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 2014 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 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’s plans to eventually adopt the Euro currency will further accelerate the country’s integration with the EU. Poland has been an active member of NATO since 1999, participating in joint peacekeeping activities in the region and elsewhere, including Afghanistan, and is investing in a major modernization of its military.
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. Abundant opportunities still 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 GDP growth of over 20 percent from 2008-2013. As predicted, Poland’s GDP growth slowed in 2013 as a result of the European debt crisis and Poland’s own fiscal consolidation efforts. However, expansion is expected to exceed 3% in 2014. Poland’s growth was in part due to the sizable resources from the EU structural and cohesion funds. Poland is the main beneficiary of these funds, receiving €68.7 billion from 2007 to 2013. The second round of EU funding for the years 2014-2020 will reportedly be used to drive continued infrastructure projects, to develop Poland’s energy industry, and to stimulate innovation.
In 2013, the U.S. sold $3.9 billion worth of merchandise in Poland, up 16.5% from 2012.
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 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 is increasing relative to the rest of the EU, it amounts to less than 70% of the EU average. Nonetheless, strong domestic consumption is one of the engines of growth in Poland. 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 significant progress in reducing bureaucratic obstacles to business. Its ranking in the latest World Bank Ease of Business Index was number 45, down ten spots (lower is better) in the last year which was down 7 from the previous. In the 2013 Transparency International Corruption Perception Index, Poland improved its rank to 38th out of 177 countries (again lower is better).
Although many infrastructure improvements have been completed or are underway, Poland still has much work to do in order to modernize its road and railway network. Weaknesses in transportation infrastructure increase 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 current attractiveness as a regional distribution hub. Internet access and connection strength is good in the cities, but still very limited in less populated regions.
The government's commitment to spend as much as $45 billion on its ten-year military modernization program has created many opportunities for companies involved in defense or defense-related products. Poland has announced it's intention to meet the NATO standard of spending 2.0% of its GDP on defense, up from recent spending levels amounting to around 1.8% 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 in 2014.
Poland is once again the largest recipient of EU structural and cohesion funds, with €72.9 billion (nearly $100 billion) pledged from 2014-2020.
These funds could create market opportunities for U.S. firms. In particular, Poland intends to use a share of the funds to support continued infrastructure development, environmental protection, and environmental remediation projects. In order to meet EU emissions targets, Poland is attempting to diversify its energy mix by introducing domestically produced shale gas and nuclear energy as well as increasing use of renewable sources of energy, such as wind, biomass and biogas. Other strategies to reduce emissions may include introducing clean coal technologies upgrading coal plants, and exploring waste-to-energy systems. Polish cities will have to develop new waste stream models because EU directives require closure and remediation of landfills across the country.
In this environment, the need for premium office space and the expansion of the retail sector present opportunities for engineering and green-building services, particularly those built as ‘zero emission’ buildings and to LEED standards. Many additional opportunities exist for firms offering products that improve energy efficiencies. These top prospects will be covered in depth later in this report.
Other important sectors that will be discussed in this report, are cybersecurity and software for mobile applications, consumer goods, such as cosmetics, where an American label is still a symbol of prestige and high quality, 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 with 25% of Poles 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 2014, 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 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.