Poland: China’s Gateway to Europe?
July 4, 2014
Chinese companies are increasingly interested in investing in Poland. According to experts at consulting firm Deloitte, Chinese businesses are especially keen to invest in the Polish infrastructure sector and on the market for mergers and acquisitions.
Bilateral trade between Poland and China totaled $14 billion last year. China is the third largest buyer of Polish goods. According to the National Bureau of Statistics of China, from 2009 to 2013 the value of bilateral trade between China and Poland grew at an average rate of 15.8 percent a year. Chinese customs statistics show that electrical equipment and “devices and spare parts” are the two most important groups of products that Poland imports from China, at 20 percent and 18 percent of the total respectively. On the other hand, copper and copper products (30 percent) and engineering products (8 percent) are the key groups of goods that Poland exports to China.
Trade statistics are not the only sign that the role of China is growing as an economic partner for Poland. Chinese companies are increasingly interested in Polish infrastructure projects, including renewable energy, engineering and construction. Examples include the Pinggao group, a subsidiary of the State Grid Corporation of China, a Chinese energy group that has successfully competed for tenders from the Polish power grid company Polskie Sieci Elektroenergetyczne (PSE).
After China’s Shuanghui international bought Smithfield Foods, the largest pork producer in the United States, for a record $4.7 billion, Chinese market players in the food sector began to seek opportunities on the Polish and Central European market for mergers and acquisitions in earnest.
“It’s worth noting that, in contrast to other Asian investors, such as South Korea and Japan, who prefer to carry out projects from scratch, Chinese companies focus on mergers and acquisitions and tend to establish joint-venture companies,” said Tomasz Konik, a partner at Deloitte Poland. “This proves that the presence of corporations from China does not pose a threat to Polish companies. Just the opposite, thanks to financial support offered to local businesses by Chinese companies, Poland can benefit significantly from becoming the new gateway to Europe for China.”
Contacts between Chinese and Polish businesses have picked up considerably in recent months. A business association known as the Chinese-Polish Cooperation Forum (CHPCF) signed a memorandum of cooperation with China’s Zhejiang province during the Zhejiang-Poland Youth Forum conference at the end of May in Warsaw. Bartosz Michalak, head of the Chinese-Polish Cooperation Forum, said, “Based on talks that have already been held and on agreements that have already been signed, we expect that Chinese companies will invest over zl.1.5 billion in Poland’s energy, real estate and new technology sectors over the next year. Poland will provide a foothold for businesses from China’s Zhejiang province to expand into the European Union.”
Olgierd Dziekoński, a senior official at the Polish President’s Office, said, “The initiative by the young business leaders, who have invited partners from China’s Zhejiang province to Poland, further testifies to the growing interest in trade between Poland and China. After President Bronisław Komorowski visited China and initiated a strategic partnership [with that country], it is necessary to maintain the positive climate of cooperation at both the government and business levels.”
In 2012, when the then Chinese Prime Minister Wen Jiabao paid an official visit to Poland, the so-called “Warsaw Initiative” was announced, establishing the basis for cooperation between China and 16 European countries: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, the Czech Republic, Estonia, Latvia, Lithuania, Macedonia, Romania, Serbia, Slovakia, Slovenia and Hungary, in addition to Poland.
Sławomir Majman, head of the Polish Information and Foreign Investment Agency (PAIiIZ), which works to attract foreign investment to Poland, said, “In the last two to three years we have witnessed an attempt by the Chinese to rediscover a forgotten part of Europe.” The agency says it is busy midwiving seven Chinese investment projects in Poland worth a total of 59.5 million euros and with potential to create a combined 1,700 jobs. “There is room for Chinese capital in Poland in industries such as auto parts and food,” said Majman.