The Country Commercial Guide (CCG) presents a comprehensive look at Poland's commercial environment using economic, political, and market analysis.
Market Entry Strategy
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 bloc countries of Central Europe and shares borders with both “new” EU and “old” EU-15 countries. Poland became a member of the European Union (EU) in 2004. 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 is now the sixth-largest economy in the EU. Poland is an active member of NATO, upgrading its armed forces 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.
While the rest of Europe struggled with the global financial crisis, Poland experienced gross domestic product (GDP) growth of over 18 percent from 2008-2012. This was especially true in 2009 when Poland was the only EU country with positive economic growth, earning the country the name of the “green island”. Despite a relatively difficult year in 2013 (by Polish standards of earlier robust growth) when GDP edged up only by 1.6% and domestic demand shrank by 0.2% as a result of the European debt crisis and Poland’s own fiscal consolidation efforts, Poland continues to catch up to the Western EU Countries. As a result, in 2014, a 3.3% increase in GDP was recorded, Poland is back on track toward reaching parity with Western EU countries. Data from Eurostat indicate Poland’s GDP per capita in 1995 was 43% of the EU average, in 2000 it was 48%, and by 2013 – it was 67%. This trend is expected to continue.
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 Polish public holds very positive attitudes toward foreign investment. U.S. investors represent a wide range of industry sectors including automotive, aerospace, information technology: 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 is increasing, compared to the EU average, 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 still somewhat rigid labor code, bureaucratic red tape, a lag in regulatory reform in the energy sector, and a burdensome tax system as challenges for foreign companies.
Poland ’s ranking in the World Bank’s Ease of Doing Business Index was number 32, (lower is better) in 2015. Poland’s ranked 30 in 2014. This decline is a reversal of previous years which saw constant improvement. More information on the factors used to determine the ranking can be found here: http://www.doingbusiness.org/data/exploreeconomies/poland.
In the 2014 Transparency International Corruption Perception Index, Poland improved its rank to 35 out of 177 countries (lower is better).
Poland still has work to do in order to modernize its road, railway and internet network. Weak transportation infrastructure increases the cost of doing business for all businesses by limiting ready access to all of the markets within Poland and diminishes the country’s potential as a regional distribution hub. Internet access and connection strength is good in urban areas, but remains limited in some less populated regions which continue to invest heavily in the broadband internet projects.
The Polish government’s Military Modernization Program has created many opportunities for companies involved in defense or defense-related products. As a member of NATO, Poland committed to spend 1.8% of their GDP on defense. In 2014 Poland increased that pledge to 2% of GDP. There are currently over 80 active Foreign Military Sales cases in Poland which makes military/defense spending Poland’s top prospect for American businesses again in 2015.
Poland is the largest recipient of EU structural and cohesion funds, with nearly 144 billion budgeted during 2014-2020. Current plans are to use funds to support continued infrastructure development, including improving internet access and developing smart cities, and encourage companies to conduct research and development in Poland.
Engineering and green-building services firms may find opportunities in Poland’s need for premium office space and retail sector expansion. Firms with experience in ‘zero emission’ buildings and LEED standards will find the greatest opportunities. Many additional opportunities exist for firms offering products that improve energy efficiency. These top prospects will be covered in depth later in this report.
Other important sectors that will be discussed are cybersecurity and software for mobile applications, consumer goods, and automotive products. All of these sectors continue to perform well and show signs of growth.
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.
The Polish market is characterized by wide population dispersion. A quarter of Poles live in rural areas, while urban dwellers are 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 e-mail 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 continue in 2015 challenging even the most well-planned export strategy. Careful crafting of terms of sale, including creative packaging of currency and pricing terms, will help U.S. exporters gain a 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.
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