4 Jan 2016
Polish Businesses Keen to Capitalise on Belt and Road Opportunities
Disappointed at the one-way traffic that largely characterises Polish-Chinese trade, a number of companies in the country are now hoping that the Belt and Road Initiative will prove a key means of helping to redress that balance.
With the Belt and Road Initiative (BRI) now securing global attention, Poland is one of the many countries looking to capitalise on the array of opportunities opening up as a result of the mainland's huge trade and investment program Addressing the Poland-China Trade Investment Forum in Shanghai late last year, Andrzej Duda, the Polish President, 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 is also one of the 16 European countries to have taken part in the China-Central and Eastern Europe Summit in Suzhou last year. The event saw President Duda accompanied by 80 representatives of Poland's business community, all keen underline their commitment to the Belt and Road Initiative.
Poland's heightened co-operation with China actually pre-dates the formal announcement of the BRI back in 2014. The previous year had already seen the official opening of a new railway line linking the Polish city of Lodz with Chengdu. As a result, rail freight time between the two cities has now been reduced to 14 days.
Despite this improved access, many in Poland remain concerned about one-way trade between the two countries, with the majority of the trains returning to China far less laden than when they arrived. Principally, the rail route has only attracted a limited number of Polish export categories, notably FMCG items, luxury goods and advanced electronic products. Exporters of the more durable goods inevitably still favour the slower, but cheaper, sea freight options.
Despite the growth in exports to China, many in Poland still believe the country is failing to achieve its potential. At present, in value terms, Poland still imports 10 times as much from China as it exports.
In 2014, Poland's exports to China were headed by copper products (valued at US$830 million) and mechanical appliances ($563 million). Now, though, the country looking to nurture those industries that have the potential to successfully export to the mainland.
Among those accompanying Duda to Shanghai were representatives of Selena FM, the construction chemicals group based in Wroclaw, the largest city in western Poland. Recently, the group has grown its mainland business by more than 40%, something that has been taken as an encouraging sign by other Polish businesses.
Commenting on its success, Jaroslaw Michniuk, a Director of the company, said: "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. Now our priority is to increase our market presence and nurture a higher demand for our products."
Construction chemicals aside, Poland's food industry also has high hopes of success on the mainland, as well as in a number of other key export markets. The country has recently been participating in the Tastes of Europe campaign, an initiative aimed at boosting the global sales of EU agriproducts. With the program set to run for three years, the promotion of Poland's food sector is backed by a $6 million spend, with half of that coming from EU coffers.
As a key means of accessing China – and the wider Asia market – many Polish food companies have looked to Hong Kong as the ideal platform to promote their produce. Among other initiatives, this has seen a dramatic increase in the number of Polish companies exhibiting at the Hong Kong HKTDC Food Expo.
Commenting on the move, Lucjan Zwolak, Deputy President of Poland's Agricultural Market Agency, said: "For years now, Hong Kong has been the gateway to the Chinese market for our food industry. Currently, our food exports to the mainland are valued at around $76 million per annum, but we believe that our potential sales could be significantly higher."
Taking a more cautious approach, Radosław Pyffel, Director of the Centre for Poland-Asia studies, believes Poland needs to 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, however, signs that this is being addressed, with a number of Polish government agencies now actively promoting and facilitating trade with the mainland. The country's Translation Bureau is also working with many Polish businesses to produce promotional documents in Mandarin.
Ultimately, though, many Polish businesses are on the lookout for investors and partners who understand the demands of the Chinese market and its idiosyncratic ways of doing business. Such developments are likely to be boosted by funding from the Asian Infrastructure Investment Bank. As part of the Belt and Road Initiative, Poland is eligible for a share of the Bank's $100 billion initial funding, with the country's government already lobbying for support for a number of key projects.
Anna Dowgiallo, Warsaw Consultant