Janusz Władyczak: Ukraine and the US are on the same page as Poland. We must take advantage of it

Does the Export Credit Insurance Corporation [Korporacja Ubezpieczeń Kredytów Eksportowych] see any new trends in the global trade?

We have noticed that since the middle of the coronavirus pandemic, the supply chains are coming closer, which means regionalisation. Bringing manufacturing plants closer to markets is nearshoring.

We are also seeing the intensification of another phenomenon that is not yet materialising on the scale we would like it to. This has resonated particularly strongly since the start of the war in Ukraine. This is also due to geopolitical complexities. I’m talking about friendshoring. This is a relatively new concept, but it has got an interesting dimension. Investors and countries are starting to look at each other in terms of whether someone is with me or against me. In the long term, this is dangerous, but on the other hand, investors are looking for security. We are starting to progress in the matrix system. On the one hand, we have nearshoring, which is supposed to bring investments closer to regions. We have the European Union, Asia (that’s where most of the factories are), and the United States along with NAFTA. If we put friendshoring on top of that, we are looking at how countries work together. Now, we need to take more factors into account. We look at whether someone is in NATO, so that a potential investment may be safer than if it were located in a country outside the alliance. Later, we look at whether someone is in an economic alliance, like the EU, NAFTA, or OECD. More such organisations are beginning to emerge. We are seeing new ones in Asia, one revolving around China, another around Japan. Everyone is trying to develop a community around them that shares the same values. This new trend was highlighted heavily after the outbreak of war in Ukraine and is beginning to gain traction.

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Janusz Władyczak: Ukraina i USA mają po drodze z Polską. Trzeba to wykorzystać

Nasila się friendshoring. Inwestorzy i kraje zaczynają patrzeć na siebie z perspektywy tego, czy ktoś jest ze mną, czy przeciwko mnie – mówi Janusz Władyczak, prezes KUKE.

Let’s take a purely hypothetical situation: suddenly we find that the Chinese market is not a friendly market for companies that produce there (from Western Europe and the US). We do not count them among our circle of trusted friends. Automatically, we start to think quite differently about this market and consider whether to successively move investments from there as part of regionalisation, by pushing on the friendshoring aspect. This could have major economic repercussions for China. If such a trend is picked up, we will suddenly find that many investments will leave that country. China’s economy, which already has its problems, may exacerbate them. The recession that is already looming may be harder. This will cause further repercussions, such as social, and may affect the election of a new Communist Party leader.

This must be seen as a deglobalisation process. As the word regionalisation implies, the scope of trade is limited.

Yes. The question is whether the final good we produce will only be sold within the region, or whether producers will be tempted to sell globally. We seem to be following a trend of regionalising this, but it is not unlikely that, for example, components for complex products will have to come from multiple countries. This will not be avoided.

Deglobalisation is a trendy term. It is somewhat happening, but it is more likely that globalisation will take on a completely different dimension than it is at the moment. We should not be overly concerned about this, but go with the trend and find our place as Poland.

As popular investors from Japan or South Korea will be wondering where in the EU to invest in the long term, the question is whether the Hungarian market (viewed peculiarly in recent months) will lose out to Poland, which is more predictable and strongly declared about where it would like to go politically, which countries it is friendly with. This will translate into decisions made by investors.

Can you give examples of countries as regards friendshoring for Poland?

We have two countries that can be subject to this terminology. First and foremost, it is Ukraine, which is currently closest to us. Not only because of what is happening in Ukraine and the support we give, but because they are our neighbours. We have always had a good relationship and understanding of the country’s needs. We are starting to have more and more common values, and the same goals.

On the other side is the United States. Our ally who came with support in our region and who we can rely on. If we use this well, we should be able to build something meaningful out of this type of alliance that has a strong foundation. This will allow our companies to grow. By working with the US, some barriers to entering that market can be lifted. We can sell more and establish new factories. Freight is still expensive and a bit uncertain. Our companies that are doing well in those markets may be tempted to open factories and produce for that market in that region. They then have access to three countries, plus Canada and Mexico, with significant purchasing power and can slowly build their position. It makes sense. The countries I mentioned are on the same page as Poland and this should be capitalised on.

Recorded by: Grzegorz Balawender

Partner: KUKE