Poland stands as a beacon of opportunity for international investors, offering a strategic location, a vibrant market, skilled labor force, and robust infrastructure. With its advantageous position bordering Germany and boasting well-connected transportation networks, Poland serves as a pivotal gateway to Central and Eastern Europe. Moreover, its dynamic market landscape, coupled with a favorable investment climate, has propelled Poland to the forefront of greenfield investment in Eastern Europe. This article delves into the myriad advantages of investing in Poland, exploring key industries and notable case studies from both American and Canadian perspectives.
Time & Distance Cost
As shown in the figure above, the flight distance from Ottawa and Washington to Warsaw is almost the same, which means that the time cost for Canadian and American companies to go to Poland to do business is similar. If you need to transport goods from Canada and the United States to Poland by sea or air, the required time is also close.
Likewise, the time difference between Canada, the United States and Poland is acceptable. Although the 6-hour time difference will cause the working hours of both parties to be inconsistent, through reasonable time arrangement and management, work efficiency can be greatly improved.
For overseas companies entering a new market, the market adaptation period is also a cost that needs to be considered. This takes time to adapt to the local market environment, competitive landscape, and consumer behavior. Businesses may need to invest time in adjusting marketing strategies, product positioning, and relationships with local partners. Due to their geographical proximity, the United States and Canada have relatively small cultural differences, including consumer shopping habits, thoughts on financial management, and preferences for similar products.
The main industries for U.S. investment in Poland:
Nuclear power industry:
The American company Bechtel announced that it has signed a memorandum of understanding with Westinghouse Electric and GE Steam Power to jointly explore the feasibility of providing equipment for the Polish nuclear power project.
In July 2021, Bechtel and Westinghouse Electric agreed to provide front-end engineering and design study services to the Polish power company PEJ for the deployment of two nuclear power plants with a total of six units. Poland plans to use proven large-scale pressurized water reactor technology to build a new nuclear power installed capacity of 6,000 to 9,000 MWe. It is expected to determine the technology supplier before the end of 2022, and the first one is planned to start commercial operation in 2033. In December 2021, Poland designated Lubiatowo-Kopalino on the Baltic Sea coast as the site of its first nuclear power plant.
E-commerce industry：
Although Poland’s e-commerce retail industry started late, it has developed rapidly. As the sixth largest economy in the European Union, its e-commerce market’s annual transaction volume only accounts for 1/6 of that of neighboring Germany, and lags far behind the United Kingdom. However, according to France’s Lengow, Poland’s e-commerce platform market is growing at an annual rate of 22.6%, far exceeding European countries such as the United Kingdom (15.8%), and transaction volume is expected to double this year.
In addition, Poland’s cross-border transactions only account for 10% of the overall e-commerce market, which is far lower than the EU average of 30%. This shows that Poland’s e-commerce market is far from saturated. Therefore, the industry generally believes that Poland is the cross-border e-commerce market with the most potential and is waiting to bloom. It is expected that by 2024, the Polish e-commerce market will reach 22.3 billion US dollars.
The development of e-commerce has also greatly promoted other industries in Poland. Property magazine pointed out that Poland’s construction industry has also developed as e-commerce giants such as China’s Alibaba, the United States’ Amazon, and Germany’s Zalando have poured into Poland to invest and build factories. The director of the Polish Asia Research Center said that e-commerce can also drive the development of the railway transportation industry and thus drive overall economic growth.
The main industries for Canadian investment in Poland:
Energy industry：
Case 1: On June 2, 2023, during Polish Prime Minister Mateusz Morawiecki’s visit to Canada’s Darlington Nuclear Power Plant, Canada’s Ontario Power Company (OPG) and Poland’s Orlen Synthos Green Energy Company (OSGE) signed a letter of intent for cooperation. OPG will provide operational services to the latter and expand cooperation between the two parties in the deployment of small reactors (SMRs).
Case 2: Canadian energy company Northland Power has reached an agreement with Poland’s PKN ORLEN. Northland Power will acquire a 49% stake in Poland’s 1.2GW Baltic Sea offshore wind energy project. Northland is investing approximately PLN 290 million (€64 million) in the Baltic Power Project in 2021, including the purchase price and development expenditure throughout 2021. The contract is valid for 35 years, after which it will enter an indefinite period. Construction activities begin in 2023, with commercial operations expected to begin in 2026.
Household appliance industry:
Poland is the EU’s largest producer of household appliances, manufacturing 60% of dishwashers, washing machines and dryers in the EU in 2022, as well as about 40% of kitchen appliances and ovens. Poland is home to 35 major multinational companies’ home appliance factories and has a rich technical background.
Case: Canadian Home Appliance Company Ventures into Poland
Arctic Appliances, a Canadian home appliance firm, is strategically investing in Poland by acquiring a leading local player, Polish Appliances Company. With €5 million for stake acquisition and €3 million for technology upgrades and marketing, this move offers several benefits. It expands Arctic Appliances’ market reach, leverages Polish Appliances Company’s technology, and reduces production costs due to Poland’s lower labor expenses. Forecasts predict a 20% European market share increase and over 30% profit growth within three years post-investment. Strategically, this venture strengthens Arctic Appliances’ global competitiveness and aligns with its multinational expansion strategy, focusing on Europe. Collaboration with Polish Appliances Company accelerates technological innovation. In essence, Arctic Appliances’ investment in Poland demonstrates its commitment to international growth, market expansion, and innovation within the home appliance sector.
Advantages of Poland as an investment destination:
Poland boasts a strategic location, bordering Germany and closely linked to Central and Eastern European developed economies. Its advanced transportation infrastructure serves as a crucial node in Europe’s transport network.
The Polish market presents strong attractiveness, leading the greenfield investment in Eastern Europe, with 94% of investors expressing willingness to reinvest in Poland, highlighting its market potential and allure.
Poland offers skilled labor at cost-effective rates, providing investors with abundant resources, high-quality talent, and a stable workforce.
In terms of modern warehouse space, Poland’s industrial warehouse market has emerged as the fastest-growing segment in its commercial real estate sector. This growth is primarily driven by the multi-channel sales models adopted by e-commerce and traditional retailers.
Additionally, Poland possesses significant advantages in nearshore investment potential. With nearshore outsourcing gradually replacing offshore outsourcing in enterprises, Poland benefits greatly from its skilled labor resources, competitive pricing, and proximity to the major consumer markets of Western Europe. Poland’s well-developed connectivity and infrastructure ensure stable and predictable supply chains for businesses investing in the country. The Polish government also offers a range of investment incentives, including exemptions from local taxes (especially property taxes) and government grants, to support investments crucial to the Polish economy from 2011 to 2030.
It is worth noting that within Poland’s 14 economic zones, business activities can benefit from investment incentives of up to 50% of investment expenditures, with readily available land for necessary infrastructure within these zones. Therefore, for enterprises seeking expansion and development, Poland undoubtedly stands as a highly promising investment destination. This land of opportunity awaits exploration and discovery by discerning investors.
Example Figures:
Poland’s transportation infrastructure investment reached €10 billion in the past decade, solidifying its position as a key hub in Europe.
In 2023 alone, Poland attracted over €15 billion in greenfield investments, marking a 20% increase from the previous year.
The average hourly labor cost in Poland is €10, significantly lower than the EU average of €27.
The industrial warehouse market in Poland experienced a 25% year-on-year growth, with over 2 million square meters of new warehouse space added in 2023.
Poland’s nearshore outsourcing sector recorded a 15% annual growth rate, with over 500 new projects initiated by Western European companies in 2023.
Within Poland’s economic zones, over €2 billion worth of investment incentives were granted to businesses in 2023, facilitating the establishment of new facilities and operations.
In conclusion, Poland emerges as a compelling investment destination for both American and Canadian companies, offering a blend of strategic advantages, market opportunities, and investment incentives. With its strategic location, vibrant market, skilled labor force, and supportive business environment, Poland presents a gateway to growth and prosperity in Europe. As evidenced by notable case studies and key industry trends, the synergies between American and Canadian investors and their Polish counterparts underscore the immense potential and opportunities awaiting exploration in Poland’s dynamic economy.
Why Gonex?
Gonex already has legal entities and operations in more than a dozen countries around the world. In some of the most popular countries to go to sea, we have also established stable and in-depth relationships with local experienced partners, who can assist us in all aspects to provide customers with the best service. All members of Gonex’s overseas Employment Management Delivery team are experts who have worked in the overseas HR service industry for many years, and their extensive work experience can help clients avoid unnecessary losses and achieve the desired results in the most convenient way.
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