| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
|
Country Commercial Guides for FY 2000:
|
CHAPTER IV: Marketing U.S. Products and Services
A. Distribution and Sales Channels
(1) Regional Nature of Market and Review of Major RegionsOpportunities for doing business in Poland are, like the population, dispersed throughout the country. Twenty-five percent of the population resides in rural areas, and urban dwellers are widely spread among a number of population centers.
The largest Polish cities include:
CITY POPULATION Warsaw 1,626,100 Lodz 825,600 Krakow 746,000 Wroclaw 641,000 Poznan 582,800 Gdansk 463,000 Szczecin 417,100 Lublin 351,600 Katowice 359,500Source: "Gospodarczy Atlas Polski 1999," published by BMB Promotions
(A) Warsaw
Warsaw Province is the capital of Poland and has 2.1 million people, 5.5% of the country's total population. The city of Warsaw, with a population of 1.6 million, is a center of culture, science, education, and finance, and is a major transportation hub. Warsaw's Okecie airport has direct connections to more than 50 airports around the world.
The impact of Poland's strong economic growth during the past few years is best seen in Warsaw. Average earnings in Warsaw are the highest in Poland. Industry sectors within Warsaw are dominated by machinery and electronic equipment production. The most important products manufactured in the area are television sets, computer hardware and software, tape recorders, passenger cars, and tractors. The capital has more than 280,000 businesses.
In recent years, Warsaw has shown the highest levels of investment in Poland. About a third of foreign businesses investing in Poland choose Warsaw as their headquarters. The investment programs implemented by foreign firms have created over 11,000 jobs. Large U.S. companies with investments in Warsaw include: PepsiCo, Procter & Gamble, Reynolds, General Motors, and Colgate. Head offices of the largest U.S. consulting, law, and auditing firms, as well as financial and insurance companies, such as Pioneer, AIG, Citibank, Amerbank, GE Capital, Bank of America, and Cigna, are also in Warsaw.
To attract potential investors to the least developed areas of Warsaw, the local government plans to establish a special economic zone in the southern part of the city very close to the international airport and cargo terminal.
For more information, please contact:
Warsaw Voivodship Office Economic and Urban Development Department Ms. Alicja Maciejczuk-Bukowska, Director Plac Bankowy 3/5 00-950 Warsaw Tel: (48-22) 695-6046 Fax: (48-22) 695-6047(B) Lodz
The city of Lodz is located nearly at the geographical center of Poland, only 130 km west of Warsaw. Its population of 825,000 people makes Lodz the second largest city in Poland. Together, Lodz and Warsaw represent 10% of the total population of Poland.
Lodz is still strongly associated with the textile industry, although this sector went into steep decline some 14 years ago. Textile plants remain in operation here, but the city has attempted to diversify its manufacturing base. The past five years have brought substantial changes. The major industries are now light manufacturing, food, chemicals, and electrical engineering.
Investors will find many opportunities in Lodz. Construction of planned highways will place Lodz at the intersection of major Warsaw-Poznan (A2) and Gdansk-Katowice (A1) highways. Important academic centers in Lodz include the Institute of Technology, the University of Lodz, two Medical Academies, and the branch of the Polish Academy of Science, as well as industry research centers. Current investors include ABB, Coats Viyela, Coca-Cola, Gillette, Mercedes, PepsiCo, Shell, and Wrangler.
On April 15, 1997, the Government of Poland announced the establishment of the Lodz Special Economic Zone (LSEZ) for a duration of 20 years on land owned by the State Treasury and existing companies. Investors who receive permission from the authorities to operate in the LSEZ and who comply with the necessary conditions (either investment of ECU 2 million or employment of 100 workers during the 20 years of the LSEZ) will qualify for a 100% income tax reduction for the first 10 years and a 50% reduction for the next 10 years. Additionally, the Lodz Labor Office has incentives such as paying a company the first six months worth of welfare payments (326 PLN/month) plus a 45% social security payment for every unemployed person hired.
For more information about the region, please contact:
Urzad Wojewodzki w Lodzi (Lodz Voivodship Office) Biuro ds. Restrukturyzacji Regionu Lodzkiego (Office for Restructuring of Lodz Region) ul. Piotrkowska 104 90-004 Lodz Tel: (48-42) 633-38-19 Fax: (48-22) 633-32-98 Contact: Mr. Tomasz Ciszewski, Deputy Director(C) Poznan
Poznan, located in the mid-western part of Poland, is home to 600,000 people. Poznan is one of the major junctions for rail and highway transport. The main route from Eastern to Western Europe through Warsaw and Berlin runs through Poznan. So does the transit route from Scandinavia to the Czech Republic, Slovakia, and the Balkans. Poznan's airport at Lawica serves as both a domestic and international airport.
Poznan has become the second largest banking center in Poland (after Warsaw), with 14 banks having headquarters there. Many insurance companies operate there as well. Manufacturing plays a leading role in the economy, employing one-fourth of professionally active people. Products from the region include: ship engines, passenger railway carriages, metal working and food industry machines, textiles, batteries, vehicles, telecommunication switchboards, teletransmission equipment, furniture, phosphoric fertilizers, and cosmetics. The food industry is prominent, especially soft drinks and tobacco. The high quality and large quantity of agricultural products available in the Poznan area create a suitable basis for increasing exports. There are opportunities for investment in food processing.
The Poznan International Fair has a 70-year tradition, and every year more than 20 trade fairs, promotional events, and exhibitions are held at its expansive fairgrounds.
Poznan is an important scientific and cultural center in Poland. In Poznan there are numerous research institutes, branches of the Polish Academy of Science, and 14 universities, including four recently founded private universities offering bachelor degrees in management, banking, and marketing. There are 10 universities offering masters and doctorate degrees in numerous fields. Nearly 60,000 students study at universities in Poznan.
There are about 1,000 companies with foreign capital participation in the Poznan area. The most notable foreign investors are: International Food Corporation, CPC International, Amino S.A. (United States), Wrigley (United States), SC Johnson (United States), General Bottlers (United States), Alcatel (United States), Volkswagen (Germany), Alcan, Inc. (Canada), and Marbaise (Germany). An analysis carried out the by the Bonn-based research firm Empirica showed that the Poznan region ranks fifth among 155 regions in Central and Eastern Europe in terms of attractiveness for investment.
For more information about the region, please contact:
Poznan Province Government Office Urzad Wojewodzki Wydzial Rozwojm Regionalnego Mr. Janusz Meissner, Director Al. Niepodleglosci 16/18 61-713 Poznan Tel: (48-61) 852-55-21 Fax: (48-61) 852-73-27 http://www.poznan.uw.gov.pl http://www.man.pozn.pl/~wup/html-eng/wup_eng.html(D) Southern Poland
The lower geographic third of Poland is home to half of Poland's population and represents almost half of the nation's industrial output. The region boasts a well-educated and relatively low-cost work force. The three principal cities include Katowice, Wroclaw, and Krakow. One of the world's largest copper ore deposits is found in the southwestern province of Legnica. In addition, there are special economic zones in the Rzeszow (Mielec), Katowice, Legnica, and Walbrzych provinces.
Katowice
Katowice is very urban and densely populated. The greater Katowice area, combines 24 cities with 2.5 million inhabitants. There are 13 schools of higher education and more than a dozen scientific research institutions in the Katowice area.
The region's main natural resource is coal. Ninety-seven percent of the country's coal comes from this province. The Upper Silesian Coal Basin is one of the largest in the world. There are also deposits of natural gas, zinc, and lead ore with a mixture of silver. The industrial output of the province provides much of the Poland's industrial output. Major industries in the region include mining, metallurgy, chemicals, and automobiles.
Currently the center of Poland's coal industry, the Katowice area is transforming into an automotive center as well, with several major automotive firms, including Fiat, General Motors, Isuzu Motors, Delphi, and Lear, investing in the region. Katowice province has excellent air and rail connections to Warsaw and other major European cities.
For more information, please contact:
Provincial Office in Katowice Urzad Wojewodzki w Katowicach Mr. Dariusz Gruszecki, Director Department of Foreign Cooperation ul. Jagiellonska 25 40-032 Katowice Tel: (48-32) 256-5293 Fax: (48-32) 255-3775 http://www.um.katowice.plWroclaw
Wroclaw (pronounced "vrot-suave") has a population of 650,000 and is one of the most important intellectual centers in the country. Over 64,000 students study at 13 state institutions and several private universities.
Wroclaw, located at the intersection of important east-west and north-south roadways, is served by three international highways, the largest railway network of Lower Silesia, and direct rail links with several major European cities. An international airport and two river ports are located in Wroclaw. The province has deposits of natural gas, stone, serpentine marble and basalt, vein quartz, quartz sand, argillaceous resources, kaolin resources, ceramic clays, and gravel aggregate.
Together with other cities in the province, Wroclaw is one of the most important industrial centers in Poland. It ranks ninth in the country in industrial employment. Wroclaw's diversified industrial sector includes electromechanical, food processing, chemical, metallurgical, and paper. The electromechanical industry is represented by companies such as POLAR, Semens-Elwro, Dolmel-Drivs, Agroma-Pilmet, ABB Dolmel, and ABB Instal. These companies produce a large share of the home appliances made in Poland. Also, Wroclaw companies produce buses and much of the nation's agricultural equipment. Chemical firms include Rokita in Brzeg Dolny, Viscoplast, Polifarb Wroclaw, Herbapol, and Cussons Polska. The Wroclaw food processing industry has a variety of companies, including Brewery PIAST.
In the Wroclaw area there are more than 1,700 companies that have been formed with foreign capital. In addition to the top two investing countries, the United States and United Kingdom, investors from Austria, Italy, France, Sweden, Taiwan, and Russia have found the province attractive. British Cadbury built a large chocolate factory outside of Wroclaw, the first investment of this company in Central and Eastern Europe. Others have followed the same path, including Ikea (Sweden), Castorama (France), Cargill (U.S.), General Bottlers (U.S.), and Coca-Cola (U.S.). Foreign banks opening branches in Wroclaw include Citibank (U.S.), Creditanstaldt (Austria), Raiffeisen-Centrobank (Austria), and Hypo-Bank (Germany).
Wroclaw's local authorities strive to create positive conditions for foreign investors. Property ownership issues are clearer in Wroclaw than in other parts of Poland, and a significant excess of production capacity is available to foreign investors, on the condition that new activity will be environmentally friendly.
For more information, please contact:
Provincial Office in Wroclaw Urzad Wojewodzki we Wroclawiu pl. Powstancow Warszawy Tel: (48-71) 40-61-00 Fax: (48-71) 40-69-64 Economic Development Department Ms. Maria B. Dytko, Director Tel: (48-71) 343-28-27 Fax: (48-71) 343-46-04 http://www.wroclaw.plKrakow
Krakow has a population of 640,000. The city of Krakow is included on the UNESCO World Cultural Heritage list due to its historical and cultural value. It is the second largest research and academic center in Poland, with 15 institutions of higher learning and 96 research institutes. Among the major state academies are the Jagiellonian University, founded in 1364, the Academy of Economics, the Academy of Fine Arts, and the Music Academy.
Krakow has excellent rail and road connections to all major European cities. It is only two hours and 40 minutes from Warsaw by express train. In addition, the John Paul II Memorial International Airport provides direct connections to major cities in Europe, as well as New York and Chicago.
Krakow province has deposits of rock salt, limestone, marble, cement, dolomite, natural aggregate, clay (silts), and curative mineral water. Major industries in the region include food processing, pharmaceutical, metallurgy, electronic, health service, and research and technology. Almost all of Krakow's enterprises are in private hands.
The largest foreign investor is Philip Morris, which constitutes one-third of total foreign investment in the region. Other significant investors include: Coca-Cola (U.S.), Pilva (Croatia), and Electricite de France (EDF) (France). Other countries investing in the region include Germany, Turkey, Austria, and Netherlands.
For more information, please contact:
Provincial Office in Krakow Urzad Wojewodzki w Krakowie ul. Basztowa 22 Tel: (48-12) 61-60-208 Fax: (48-12)422-72-08 Economic Development Department Mr. Tadeusz Trzmiel, Deputy Director Tel: (48-12) 61-60-391 Fax: (48-12) 60-61-950(E) Gdansk
Gdansk is situated in northern Poland on the Baltic Sea coast and is an important seaport. The area's population of 1.4 million is concentrated in the tri-city area of Gdansk, Gdynia and Sopot. Gdansk is 330 km north of Warsaw and has the second largest international airport in Poland. There are plans to build a north-south highway connecting the ports of Gdansk and Gdynia with Southern Europe.
Industry in the Gdansk district is dominated by energy, shipbuilding, transportation, food processing (mainly seafood), chemical, electrical, and electronics. It is also home to the second largest refinery in Poland, Rafineria Gdanska. Other large investors include Arall, GE Capital Bank, Ericsson, Ernst & Young, PepsiCo, and Shell. The list of major importers includes Rafineria Gdanska Co., Stocznia Gdynia Co., Stocznia Gdanska Co., and Elbrewery Co.
Gdansk, with its relatively well-developed infrastructure, skilled work force, and eight universities, has potential for growth, especially in industry and tourism. Favored investments include: development and modernization of the ports and transportation networks, extension of hotel facilities and trade and service centers, housing construction, and environmental protection. Local authorities are interested in renting or leasing land to foreign partners. Updated local laws and regulations encourage foreign investment and trade with special attention on the seaports.
Important academic centers in the Gdansk district include the University of Gdansk, the Medical Academy, and the Technical University.
For more information, please contact:
Gdansk Voivodship Office Economic Development and Privatization Mr. Jaroslaw Zietkiewicz, Director ul. Okopowa 21/27 80-810 Gdansk Tel: (48-58) 307-7779 Fax: (48-58) 301-1765 http://www.gdansk.gda.pl (2) Consumer Goods DistributionCompetition in the consumer goods sector, particularly non-durable consumer goods, is intense in Poland. The previously insatiable demand for western goods has been replaced by more pragmatic attitudes about price and quality. Polish consumers and importers are more selective about the products they will buy. A western brand is no longer the sure-sell it once was, as local brands have improved immensely in quality. Brand name recognition is still important, but it is a great challenge for U.S. firms to develop brand images and loyalty, as the market is overwhelmed by hundreds of new western and Polish brands.
A major roadblock to selling consumer goods in Poland is distribution. Poland's entrepreneurial spirit is evident in its retail sector, and on nearly every street corner where small stores or stands have sprung up. The retail sector is dominated by these very small entrepreneurial, "mom-and-pop" stores, most of which have opened in the past five years. There are hundreds of thousands of such small retail outlets across the country, posing major logistical problems for the distributor. Although these shops are generally product-specific, many sell a wide range of goods. For example, a toy store may also sell stationery and housewares.
However, large-scale retailing is developing very quickly. Retail chains, which operate near major population centers, are dominated by foreign firms: IKEA (Sweden), Makro Cash and Carry, Ahold (Netherlands), Tesco (U.K.), Billa and Julius Mainl (Austria), HIT, Allkauf, Metro AG, (Germany), LeClerc, Auchan, Geant, Intermarche, Castorama, Carrefour (France), Jumbo (Portugal), Rema 1000, and Office Depot (U.S.). Foreign companies have a great interest in investing in large-scale retailing in Poland. The large stores are extremely popular and most of these firms are expanding rapidly. The few shopping malls that do exist are mainly filled with upscale boutiques.
Poland is also considered a very promising market in which to establish chains of specialty stores and department stores that cater to a more demanding clientele and that will be categorized as mid-level stores. There is only one local department store chain in Poland.
Poland is still largely a cash economy. However, banks are increasing the issuance of credit cards. Checks are almost unheard of. Most payments for regular transactions, if not cash, are made by wire transfer. Cash machine networks are growing.
Distribution networks do exist in Poland, although most are new and vary in their structure and scope. For consumer goods, most such networks have been pieced together and are product specific with differing layers of agents, wholesalers or retailers. Regulations covering sales and distribution networks do not exist beyond those needed to establish a business. Distribution is an extremely difficult task for consumer goods. It is very difficult, even for the large producers, to keep products on the shelves of hundreds of thousands of retail stores.
Smaller U.S. companies usually begin with a small, regionally located distributor and then develop a network from there. Larger firms may initially establish a regional warehouse system with a series of trucks and distributors to branch out to assorted markets across the country This requires a significant up-front investment. Poland is, without a doubt, a market of regions. Not only is the population distributed among Poland's major cities, but poor road conditions, inadequate local train service, underdeveloped banking networks, and the still-developing nature of the market itself make it difficult for a single distributor (especially a foreign-based distributor) to cover all of Poland.
(3) Industrial Goods Distribution
Imports of equipment and technology have increased tremendously as Polish industry modernizes and restructures to compete with the western world. What has been surprising to U.S. exporters in many industrial sectors is the familiarity among Poles with the technical parameters of U.S. products prior to the actual introduction of those products in the marketplace. This results from a combination of historical knowledge of some importers (who probably worked for a former foreign trade organization before 1989) and the fact that serious Polish importers do their homework.
Under the Communist regime all foreign trade was handled through a small number of foreign trade organizations. Each industry was associated with an entity which handled its importing, exporting, marketing and distribution needs. Most of these organizations still exist in one form or another; many have been privatized, and some, such as Elektrim and Ciech, have grown to become among Poland's largest firms.
Industrial distributors may therefore be part of a network that developed from former foreign trade organizations, or may be individuals with significant connections to their industry (often former employees of the large foreign trade firms). As industries and companies continue to privatize in Poland, distribution networks will expand in scope and complexity.
Many distributors of industrial equipment are very specialized and have very specific technical expertise. Because of this, some are better able to serve on a national level than most consumer goods distributors, but exporters are still advised to carefully check out a company's claim that it can represent a U.S. firm throughout the entire country.
As with consumer goods, importers and other companies that represent foreign companies are becoming more sophisticated, and selective. The number and variety of imported goods available on the Polish market play an important role here as well. Polish agents or distributors increasingly look to the foreign partner to provide marketing and promotional support, training and financing. Polish trade fairs, which have become more and more specific in scope, are a good place to look for possible distributors.
B. Use of Agents and Distributors; Finding a Partner
Polish companies tend to act more as distributors (importing, taking possession of, and reselling a good) than as agents. Expensive equipment is an exception to this, since Polish companies generally do not have the financial capability to make such purchases. However, there are no laws imposing roles for Polish importers, so distributor agreements may take any form beneficial to the parties involved.
The ideal solution would be to find a distributor who is experienced, knowledgeable, and well-connected to existing distribution channels for the product. Polish companies tend to be much younger and less experienced than their western counterparts. They may not fully understand the product or how it is to be used and may need extensive training.
C. Franchising
Poland, a country of nearly 40 million people, is ripe for the development of franchising. Poland is rapidly developing its infrastructure, telecommunications and banking services. More importantly, the rapid expansion of media and advertising sectors indicates that the development of the consumer market is just beginning.
The most popular and largest U.S. franchises arrived first and introduced the concept here, and they now dominate Poland's franchise landscape. Their success over the last few years has proven to be the best advertisement for the promotion of franchising in Poland. The largest foreign franchisers active in Poland are: McDonald's, Burger King, Domino's Pizza, PepsiCo, ARAL, Kodak, Agfa, and the Yves Rocher Group.
Although the total number of franchises is currently low (at the time of this writing, only about 40 exist), the Polish Franchising Association (PFA) believes the Polish market has considerable demand for new, internationally known franchise concepts. PFA estimates that only about 10 networks operate in a pure franchising system. Very often, franchising companies operate their own establishments, expand through licensing operations, and sell franchises at the same time.
Financing is the most critical element for successful entry and penetration by U.S. franchisers. Although it has generally been difficult for foreign companies to locate Polish investors capable of becoming master franchisees, the number of local candidates interested in becoming master franchisees is on the rise.
There are no Polish laws or regulations that specifically address franchising. A franchise is subject to general commercial law. The contract between two parties is therefore the sole legal platform for the franchise agreement. It usually contains not only elements of civil law, but also elements of intellectual property and trademark protection.
The best franchise concept prospects are in services, retail, mid-range hotels, and fast food chains. For more information about franchising in Poland, please contact:
Ms. Ewa Bogdanowicz Commercial Assistant U.S. Commercial Service Warsaw Al. Jerozolimskie 56c 00-803 Warsaw, Poland Tel: (48 22) 625-4374 Fax: (48 22) 621-6327 E-mail: Ewa.Bogdanowicz@mail.doc.gov Polish Franchise Association (PFA) Polskie Stowarzyszenie Franchisingu ul. Madalinskiego 67B/15 01-549 Warszawa Tel/Fax: 48-22/849-0835 Ms. Maria Kozlowska, PresidentD. Direct Marketing
Direct marketing is still new to Poland and is mostly practiced by joint ventures or foreign companies selling consumer products and services. Several years ago the first foreign companies began to sell a very limited assortment of products through catalogs. This form of marketing is growing rapidly, but one factor limiting the spread of direct marketing is the use of cash for most transactions. Nevertheless, the Polish market offers enormous potential, especially for expansion of mail-order companies. Women are the biggest group of customers who take advantage of mail-order catalogs. Mail-order companies selling books, CDs and cassettes have become popular in Poland. Swiat Ksiazki (Book World) has gathered, for example, more than 900,000 club members since 1994.
The Direct Marketing Association, Stowarzyszenie Marketingu Bezposredniego (SMB), was established in Poland at the end of 1995. Currently SMB has 30 members. Negotiations on possible membership are now underway with several, mostly foreign, companies. The members of SMB have established a code of ethics to undertake effective methods of operation in direct marketing, protect customer's rights, and prevent illegal business practices. The organization has participated in drafting legislation for the protection of privacy, which was established on April 30, 1998. SMB has created a database of names and addresses of individuals who do not wish to receive direct marketing materials.
Direct Marketing Association Stowarzyszenie Marketingu Bezposredniego (SMB) Mr. Andrzej Miekus, President ul. Marszalkowska 87 apt. 85 00-683 Warsaw Tel/Fax: (48-22) 628 02 60 Fax: (48-22) 828-04-66E. Joint Ventures/Licensing
Joint ventures as a form of business are abundant in Poland. Many U.S. businesses in Poland take the form of joint ventures, with Polish companies set up to handle the trade and share in the risks and rewards. As such, a joint venture can be an excellent way to facilitate export sales to the Polish market.
In most joint ventures the American partner contributes capital and technology while the Polish side contributes the land, distribution channels, trained workers, access to the Polish market and introductions within the local government and local business environment that would take years to develop.
Licensing of products, technology, technical data, and services is less practiced in Poland, due to concerns about intellectual property protection. However, now that Poland has made major steps in intellectual property rights and copyright legislation, it is probable that more U.S. firms will begin to license their products in Poland. Licensing is particularly prevalent in industrial manufacturing, consumer goods, and textile sectors.
F. Steps to Establishing an Office
Besides joint ventures, U.S. companies may establish a business entity in Poland through three types of legal forms.
(1) Limited liability companies (Sp. z o.o.) require at least one founder and minimum initial capital of 4,000 zlotys to be paid prior to registration. Reserves are not required to be taken out of after-tax earnings, audits are only obligatory in certain situations, and assets can only be distributed 6 months after liquidation is announced.
(2) Joint stock companies (S.A.) require 100,000 zlotys minimum initial capital, of which 25% must be paid prior to registration. There are no maximum limits and in-kind contributions are exempt from customs duty. After-tax profits from the venture may be exchanged and repatriated without permission at the end of each fiscal year of the venture. Proceeds from the sale of shares in the venture, or liquidation of the venture, may also be repatriated. Twelve months must pass after the liquidation announcement before assets may be distributed. Polish law does not allow interim dividends. The minimum number of founders is three entities.
(3) Representative offices are permitted by law to engage in business activity under three variations: supervisory offices, technical offices and commercial branch offices. Permits for establishing an office are granted by the relevant Ministry upon application by the foreign firm. Permits are valid for the length of time granted by the Ministry, usually a maximum of two years. The foreign firm must reapply for renewal. Offices are by law treated as parts of the U.S. company and are considered an exporter of products from abroad. Therefore, offices may not engage in retailing or manufacturing activities and may hold inventory only for marketing and service purposes.
Modern telephones, copy machines, faxes, computers and office amenities are easily available and can be leased from a number of reputable Polish and western firms. The secretarial labor pool is reasonably abundant, although English speaking secretaries with modest secretarial skills are not easily found. Employees with western management or accounting experience are also difficult to find. There are, however, many head-hunter companies offering assistance in finding appropriate staff.
G. Selling Factors/Techniques
As discussed earlier, the Polish market is in most cases regional, and this description applies to selling as well. In addition, people in cities, particularly the major cities in Poland, have more purchasing power than those in rural areas, as unemployment is significantly lower in the cities. The countryside is dotted with single-factory (or formerly single-factory) towns with high unemployment.
Letters, faxes and packages of product literature will serve to introduce a product or service to a Polish company. Communication in the Polish language is recommended for speediest response. U.S. companies should ensure that translation into Polish is done by professional translators.
A Polish customer generally will not consider making a final purchase until he has met with someone face-to-face about the product. However, there are Polish companies that started their business through offers on the Internet. American companies that are little known outside of the U.S. may need to make quite a bit of effort to convince the Polish side that they are "for real." Demonstrations of the product are also effective, as Poles tend to be skeptical about claims until they are proven. Sponsored visits to the U.S. or other facilities around the world may help convince Polish buyers to purchase a U.S. product.
The decision making process, especially in large companies or government agencies, can be painfully slow, as every person or section involved in a decision usually must sign off before a decision is made. It usually takes several meetings, and many rounds of negotiations before a deal is closed. It is not unusual for a deal to take two or three years to be concluded. This means that success in Poland is extremely difficult without a representative in-country, whether it is an agent, distributor, or representative office.
Polish customers will want to discuss the technical parameters of the product, explain their needs, and negotiate (and renegotiate) the price. In addition, the product may not be sold in the first meeting, as the customer will want some time to consider the points discussed and to arrange financing. Small orders are usually the result, as major initial orders are unlikely due to limited amounts of working capital and high rates of interest on credit.
The American exporter should be aware of the Polish customer's main problem: access to capital. Most Polish firms are still too small to consider going public or issuing commercial paper. Therefore, most business activities, including payment for imports, are still self-financed. American companies that can guide their Polish customers to affordable financing will have an edge over their competitors. The U.S. Exim Bank offers a credit insurance program that can help small and medium size U.S. firms in this regard. For details contact the U.S. Commercial Service office in Warsaw at Warsaw.Office.Box@mail.doc.gov. Many Polish importers also look for marketing support.
Polish customers are generally enthusiastic about U.S. products and, if seriously interested, will travel across the country to meet with a U.S. representative who may be visiting Warsaw. If a customer has driven five hours to Warsaw to meet with a U.S. company, the potential for a sale is good. If the proposal is well thought out, the pricing is flexible (or assistance with financing is offered), and promotion, servicing and customer support are part of the package, chances are good that a contract will ultimately be written. Doing business in Poland is built upon personal relationships and trust. U.S. companies still have an advantage in Poland, as the U.S., its people, and its products are held in high regard.
H. Advertising and Trade Promotion
The trade fair business in Poland has boomed over the past few years, from a single major event (the June Poznan International Fair) to a full year's schedule of industry and product specific events in major cities around the country. Most industry specific trade fairs in Poland are newly emerged and are still proving their worth. Some are better than others at attracting key Polish and international business. Trade fairs for computers, medical, environmental, automotive, agri-business, consumer goods, building products and mining have grown in popularity in recent years. Direct U.S. company presence at trade fairs in Poland is minimal, but many U.S. firms exhibit through their European or Polish distributors. Most U.S. firms find that exhibiting directly in a Polish fair is still less cost effective than many big European trade fairs. CS Warsaw can help find distributors interested in representing U.S. products at these fairs. Contact us at Warsaw.Office.Box@mail.doc.gov.
Advertising in Poland is considered crucial, not only in the consumer products field but also in a developing company image for all kinds of goods. Television -- which reaches virtually every home in Poland via local channels or satellite -- is believed to be the most effective medium in Poland. Products advertised through TV commercials show the greatest sales growth of all advertised products. The bulk of advertising revenues go to television. The price of TV spots on top rated shows has grown dramatically in the last few years as demand has soared. Radio is another means of advertising with more than 200 local radio stations as well as two national networks.
There is a ban on cigarette and alcohol (including beer and wine) advertising for broadcasters and on alcohol ads for display and print media. There is also a ban on pharmaceutical advertising, except for over-the-counter drugs and in professional publications.
Print media advertising is sophisticated, and the print media market itself has grown to include a full range of publications. Poland is wholly literate. Major newspapers circulate throughout the country and reach every corner of Poland. In addition, special interest magazines, business journals, niche publications, and specialized newspapers have proliferated. Classified advertising is very well developed and effective. Most U.S. companies find print a highly effective means of reaching customers and candidates for jobs. Major dailies include Rzeczpospolita, Gazeta Wyborcza, Zycie, and Trybuna. There are also two English-language weeklies that cater mainly to foreigners both in and out of Poland. Major international, as well as local, advertising and public relations agencies abound in Poland.
I. Pricing a Product
Pricing is the key to effective selling of a U.S. product in Poland. As mentioned above, working capital is limited in Poland, even among the larger, more successful Polish companies. Polish businesses generally spend money wisely, after thoughtful and sometimes lengthy consideration. The most common complaint the Commercial Service in Warsaw hears about U.S. products continues to be that "the price is too high." Pricing of U.S. made products is complicated by the additional customs duties, VAT, and, in some cases, an excise tax, all of which elevate the retail price dramatically.
Flexibility is the key, and initial market penetration to gain product knowledge among Polish consumers is the goal. Successful U.S. exporters work together with their Polish representatives to keep costs, particularly import costs, as low as possible. For example, some companies ship products unassembled to help reduce import duties. The Polish market for all kinds of products is huge and expanding, and U.S. companies that approach the market with a long-term view of creating market share for their products will reap rewards.
J. Sales Service/Customer Support
After price, service is second on the list of the Polish customer's concerns. A manufacturer in the United States is seen by the Polish distributor and customer alike as being very far away from a product exported to Poland. A potential customer may shy away from a U.S. product because s/he fears ineffective servicing, simply due to distance, if the product breaks down.
Shipping a product back to the United States for repair or service, even if paid for by the U.S. company, is not generally a preferred option for Polish customers. Sending spare parts to Poland is easy to do. Some firms provide service for their exports to Poland through European representatives or firms licensed to repair their products. Even then, some distributors worry that they may not get adequate support.
The ideal method is to provide service and customer support through a trained Polish representative or U.S. affiliate company. U.S. manufacturers with major export accounts in Poland may wish to periodically send a service representative to Poland to work with the local representative and visit customers.
K. Selling to the Government
Poland's public procurement law, in effect since January 1995 (January 1996 for local governments), applies to most acquisitions of goods, services, or construction by nearly all government agencies, including local governments, foundations, associations, and cooperatives. Procurements by the Ministry of Defense are also included, but are subject to special rules. Procurements by state-owned enterprises are excluded from the law.
All tenders for amounts above 30,000 ECU are required to be officially announced. Tenders for lower amounts can be announced locally, in the local press or through local media.
The Polish procurement law provides for domestic preferences. Bids submitted by Polish firms are lowered (for the purpose of the evaluation of the tender) by 20%. Since the tenders are evaluated by assigning an appropriate number of points to various parts of the offer, this lowering of price is done only for a better and more favorable evaluation of the offer. In reality, when the project is executed, the price is what the Polish offerer quoted. This 20% "discount" applies only in cases where 50% of raw materials used for completion of the project come from Poland.
Unlimited tendering is the preferred method, and other procedures are restricted. Tender documents must contain specifications, selection criteria and terms and conditions for the contract. Deadlines for the submission of offers must be at least six weeks from the announcement. Offers are publicly opened. Participation in tenders is open to all those legally, technically, and financially able to perform the contract (including foreign companies if applicable).
The Bulletin of Public Procurement (Biuletyn Zomowien Publicznych), which lists public procurement opportunities throughout Poland, is now published twice a week. Subscriptions are available through:
Wydzial Wydawnictw I Poligrafii Gospodarstwa Pomocniczego Kancelarii Prezesa Rady Ministrow ul. Powsinska 69/71 09-903 WarsawL. Protecting Your Product From IPR Infringement
Almost all the intellectual property measures required of Poland by the World Trade Organization (WTO) Trade-Related Intellectual Property (TRIP) rights are now in place. Although the enforcement has improved significantly, it is still often inadequate. Foreigners, both resident and non-resident in Poland, benefit from intellectual property ownership rights, whether as a result of Polish law or bilateral agreements. Poland is a signatory to a number of international IPR conventions, including the Berne and Paris conventions as well as the World Intellectual Property Organization (WIPO). In 1997, Poland ratified the Rome Convention. Poland has yet to enact 50-year protection for preexisting sound recordings. Although legislation to enact such protection is being considered by the Polish government, currently, protection is only provided for recordings made since 1974.
As a result of its uneven IPR performance, in 1997 the United States Trade Representative (USTR) placed Poland on the Watch List of its Special 301 report on IPR practices. Poland remains on the Watch List at the present time. However, due to increased concern over the IPR situation, USTR will undertake a special "out-of-cycle" review of Poland's IPR protection practices in December 1999.
(1) Patents
The Polish Law on Inventive Activities protects inventions through patents and utility models. Applications are filed with the Polish Patent Office; Polish attorneys must represent foreign applications. Patents are granted based on novelty, non-obviousness, technical character, and applicability and are product patents versus process patents. Applications are published 18 months from the application or priority date. Registered patents are valid for 20 years from the filing date. Registered models, inventions, and industrial designs are valid for five years and may be extended for another five years. Annual fees must be paid for maintaining a patent. There are no regulations regarding license terms. Criminal penalties are possible for infringement.
(2) Trademarks
Poland's trademark law of 1985 stipulates that trademarks, service marks, or collective marks may be registered. Trademarks are also protected under the Law on Combating Unfair Competition of 1993. A trademark must define the goods and services that are to be marked by the registered trademark. Applications are filed with the Polish Patent office, and priority under the Paris Convention may be claimed. Polish patent agents must represent foreign applicants. A registered trademark is valid for 10 years from the date of filing, unless the mark is not used for three consecutive years. The registration may be renewed for 10-year periods. Trademarks may be licensed. Ornamental designs and integrated circuits are protected.
U.S. companies find, however, that despite the existence of adequate laws, Polish authorities at times do not vigorously enforce them. U.S. companies must often expend significant resources protecting their own interests.
The Pro-Marka Polish Association of Branded Goods Producers (PABGP) was established in 1996 with the goal of protecting trademarks, foiling pirates, and educating consumers and regulators alike about the value of brand names. Currently Pro-Marka has about 25 international and Polish member companies and focuses on consumer products. For more information, please contact:
Pro-Marka Polish Association of Branded Goods Producers (PABGP) Mr. Tomasz Gryzewski, Director General ul. Trebacka 4, Room 453 00-074 Warsaw Tel: (48-22) 630-9621, 630-9727 Fax: (48-22) 826-1399(3) Copyrights
The 1994 Copyright Law protects not only literary, musical and graphic works, but also computer software, audio-visual works and industrial patterns. It extends copyright protection from 25 to 50 years to comply with international standards, and protects authors, producers, artists, and performers for both commercial and personal rights. Generally, commercial rights expire 50 years after the author's death.
U.S. companies find that enforcement of copyrights, like trademarks, is still inadequate despite significant progress made in the last three years. Since the beginning of 1998 the Polish customs authorities and police have been more actively protecting intellectual property rights by not only reacting to claims of interested companies or organizations but also being proactive. U.S. companies and trade associations have made extensive efforts to inform the public as well as the legal community on the issue of copyright protection. The greatest problems are in the area of sound and video recordings and especially software. In 1998, local audio-visual trade associations, including the Business Software Alliance, founded the Union of Audio-Visual Producers (ZPAV) to fight piracy. ZPAV actively helps the Polish authorities in prosecuting pirates and has lead an active public awareness campaign against piracy. For more information, please contact:
Union of Audio-Visual Producers (ZPAV) Mr. Andrzej Kosmala Ul. Kruczkowskiego 12 m. 2 00-380 Warsaw Tel: (48-22) 625-1957 Fax: (48-22) 625-1661(4) Trade Secrets
Trade sector technological secrets are protected under the Law Regarding Protection Against Unfair Competition of 1993.
|
[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
Next Chapter | Table of Contents
|
