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The Warsaw Voice » Business » February 23, 2010
Business & Economy
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China: A Strategic Partner
February 23, 2010   
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Marek Łyżwa, vice-president of the Polish Information and Foreign Investment Agency (PAIiIZ), talks to Andrzej Ratajczyk.

What is China's role in the global economy? Why should Poland develop its economic links with China?
China is already an economic superpower, but this does not satisfy the ambition of the Chinese people, who aspire to become the world's leading economy. Outpacing the current superpowers, namely the United States and the European Union, in the near future is not so unrealistic. It is enough to look at the impressive pace of the Chinese economy's development, with average annual growth of 9.6 percent over the past 30 years.

Chinese companies and Chinese goods today are competitive internationally not because of cheap labor. Cheap labor, even cheaper than in China, can be found across half the world, in India, Indonesia, Pakistan or Africa. China's greatest assets, which give it a competitive edge over other countries, are its well-organized and hard-working people. Equally important is the fact that in both the state and private sector, all economic plans and tasks are carried out practically to the last detail. This is the opposite of what we had under the previous system in Poland, when wonderful and ambitious programs were approved but later only remained on paper. Over there, they are carried out.

It is impossible not to notice the growing role of China in the global economy. That is why the Polish government has put a lot of effort recently into stimulating economic contacts with China. This increased activity includes Prime Minister Donald Tusk's recent visit to Beijing and visits by Deputy Prime Minister and Economy Minister Waldemar Pawlak and other ministers. In addition, there have been numerous economic missions to China, in which PAIiIZ has also been involved. There is a good opportunity for the development of economic relations with this country.

In recent years China has become a serious global investor. Chinese companies are investing big money in Asia, the United States and Europe. Are Chinese businesses becoming more interested in investing in Poland?
Yes. More Chinese companies are inquiring into investment opportunities in Poland. At PAIiIZ we have registered over 30 projects by Chinese investors, about 10 of them already in progress. Over the past two years Chinese business invested $80 million to $100 million in Poland, and total Chinese investment now exceeds $200 million. However, that does not change the fact that this is far below the potential and capacity of both countries. We hope to see Chinese investment in Poland growing several-fold, among other things thanks to recent efforts by PAIiIZ. Though Poland's most important partner-in terms of foreign direct investment-is still the European Union, followed by the United States, Japan and South Korea, in the past few years China, along with Russia, India and Brazil, have come to be regarded as strategic partners.

Which sectors of the Polish economy are Chinese investors most interested in?
Major Chinese investors in Poland include GD Poland (a wholesaler in Wólka Kosowska), Min Hoong Development (a real estate trading company), TTL Polska - an investment by TCL Corporation (manufacturing of LCD monitors and TV sets in Żyrardów). Another interesting investor is Nuctech, which has opened its first overseas office in Warsaw and started production (together with Poland's Bumar) of equipment for scanning containers and trains in motion, using nuclear technology. This is cutting edge technology. On the other hand, companies making less complicated products, like textiles and candles, are also present on the Polish market. These investment projects are mostly scattered and their value is relatively low (up to a few million dollars).

A lot has been said recently about Chinese companies taking on the construction of Polish roads and freeways. Are many companies interested in such projects?
In late September 2009, a consortium of Chinese companies led by China Overseas Engineering Group Co. Ltd. signed a contract on the construction of two sections of the freeway from ŁódĽ to Warsaw. We hope this company will not only build the freeway but also invest in the production of construction machinery in Poland. I know of other Chinese companies interested in investing in the railway sector, for example in the production of railroad carriages and engines. No contracts have been signed yet, but talks and negotiations between Polish and Chinese partners are underway.

What prevents Chinese business from becoming more involved in the Polish market?
The main problem in doing business with the Chinese is communication, language. Chinese people have started learning foreign languages, but knowledge of English is not yet widespread. This problem does not affect just Poland but all European countries.

What about cultural differences?
Of course cultural, mental differences exist, but they are not a barrier to doing business. Chinese businesspeople are interested in money, not cultural or political issues. On the other hand, since many large companies remain in state hands, political relations are not unimportant. The better the political relations at the highest level, the more contacts there are, the better the atmosphere for doing business. That is why we have high hopes for our contribution to World Expo 2010 in Shanghai. This will be Poland's greatest economic promotion in China in history.

What can you tell us about Polish companies' investment in China?
Polish companies have invested an estimated $150 million on the Chinese market so far. This is very little compared to the market's size and potential, and also in view of the long history of Polish-Chinese business ventures. One example is Chipolbrok, a shipping company in which Poland and China both own 50 percent. The company, based in Shanghai and Gdynia, was established over 50 years ago and constitutes entry number one in the register of foreign companies. Chipolbrok is still doing very well, specializing in unusual cargo such as parts of factories and large loads.

Polish companies making mining machinery and boilers for power plants have been successful in China for many years. Recently, several Polish companies started operating in environmental protection. Other large projects worth mentioning include the Selena company's construction chemicals factory and investments by Bioton, a pharmaceutical company.
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