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Poland - Country Guide

Poland constitutes a market of over of 38 million people located in the heart of Central Europe, sharing borders with both “new” EU and “old” EU-15 countries, and markets to the east including Ukraine, Belarus and Russia (Kaliningrad oblast). Poland's integration into the European Union (EU) has been a gradual but steady process. Adoption of EU legislation allowed Poland to reform the way in which its economy is regulated and reduce government intervention in the private sector. Changes in areas such as financial markets, company and competition law, accounting, and intellectual property rights have created a better environment for business and have contributed to economic growth. Poland plans to eventually adopt the Euro currency which will further the integration process. Poland is an active member of NATO, upgrading its armed forces accordingly and participating in joint peacekeeping activities in the region and elsewhere. Poland has troops deployed in support of the NATO mission in Afghanistan.

Poland's GDP growth doubled in 2010 to 3.5%. Recent GDP projections for 2011 are for continued expansion of about 4.0%. Poland's strong economic performance was fuelled by high export output, individual consumption and increased business investment. Over the medium term, growth will be generated by domestic demand, infrastructure spending (with EU support), and capital investment. EU Structural and Cohesion Funds will help maintain Poland as a market offering growth, stability and good prospects for UK business. Poland's allocation of EUR67 billion will underpin investment in Polish infrastructure, environmental and technology projects, as well as supporting human and regional development.

In 2010 Poland was the UK’s largest export market in Central and Eastern Europe. UK exports to Poland in 2010 went up to GBP 3.6 billion –a 35% increase comparing to 2009. The value of Polish exports to the UK amounted to GBP 5.9 billion (29% increase). More goods were exported to Poland than to Turkey, Australia or Russia. Bilateral trade between Poland and the UK increased from GBP 3 billion to GBP 9.56 billion between 2003 and 2010.

Sectors which offer particularly strong sales opportunities include nuclear power generation, shale gas exploration and production equipment and services, environmental technologies including renewable energies, medical equipment, defence equipment, IT products and services, and automotive after-market products. Poland continues to offer the benefits of a positive public attitude toward foreign investment, consistent economic growth rates, a well-regarded workforce, proximity to major markets and political stability.

The Polish Government plans to complete its first nuclear power plant by 2020. This is a massive undertaking which has created opportunities for reactor technology, engineering services, legal/regulatory services and training services.

The shale gas exploration phase is expected to last another two years or so. Geology and local cost structure will strongly influence the feasibility of full field production. Industry sources are cautiously optimistic that shale gas may eventually make a substantial contribution to Poland?s energy supply.

Poland's membership in the EU offers access to billions of Euros in structural and cohesion funds to support infrastructure and environmental protection and remediation projects. From 2007 to 2015 Poland will be the EU?s largest recipient of funding, receiving €67 billion in total from the EU budget. Many infrastructure projects are underway to prepare for Poland?s co-hosting of the European Cup Soccer Championships in 2012 with neighbouring Ukraine. Extensive effort and investment is still required to upgrade and modernize Poland?s transportation infrastructure. The country?s airport network is in need of expansion and modernization. The expansion of airport terminals in Krakow, Poznan, Wroclaw and Gdansk are planned as well as modernization of taxiways, runways and construction of new aprons.

Western investors represent a wide range of industry sectors including automotive, aerospace, IT hardware and software, food products, transportation, pharmaceuticals, paper production, appliances and financial services. Poland has also emerged as a favourable location for business processing centres including call centres, back-office operations and research centres.

Market Challenges

Poland remains one of the EU's lesser developed countries with limited individual purchasing capacity and domestic consumption. However, GDP per head jumped from 50% to 56% of the EU average in 2009.

Poland has made some progress in reducing bureaucratic obstacles to business. Although many projects are underway, Poland has made little progress in modernizing its road, railway, and air transportation network. Weak transportation infrastructure increases the cost of doing business for U.S. businesses by limiting ready access to all of the markets within Poland and diminishes the country?s potential as a regional distribution hub.

Market Opportunities

Sectors which offer particularly strong sales opportunities include power generation, environmental technologies including renewable energies, defence equipment, medical equipment, IT products and services, and automotive after-market products. Assuming Poland?s shale gas deposits transition into a production phase, this will produce a dramatic increase in the need for gas drilling rigs, gas field equipment, and services.

Much of the country’s road, rail, airport infrastructure, and tourism and athletic facilities need building or improvement, in preparation for the European Cup Soccer Championships in 2012.

With a talented labour force, wage rates among the lowest in the EU, excellent regional location and a sizeable market, Poland will continue to attract substantial new private investment for years to come. Due to the high education levels and language aptitude of its people, Poland has also emerged as a leading regional hub for business processing centres, including call centres, back-office hubs and tech and research centres. Incentives will continue to be offered at the national, municipal, and EU levels to stimulate inbound investment.

Market Entry Strategy

The Polish market is characterized by wide population dispersion with 25% living in rural areas and urban dwellers spread among a number of population centres including Warsaw and Lodz in the centre of the country, Krakow in the south, Wroclaw and Poznan in the west, Gdansk and Szczecin in the north and Lublin in the southeast.

Urban consumers generally have greater purchasing power than their rural counterparts. Personal contact with the customer is critical and final purchasing decisions typically require a face-to-face meeting. Success in this market typically requires an in-country presence such as an agent, distributor or representative office. Communication in Polish is recommended in order to elicit prompt responses to offers and inquiries and to facilitate negotiations. Poland?s communication network is relatively well developed and email communications and website offerings are an increasingly effective means of reaching local buyers.

Pricing remains the most critical factor in positioning a product or service for sale in Poland. Access to capital is difficult for most Polish firms and business transactions are typically self-financed. Western firms that can arrange financing will have a competitive edge. The effects of the global financial crisis have underlined the need for U.S. exporters to develop a creative strategy for financing exports. In addition, currency fluctuations may continue in 2011, challenging even the most well-planned export strategy. Careful crafting of terms of sale including creative packaging of currency and pricing terms, will help exporters gain long term advantage in the current Polish market.

Using an Agent or Distributor

Polish trading partners most often serve their western counterparts as distributors. They import goods, clearing them through customs and then offering the goods on the local market. Their network of contacts in the industry is highly leveraged when offering products on the market. One of the most common tools for distributors to use is the internet, where goods are advertised and, increasingly, also sold through e-commerce.

Signing an agent agreement with a Polish entity allows the agent to act as a representative for the foreign company in Poland. Agents have the authority to manage the company’s activities in the country and often also act as distributors. There are no local laws imposing rules specifically for Polish importers. Distributor and agent agreements may take any form mutually beneficial to the parties involved.

It is best to select a distributor (or agent) who is experienced, knowledgeable, and well-connected to existing distribution channels for the product. Polish companies tend to be less experienced than their western counterparts. In most cases, product and marketing training must be provided to new distributors.

As an EU member, Poland adheres to EU-wide business directives and requires local market compliance.

Companies wishing to use distribution, franchising and agency arrangements need to ensure that the agreements they put into place are in accordance with European Union (EU) and Member State national laws. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. In essence, the Directive establishes the rights and obligations of the principal and its agents; the agent’s remuneration; and the conclusion and termination of an agency contract, including the notice to be given and indemnity or compensation to be paid to the agent.

Establishing an Office

The type of business entity that companies choose to establish is often determined by the scope of activities the company plans to undertake in Poland. If a company plans to sell its products and services in Poland exclusively through its own office, it usually establishes a representative office. If a U.S. company plans to invest in Poland, there are different legal forms available to carry out business activity. Investors can choose the most suitable one from the following options for their business presence in Poland:

• Limited Partnership
• Limited Joint-Stock Partnership
• Limited Liability Companies (Sp. z o.o.)
• Joint Stock Companies (S.A.)
• Representative Office
• Branch Office

Modern office equipment like 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 labour pool is reasonably abundant and English-speaking secretaries with good secretarial skills are relatively easy to find as are employees with western management and accounting experience. Many executive search firms exist in Poland that offer assistance in finding appropriate staff.

Franchising

Poland is considered a mature franchise market. The growth of the franchise sector is projected at a rate of approximately 15-20% annually over the next several years.

According to the franchising expert, PROFIT system, at the beginning of 2010 there were over 565 franchise networks in Poland, (an increase of 16% over 2009) including 410 local franchise systems with nearly 155 foreign owned. PROFIT system forecasts more than 640 franchise operations in the Polish market by January 1, 2011. This target includes a growth of approximately 75 new franchise systems. The Polish franchise market has been consistently growing. In 2009 the market grew by 5.5 thousand new franchise units, registering the largest jump in units in Polish franchise history. At the beginning of 2010, over 32,000 franchise units were in operation (a 20% annual growth). Experts estimate that in 2010 the number of franchise units will increase by 5,000 reaching 37,000 units. The Polish franchise market is growing fastest within the retail sector and secondarily in the service sector. In 2009, Poles willingly invested in grocery stores, consumer electronics and home appliance stores as well as telecom stores. Within the services sector, the most popular new franchises included gastronomy, hairstylists, beauty care salons, education and laundries. The average investment amounted to USD 95,000, however the most popular are franchises valued at less than USD 32,000. This price is enough to invest in a small retail or services outlet. The most expensive investments involve supermarkets and petrol stations at a cost of over USD 2 million. The average income in a franchise unit was USD 54,000.

About 155 foreign franchise systems from 19 countries operate in Poland. The majority of foreign franchise systems come from France (17%), the U.S. and Germany (15% each), Italy (14%), Great Britain (8%), Spain and the Netherlands (5% each), among others (20%). These franchises represented the following sectors: apparel (30%), gastronomy (14%), beauty (10%), business services (7%), car services (7%), education (6%), other fast moving consumer goods –FMCG –and health (5%), household appliances (4%), and others (20%).

McDonald's, the first franchiser to Poland, establishing its first operation in Poland in 1992 and has become the most popular fast-food chain. Other exemplary franchise networks operating in Poland are Pizza Hut, Kentucky Fried Chicken (KFC), Burger King, Starbucks, Kodak Express, T.G.I. Friday, Subway, Levi's, MBE Etc., RE/MAX, and Best Western. The latest U.S. franchise systems that have entered the Polish market are Crestcom and Curves.

Local Polish franchise firms began operating in 1991-1992, simultaneously with large western franchisers entering the Polish market. Currently 72% of franchise brands are of Polish origin and 12% of them are expanding abroad. Polish franchises developing abroad represent mainly apparel, footwear and accessories, and the food and cosmetic retail sectors.

Franchisors must be prepared to adapt to required market norms and standards, invest in market research, test market receptivity through pilot projects, and to adjust their concepts to Polish business practices and consumer tastes. They should also be willing to provide continuing support to their master/area franchisees by advertising in local business oriented magazines or other appropriate advertising vehicles.

There are no special legal requirements for franchises in Poland. A franchise agreement is regulated by the general provisions of the Polish Civil Code and is affected by competition law, intellectual property regulations, consumer protection and tax law. Sub-franchising is permitted and is not restricted in any way.

Direct Marketing

Direct marketing has been utilized in Poland for over 20 years and is an accepted business practice in Poland, as in other EU countries. The DM market is growing by approximately 10% annually in Poland. Polish consumers are accustomed to purchasing via catalogue and have become more receptive to shopping on Internet platforms. More than 70% of Polish enterprises use direct marketing to sell their products and services. Popular DM forms utilized in Poland are: direct mail (products available in catalogues and internet), telemarketing, direct sales, TV marketing, and internet marketing.

There are no Polish laws or regulations that specifically address DM. In general, Polish law is compatible to legal regulations applied to DM activities throughout the EU. For companies operating in the DM sector, laws to consider include the Law of Personal Data Protection (introduced in August 29, 1997) and the Law of Protection of Consumer Rights, especially regulations referring to “distance sales” (introduced in March 2, 2000). Polish protection of personal data is very rigorous, although recent interpretations in court have been less strict.

There is a wide range of EU legislation that impacts the direct marketing sector. Compliance requirements are stiffest for marketing and sales to private consumers. Companies need to focus, in particular, on the clarity and completeness of the information they provide to consumers prior to purchase, and on their approaches to collecting and using customer data.

Direct Marketing over the Internet

The e-commerce Directive (2000/31/EC) imposes certain specific requirements connected to the direct marketing business. Promotional offers must not mislead customers and the terms that must be met to qualify for them have to be easily accessible and clear. The Directive stipulates that marketing e-mails must be identified as such to the recipient and requires that companies targeting customers on-line must regularly consult national opt-out registers where they exist. When an order is placed, the service provider must acknowledge receipt quickly and by electronic means, although the Directive does not attribute any legal effect to the placing of an order or its acknowledgment. This is a matter for national law. Vendors of electronically supplied services (such as software, which the EU considers a service and not a good) must also collect value added tax (see Electronic Commerce section below).

Joint Ventures/Licensing

Joint ventures as a form of business are frequently utilized in Poland. Many western businesses in Poland are established as joint ventures, with the Polish partner company holding responsibility for sales in the marketplace. Joint ventures are an excellent way to facilitate export sales to the Polish market.

Most joint ventures are established with the American partner contributing needed capital and technology. The Polish partner typically contributes land, distribution channels, trained workers, access to the Polish market and introductions within the local government and business community that could take years to develop for an American company on its own. Increasingly, American firms participating in joint ventures are asked to provide marketing, training, and promotional support for their Polish partners.

The licensing of products, technology, technical data, and services has been less common in Poland, due to concerns about intellectual property protection. Now that, as a member of the EU, Poland has taken major steps in the areas of intellectual property rights and copyright legislation, more foreign firms are expected to license their products here. Licensing is particularly prevalent in the industrial manufacturing and consumer goods sectors.

Selling to the Government

Information on the Office of Public Procurement, public procurement regulations and public tenders is available via the internet: http://www.uzp.gov.pl/cmsws/page/?F;356

Procurements by the Ministry of Defence are held by the Armed Forces Procurement Department. Comprehensive information about military procurement laws and regulations are provided on the Ministry of Defence website: http://www.dostawy.wp.mil.pl/?menu=7

Unlimited tendering is the preferred method. Participation in tenders is open to all those who are legally, technically, and financially able to perform the contract (including foreign companies).

Distribution and Sales Channels

The Regional Nature of the Market and Review of Major Regions

Opportunities for doing business in Poland are, like the population, dispersed throughout the country. Twenty-five per cent of the population resides in rural areas; urban dwellers are widely spread among a number of population centres.

Poland’s largest cities and their respective population are:

• Warsaw 1,711,000
• Kraków 751,000
• Lódz 774,000
• Wroclaw 632,000
• Poznan 554,000
• Gdansk 460,000
• Szczecin 406,000
• Bydgoszcz 357,000
• Lublin 349,000

Industrial Goods Distribution

Imports of equipment and technology have remained steady as Polish industry modernizes and restructures to compete with the West. Poles are familiar with the technical parameters of U.S. products, even prior to the actual introduction of those products in the marketplace. This reflects the fact that serious Polish importers do their homework.

Industrial distributors may, therefore, be part of a network that developed from former foreign trade organizations (i.e. organizations that handled imports during the Communist period), or may be individuals with significant connections to their industry (frequently former employees of the large foreign trade firms). As industries and companies continue to privatize in Poland, distribution networks are expected to expand in scope and complexity.

Many distributors of industrial equipment are specialized and have very specific technical expertise. Because of this, some are better able to represent foreign manufacturers on a national level than most consumer goods distributors. However, exporters should be aware that large industrial enterprises would rather have direct contact with manufacturers when purchasing heavy machinery.

As with the consumer goods sector, 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 foreign partners to provide marketing and promotional support, training and financing. Polish trade fairs, which have become increasingly specific in scope, are a good place to look for possible distributors. It is advisable to consider having one exclusive distributor. Potential channel partners in this sector tend to prefer exclusive arrangements because often they bear the marketing costs of new products and do not want potential competitors to reap the benefits of their promotional activities.

Selling Factors/Techniques

The Polish market is in most cases regional, and this description applies to selling as well. Because unemployment is significantly lower in Polish cities, urban dwellers generally have more purchasing power than inhabitants of rural areas. The countryside is dotted with single-factory towns, many of which currently suffer from high unemployment.

Letters, faxes, Internet websites and packages of product literature will serve to introduce a product or service to a Polish company. Communication in Polish is recommended if the seller would like to receive a speedy reply. Companies should ensure that translations from English into Polish are performed only by proficient translators who are fluent in modern business Polish and grammar.

An average Polish customer no longer requires face-to-face contact with a person selling a product. The role of the Internet in securing business contacts is growing and can now be considered a valuable selling tool. Over 17 million Internet users in Poland constitute approximately 46% of population. Approximately 40% use e-commerce to shop for products or services regularly. Over 98% of Polish companies have access to the Internet and many of them have begun to conduct business through this venue.

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. This means that success in Poland is difficult without an in-country presence, whether that presence is an agent, distributor, or representative office.

Polish customers will want to discuss the technical parameters of the product, explain their needs, and negotiate the price. In addition, the product may not be sold at the first meeting, as the customer will want some time to consider the points discussed and to arrange financing. Initial orders are frequently small due to Poles access to limited amounts of working capital and high rates of interest on credit. Follow-on sales often grow rapidly once effectiveness and profitability are established.

Exporters 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 to issue commercial paper. Therefore, most business activities, including payment for imports, are still self-financed. Companies that can arrange for affordable financing for their Polish customers will have an edge over their competitors.

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 sale will ultimately be completed. Doing business in Poland is built upon personal relationships and trust.

Electronic Commerce

There are no significant barriers to electronic commerce activities in Poland, although American companies should consider the strict requirements of the personal data protection regulations and tax issues which match those of other European Union countries. In January 2011 Polish fiscal authorities finally decided to fully recognize e-invoices, waving the requirement that companies maintain hard copies. This is expected to greatly increase the use of the internet and facilitate the development of electronic commerce.

Even though electronic commerce in Poland has been growing both rapidly and steadily over the last decade, it still is early stages of development. The total value of online sales to consumers through e-shops and auction sites has reached over USD5 billion in 2010, an 18% growth over the previous year. E-commerce sales currently constitute only 3% of the entire retail turnover in the country. For a variety of reasons, including the language barrier and some limitations set by foreign auction and e-commerce sites, the majority of online shopping is done locally in Poland.

The most popular products for e-commerce consumer transactions are airlines tickets, tourist services, consumer electronics, cosmetics, clothes, books, and house and garden equipment. In large cities, ordering groceries online has become popular among the mid and higher income population. In general, Poles prefer auction services over e-shopping, so almost half of the e-shops channel their sales also through auction websites. Allegro continues to be the most popular auction site in Poland. Recently, there has been a growth of transactions done by users of social portals.

In the beginning of 2010, there were some 7,500 online stores with the count increasing to almost 10,000 by the end of the year. The majority of online shops complement the traditional brick and mortar operations.

E-commerce development is facilitated by easy access to the Internet at affordable prices, common usage of banking accounts and credit cards, and, in general, familiarity with Internet technologies. Over the past 4 years, the value of transactions paid by credit cards has increased four-fold with every fifth client using online banking services.

At the end of 2010, Poland counted two million of internet addresses with the .pl suffix, nearly half a million more than the year before. In addition to websites in the .pl domain, Polish companies increasingly register their website under .eu or .com. Even though almost all companies have Internet access, less than 2/3 of SMEs maintain their websites. The majority of their websites contain only basic information and only 7% allow for ordering products online.

Approximately 61% of Polish homes have a computer, and 86.1% of them have internet access, although only half of the Poles surveyed use the Internet regularly. Approximately 40% of Internet users conduct online transactions and 17% of them use Internet banking services. The use of the Internet is also enhanced by the tremendous popularity of social networking sites. The most popular sites in Poland are Nasza Klasa and Facebook.

With funding support from the EU, the Polish government and regional authorities continue to invest in broadband internet development projects in the five provinces in Eastern Poland which currently have the lowest internet access and weakest infrastructure. Once these projects are completed by the end of 2010, the USD350 million spent on the projects should greatly facilitate e-commerce development in these regions. The public administration also continues to work on new services available through its electronic platform which was launched in 2008. Total public expenditure in Poland on digitalization and e-services fluctuate around 1% of GDP.

Trade Promotion and Advertising

General Legislation

Laws against misleading advertisements differ widely from member state to member state within the EU. To respond to this imperfection in the Internal Market, the Commission adopted a Directive, in force since October 1986, to establish minimum and objective criteria regarding truth in advertising. The Directive was amended in October 1997 to include comparative advertising. Under the Directive, misleading advertising is defined as any "advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which for those reasons, injures or is likely to injure a competitor." member states can authorize even more extensive protection under their national laws.

Comparative advertising, subject to certain conditions, is defined as "advertising which explicitly or by implication identifies a competitor or goods or services by a competitor." member states can, and in some cases have, restricted misleading or comparative advertising.

Following the adoption of the 1999 Council Directive on the Sale of Consumer Goods and Associated Guarantees, product specifications, as laid down in advertising, are now considered as legally binding on the seller.

The EU adopted Directive 2005/29/EC concerning fair business practices in a further attempt to tighten up consumer protection rules. These rules outlaw several aggressive or deceptive marketing practices such as pyramid schemes, "liquidation sales" when a shop is not closing down, and artificially high prices as the basis for discounts in addition to other potentially misleading advertising practices. Certain rules on advertising to children are also set out.

Medicine

The advertising of medicinal products for human use is regulated by Council Directive 2001/83/EC as amended by Directive 2004/27/EC. Generally speaking, the advertising of medicinal products is forbidden if market authorization has not yet been granted or if the product in question is a prescription drug. Mentioning therapeutic indications where self-medication is not suitable is not permitted, nor is the distribution of free samples to the general public. The text of the advertisement should be compatible with the characteristics listed on the product label, and should encourage rational use of the product. The advertising of medicinal products destined for professionals should contain essential characteristics of the product as well as its classification. Inducements to prescribe or supply a particular medicinal product are prohibited and the supply of free samples is restricted.

The Commission presented a new framework for information to patients on medicines in 2008. The framework which is still being debated would allow industry to produce non-promotional information about their medicines while complying with strictly defined rules and would be subject to an effective system of control and quality assurance.

Nutrition & Health Claims

On July 1, 2007, a regulation on nutrition and health claims entered into force. Regulation 1924/2006 sets EU-wide conditions for the use of nutrition claims such as “low fat” or “high in vitamin C” and health claims such as “helps lower cholesterol”. The regulation applies to any food or drink product produced for human consumption that is marketed on the EU market. Only foods that fit a certain nutrient profile (below certain salt, sugar and/or fat levels) will be allowed to carry claims. Nutrition and health claims will only be allowed on food labels if they are included in one of the EU positive lists. Food products carrying claims must comply with the provisions of the nutritional labelling directive 90/496/EC and its amended version to come into effect in 2011.

The development of nutrient profiles, originally scheduled for January 2009, has been delayed. Nutrition claims can fail, however, on any single criterion, i.e. if only one nutrient (salt, sugar or fat) exceeds the limit of the profile, a claim can still be made provided the high level of that particular nutrient is clearly marked on the label. For example, a yogurt can make a low-fat claim even if it has high sugar content but only if the label clearly states “high sugar content”. A European Union Register of nutrition claims has been established and is updated regularly. Health claims cannot fail any criteria.

A simplified authorization procedure has been established for health claims based on new scientific data.

Food Supplements

Regulation 1925/2006, applicable as of July 1, 2007, harmonizes rules on the addition of vitamins and minerals to foods. The regulation lists the vitamins and minerals that may be added to foods. This list was most recently revised in November 2009. A positive list of substances other than vitamins and minerals has not been established yet, although it is being developed. Until then, member state laws will govern the use of these substances.

Tobacco

The EU Tobacco Advertising Directive bans tobacco advertising in printed media, radio, and internet as well as the sponsorship of cross-border events or activities. Advertising in cinemas and on billboards or merchandising is allowed, though these are banned in many member states. Tobacco advertising on television has been banned in the EU since the early 1990s and is governed by the TV without Frontiers Directive. The EU plans to revise the Tobacco Products Directive in 2012 with possible changes could include bigger, double-sided health pictorial warnings on cigarette packages and plain packaging.

Local Market Specifics

Trade fair activities in Poland grew rapidly at the beginning of the last decade, from a single major event (the annual June Poznan International Fair) to a full year's schedule of industry and product specific events in major cities around the country. For information on upcoming trade events please see Chapter 9: Trade Events. Some fairs are still proving their worth while others have lost popularity in recent years and are no longer attracting key Polish and international businesses. Direct company presence at trade fairs in Poland is minimal, but some firms exhibit through their European or Polish distributors.

Advertising in Poland is considered important, not only in the consumer product field, but also in developing a company image for all types of goods. Television, which reaches virtually every home in Poland via local channels or satellite, is believed to be the most effective advertising medium in Poland. Products advertised through television commercials show the greatest sales growth among all advertised products. The bulk of advertising revenues go to television. The price of television 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 five national networks in operation: (Polskie Radio SA, Polskie Radio SA Program 2, Polskie Radio SA Program 3, RMF FM, and Radio ZET).

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 (OTC) 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. Major newspapers circulate throughout Poland and reach every corner of the country. In addition, special interest magazines, business journals, niche publications, and specialized newspapers have proliferated. Newsweek Polska, a division of Newsweek, will celebrate its 10th anniversary this year (2011) and the Polish edition of Forbes magazine, which was launched in January 2005, will celebrate its 6th anniversary this year. Classified advertising is very well developed and effective. Most U.S. companies find print media to be a highly effective means of reaching customers and candidates for jobs.

Major daily newspapers include Rzeczpospolita, Gazeta Wyborcza, Super Express, Fakt, Dziennik Polska, Nasz Dziennik, and Polska The Times. Major daily business journals include Gazeta Prawna, Parkiet-Gazeta Gieldy, Puls Biznesu, and Financial Times. The Polish edition of Business Week is published on a biweekly basis. There are also two English language weeklies that cater mainly to foreigners in Poland, the Warsaw Business Journal and the Warsaw Voice. Major international, as well as local, advertising and public relations agencies abound in Poland.

Pricing

The importance of pricing in Poland cannot be understated. Pricing is the key to successfully selling products and services in Poland. 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 commonly expressed reason for failed sales efforts according to potential Polish clients continues to be that “the price is too high.” The risks surrounding an unstable exchange rate can make pricing especially difficult. Flexibility in pricing is important, and the initial market penetration to gain product awareness among Polish consumers should be the goal. Successful exporters work together with their Polish representatives to keep costs, particularly import costs, as low as possible. Poland’s accession to the EU has given the price advantage to European producers: other goods are burdened with customs duties, while products imported from EU countries are not.

The Polish market is large and expanding for all types of products, but is also increasingly competitive: those companies who approach the market with a long-term view of creating market share for their products will reap the rewards.

Sales Service/Customer Support

After price, service is the second greatest concern for Polish customers. 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.

Ideally, customer service and support should be provided through a trained Polish representative or an affiliate company. The local technical support teams can be considered a part of the manufacturer’s image in the Polish market. Effective, fast and reliable service contributes greatly to success in Poland. Manufacturers and suppliers should be ready to provide full assistance to their service personnel in Poland and may wish to periodically send a service representative to Poland to work with the local representative and visit customers. As an EU member, Poland adheres to EU-wide business directives and requires local market compliance.

Product Liability

Under the 1985 Directive on liability of defective products, amended in 1999, the producer is liable for damage caused by a defect in his product. The victim must prove the existence of the defect and a causal link between defect and injury (bodily as well as material). A reduction of liability of the manufacturer is granted in cases of negligence on the part of the victim.

Product Safety

The 1992 General Product Safety Directive introduced a safety requirement at the EU level to ensure that manufacturers only place safe products on the market. It was revised in 2001 to include an obligation to the producer and distributor to notify the Commission in case of a problem with a given product, provisions for its recall, the creation of a European Product Safety Network, including a ban on exports of products to third countries that are not deemed safe in the EU.

Legal Warranties and After-Sales Service

Under the 1999 Directive on the Sale of Consumer Goods and Associated Guarantees, professional sellers are required to provide a minimum two-year warranty on all consumer goods sold to consumers (natural persons acting for purposes outside their trade, businesses or professions), as defined by the Directive. The remedies available to consumers in case of non-compliance are:

• Repair of the goods;
• Replacement of the goods;
• A price reduction;
• Rescission of the sales contract.

Protecting Your Intellectual Property

Polish legislation and regulations have been amended several times to bring them into full compliance with the WTO TRIPS Agreement and EU Directives. The Polish government also continues to review and amend other laws and regulations to reflect the development and use of new technologies. Even though piracy remains a problem, Poland has made great progress in this respect, which resulted in taking Poland off the USTR 301 Watch List in 2010.

The main organizations responsible for IPR and related issues in Poland are the Ministry of Culture and National Heritage (http://www.mkidn.gov.pl/english/english.html) and the Polish Patent Office (http://uprp.gov.pl/English).

Specifically for copyright, all EU Member States are parties to the Berne Convention for the Protection of Literary and Artistic Works, so EU copyright protection is automatic and no formal registration is necessary. Therefore, if a company has copyright protection in the US under the Berne Convention, that company will equally have protection in the EU-27. EU Member States are also party to the Berne Union, which allows them to offer more, but not less, protection than is required under the Berne Convention. Many EU Member States have therefore, created domestic registration systems that provide additional benefits to the copyright holder.

As for patents, the EU countries have a “first to file” approach to patent applications. This makes early filing a top priority for innovative companies in the EU. If a company wants to protect a trademark asset in the EU, it must register the trademark with an individual Member State or with the EU in the form of a Community Trade Mark (CTM). Registration is especially important in the EU because, unlike in the US, where trademark protection is based on “first use" as well as registration rights; the trademark registration system in the EU is based on a "first-to-file", or more precisely, a “first to successfully register” approach.

It is always advisable to conduct due diligence on potential partners. Negotiate from the position of your partner and give your partner clear incentives to honour the contract. A good partner is an important ally in protecting IP rights. Consider carefully, however, whether to permit your partner to register your IP rights on your behalf. Doing so may create a risk that your partner will list itself as the IP owner and fail to transfer the rights should the partnership end. Keep an eye on your cost structure and reduce the margins (and the incentive) of would-be bad actors. Projects and sales in the EU require constant attention. Work with legal counsel familiar with EU laws to create a solid contract that includes non-compete clauses, and confidentiality/non-disclosure provisions.

Local Professional Services

The legal environment in Poland continues to evolve at a rapid pace, and this is expected to continue. In general, Polish law firms follow changes closely. Thus, companies doing business in Poland are strongly urged to obtain legal representation. This is particularly essential when bidding on a major project, forming a joint venture, or untangling a trade dispute. Most major law firms in Poland provide business counselling in addition to legal advice. Some firms are also experienced in helping their contacts find Polish business partners, investments or projects to pursue.

Most of the major international accounting firms have operations in Poland that focus on business formation, tax matters, and employee benefits. Many are also involved in the privatization process in Poland, including advising the Polish government. All can offer practical business counselling and assistance in establishing a representative office or incorporating a business in Poland.

Leading Sectors for Export and Investment

• Commercial Sectors
• Defence Systems
• Gas Drilling and Exploration
• General Aviation Equipment
• Green Building Products and Technologies
• Machine Tools
• Medical Equipment and Services
• Nuclear Energy
• Process Controls
• Water and Wastewater Infrastructure
• Wireless Telecommunication Equipment and Services
• Agricultural Sectors
• Agricultural Sector Best Prospects:
• Feed & Fodder
• Processed Fruit & Vegetables (Consumer Oriented Product)
• Tree Nuts (Consumer Oriented Product)
• Wine (Consumer Oriented Product)
• Salmon Whole (Fish Products)
• Hardwood Lumber (Forest Product)