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The Warsaw Voice » Business » May 31, 2012
Business & Economy
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Chinese Interested in Investing in Poland
May 31, 2012   
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The establishment of a special investment fund, the launch of a large credit line, and the creation of new jobs—these are just some of the expected benefits of Chinese Prime Minister Wen Jiabao’s April visit to Poland.

China, which recently became the second largest economy in the world, is seen today as a highly desirable business partner. The Polish authorities have been declaring for years that they are interested in developing cooperation with China. At the moment Polish-Chinese economic relations leave much to be desired. The pattern of trade has gradually evolved in China’s favor over the years. Poland is struggling with a huge deficit in trade with China; in 2010 this came to $14.8 billion.

Chinese investment in Poland is unimpressive, at a paltry $250 million. However, there are indications that Polish-Chinese economic relations will be given a massive boost after the recent visit to Poland by the Chinese prime minister. While taking part in the Poland-Central Europe-China Economic Forum in Warsaw, Wen Jiabao declared that China will set up a $500 million fund to invest in Central European countries. A $10 billion credit line will also be launched to support investment by Chinese companies in infrastructure, new technology and the “green economy” in Central and Eastern Europe.

“A very strong signal came from Chinese Prime Minister Wen Jiabao about China’s involvement in Central and Eastern Europe, especially Poland,” said Sławomir Majman, head of the Polish Information and Foreign Investment Agency (PAIiIZ). “The Chinese are interested in two kinds of investment projects. First, they are interested in taking part in the development of infrastructure in Poland, and second, they are thinking of taking over those Polish companies that guarantee them a reasonable profit or access to decent technology. In both cases, we are interested—because this contributes to job retention and creation and helps strengthen the power of Polish enterprises.”

Since 2010, when China adopted a strategy of large-scale investment abroad, Chinese investment in Europe has grown by 102 percent, according to a report by the Central & Eastern Europe Development Institute, a Polish think-tank. Even before then trade between China and Central and Eastern European countries had been growing rapidly. In 2000 it amounted to $3 billion, and in 2010 it exceeded $41.1 billion, which means an average annual increase of 32 percent.

Another result of the Chinese prime minister’s visit was a letter of intent signed by Poland’s Industrial Development Agency (ARP) and the Bank of China, the world’s largest bank in terms of profit and market capitalization. They will team up to offer financial support for Chinese investment in Poland as well as support for Polish companies planning to do business on the Chinese market. The Bank of China (BoC), which is launching operations in Poland, is one of four powerful state-owned banks in China, alongside ICBC, the Agricultural Bank of China, and China Construction Bank. BoC has over $2 trillion in assets, about ten times more than all Polish banks put together. “Thanks to cooperation with a large bank such as the Bank of China, I believe that economic relations with companies from China will take on a new dimension,” said Wojciech D±browski, chairman of the Industrial Development Agency.

BoC will focus on financially supporting Chinese investment in Poland through loans and guarantees. In addition, the bank will work with the largest Polish companies planning to do business on the Chinese market. “There’s huge interest among Chinese companies in investing in Poland, and projections show that the number of these will be growing rapidly. The Bank of China wants to be a bridge between Poland and China,” said Wenbo Hou, general manager of BoC’s Polish subsidiary.

The agreements signed by the ARP are not the only contacts established by the agency with potential investors from China. During a recent visit by ARP officials to China, declarations were made of mutual economic cooperation between the Chinese province of Hubei and the ARP, and China’s Tri-ring Group Corporation said it wanted to acquire Polish rolling bearing producer Fabryka Łożysk Tocznych Kra¶nik, which is controlled by the ARP. Earlier, China’s Guangxi LiuGong Machinery finalized the acquisition of the civilian part of Poland’s Huta Stalowa Wola, which produces construction machinery.

The further development of Polish-Chinese cooperation will depend on factors including whether or not business partners from the two countries will get to know each other better. This goal is expected to be furthered by an agreement on the promotion of exchange and cooperation between Polish and Chinese small and medium-sized enterprises, which was signed by Poland’s Deputy Prime Minister and Economy Minister Waldemar Pawlak and China’s Trade Minister Chen Deming.

The Polish Agency for Enterprise Development (PARP) says it is ready to help Polish companies interested in the Chinese market. “What is very important and needed is that they must know how to do business there and have to be familiar with the legal environment, for example regulations governing intellectual property,” said Bożena Lublińska-Kasprzak, president of PARP. “But entrepreneurs attending trade fairs and going on business missions must also be prepared in the right way. In the near future we are planning a series of seminars together with the European Center for Small and Medium-Sized Enterprises in China, which will be attended by speakers from China and renowned experts in the field.”

PARP also plans to organize two business missions in September for small and medium-sized enterprises interested in attending a trade fair in Chengdu, China. This is not the only kind of support offered by the Polish Agency for Enterprise Development. Companies interested in entering the Chinese market can also benefit from the Paszport do Eksportu (Export Pass) program for co-financing investment projects on foreign markets. This year PARP will carry out three rounds of the program; it has assigned a total of zl.324 million for them.

Under the Polish government’s Go China program, PARP has launched a special website to provide useful information to investors, exporters and importers.
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