, have cut into profit margins. Despite this, it is believed that the wide acceptance of Polish pork products within Hong Kong will ultimately boost chances of the direct mainland import ban being lifted.

According to Lucjan Zwolak, Deputy President of the Agriculture Market Agency (ARR), Hong Kong now plays a key role in the Polish food industry. The volume of Poland's trade with Hong Kong has been steady at the 90 million euro level for the last three years. Food products account for some 70 million of this total, of which about 40% is poultry and other related products. Products such as intestines and bladders, for instance, are bought exclusively by the Chinese. Hong Kong companies, however, buy Polish sweets – accounting for 4% of total export value – as well as several cereal products.

At present, ARR co-ordinates the Promotion of Polish Food Companies in Hong Kong programme. This initiative is supported by the Ministry of Economy and is co-funded by the EU European Meat – Tradition, Quality and Taste directorate. This saw 23 Polish food companies participate in the HKTDC Hong Kong Food Expo this year.

Notable among the attendees were 15 meat producers, as well as a range of fruit juice and cider manufacturers. The dairy sector was represented by the firms Spomlek and Lowicz. Both of these companies now comply with China's strict import regime.

Addressing the prospects offered by the mainland, Edward Bajko, President of Spomlek, said: “China, the most populated country in the world and the one with the most rapidly developing economy, represents the perfect opportunity for us. Now that we are authorised to export to the mainland, we can now directly access this huge market.

“With our products already on sale there, we have now extended our co-operation with a large producer of fat-free powdered milk. We also had meetings with representatives of the A.S. Watson Group, which I hope will prove fruitful.”

In other developments, it is also believed that China may become an important market for Polish eco-agriculture products. Talks are said to be underway with regard to launching an air-transport channel for the direct delivery of Polish ecological products to China, obviating any necessity for deep freezing.

Gabriela Chan, Warsaw Consultant

Content provided by Picture: HKTDC Research
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