China is the most dynamically growing economy in the world. With an average growth over 9% in the past 30 years, China’s impact on the world economy has been rising in geometric progression. Right now, China ranks third in terms of GDP and economists predict that it may soon develop into the world’s second largest economy.
China’s growth offers vast opportunities and challenges for Poland. Tapping these opportunities to our advantage calls for determination in exploiting the full potential of mutual cooperation, consistence in shaping Poland’s image as a country considering its collaboration with China as a priority and a pragmatic approach to developing economic ties with that country. Political and business contacts possibly at the highest level need to be fostered, as well as integrity and consistence in pronouncing our interest in that area. Streamlining the system of promoting the Polish economy in China is vital, with adequate financial support provided for this goal.
In the past four years, Polish-Chinese trade and investments have been growing rapidly, even exceeding Chan’s growth rate. Polish exports in 2003-2007 went up from 249 million USD to 1.111 million USD, a four-fold increase. China has become Poland’s biggest trade partner in Asia in terms of exports and imports while Poland is now China’s biggest trade partner in Central and Eastern Europe. This does not mean that we can rest satisfied and that all growth opportunities have been tapped. After all, imports from China are eight-nine-times higher than Polish exports to that country. About 40% of Chinese goods is still imported to Poland from EU countries. The point is to maintain Polish exports to China at a higher rate of growth than imports.
The main areas that bode well for Polish exports to China are mining (mining machinery, plants and work safety equipment), metallurgy (copper and copper products, cast iron and steel products, concrete steel and strap), aviation (helicopters, specialist, tourist and training aircraft), chemical industry (inorganic and organic chemistry, adhesives and epoxide resins), environment protection (ecological water treatment substances, industrial and municipal sewage treatment plants), power engineering (turbines, boilers, power cables and lightening arresters, electrical machines and equipment), farming as well as agricultural and food processing industries (meat, meat and poultry products, coffee and coffee-based beverages, sugar and confectionaries, bakery products, farming machinery and equipment, beer, fruit wine and alcoholic drinks, cold storage plants and fruit stores, cattle and poultry fodder, dairy products including cheese), automobile industry (including spare parts), wood and furniture industry (furniture and timber, chipboards, plywood, floor panels and furniture finishing materials including veneer, scale boards etc), paper industry (paper and paper-making machines), construction industry (building and interior finishing materials including glues and skim coats, construction machines and building materials including bulldozers, loading machines, conveyors and piling machines), electronics (sub-assemblies and components), and decorative products (including silver jewellery and amber products).
In all these fields, Polish companies have encountered fierce competition from the European Union and other developed countries. In many instances the only way of selling processed industrial goods is to produce them in China or to establish direct collaboration with Chinese partners and to implement Polish FDIs in China. Sales of Polish products in China frequently depend on whether Polish suppliers are ready to grant favourable credit and export guarantees. A crucial role is played by Polish government credits in support of Polish exports to China offered on very attractive, low-interest terms. These credits were instrumental in resuming exports to China after a break of 15 years of Polish mining machinery (manufactured by Kopex and Famur), the sale of 15 Dromader agricultural aircraft (Mielec), two waste treatment plants and a waste segregation plant. The delivery to China of helicopters (Świdnik) and fire engines (Stolarczyk) is planned within the very near future. Demand for the above mentioned products on the Chinese market is immense and it goes into hundreds and thousands.
As a result of intensive marketing and promotion campaigns a number of Polish companies have scored success on China’s vast and difficult market. One good example is Wódka Wyborowa which has now become the best known brand of foreign vodkas in China. The sale of crisp bread by the Mamut company in Wrocław for Chinese State Railways has been another.
The expansion of own production faciltities in China has proved to be a very good way of boosting sales of Polish products as testified by Kopex (wall casings factory) Glaspol (car windows manufacturer), Selena (producer of adhesives and polyurethane foams), Fasing (couplings), Rafako (boilers) and Bioton (now building an insulin plant in China).
It is indispensable that Polish businesses in China should be propped up with respect to substance, logistics and promotion. To this end, the Polish Embassy’s Trade and Investment Promotion Section needs be reinforced in terms of staff, funding and instruments. The institutional a infrastructure of Polish companies in China needs to be improved. Scheduled LOT Polish Airlines flights to Beijing should be resumed as soon as possible. A Polish Tourist Organisation Office should be set up in China, along with branches of Polish banks (BGK, PKO BP). Offices representing Polish chambers of commerce and industry as well as business organizations should be opened in major cities to support Polish companies and businessmen working hand in hand with the Polish Embassy’s Trade and Investment Promotion Section.
A crucial role in the development of Poland’s economic cooperation with China is played by annual meetings of the Polish-Chinese mixed commission. The next one will be held in Poland next autumn. It will provide another opportunity to put our ideas across along with a list of projects which Polish companies would be interested in carrying out. Such meetings smooth the way for winning Chinese authorities’ support.
China is a big country and one in which we have used all available promotion methods and means to develop bilateral business relations. These include taking part in fairs and exhibitions, staging Polish Days, holding seminars and industrial workshops as well as bringing in economic missions. The Polish Embassy’s Trade and Investment Promotion Section has been focusing its campaigns on supporting those sectors opf the Polish economy that represent the highest export potential, encouraging Chinese tourism to Poland as well as foreign investments.
The biggest undertaking in promoting the Polish economy in China regards EXPO 2010 in Shanghai, to be attended by about 100 million Chinese people. The design of the 2,000 square metre Polish pavilion to be built shortly has won high marks from the organisers. The imminent opening of a Polish Trade and Investment Promotion Section in Shanghai is to enhance Poland’s position in China’s largest city. During the investment fair in Xiamen in early September, one of the largest such events in the world, featuring a Polish display, the embassy’s section in Beijing will organize a seminar attended by Polish business representatives headed by the Polish minister of the economy. A big Polish-Chinese business seminar attended by government and business delegations is to be held in Shanghai and Beijing in October. Over the years, our section has been organizing dozens of events and promotion campaigns together with Polish business organizations as well as chambers of commerce and industry. We hope that all of that will help Polish companies to find valuable partners, conclude good contracts and attract more Chinese investment to Poland.
In recent years, Chinese companies have been stepping up their investments abroad both by taking over existing firms and going in for green field projects. Many developed countries have been doing their best to attract such investments. Poland, similarly as many other EU countries, has been focusing its promotion campaigns on investments in sectors potentially auguring the most profitable results, i.e.
- electronics, telecommunications and IT industry. These are fields in which China’s potential is great and which entail a technology transfer. So far, investments have been made by such Chinese companies as Lenovo (computers), Huawei and ZTE (telecommunications) and TCL (TV sets);
- centres for trading and processing Chinese goods which would be subsequently re-exported to neighbouring countries. That covers first of all the establishment of a logistics centre for trading and processing Chinese goods in Sławków and the establishment of a Chinese Investment Centre in Koszalin.
- services (e.g. hospitality and catering industries which stimulate employment growth in Poland). All EU countries, including Poland, have obtained the ‘approved destination’ status. This has opened the way for visits of organised Chinese tourist groups to Poland. Such visits would help to improve the balance of payments, learning the country and in an indirect way increase economic cooperation. .