Export is changing routes and growing

The war broke out, cutting off opportunities for Polish exporters to trade with Russia, Belarus, and Ukraine. Although these countries have not been the main destination of Poland’s foreign trade for years now, the loss of these markets, to which Polish exports were worth comparably as much as our trade with Italy, was painful, especially as the growing economic crisis also limits the absorptive capacity of Poland’s other trading partners.

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Handel

Eksport zmienia szlaki i rośnie

Wyzwania polskich eksporterów w obliczu wojny, która zamknęła rynki eksportowe i sprowadziła kryzys do Europy, były tematem dyskusji ekspertów w Salonie „Rzeczpospolitej” w Karpaczu.

In search of alternatives

 – There are several industries from which we shipped a lot of goods to the eastern territories; however, from the perspective of a few months, we can see that entrepreneurs are looking for alternative markets, primarily to the German market. Unfortunately, the German economy is also decelerating, so we may have another problem, said Grzegorz Piechowiak, Deputy Minister of Development and Technology, Government Plenipotentiary for Foreign Investments.

He admitted that today, it is difficult to point out which new direction would be best. – Far Eastern directions are interested in cooperation. Next week, there will be consultations with representatives of the United Arab Emirates (UAE). They are interested in food safety, the Minister said.

Exports to Ukraine are slowly starting to bounce back, as mentioned by Janusz Władyczak, President of the Export Credit Insurance Corporation. Exporters also benefit from the PLN low value. – We anticipate that there will still be double-digit increase in 2022, perhaps similar to the roughly 20% achieved a year ago, J. Władyczak said. He pointed out that Poland’s internal market, which absorbs slightly more goods thanks to the influx of people from Ukraine, is also an alternative for exporters. Part of the goods from the eastern direction will also be acquired by the EU, but the challenge is to win new markets, namely Africa, the Middle East and Asia.

– Our companies in African markets are not doing very well, but with the help of intermediaries from the UAE, they are able to enter there, similarly with Asian markets, J. Władyczak stated.

Jerzy Kwieciński, Vice President of the Management Board of Bank Pekao, explained that the surge in Polish exports to the U.S. and Ukraine was, for the time being, more the result of a low base, as our trade with those countries was relatively small. – These are the two directions in which Polish trade will grow. The outlook for Polish exports remains good, despite the difficult months ahead. Our economy is open; this is measured by the ratio of exports to GDP, which is about 50%, similar to Germany, said J. Kwieciński.

Poland recently signed a cooperation agreement with the Suez Canal Special Economic Zone, thanks to which the first companies have begun to invest in Egypt, according to the plenipotentiary for investments. Dubai wants to buy food as well as refrigeration and food storage equipment from us. – There are companies in Poland that are already manufacturing for Saudi Arabia’s markets, and we will also discuss this during the meeting with UAE representatives next week, G. Piechowiak said.

Experts wondered about the possibilities of exporting to Asia, which is developing very slowly. A chance to advertise Poland is the upcoming Expo 2025 world exhibition in Osaka – Poland’s participation is traditionally organised by PAIH. The exhibitions are bearing fruit. Next week, for example, as a result of contacts made at Expo 2020 in Dubai, the UAE trade minister will visit Poland to talk to Polish companies about expanding trade in Poland.

Emphasis on marketing

– Asian markets are penetrated by the Chinese; their diasporas live there and support one another strongly. Vietnam, which is like Poland 25 years ago in terms of investment opportunities, is an ideal destination for Polish companies, but it is heavily dominated by the Chinese and Koreans, so their intermediation is needed, said Janusz Władyczak of the Export Credit Insurance Corporation. He did, however, point out that Poland badly needs a strong brand that inspires confidence in quality and facilitates entry into new markets, along the lines of the Japanese brand. This country’s strong brand facilitates the sale of a variety of Japanese products throughout Asia.

– Participation in world exhibitions is an ideal branding tool for our country. Thanks to our participation in Expo 2020 Dubai, we were able to present our country to a wide audience, and that’s exactly the kind of broad global marketing we should be betting on. We need to make ourselves known, promote our country not only economically, but also as a tourist destination, said G. Słomkowski. He admitted that PAIH could be such an umbrella vehicle that unifies all of Poland’s marketing efforts.

The experts also addressed the new export financing system, which has been in place for a year. – The new product introduced by the Export Credit Insurance Corporation is very good. It is a guarantee for an investment loan that would be used for future exports, said Jerzy Kwieciński. – It’s a great idea. It’s very popular with our clients, but it also requires that the financial strength of Export Credit Insurance Corporation grows, said the Vice President of the Management Board of Pekao.

The panellists also addressed the sensitive topic of government representatives’ support for private company initiatives, or economic diplomacy. Such support, according to the panellists, is useful in difficult markets, not in the EU, but in the markets we are trying to reach today, i.e. Asia and Africa, where the contacts in general of most EU countries are poor. – We need instruments to mitigate the risk of entering difficult markets, and this cannot be done without political decisions, J. Kwieciński said. – When senior ministers from developed countries come to Poland, they almost always come with specific agendas and companies. They present them without hesitation and fight hard for their interests, he said.

Among Polish exporters, the largest companies are by far the most dominant, and the propensity to go to third markets decreases as the size of the company decreases. – Everyone has problems with SME exports; Germany, too. Only they have more medium-sized companies, noted Janusz Władyczak. It takes time and funds to win new contracts this far away, if only for travel.

However, the panellists pointed to an easier way – selling through large trading platforms, which is an opportunity precisely for small and medium-sized companies, reducing costs and risks of market entry. – Now, the battle to build new distribution chains is underway. A giant Dubai Global Connect platform is being built in Dubai, which will deliver goods within an 8,000-kilometer radius, G. Słomkowski said. As Jerzy Kwieciński pointed out, platforms allow companies with a good product and competitive quality to enter other markets quickly and, if this step is successful, to subsequently make their sales more independent. Polish companies should also take a look at their intermediaries from Germany, the Netherlands, and France, who continue to sell Polish goods often under their own brands, taking most of the profit margin.

The programmes to support companies should be refined. This subject is a big one, but it is a problem of our economic development. We must have time to catch up with our economic development. We can’t all go into export markets now; some companies can’t afford it and don’t need it, except for IT companies, for example, which are doing well. But for manufacturing companies, the situation is different. We are at a stage where we will not yet see sharp increases.