Export opportunities and preparation for the expansion process. We talked with Grzegorz Słomkowski, Member of the Board of The Polish Investment and Trade Agency
In the time of the crisis caused by the coronavirus, many companies are looking for methods to expand their business, including entering new markets. What is the most important thing in planning to go abroad with your own product?
The activity of Polish enterprises on foreign markets is related to the condition of the world economy as well as the Polish economy. The economic crisis resulting from the COVID-19 pandemic is not a direct result of the scale of infections, but a kind of administrative shock on a global scale, resulting from the introduced restrictions. The use by many countries of the so-called lockdown was a regulatory shock to the economies of many countries.
Moreover, the pandemic situation has hit the world economy, not only on the regulatory side, but also on the demand and supply side. It can be said that reducing consumer spending, limiting the functioning of industries such as gastronomy or tourism, and on the other hand disrupting supply chains, and restrictions on the functioning of enterprises are a derivative of a regulatory shock. This is a completely different situation than in previous slowdowns. Despite such disturbing signals from around the world, Poland is doing well.
In the pandemic, Polish exporters saw new opportunities related to the need to adapt and diversify their activities. In terms of exports, they saw new markets. The pandemic has shown that nothing is impossible in business and has opened up new opportunities for us. The offer of Polish companies is attractive in terms of price to foreign recipients, but above all appreciated for its quality. Our domestic goods and services, with the institutional support of, among others, Polish Investment & Trade Agency or KUKE, securing various types of risk, can effectively compete on the international arena, even in times of crisis. We can see it very well by observing the sales dynamics of, for example, agri-food products, but not only.
Preparing for expansion, in the present situation requires even more careful study of such “ABC of export”. Therefore, now I invite you to visit us with much greater intensity. The team of Polish Investment & Trade Agency experts provides all the necessary support here. The role of our employees is to take care of the entire expansion process so that it proceeds according to the plan and brings the expected results. I always warn against hasty decisions and excessive optimism. However, I encourage you to prepare a kind of road map and methodical, consistent implementation of point by point. The list should definitely include: analysis of the product’s potential on a given market, identification of entry barriers, selection of a business model, all financing issues, and finally determining the budget for promotion. Of course, there are even more of these items to think about, but here again, I encourage you to contact Polish Investment & Trade Agency.
The foundation of a successful investment is good, conscious choices in the initial phase. Which directions of the world are an opportunity for Polish entrepreneurs?
In 2020, Polish Investment & Trade Agency handled over 20,000 inquiries from entrepreneurs and supported almost 270 export contracts. At least a dozen more contracts are in the negotiation process. We focused on finding local export opportunities arising directly or indirectly from the pandemic. We see our exporters seizing the opportunities caused by disrupted supply chains. We keep informing about the successes of domestic companies. Last year, the most popular destinations were the United States, Kazakhstan, Germany, Israel and the United Kingdom. The potential in the USA was used by, among others Polish brand Saddar, offering innovative ecological solutions, incl. for the construction industry. The Polish brand DAKO is strengthening its position in Canada. One of the largest window manufacturers has opened a showroom in Ontario and is gaining new customers in British Columbia. Polish food found its way to Singapore and Vietnam. Polish cosmetics are successfully conquering Malaysia and Spain. Polish Investment & Trade Agency also supported a large IT contract in Australia and the export of sports equipment, including to Hungary or Denmark.
However, there are still many opportunities to discover before Polish entrepreneurs. Undoubtedly, the countries located in Southeast Asia, i.e. Singapore, Vietnam, Thailand, Indonesia and the Philippines are a very interesting direction. But also South Korea and Japan. In all countries, great investments have been made in recent years, resulting in easier access to these markets. Moreover, these are extremely dynamic developing countries, with an aspiring middle class looking for interesting, innovative products. In this list, one cannot forget about China and India, where almost 40 percent of the world population lives. The structure of trade with China is extremely unfavorable for Poland. Reducing the trade deficit with the Middle Kingdom will be extremely difficult and time-consuming, but not impossible. Another interesting direction of international expansion for Polish companies are also the countries of North America, i.e. Mexico, the United States and Canada. In turn, just over 1 percent of the Polish export value goes to Africa. It is a continent of great opportunities that requires great commitment. The demography of Africa makes it a very attractive expansion direction for Polish companies. It is also worth looking at the countries located in the Middle East – Israel, Jordan, and in the Persian Gulf region, i.e. Saudi Arabia, the United Arab Emirates and Kuwait. We definitely want to encourage Polish entrepreneurs to explore the so-called emerging markets.
What scenarios can be made regarding exports in 2021 and what is the impact of the pandemic on trade?
First of all, I must emphasize that the pandemic did not leave the mark on exports that everyone expected in watching the developments around the world as a result of the pandemic. Poland has certainly won not only with its location, previously implemented FDI investments, but also, as I have already mentioned, with price competitiveness and product quality. In addition, we are, to a large extent, an exporter of basic necessities, which consumers do not buy as a last resort.
What will the near future bring? I believe that a gradual easing of economic restrictions may take place in the second quarter of 2021. During this time, there should be a recovery, the driving force of which will be the private consumption, investments and, traditionally, exports. I think this year will belong to the agri-food industry. But broadly understood, taking into account both the eco trend and advanced technologies for food production. The 2021 will also bring the increase of the cosmetics and furniture industry as well as window and door joinery. Artificial intelligence and “augemented reality” technology will be very important. The development of smart city and smart home, e-learning and digital health, i.e. telemedicine, chatbots, and diagnostic tools based on artificial intelligence is expected. As a country, we stand out significantly here, thanks to the country’s great intellectual capital.
I am sure that export in 2021 will again turn out to be the driving force behind Polish economic growth. The economic rebound in the world, government plans to stimulate economic development and increased spending will result in larger orders and translate into the size of the export stream.
Once we have achieved our first goals, it is crucial to establish our position. How to effectively build a competitive advantage?
In today’s world, the competition of alteration is broadly disputed. Therefore, companies strive to seek and build competitive advantages – so as to stand out and keep the client for longer. In this process, it is worth remembering about building a corporate culture that will attract the greatest talent.
Another extremely important aspect is defining underdeveloped niches. Searching for areas where something is still missing or where something can be significantly improved. In such situations, the competition is usually not high, so you can take advantage of the market opportunities at an early stage to, inter alia, properly establish brand recognition.
In the process of building a competitive advantage, it is important to get to know the DNA of the company’s model client. Only this guarantees success in communication with him, and will ensure an appropriate level of identification with the brand and its values. The right sales support and after-sales support team can help you retain the customer for many years.
It is also very important to clearly define the strengths of the company. Perhaps it is processes, technology, unique knowledge or experience. This is certainly of paramount importance to customers. Entrepreneurs should know how to use these strengths in an innovative and creative way to gain new business or enter new markets.
The economic crisis is a challenge for most entrepreneurs. Can this difficult situation be turned into success?
At Polish Investment and Trade Agency, we repeat from the beginning of the pandemic that the economic crisis can be considered not only in the category of a threat, but also an opportunity. In tough times, businesses and consumers are focused on saving money and cutting down on expenses.
Another noticeable trend – in times of crisis, people stay at home more often. It is worth considering providing services or products that will work perfectly in the comfort of four walls. When thinking about entertainment, we can distinguish books, games or movies. When considering sports – home activity equipment.
An interesting alternative to run a stationary business may also be entering the world of online sales. And such activities of companies are more and more often observed in the era of COVID-19. On the one hand, the company reduces operating costs, on the other, it may even think about using the e-commerce channel to enter a new market.
I must admit that for Polish Investment and Trade Agency, the crisis related to COVID-19 means even more intensive activities for Polish entrepreneurs. We focus on finding local export opportunities arising directly or indirectly from a pandemic. We can see that the doors of many foreign markets are opening up to Polish business. The effect of this approach is also an increase in the number of contracts signed with PAIH. Polish entrepreneurs take advantage of these opportunities. I have already mentioned examples, and we could talk about this cases for many hours. Believe me, each of these cases is a source of pride for us. And, of course, the motivation to do more, faster and, above all, more effectively.
What is the level of support investors can get from you? Does this support play a big role for the investor?
The Polish Investment and Trade Agency is an advisory institution and the first point of contact for exporters and investors. The agency helps entrepreneurs choose the optimal expansion path abroad. It also supports the inflow of direct foreign investments to Poland and the implementation of Polish investments in the country. Our clients are foreign investors, current and potential, as well as domestic entrepreneurs planning local development. We work with companies at every stage of the investment process, from providing information on the rules and costs of doing business in Poland to support in choosing a location, preparing an offer for investment sites or organizing site visits, during which investors have the opportunity to meet local authorities, business partners or talk with companies that have already invested in a given place. In addition, as the operator of the government grants program, we provide information about available investment incentives. We also support investors in relations with both central and local administration. We indicate the possibilities of cooperation, optimal paths of investment implementation. We are an important advisory voice and promoter of Poland as an ideal place for investment.
Our support offer is dedicated to: investors from the business services sector and the manufacturing sector. In the case of the former, i.e. companies planning to establish business centers, investors interested in implementing IT projects located in the Tri-City dominate. They are primarily attracted by the human resources potential of the region, the high level of Tri-City universities and extensive office facilities.
In the case of investors looking for investment areas, the interest in Northern Poland is shown mainly by those companies that intend to use sea transport to import components needed for the production process, or to export ready goods this way. In this case, the industry or the investor’s country of origin does not matter, but the key element in obtaining such an investment is finding a properly equipped investment area that meets the investor’s expectations.
Last Updated on April 7, 2021 by Karolina Ampulska