Export To Poland Presentation 2nd June 2009

Export to PolandExport to PolandExport to PolandExport to Poland

Bi-Lateral Trading between Poland and Britain

Michael Clay, Board Member, BPCC



• Poland as the biggest new member of the single

European market offers the right balance between low business risk, and high growth opportunity

• Attractive domestic market of 38m consumers – larger than the other seven 2004 EU entrants combined in terms of population and GDP

• CEE gateway to regional sales, manufacturing and

logistics hub – EU expansion opportunity

• Human capital – young, skilled demographic

WHY POLAND?



• 20 years after the downfall of communism, 20 years of economic transformation

• 10 years in NATO, five years in the EU

• Strong GDP growth

• Inflation tamed

• Unemployment has fallen rapidly (Feb ’04 to Oct ’08)

• EU funds flooding in

• ...and then the global economic crisis hits Poland.

The story so far...



• Dramatic changes in global economy have changed prospects for Poland

• Fall in value of zloty

• Entire CEE region tarred with same brush

• New opportunities opening up as others disappear

• EU structural and cohesion funds will shore up Polish economy

• Consumer spending falling slower, unemployment growing slower than across EU15, opportunities not only to cut costsbut to find new market opportunities

Main themes



EU Structural & Cohesion Funds

• 2004-2006: €12.8 billion

• 2007-2013: €67 billion

(plus matchfunding – another €23 billion)

Money earmarked for infrastructure (€28 billion), regional

development, enterprise development, skills training,

business competitiveness, is being spent between now and 2015/6 (‘n+2’/‘n+3’)

Will change the face of Poland.



And yet...

• GDP 2009 forecast

to contract by 0.4%

• Debt rose by 24%

between 2000-07

• S&P rating A-

• GDP 2009 forecast

to contract by 6%

• Debt rose by 65%

between 2000-07

• S&P rating BBB

Poland Hungary



Poland has a competitive economy

The Alllianz/Lisbon Council study,

published on 9 March 2009, ranks EU countries according to six key

criteria including economic growth, productivity growth, jobs, human capital, future-oriented investment and sustainable public finances.

Overall, Poland comes in at No. 2 with strong performances on

economic growth and productivity growth, where it finishes No. 1 and

No. 2, respectively.

2009 2008

1 Finland 1

2 Poland 2

3 Netherlands 9

4 Greece 5

5 Sweden 3

6 Spain 12

7 UK 6

8 Belgium 10

9 Germany 8

10 Austria 11

11 Denmark 7

12 France 13

13 Ireland 4

14 Italy 14



Central and Eastern Europe

Latvia, Hungary, Ukraine – these

are the countries with most serious

problems.

Poland, Czech

Republic, Slovakia, and

Slovenia – these

are the countries likely to be least

affected by crisis



New law came into force on 27 February, less proscriptive than

old law from 2005 (under which no project was initiated)

Will PPP finally get moving?

• EU funds – projects need local matchfunding

• Municipal bonds and loans – 60% debt/budget limit

• Banks showing far less appetite to lend

• Yet projects have to be delivered.

Is PPP the answer?

Public Private Partnerships



Source: OECD, GUS, Eurostat

• Young, skilled, motivated and flexible working population

• Multilingual – 71% of students have passed English at

‘A’ Level equiv.

• Record numbers of graduates and school-leavers have

been entering the labour market

• Poland’s student population quadrupled during ‘90s –

today, 1.9m in tertiary education – more than entire

population of Estonia

Poland’s skilled workforce



• Multinational investors cutting regardless of local

conditions on Polish market

• Polish employers have seized opportunity to get

‘leaner and fitter’

• Skills shortages have not gone away in cities

• Temp workers likely to become more popular

Have employers cut too far?



Announced job losses across EU



• UK 6th largest investor in Poland – dominated by large corporates

• UK ranked 4th largest Polish export market

• Poland ranked 17th largest UK export market (up from 25th in 2005)

• Very low presence of British mid-caps and SMEs on Polish market (different legal system)

• Unrecognised export opportunity for British exporters

The British Polish experience so far



Tesco

BP

GlaxoSmithKline

Pilkington

Cadbury’s

Shell

Largest British investors in Poland

Unilever

Arcelor Mittal

Aviva (Commercial Union)

Provident

Associated British Foods

HSBC



Fill

fill

1.3

5

1.2

1

1.1

7

1.3

0 1.6

5

2.3

1

2.3

9

3.0

3

1.1

7

1.8

3

2.3

2

3.6

1

4.3

5

1.4

1

1.3

2

1.3

0

1.3

6

1.4

61

.26

0.9

1

0.6

8

0.6

7

0.5

7

0.6

0

3.2

0

1.5

4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.51996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

UK exports to Poland Polish exports to UK

GB

P b

illio

ns

Source: Office of National Statistics, UKTI

Trade between UK and Poland



• Re-orientation of investment sourcing – new global economies; Middle and Far East seeking EU platform; private equity funds looking for M&A opportunities, public sector investment

• Cutting costs in western Europe – upping investment in Poland (this affects only investors already present here!)

• EU funds and grants

• Eurozone entry planned for 1 Jan 2012 (???!)

• Climate change, environment and energy

• UEFA Euro 2012

• 2015 deadline for ensuring all water pumped into rivers is treated – otherwise local authorities face fines

Catalysts for future growth



• Poland’s downturn likely to be far more mild than in rest of EU

• Strategic location, several large, high-growth cities

• Infrastructure projects offer promise

• Greenfield FDI once again becoming attractive

• Poland offers the right balance between low risk and higher growth opportunities

Summary



GDPGDPGDPGDP growgrowgrowgrowing faster than ing faster than ing faster than ing faster than ‘‘‘‘oldoldoldold’’’’ EUEUEUEU

Source: EurostatSource: EurostatSource: EurostatSource: Eurostat *2008, 2009 forecasts (Economist)*2008, 2009 forecasts (Economist)*2008, 2009 forecasts (Economist)*2008, 2009 forecasts (Economist)

0%

1%

2%

3%

4%

5%

6%

7%

Poland UK Eurozone

2004 2005 2006 2007 2008* 2009*

Growth compared



FDI destinations and unemployment

6.7%

2.2%

7.4%

1.7%

8.5%

2.2%

8.7%

3.0%

12.2%

2.2%

13.2%

3.8%

14.1%

7.1%

19.5%

6.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Warsaw Poznań Katowice Kraków Tri-City Wrocław Lublin Łódź

Feb '04 Jul '08Source: GUS



FDI destinations and unemployment

16,900

4,000

22,700

5,500

39,800

6,800

21,800

11,100

38,200

11,200

31,500

11,500

67,100

21,600

66,100

24,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Katowice Poznań Tri-City Lublin Wrocław Kraków Łódź Warsaw

Feb '04 Jul '08Source: GUS



The weak Pound

Zloty appreciation in %age terms (1 May ‘04=0%)

43%

31%

0%

10%

20%

30%

40%

IV '04 IV '05 IV '06 IV '07 IV '08 IV '09

£1 = 7.15 zł £1 = 4.85 zł

Monthly average value of PLN. Source - NBP



• Smaller towns and rural Poland have high unemployment; large amount of undisclosed employment in grey economy

• Labour mobility – both high and low (Poland and UK!)

• Over 44% of Poles of productive age are not working

• 45% of Poles registered as unemployed live in villages

• Age is important factor – older Poles less flexible, less mobile, less prepared to work in market economy. Only 28% of Poland’s over-55s are working (58% in UK)

Labour availability in Poland



Wrocław

Warszawa

Kraków

Silesian agglomeration

Poznań

Łódź

Where to find human resources

Wrocław

Warsaw

Kraków


Poznań

Łódź

Wroclaw

Warsaw

Krakow


PoznanLodz

Tri-City

Source: GUS, July 2008

Bydgoszcz Torun

Polish unemployment



Inward investment

Manufacturing: look to produce for local and regional markets, rather than as low-cost source

Outsourced services (though S. Poland overheating)

Consumer market

High-growth conurbations – Warsaw, Katowice, Krakow, Wrocław, Poznan, Tri-City and Lodz –several million prosperous consumers

Property & Construction

Residential, commercial, retail; EU-funded infrastructure projects; Euro 2012; PPP expertise

Business-to-business

Consultancy, HR (training, coaching), legal services

Business opportunities



• Economic growth expected to be reasonably strong over coming five-six years• Poland insulated against harshest effects of global downturn• EU funded projects will change the way Poland looks and works• Get involved before it’s too late!

Poland: The bottom line



•The Export to Poland program can bring your

Company into Poland

•We can help you in Marketing, Distribution,

Translation, Partner search,

•Most Importantly, we can provide the SALES in a manner that keeps your costs lowWeb: www.export-to-poland.comemail: [email protected]

Next steps



Export to Poland

www.exportpoland.co.uk

Thank you

Michael Clay

Member of the Board

www.bpcc.org.pl