We should not resign from Eastern markets; however, we should look for alternatives. Never say never in business. Conclusions after the first day of the Eastern Economic Congress held in Białystok

Białystok/Katowice, 18 September 2014 – Diversification of output markets, export, expansion of Polish companies within the territory of the Eastern Europe countries and the borderland between Europe and Asia, directions and plans of Polish entrepreneurs, and food sector – these are selected topics from the first day of the Eastern Economic Congress held in Białystok.

All participants in the debates during the first day of the Eastern Economic Congress agreed that due to geopolitical tension on the East many Polish companies have been facing a difficult situation. A noticeable decrease in trade flows means lower income from export. What can we do in such a situation? Diversify – that was the joint response of the participants.

‘Situation in the East determines even stronger the attempts to diversify directions
of export and business cooperation,’ said Anna Barbarzak, Director of the Department of Economic Cooperation of the Ministry of Foreign Affairs.

Rafał Antczak, Member of the Board of Deloitte Business Consulting, was trying to convince the participants that it will be difficult to win back Eastern markets in the near future; thus, we need to search for other potential areas of economic expansion. He believes that an attractive area for such expansion may, for example, be India. He also reminded us about our presence in the EU – in the common European market.

‘The European Union is the biggest and richest market in the world. It is not by accident that everybody is pushing their way here and wants to exist on this market. We should not pretend that other markets have more prospects,’ says Rafał Antczak, and continues saying that Polish entrepreneurs have already made their existence on this market noticeable. He also brought our attention to prospects for the next years.

‘The European Union will enter into Free Trade Agreement with the USA in the near future, which will be equal to the American agreement with Mexico and Canada (NAFTA). American companies invest in these countries owing to the mentioned agreement,’ argued Member of the Board of Deloitte.

He warned, however, that we have to prepare ourselves very well for the mentioned agreement and take interest in negotiations, so that after conclusion we will not find ourselves in a situation where, for example, there are problems with access to the American market for Polish food industry products, whilst there are no such barriers as regards the import of American products.

‘It is a matter of skills of government administration,’ said Antczak. ‘There is plenty of space for Polish export in the European Union, but such companies as ours may also find their place within this market. For example, it turned out that Germany has a large demand for general contractors of investments. We have already signed the first agreement, and we have offers from other European countries as well,’ said Leszek Gołąbiecki, Chairman of the Board of Unibep.

Other participants admitted that the European Union is the basic market for most Polish companies, which does not mean that entrepreneurs should not look for new opportunities.

‘There have been attempts to increase the presence of our companies in Africa and China for a few years,’ said Sławomir Majman, Chairman of the Board of the Polish Information and Foreign Investment Agency. ‘We have created these programmes because we thought that, in a long-term perspective, Polish companies should leave a comfortable European nest and look around for other markets,’ he adds.

He thinks that Polish companies have their chance on the mentioned markets,
even though there are more and more complaints that Polish enterprises are not competitive and not innovative enough. ‘Goods which for many economy professors are not perceived as competitive have their chance on the mentioned markets. For example, Ursus tractors were sold to Ethiopia not because it is an innovative product. On the contrary, the transaction was concluded because they were good and user-friendly machines,’ said Majman.

It does not mean, however, that Polish companies should resign from Russian or Ukrainian markets, though, according to Rafał Antczak, it would be risky to base our whole business strategy around these markets.

Witold Karczewski, Chairman of the Board of the Chamber of Industry and Commerce in Białystok, indicated that Belarusian market is underestimated, whilst the market for Polish goods, especially from the Podlasie region, is large over there.

‘We are an agricultural market, our dairy, meat, and agricultural machinery market is
well-developed. This is our area of specialisation and there is demand for these products at the Belarusian market. However, cooperation with Belarus includes not only export, but also joint undertakings,’ said Karczewski. ‘This market is promising just because of its location, for whether we want it or not, we are neighbours of Belarus,’ said Chairman of the Board of the Chamber of Industry and Commerce in Białystok.

He agreed with the slogan of business diversification; however, he called not to cross out Eastern partners. ‘Never say never in business, it is not easy to find alternative markets. We are not prepared for such situation,’ he said.

Leszek Gołąbiecki agreed that expansion to new areas often requires time. His company considered conclusion of a contract in Saudi Arabia; however, they did not decide to do so due to difficulties in finding employees. At least not now. According to him, we are facing the same difficulties in the case of the African market. It is difficult to find a Polish specialist who would like to go there to work. ‘Proper atmosphere needs to be created,’ suggested Chairman of the Board of Unibep.

‘Hopefully, there will be no idea to tell entrepreneurs in which country they should invest, and the exporters where they should sell their goods. It will always be their decision, and up until now Polish entrepreneurs have presented high flexibility and made good decisions. We may only support their choices. We will go wherever Polish entrepreneurs will go,’ declared Dariusz Poniewierka, Chairman of the Board of Korporacja Ubezpieczeń Kredytów Eksportowych (Export Credit Insurance Corporation), supported by Arkadiusz Zabłoński, Director of the Department for Export Support of BGK (Bank Gospodarstwa Krajowego SA).

‘There are no better or worse directions of economic activity. A good one is this one that brings income. We have 2 millions of entrepreneurs in Poland, each with his or her own specificity, and each of them may prefer a different direction,’ summed up Robert Gwiazdowski, President of the Adam Smith Centre.

During a session devoted to foreign expansion of Polish food industry, Krzysztof Borkowski, Chairman of the Board of Zm Mościbrody and Member of the Polish Parliament, said that manufacturers will not handle the crisis caused by Russian embargo by themselves, and politicians need to do their homework and draw conclusions.

‘The European Commission needs to take care of the common market and subsidise food manufacture that may be intended for charity, not only in Poland, but also in Africa or Ukraine. Lack of any activity and stagnancy destroys the market and stops manufacture for many years. Artificial support for the mentioned manufacture makes it possible to maintain work places and provides revenues from taxes. Crisis management activities shall also be aimed at an optimisation of management over funds intended for promotion, so that they are efficient as much as possible,’ said Krzysztof Borkowski.

According to him, a lot depends on branches of the Trade and Investment Promotion Sections of Polish Embassies, where the companies may find information on possibilities of expansion to new markets.

‘Development of meat sale abroad may also be supported by bringing back
the possibility of ritual slaughter, which caused strengthening of competitive companies over Polish ones. The current embargo and the resulting crisis is the “for” argument in
the discussion,’ added Chairman of the Board of ZM Mościbrody.

He also admitted that Poles eat less and less domestic meat, choosing the imported meat, which “may have nicer packaging, but certainly is not healthier”. At the present crisis situation, Mościbrody focuses on the development of Polish and European Union market.

‘We have our own shops even though establishing the network is expensive. We do not omit our neighbours in the process of expansion. We want to return to Ukraine.
We also plan to win distant markets, such as Arabic, Asiatic, Algeria or CIS countries that are not associated in the Customs Union,’ he summed up.

Andrzej Gantner, Director-General of the Polish Federation of Food Industry Union of Employers, during the Eastern Economic Congress in Białystok was trying to convince that food manufacturers should conduct thorough control of politics.

‘The current crisis caused by embargo proves that neither Poland nor the European Union is prepared to such situations. It also proves that the European Union does not pay lots of attention to the importance of food manufacture and sale. Therefore, food manufactures need to control politicians more carefully as the current crisis results from their activities. We need to ask them questions earlier, demand scenarios of events and actions. We all knew that the embargo was coming, but nobody said what to do when it would happen. The present situation is not only an economic crisis – it means dramas of many entrepreneurs,’ commented Andrzej Gantner.

According to him, we need to demand compensations coming not from the disasters budgets, but from the European Union funds. ‘Food manufacturers should not pay for this crisis out of their own pockets,’ he added.

Director of the Polish Federation of Food Industry Union of Employers admitted that new sales markets are not a solution to the present crisis. ‘Diversification of markets is important but it is not that easy to conduct, especially when you work against the clock. It is logical that we sell where the demand is,’ said Gantner.

He thinks that Poland should put large emphasis on promotion of Polish food,
but not only on fairs and individual events. ‘It should be a long-term strategy for the food industry. At present, there is no programme for growth of Polish economy. It is business that hopes for the fluke,’ he added.

Mirosław Maliszewski, President of the Association of Fruit-Growing of the Republic
of Poland, during the Eastern Economic Congress in Białystok requested not to resign from Russia and to maintain good relations with this country.

‘The embargo will be ceased at some point, so we need to continue to maintain good relations with the Russian market. The same opinion was presented by our Russian partners, who made great businesses on sale of Polish food,’ he said. ‘Good relations between Polish suppliers and customers in Russia have been built for the past few years through promotion of our apples brand within that market. We have generated demand and took care of sale. Polish fruit farmers were establishing new farms thinking about customers from Russia, and in the process they were choosing breeds and adjusting them to the tastes of the mentioned customers. All in vain.’

He admitted that Polish fruit farmers are trying to win new sales markets, but it is difficult in the crisis.

‘The fact that it is not possible to win a new market within a short period of time is well seen on the example of the Indian market, where we conduct negotiations regarding the export of apples. There is an interest, but there are no certain partners, developed distribution market and trade, transport conditions, or phytosanitary regulations,’ added President of the Association of Fruit-Growing of the Republic of Poland.

According to him, expansion to new markets is also unfavourable due to the fact
that fruit is not a first-need good. ‘Export needs to be directed to rich markets,
and they are already filled. Now, we can win with our current competitors only with price. Today, we know that we will destroy many markets, but we have no other choice,’ said Maliszewski.

He also admitted that sale networks in Eastern Europe ceased to order apples from Poland. ‘They protect themselves against our products, thus saving their own markets,’ he added.

 

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The idea behind the Eastern Economic Congress in Białystok is twofold: to present the economic potential of voivodeships of Eastern Poland and show the eastern regions as valuable intermediaries in the relations between the East and the West of Europe. During the two-day debate in Białystok, important issues will be raised, which are important from the point of view of both Polish and European economy and which have remained outside the mainstream debate so far.

The Eastern Economic Congress in Białystok – a debate on economic and trade relations between the European Union and the East of Europe – provides a logical follow-up to, and a completion of, the subject matter of the previous editions of the European Economic Congress in Katowice held so far. Both business conferences are organised by PTWP Group.

 

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The Eastern Economic Congress (EEC) in Białystok is a two-day series of debates, meetings and accompanying events with the participation of about a thousand guests, both from Poland and from Europe.

The organiser of the Eastern Economic Congress is PTWP Group SA, the initiator and organiser of the European Economic Congress in Katowice – the largest business conference in Central Europe, which has been organised since 2009 and deemed one of the most representative debates on the future of Europe.

For further information on the Eastern Economic Congress, please visit – www.wschodnikongres.eu/pl/.

Facebook: https://www.facebook.com/WschodniKongresGospodarczy
For further information on the organiser – PTWP Group SA – please visit www.ptwp.pl

Additional information for the media can be obtained from:
Marta Stach, Imago Public Relations
M. 609 808 119, E. m.stach@imagopr.pl