Economic Data
(in U.S. dollars, 1998 figures)
Total GDP: $145 billion
GDP Growth: 4.8%
Per Capita GDP: $3,750 Inflation: 8.6%
Unemployment Rate: 10.4% Trade Balance: – $13.6 billion
Trade with RI: Poland is Rhode Island’s 36th largest trading partner, with $2.2 million in exports in 1998 ($7.6 million in 1993).
Exports: $30.2 billion: manufactured goods, machinery and transport equipment, consumer goods, foodstuffs, and fuels. Export trading partners: Germany (33%), Russia (8%), Italy (6%), Ukraine (5%), Netherlands (5%), and France (4%).
Imports: $43.9 billion: machinery and transport equipment, chemicals, consumer goods, food, and fuels. Import trading partners: Germany (24%), Italy (10%), Russia (6%), UK (6%), France (6%), and US (5%).
Best Prospects for Export: Computer software, computers and peripherals, electrical power machinery and equipment, construction materials and equipment, plastics, automobile parts, pollution control equipment, food processing equipment, health insurance, education and training, telecommunications, financial services, printing, and snacks.
Key Trading Partners: Germany, Russia, Netherlands, France, Italy, United Kingdom, and United States.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
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Ask Roger Hicks about doing business in Poland and he’ll tell you it’s all about relationships, and once you establish a level of trust and confidence it could prove to be among your most pleasant business experiences.
“For many years this country was under Communism and the older people in particular do have their doubts about countries such as our country,” said Hicks, who directs exports for the 85-year-old Leonard Valve Company in Cranston. “There is a little bit of suspicion of westerners, but when they recognize the fact we’re very honest, good business people, the relationship blossoms. To watch that go from suspicious nervousness to personal caring is really sweet.”
It is also financially rewarding. For Leonard Valve that has meant an exporting business to Poland that has been increasing an average of 50 percent a year over the last few years, with prospects for greater growth in what is an expanding Polish economy.
Leonard Valve, with about 50 employees here, is a manufacturer of water temperature control, thermostatic mixing valves.
Hicks said the company began exporting to Poland in 1996, at about the time Leonard Valve decided that a way to grow the business would be to enter into export markets directly, rather than through a licensing situation. Hicks said that now exports account for about 10 percent of the company’s overall business, with Poland about 5 percent of the export business. The company’s primary export targets have been Japan and Canada.
“They’re (Poland) not our biggest export market by any means, but it’s a part of our business, a growing part of our business, and a nice part of business,” Hicks said. “Poland is just a nice place for us.”
The prospects of doing business in Poland came about at the end of 1995, when Hicks was in Paris for a plumbing, construction show, and met Marek Coczorowski, a young man who was at the show looking at equipment.
After several meetings it was agreed that Coczorowski would become Leonard Valve’s representative in Poland. The young man, whose father, Wodek worked for the communist government as a process engineer and whose mother was a water works inspector, established Biuro Technizne EKOTECH in an apartment in a big block apartment building.
But with business growing, and a partner, Zarek Kulik in Warsaw, Coczorowski has now opened an office and warehouse in Poznan, and has brought his father and now his brother, Karol, into the business.
It is Coczorowski’s success that Hicks points to proudly, a family that had hid from the Nazis during the occupation in cellars underneath the cities, and had worked under communism. And now a young man in a democratic society, a free enterprise system, who represents the type of entrepreneurial attitude that Hicks said is spreading among young people throughout Poland.
Republic of Poland
Location: Central Europe, east of Germany. Bordered by Belarus, Czech Republic, Germany, Lithuania, Russia, Slovakia, and Ukraine.
Geographic Area: 312,683 sq. kilometers, slightly smaller than New Mexico
Climate: Temperate with cold, cloudy, moderately severe winters; mild summers with frequent precipitation.
Main Cities: Warsaw (Capital), Lodz, Krakow, Wroclaw, Poznan, and Gdansk.
Population: 38.6 million (1998)
Languages: Polish
Type of Government: Democratic State
Head of State: President Aleksander Kwasniewski
Currency: Zloty (Zl) 1 Zloty = 100 Groszy
Exchange Rate: 1 U.S.$ = 4.01 Poland Zloty (September 21, 1999)
Economic and Political Conditions: After a slowdown affected by the Russian crisis, the Polish economy is forecast to grow by 4 percent in 1999 and 5 percent in 2000. Described as the best-developing economy in the former Soviet bloc, Poland has attracted private and public investment. The European Bank for Reconstruction and Development (EBRD) will invest $386 million in 1999. The investment will promote small and medium businesses as the key to the country’s economic success. The Japanese car company Isuzu opened a $200 million plant in the Special Economic Zone near Tychy on September 17. Since more than 60 percent of the engine parts will come from the European Union, the engines will have free access to the EU markets.
Tarriffs, Trade Regulations and Taxes
Poland complies with the Harmonized Tariff System. Tariff rates are subject to changes twice a year, as Poland adjusts to becoming a market economy. Customs duties apply to all products imported into Poland. Tariffs range from zero to 45%, with the average between 15-20%. The customs duty code that is currently binding in Poland has different rates for the same commodities, depending on their point of export.
Taxation: A Value Added Tax (VAT) is assessed at 0%, 7%, and 22% of the CIF value, depending on the product. VAT is levied in addition to duty and excise tax. An excise tax applies to products such as alcohol, cosmetics, cigarettes, sugar confectionery, video cameras, satellite antennas, passenger cars, gasoline, and oil.
Foreign Ownership and Licensing: The Polish Government and all major political parties support a free-market based economy and foreign investment. A foreign investor may enter the Polish economy by means of a “greenfield” investment, acquisition, or merger with an existing Polish company. Any level of foreign investment is permitted, including 100 percent ownership. A foreign enterprise may establish a representative office in Poland for foreign trade, transport, tourism and culture, banking and insurance.
Import and Export Controls and Documentation: Trade is not generally restricted in Poland. A license or concession is required imports of strategic goods, such as police and military products. Imports of beer, wine and strong alcoholic beverages, gas and certain agricultural and food products are also licensed. A permit is necessary to sell imported alcoholic products. Gasoline, diesel fuel, heating oils, wine and other alcohol, cigars and cigarettes are subject to import quotas.
A U.S. export license is required on shipments of certain commodities to Poland, as provided under the U.S. Bureau of Export Administration’s Commodity Control List. Import documentation in Poland is compiled under a Single Administrative Document (SAD) and includes a customs declaration and certificate of origin. The SAD contains 56 questions about the goods, importer, the place of origin, and method of payment. A completed customs value declaration is attached to the SAD. An original invoice or pro forma invoice proving the value of the goods is also required.
Free Trade Zones: Eight “free customs areas” have been established. Foreign-owned firms have the same opportunities to benefit from foreign trade zones, free ports, and special economic zones as Polish firms.
Trade Financing: All commercial banks in Poland offer fund transfers, investment or working capital loans. Banks are legally limited in their exposure to any one creditor, thus large loans must sometimes be shared between two or more banks.
Import financing is conducted through qualified foreign exchange banks. The safest method of receiving payment for a U.S. export is through an irrevocable letter of credit (L/C). Most banks in Poland require the importer to deposit funds prior to issuing a letter of credit. For the Polish importers, the L/C is not a financing tool but a payment mechanism. The World Bank, the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and other financial assistance programs offer financing.
Marketing, Product Pricing, Selling Factors/Techniques: The consumer goods market is one of the hardest to penetrate. Imports are still strong, but the previously insatiable demand for western goods has been replaced by more pragmatic attitudes about price and quality. The most common complaint the Commercial Service Warsaw hears about U.S. products is that “the price is too high.” Pricing U.S. origin products is complicated by the additional customs duties, VAT, and, in some cases, an excise tax, which increase the retail price dramatically.
Advertising in Poland is considered critical for products and branding images. A western brand is no longer the sure sell it once was, as local brands have improved in quality. Brand name recognition and loyalty are challenges for U.S., since the market is overwhelmed by hundreds of new western and local Polish brands.
Patents, Trademarks, and Copyrights: Patent applications are filed with the Polish Patent Office, and take 18 months to be processed. Registered patents are valid 20 years from the filing date. Registered models, inventions, and industrial designs are valid or five years and may be extended for another five years. Annual fees must be paid for maintaining a patent.
Trademarks and service marks may be registered. Applications are filed with the Polish Patent office, and priority under the Paris Convention may be claimed. 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.
A new copyright law, in line with international standards, introduced protection for literary, musical, graphics, computer software, audiovisual works and industrial patterns. The law extends copyright protection from 25 to 50 years to comply with international standards.
Key Contacts – Poland
Rhode Island Export Assistance Center (RIEAC) and World Trade Center, Bryant College
Raymond W. Fogarty, Director, Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416 E-Mail: postoffice@itdn.net
Website: http://www.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123 E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsushashi, International Trade Specialist
Telephone: (401) 528-5104 E-Mail: kyatsuha@mail.doc.gov
U. S. Small Business Administration
Marilyn Bogue, International Trade Officer
Telephone: 528-4585 E-Mail: marilyn.bogue@sba.gov
Embassy of Poland
2640 16th Street, N.W., Washington, DC 20009
Phone: 202-234-3800 Fax: 202-328-6271
Consulate General of the Republic of Poland – New York
233 Madison Avenue, New York, NY 10016
Phone: 212-889-8360 Fax: 212-779-3062
English Language Publications:
Polish Embassy Newsletter: http://www.polishworld.com/polemb/news/
Warsaw Voice: http://www.warsawvoice.com.pl/
Polish Market: http://www.polishmarket.com.pl/
Warsaw Business Journal: http://www.ceebiz.com/poland/
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
