FOREIGN INVESTMENTS Poland: Industry is the Key Issue for Germans

Author / Editor: Robert Ocetkiewicz / Lisa Saller, Lisa Saller

German concerns are eager to establish businesses in Poland. Their investment still focus mainly on the industry, but growing interest in other branches may be observed, as well.

Volkswagen Plant in Poznań
Volkswagen Plant in Poznań
(Photo: Volkswagen)

For many years Poland has cooperated actively with Germany. According to the most recent report published by KPMG in cooperation with the Polish-German Chamber of Commerce and Industry (AHK Polska) Poland is the most attractive country for German entrepreneurs in Central and Eastern Europe in respect to investments. So far, German companies have invested as much as PLN 114 billion in Poland. Six thousand companies with German capital, that employ almost 300,000 people, operate in the Polish market at the moment. Among the main beneficiaries of the German investments is industrial processing, with automotive and chemical industries on the top, but the interest in other sectors has been growing, as well.

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Production above all

Poland is appreciated not only by Volkswagen, which is the most recognizable German investor here. A few months ago the construction of a new plant was announced by Uniwheels AG, that is one of the biggest producers of light-alloy wheels in Europe. The plant will be erected in Stalowa Wola and will employ 250 persons. Being the biggest plant in Uniwheels’s portfolio, it will contribute to the increase of the production by 2 million light-alloy wheels a year. This also means that Uniwheels AG’s production plants in Poland will manufacture as much as nine million light-alloy wheels a year.

It is not an accident that German companies invest in Poland. According to the studies performed by Polish-German Chamber of Commerce and Industry, 94% of foreign concerns are satisfied to have entered the Polish market and if they were to choose a place for their assets, they would choose Poland again. What is important, such high level of satisfaction with business conducted in Poland has been maintained for the last six years, that is since the breakout of the global economic crisis. Poland became then a safe harbour for foreign companies. Now, with 4.16 points out of six points that may be achieved, it is better than for instance the Czech Republic, Estonia, Slovakia, Slovenia, Lithuania and Latvia, and it is the most often selected location for investments in Central and Eastern Europe.

What else besides the industry?

German investors in Poland invest mainly in industrial processing (31% of investments), which is followed by the financial and insurance sector (26%) and wholesale and retail trading (15%). Experts expect that the current supremacy of industry over other branches will not survive long and its position will be taken by modern services rendered for business and IT sector. According to the report prepared by the Polish Information and Foreign Investment Agency (PAIiIZ) and Hays company, German enterprises have a 7%-share in the BPO (Polish Business Process Outsourcing) and ITO (Information Technology Outsourcing) markets, which means that they are the second biggest foreign investor (preceded by the US, but on the same position as the UK and France). Mr Stephan Fricke, the President of the German Outsourcing Association emphasizes that the key element deciding on attractiveness of Poland for German investors in those sectors is availability of qualified staff.

“In our opinion Poland is a destination characterised by a great potential, in particular for bigger organisations that generate demands for larger amounts of employees speaking many languages, who are also versatile and well educated. Moreover, Poland offers stable legal and economic conditions, which is extremely important for German investors. The size of the market and expected growth of the domestic demand for qualified services are further important aspects”, says Stephan Fricke.

Wrocław is the most popular city for location of German business services. It is appreciated due to good transportation connections with Germany, large number of graduates from Germany Philology and historical relationships with the Western neighbour. Wrocław is followed by Warsaw and Poznań.

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Why Poland?

There are a few reasons to place foreign investments in Poland. Foreign entrepreneurs highly appreciate professional qualifications of Polish employees, their involvement and productivity, and in case of management – also higher education, that is observed in case of a relatively large group of people in Poland. Stable legal and economic conditions are also of significant importance for them. A few years ago investors pointed out to the fact that Poland had not introduced the single European currency was an obstacle for them, while now they realize more and more often that Polish zloty has a positive impact on the economic situation in Poland.

German investors most often criticize the complicated tax system and lack of efficiency of the public administration in Poland. But the growing interest in investment in Poland proves that the foregoing aspects have no significant impact on investment decisions made by foreign companies.

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