20120523 Ceis Poland

Internationalization of businesses to Poland

Warsaw, 23 May 2012

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20120523 CEIS - Poland

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Key messages

• Internationalization is key for the survival of Portuguese

companies and Portuguese economy as a whole

• Central Eastern Europe, in particular Poland, is an actractive

market due to size, proximity and existing opportunities

• Although there are plenty of opportunities, there are also some

obstacles and mistakes have to be avoided

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Agenda of the meeting

• Why?

• Where?

• How?

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Internationalization is key for companies, special those in

declining markets

Source: McKinsey Research, CEIS

100%

71%

More successfulcompanies

Less successfulcompanies

Importance of internationalization focus

% of companies that rely on

international growth /

expansion for success

Advantages of internationalization (not exhaustive)

• Bigger market / Increased revenues

• Optimized production and capacity

• Better negotiation power with suppliers

• Dilution of fixed costs

• Optimization of risk

• Access to other sources of finance

• 9

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Internationalization of businesses is also a matter of survival for Portugal

CAGR*. Percentage

* At 2005 pricesSource: McKinsey Research, Global Insight; OCDE “OECD Economic Outlook”; EIU

Portuguese GDP Growth GDP growth levers

Private consumption

Government spending

Investment

Trade balance

3.6

0.7

1993-2000 2000-2010 2010-2020

3.31.3

3.61.6

7.5

-2.6

-13.0

0.9

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Portugal should be able to act on the trade balance lever, following

the example of European pears

World export quota*

* Normalized by the populationSource: McKinsey & Company, IMF; International Trade Center; Global Insight

0.4%

1.4%1.5%

1.7%

2.1%

2.7%

Portugal Sweden Austria Switzerland Denmark Belgium

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• Why?

• Where?

• How?

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The CEE market is huge and offers strong potential.

15 34 47

GDP (Current Prices),

Trillion $

4

11

14

CEE WE* USA USAWE*CEE

268

307313

Population,

Million

GDP

Per Capita (Thousand $)

2010

* Countries belonging to WE: Austria, Belgium, France, Germany, Ireland, Luxembourg, Netherlands, Portugal, Spain and United KingdomSource: World Bank & Central Intelligence Agency (The World Factbook) 7

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.and there is still space for credit-fuelled growth

USAWECEE

39

70

59

DEBT/GDP (%)

Source: Central Intelligence Agency (The World Factbook)

2010

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Poland is already a big market in Europe.

2010. Current prices

Germany

Spain

Netherlands

Czech Rep.

France

Poland

Ukraine

Portugal

Source: World Bank; Central Intelligence Agency (The World Factbook)

Countries

GDP

(Billion USD)

2,960

1,376

680

263

2,160

725

306

247

Germany

Spain

Netherlands

Czech Rep.

France

Poland

Ukraine

Portugal

Countries

Population

(Million)

82

47

38

11

65

45

17

10

Netherlands

France

Czech Rep.

Poland

Germany

Spain

Portugal

Ukraine

Countries

GDP per capita

(Thousand USD)

41

33

26

19

36

30

23

7

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.and will soon level its economy with EU peers

GDP Growth. 2005-2010, %

Source: World Bank; Central Intelligence Agency (The World Factbook)

Ukraine Poland Czech Rep. Portugal Spain Netherlands Germany France

29%

19%

16%

5%4%

~1% ~1%~0%

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Poland, basic info

Source: PAIiZ 11

Area

Population

Capital

Administrative divisions

Legislative Branch

Executive Branch

Judicial Branch

Time zone

312,679 km2

38.1 m

Warsaw agglomeration: population 2.5 million

16 Voivodships, 314 Poviats, 2478 Municipalities

Sejm (460 representatives),Senat (100 representatives)

President (5 year term),Council of Ministers (4 year term)

Supreme Court, common courts, administrative courts, military courts

GMT +1

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Poland, basic info – Cont.

Source: PAIiZ, GUS, NBP, World Bank 12

• 9being robust and resilient to external shocks –mainly due to the country’s significant internal

market and diversified export structure

• 9offering safe environment for undertaking economic activity and long-term planning (stable prices, permanent GDP growth)

• 9having very low risk of a financial crisis (public sector debt amounts to 55 % GDP while the EU 27 average equals 80% GDP)

• 9offering investment possibilities resulting from modernization of infrastructure and implementing modern technologies in corporations

• 9being driven by a large number of agile small

and medium enterprises (over 3 000 000 registered entities)

Poland is characterized as. Main financial numbers

5.3

3.6

6.26.8

5.1

1.8

3.9 4.3

2004 05 06 07' 08 09 10 2011

GDP Growth PLN. %

GDP 2010

Unemployment rate 2010

Inflation 2010

Min. salary

Avg. salary 2011

469 Billion USD (2x Portuguese: 229)

12.4%

2.6%

1.500 PLN (~375€)

3.416 PLN (~850€)

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Wages in Poland are following the growth of the economy.

Average monthly gross wages. PLN

Source: Polish statistical office (GUS)

1,924 2,062 2,133 2,201

2,290 2,380

2,477

2,691

2,942 3,103

3,225

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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.yet low compared with peers

Labour cost per hour in euros. 2010

Source: Eurostat

23

27

41

38 3836

33

3129 29

28 2826

20 20

18

1412

108 8 7 7

6 54

3

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.and inflaction is expected stable and low

Yearly price index for consumer goods and services

Source: Polish statistical office (GUS); forecast by PMR

10.1%

5.5%

1.9%

0.8%

3.5%

2.1%

1.0%

2.5%

4.2%

3.5%

2.6%

3.7%

3.1%2.8%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 F2011 F2012 F2013

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29% of Polish population is concentrated in big cities

Million. 2010

Source: Polish statistical office (GUS)

100%=38 15

23 12

11

Totalpopulation

Ruralpopulation

Urbanpopulation

Cities below100k

Cities above100k

39%

61%

32%

29%

4.5%

2.0%

2.0%

1.7%

1.5%

17.2%

Warsaw

Lodz

Krakow

Wroclaw

Poznan

Other

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Red tape still is a reality in some countries of CEE

Source: Transparency International

Worldwide Corruption Perceptions,

Ranking of Countries

Denmark (1º)

Germany (15º)

UK (20º)

Spain (30º)

Portugal (32º)

Poland (41º)

Hungary (50º)

Czech Republic (53º)

Slovakia (59º)

Croatia (62º)

Italy (67º)

Romania (69º)

Ukraine (134º)

Russia (154º)

9,3

7,9

7,6

6,1

6,0

5,3

4,7

4,3

4,1

3,9

3,7

2,4

2,1

4,6

17

2010

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“The Polish state is more bureaucratic and exercise more

control than rest of Europe.”

António Castro, ex-CEO of Group

Mota-Engil to Central Europe

“Polish bureaucracy is much like the traffic in Warsaw - no end in

sight, but eventually you somehow get through it.”

Tomi Ranta, managing director of

Poland Leinonen Accounting

“We have a good relationship with local authorities and are

careful not to create conflicts.”

José Manuel Cunha, ex-

administrator of ColepCCL Polska

IN POLAND:

Many bureaucracies,

Many places

.1 MONTH.

IN PORTUGAL:

Company at the time:

One place,

One company

24 HOURS

1º Define the type

of society

FILL

FORM

3º Statistical Register

5º Open account

7º Social Security

4º Stamp making

6º Get tax Id & PIN

8º Notary

2º Register company in

the registration district

Bureaucracy also creates bottlenecks in many transactions

in Diário Económico, 2007

In Investing in Poland, 2011

in Diário Económico, 2007

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There are opportunities at all levels

• Mergers and acquisitions

• Green field entry

• Privatizations

• Trade / export of products and services

Entry form Sectors

• Infraestructure (roads, railroads, airports, energy production, transport and distribution, waste management, water, amoung others)

• Services / customer care

• Luxury goods

• Niche markets

• Others

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• Why?

• Where?

• How?

20m

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Company name Background Possible reasons for exit

Greendays Polska

• Year of entry: 2006• Corebusiness: Collection and transportation of

industrial waste

• Lack of knowledge of the most direct competitors

• Lack of investment• Lack of knowledge of the Polish

market• Problems in developing the company's

business (prospecting for new clients)

FNAC

• European leader in the distribution of technological and cultural assets

• Only brand that offers, in one space, one selection of product literature, music, image, sound and all the technologies

• 145 stores in seven countries: Belgium, Spain, Italy, Portugal, Switzerland, Greece and Brazil

• Lack of knowledge of the most direct competitors (Empik is the leading brand in the Polish market, with a large market share)

Portugalia Shoes• Corebusiness: Import and distribution of

footwear

• Lack of knowledge of the most direct competitors

• Lack of knowledge of the Polish market

• Problems in developing the company's business (prospecting for new clients)

Some companies failed to enter Poland successfully

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IN PORTUGAL:

Pingo Doce

IN POLAND:

Biedronka

- Chain supermarket of Jerónimo Martins

- Serving small residential areas, specially middle class and middle/high class population

- Pingo Doce has the competitive advantage of possessing lower prices regarding the meat, fish, vegetables and fruits

- Chain supermarket of Jerónimo Martins

- One of the main purpose is to satisfy small areas in the suburbs, targeting in particular the middle class and the middle/low class population

- It differs from competitors by its low prices, name, colors and by it's stores location strategy (single buildings and isolated)

There is a cultural and linguistic barrier which makes it

necessary in many cases to adapt business models

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But mainly, mentalities have to be adapted.

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“I am market leader in Portugal. Why should I pay market price for a location in a shopping mall??”

“I want very much export to Poland, but I can not invest in marketing and publicity...”

“This is not how we do business in Portugal...”

“We do not need a market study. Let’s just start and see how it goes...”

“If it sells in Portugal for sure it will sell in Poland...”

REAL COMMENTS, ADAPTED

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“In Poland, we saw a local partner that made us think about investing in the country. As a growing

country, we saw a business opportunity.”

Yuval Avni, GIZA Venture Capital* managing partner

In Globes Israel’s Business Arena, 2011

* GIZA is an investment fund in several areas: Communications, Semiconductors, Information Technology, Enterprise Software, Life Sciences, CleanTech, Media, Internet & Entertainment

“When we entered the market it was essential to resort to a Polish partner in order to immediately

acquire some of the market knowledge.”9

“Is not required entering in market with a local partner, but you have to have a deep knowledge of

the Polish market.”

Francisco Lacerda, ex-administrator of Millennium BCP

In Diário Económico, 2007

“It is important to have a partner in the field, even if it isn’t a local.”

António Marques Varela, president of Tiner*

* Construction company of Logistics and Distribution Centers, Shopping Malls, Retail Parks, Factory Outlets, Commercial and Residential Buildings

In Diário Económico, 2007

To have the key business contacts and introductions can

make the difference between success and failure

“With the strong development of the transport sector in Poland, there was a necessity to have a local

partner to help us in the company's growth.

Jens Holger Nielsen, CEO of Samskip Multimodal

Container Logistics

In Samskip News, 2009

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Economical opportunity in CEE

• The market is huge and offers strong potential

• The economy is growing at a strong and sustainable pace

• Overall the region resisted well (comparatively) to the credit crunch

• There is still space for credit-fuelled growth

• The age-pyramid is favourable to further growth

• The education system has shown proves of great effectiveness

• There are examples of companies that did not succeeded in entering CEE

• There is a cultural and linguistic barrier which makes it necessary in many cases to adapt business models

• It is hard to do business without appropriate business contacts and introductions

• Red-tape is still a strong reality in some countries of CEE

• Bureaucracy creates bottlenecks in many transactions

Entry barriers for companies

Our Vision

To be the key catalyst and

partner of new and successful

businesses in CEE

Our Mission

To identify and select businesses

that could succeed in CEE and

support them with an integrated

offer as their local partner

CEiS aims to be the key partner of new successful

businesses in CEE

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Start-up

incubator

Legal adviser Tax adviser

Outsourcing

Private

equity/

Business

Angel

Interim

management

Management

consultant

Partner

CEiS offer is the combination of several existing services, with

the added value of being integrated

Know-how

Network

Alignment

• Extensive know-how

and expertise in

management

• Profound knowledge

of CEE market

Broad network of

contacts in a

comprehensive set of

business fields in CEE

Complete alignment

with the client by

establishing a

partnership with

common incentives

Foundations of CEiS value proposition

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Strategy support

Finance

Business origination and sales

Management

and back-office

• Contact clients• Establish, train and manage the

sales force• Introduce sales team to potential

clients and partners• Support business development

initiatives

• Define the entry strategy to CEE– Analyse segments and pricing– Elaborate market studies– Define product and value proposition– Design the business plan

• Support execution of the strategy

• Define corporate finance structure

• Negotiate on behalf or support negotiations for funds raising

• Support project finance design and negotiations

• Perform due diligence• Design metrics and control

mechanisms

• Manage the day-to-day activities• Manage the back office (accountancy,

legal, payroll, HR, etc)• Design and optimize procedures

CEiS offer is based on 4 integrated solutions,

tailored to each clientNOT EXHAUSTIVE

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Who we are - Experience highlights

Bruno

Ferreira

• CEO Central Europe Integrated Solutions• Board member Polish Portuguese Chamber of Commerce• Previously board member EDP Renewables Polska, with

responsibilities in planning and control• Previously consultant with McKinsey & Company• MBA from Insead

• Firm commitment to success

• Solid partnership to grow the business in CEE

• Strong and solid background to guarantee future achievements

João

Rodrigues

• Vice President Central Europe Integrated Solutions• CEO AJR Development• CEO Grill & Co• Board member AJR HD Sp. z o.o. (Haagen-Dazs shops)• Vice President Polish Portuguese Chamber of Commerce• Previously Member of Supervisory Board – FoodCare Sp. z o.o.• Previously Board Member Martifer Gestão Imobiliária (Portugal)

and CEO Martifer Polska• MBA from IEDE/EUDEM

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To guide and advise CEIS is supported by an Advisory

board

• To give guidance to the definition of CEIS’ strategy

• To support the identification of long-term market trends that can affect CEIS

• To evaluate and supervise the quality of the service provided by CEIS to its clients and partners

Responsibilities of the

advisory board

Advisory board

Executive board

• His Excelency the Ambassador of Portugal in Poland, Mr. José Sequeira e Serpa

• Chairman of the Polish Portuguese Chamber of Commerce, Mr. Pedro Silva

• Partner at Law Firm Domański Zakrzewski Palinka, Mr. Marcin Krakowiak

• Secretary General of the Polish Portuguese Chamber of Commerce, Mr. Tiago Silva

• Bruno Ferreira, CEO• João Rodrigues, Vice-President

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Key messages

• Internationalization is key for the survival of Portuguese

companies and Portuguese economy as a whole

• Central Eastern Europe, in particular Poland, is an actractive

market due to size, proximity and existing opportunities

• Although there are plenty of opportunities, there are also some

obstacles and mistakes have to be avoided

Documents

20120523 Ceis Poland