Export To Poland Presentation 2nd June 2009

Export to Poland

Bi-Lateral Trading between Poland and Britain

Michael Clay, Board Member, BPCC

Export to Poland


• 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?

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• 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...

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Bi-Lateral Trading between Poland and Britain• 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 costs

but to find new market opportunities

Main themes

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Bi-Lateral Trading between Poland and BritainEU 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.

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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

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Bi-Lateral Trading between Poland and BritainPoland 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 20081 Finland 12 Poland 23 Netherlands 94 Greece 55 Sweden 36 Spain 127 UK 68 Belgium 109 Germany 8

10 Austria 1111 Denmark 712 France 1313 Ireland 414 Italy 14

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Bi-Lateral Trading between Poland and BritainCentral 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

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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

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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

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• 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?

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Bi-Lateral Trading between Poland and BritainAnnounced job losses across EU

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• 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

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Tesco BP

GlaxoSmithKline

Pilkington

Cadbury’s

Shell

Largest British investors in Poland

Unilever

Arcelor Mittal

Aviva (Commercial Union)

Provident

Associated British Foods

HSBC

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Fillfill

1.35

1.21

1.17 1.30 1.

65

2.31 2.39

3.03

1.17

1.83

2.32

3.61

4.35

1.41

1.32

1.30

1.36 1.

461.

26

0.91

0.68

0.67

0.57

0.60

3.20

1.54

0.00.51.01.52.02.53.03.54.04.5

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

UK exports to Poland Polish exports to UK

GBP

billi

ons

Source: Office of National Statistics, UKTI

Trade between UK and Poland

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• 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

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• 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

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Bi-Lateral Trading between Poland and BritainGDP growing faster than ‘old’ EU

Source: Eurostat *2008, 2009 forecasts (Economist)

0%

1%

2%

3%

4%

5%

6%

7%

Poland UK Eurozone

2004 2005 2006 2007 2008* 2009*

Growth compared

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Bi-Lateral Trading between Poland and BritainFDI 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 J ul '08Source: GUS

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Bi-Lateral Trading between Poland and BritainFDI 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

010,000

20,000

30,00040,000

50,000

60,00070,000

Katowice Poznań Tri-City Lublin Wrocław Kraków Łódź Warsaw

Feb '04 J ul '08Source: GUS

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Bi-Lateral Trading between Poland and BritainThe 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

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• 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

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Wrocław

Warszawa

Kraków

Silesian agglomeration

Poznań

Łódź

Where to find human resources

Wrocław

Warsaw

Kraków


Poznań

Łódź

Wroclaw

Warsaw

Krakow


Poznan Lodz

Tri-City

Source: GUS, July 2008

Bydgoszcz Torun

Polish unemployment

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Inward investmentManufacturing: look to produce for local and regional markets, rather than as low-cost sourceOutsourced services (though S. Poland overheating)

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

Property & ConstructionResidential, commercial, retail; EU-funded infrastructure projects; Euro 2012; PPP expertise

Business-to-businessConsultancy, HR (training, coaching), legal services

Business opportunities

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• 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

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•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

http://www.export-to-poland.com/

http://www.export-to-poland.com/

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Export to Poland

www.exportpoland.co.uk

Thank you

Michael ClayMember of the Board

www.bpcc.org.pl