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The Warsaw Voice » Business » April 28, 2011
Business & Economy
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Chinese Firms Home in on Poland
April 28, 2011   
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Two large Chinese corporations want to spend over zl.15 billion to build coal-fired power units at Polish power plants. Chinese companies are also interested in investing in Polish infrastructure.

The Rzeczpospolita daily reported that Shanghai Electric Group and China National Electric Equipment Corporation, in conjunction with the Covec company, not only want to build power units at Polish power plants but could also partially finance the projects. Among the projects the Chinese are interested in are new power units planned by the Enea energy group at the Kozienice power plant, south of Warsaw, and by the Tauron group at the Jaworzno power plant in Silesia, southern Poland. Deputy Treasury Minister Jan Bury, who is in charge of the energy sector, says the Chinese offer is attractive, adding that Poland needs new coal-fired power units.

Apart from eyeing Polish power stations, Chinese companies also want to invest around zl.20 billion in infrastructure. They sent letters at the beginning of March to the mayor of Warsaw and the Infrastructure Ministry with proposals to carry out several large projects, including the construction of sections of the second line of the Warsaw metro outside the city center. The project could be completed within three years. Covec also wants to design, build and finance the section of the A2 freeway from Warsaw to Poland’s eastern border and a southern stretch of the A1 freeway.

There are many signs that in the near future Chinese firms on the Polish market will no longer be associated exclusively with trade. Last year alone, Poland imported almost 10 billion euros worth of goods. In comparison, the value of Polish exports to China was only 1 billion euros. Among the most important items imported from China to Poland were computers, parts for TV cameras, mobile phones, devices for voice, image and other data processing—such as MP3, tape recorders and modems—computer parts and accessories, electronic components for audio-video equipment, digital cameras and parts, hard disc drives, and vehicles with piston engines. Eight of the 10 largest importers of Chinese goods in Poland trade in electronic equipment, one in lighting equipment and one in clothing.

Global players
In recent years, Chinese firms have started to turn into global players, which is reflected in their growing eagerness to make large-scale investments outside China. Supported by increasingly strong Chinese banks, they are investing successfully in many areas. The main direction for the expansion of Chinese firms is Asia, but Europe—especially European Union countries—ranks just behind. Poland, which stands out in terms of economic performance, is increasingly expected to attract more Chinese investment.

For the time being, the Chinese presence in Poland is not impressive—it is estimated that Chinese firms have invested just over $200 million in this country so far.

Among the largest Chinese investors in Poland are the GD Poland company, a wholesaler operating in Wólka Kosowska, outside Warsaw, Min Hoong Development, a real estate agent operating in Warsaw and the coastal city of Sopot, the TTL Polska company set up by TCL Corporation to manufacture LCD displays and television sets in the city of Żyrardów, and Athletic Group, which manufactures bicycles in the city of Koszalin.

Eyeing infrastructure
There are especially large opportunities for Chinese firms connected with infrastructure projects planned in Poland—freeways, roads, sports stadiums, urban buildings and structures. Some of them are associated with the UEFA Euro 2012 soccer tournament to be hosted by Poland and Ukraine. An example is a contract for the construction of two sections of the freeway from the central city of ŁódĽ to Warsaw awarded more than a year ago to a Chinese consortium led by China Overseas Engineering Group Co. Ltd.

The acquisition of the Stalowa Wola steelworks, Poland’s largest producer of construction equipment, by the Chinese corporation LiuGong is another Chinese business project in Poland. The value of the deal is estimated at zl.250 million. Under a sales agreement signed in January, the steelworks’ output is to increase several-fold. LiuGong plans to set up a center manufacturing heavy construction machinery and caterpillar tractors for the European and U.S. markets. LiuGong is a giant, selling around 30,000 excavators annually in China and through its global distribution chain.

The CNR Cargo Wagon company is another example of Polish-Chinese business relations. It was set up by Jinan Railway Vehicles Equipment, a Chinese rolling stock producer, and PKP Cargo, a Polish railway freight operator. CNR Cargo Wagon will deal with the production of rolling stock. Work is under way on a feasibility study for the project. CNR Cargo Wagon is expected to deliver rolling stock for the European market. The wagons will be manufactured in China and assembled in the Polish coastal city of Szczecin. Production could be launched next year. Both partners have a 50-percent stake in the venture.

There is every indication that Chinese investment in Poland will grow rapidly in the coming years as the country becomes increasingly attractive to investors. International institutions agree that, thanks to its strong economic performance, Poland is already one of the most attractive investment destinations in the world.
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