The conversation is led by Marcin Wandałowski, editor of the publication of the Civic Congress.
What will Poland's competitiveness be based on in the context of a dynamically changing global geopolitical and economical strategy in the coming years?
Our country is presently at a very interesting minute in its fresh history. We are trying to change the current growth model, based on low labour costs, based on a model based on higher innovation – which is simply a "holy Grail" of development. We believe that now is the time to make specified a transition.
The erstwhile model has brought many benefits to Poland – we are now the 20th largest economy in the world, our accumulated income from the last 30 years is among the highest in the world, and the economy is comparatively balanced and prosperous. I think this is simply a good time to make innovation more an engine of growth. Of course, this will not be possible if we do not build up in parallel the ability to accumulate Polish capital and conditions conducive to innovation.
Labour costs have been rising rapidly for a long time. Can it be said that Polish companies are increasingly competing with innovation, quality, value creation and not price?
Yes, Polish companies are increasingly innovative. We besides see a clear increase in the fund sector, which funds innovation in Poland, and an expanding and more comprehensive engagement of public administration in this area. This effort translates into a real improvement in innovation and competitiveness of Polish companies.
For many years, the simplest and most common form of abroad expansion of Polish companies remains exports to the countries of the European Union within the common market. This strategy is comparatively easy and “friendly“ which, from the position of our economy, is of course a large plus. But expansion is simply a bigger challenge stricte equity.
However, erstwhile considering this subject deeper, it should be noted that Poland has a reasonably circumstantial economical structure that distinguishes us to any degree from the countries of the region. The privatisation process has led us to a model based mainly on tiny and medium-sized enterprises. Moreover, we are besides characterised by a comparatively low degree of "oligarchization" of the economy – we did not make besides many large conglomerates or financial groups, operating according to a completely different investment logic.
My point is that for many years the simplest and most common form of abroad expansion of Polish companies remains exports to the European Union countries within the common market. This strategy is comparatively easy and “friendly”, which, from the position of our economy, is of course a large plus. A larger challenge is the expansion of strict capital, which is mostly due to the structure of Polish companies.
Or are there aspects related to the mentality of many entrepreneurs who do not want to take greater risks?
The survey that PFR carried out 2 months ago together with Deloitte shows that more than 50% of the surveyed entrepreneurs declared their interest in abroad expansion in specified a formula. They realize that this is the way to make their companies more competitive. The results of this survey so do not confirm the thesis of excessive aversion to the hazard of Polish entrepreneurs.
Just due to the fact that the capital expression of abroad expansion poses a greater challenge than carrying out export activities to neighbouring countries does not mean that our companies do not undertake it. On the contrary, in fresh years the number of specified investments has been increasing, and Polish entrepreneurs are doing very well in them.
What directions of capital expansion are most frequently considered by native entrepreneurs?
They are the biggest concern for European countries, and in peculiar Germany, due to geographical and economical proximity, past of cooperation in the last 30 years and good knowing of the specificities of the east lands. For this reason, the presence of Polish companies is constantly increasing there. On the another hand, the interest in the US marketplace is besides increasing, which, paradoxically, is due to the larger customs barriers: the best way to establish a capital investment in the United States could be the capital investment.
Can we talk about sectors where there is the top possible for capital expansion?
In principle, abroad expansion, especially in the capital area, is not yet a mass phenomenon. For this reason, the definition of sectors is somewhat secondary to me: in order to do so statistically crediblely, we would request a larger base of specified transactions.
The sectors with the top possible for abroad expansion in the capital area include low-carbon transport, IT and dual use.
However, I may be tempted to choice certain areas based on my experience and observation. I believe that low-carbon transport companies have a very large possible for expansion. The best example is PESA, who courageously thinks about marking his presence abroad. Poland besides has a strong IT service sector, which is increasingly entering abroad markets. An example is Euvic, which together with us has invested in Ukraine, making respective acquisitions already during the war.
Very interesting area are besides companies operating in the sector dual useEven in defence technologies. For example, in our portfolio we have WB Electronics, a company powerfully present on global markets, but we besides see a number of investments made by smaller entities. This is encouraging, due to the fact that strengthening resilience is 1 of the most crucial goals facing the Polish economy today.
What organization and financial conditions would you consider essential for the capital expansion of Polish companies to continue, becoming increasingly recognisable in Europe and even in the world?
In my opinion, Polish entrepreneurs can benefit present from a reasonably complete product offer offered by national improvement institutions. I am referring to, among others, BGK's grant and elder debt instruments and more specialised debt and capital Equity – from PFR. There is besides a wide scope of guarantees, besides under CAPEX, which KUKE provides. Moreover, abroad expansion activities are besides supported by commercial financial institutions, specified as PKO BP. In my opinion, backing itself is not a decisive obstacle today.
Rather, the barrier concerns the decision of the Polish entrepreneur to go abroad. The Polish economy and the size of the home marketplace let many companies to grow well without abroad expansion, so the minute erstwhile the entrepreneur considers that he wants to take another step is crucial. Through PFR actions and facilitating access to capital financing, we are trying to encourage entrepreneurs to take a small more risks and enter fresh markets.
In Poland we frequently have a situation where the scale of the home marketplace allows companies to grow and function well without abroad expansion. As a PFR, we want to gradually break this stalemate.
If I realize correctly, would you so be willing to agree with the thesis about a kind of “curse of the Polish market”? It is large adequate to build a company here, to make it well and to accomplish unchangeable profits, without having to go abroad. If we were a tiny economy – like Estonia or Lithuania – entrepreneurs would think about abroad expansion much faster.
I totally agree with that. The scale of the home marketplace allows companies to grow and function well without abroad expansion. As a PFR, we want to gradually break this stalemate. Building the global position of Polish capital is 1 of our key priorities. To this end, in the first half of the year, we carried out 3 transactions in support of abroad expansion: we helped take over 3 companies in full – 2 in Germany and 1 in Lithuania – and we supported 1 of Polish companies in expanding the production base, with a view to entering the US market.
What function does PFR want to play in building the global position of Polish companies – investor, partner or strategical advisor?
One time, in 1 of the interviews, there's a word that I think is very accurate: we're kind of Traffic Manager for capital movements. We aid direct capital coming from Poland and capital coming to Poland.
In the context of the first of these aspects, I mean mainly the abroad expansion of Polish companies. We facilitate this process by removing part of the hazard from the entrepreneur through financing – both equity and debt. This makes the decision to enter abroad markets easier for him.
We are besides developing squad Poland initiative prepared jointly with partners from the PFR Group: BGK, KUKE, PAIH, ARP and PARP. Within this framework we offer entrepreneurs access to all tools at a single, coherent point of contact. This means that the company does not gotta address each institution separately and talk about its products separately, but receives comprehensive product care. The pilot expression of this task was presented in July this year as squad Poland for Ukraine. We send a clear message to Polish entrepreneurs: if you want to invest in Ukraine as part of reconstruction processes, you can number on the support of our full tool package.
Polish improvement Fund plays a function Traffic Manager for capital flows – helps to direct capital coming from Poland and coming to Poland.
What was the impulse to make squad Poland?
We wanted to overcome the strength of the institutions belonging to the PFR Group. Although they have so far had coordination mechanisms, they were neither systematic nor peculiarly effective. The aim was, therefore, to make a mechanics that will work more efficiently first, and secondly, to send a clear message to entrepreneurs and to the world: Poland takes up a glove in the area of abroad expansion, from which it has not yet been known.
Team Poland has 3 dimensions for us. The first is strategical – we support the strategical direction of abroad expansion, finance and aid in transactions. A applicable example of squad Poland cooperation are 2 of the transactions that we financed during the expansion in the last year – they were besides insured by KUKE.
The second dimension is simply a product. On the example of squad Poland for Ukraine, i.e. the first installment of the program operating in practice, we have more than 35 products offered and integrated within a single platform for entrepreneurs, as well as dedicated information resources. This product platform is so a key component of the full initiative.
The 3rd dimension refers to brand building. It has a marketing aspect, of course, but above all it allows us to show better how Poland is approaching abroad expansion today.
Team Poland initiative, prepared jointly with BGK, KUKE, PAIH, ARP and PARP, allowed to break the strength of individual institutions belonging to the PFR Group. Within this framework, entrepreneurs wishing to grow abroad offer access to all tools in 1 contact point. This means that the company does not gotta address each institution separately and talk about its products separately, but receives comprehensive care.
By the way of characterizing the function Traffic Manager You besides mentioned the directing of capital coming to Poland – what action is PFR taking in this regard?
We act as a task integrator and are a platform for cooperation with investors from all over the planet – I mean state wealth funds, improvement institutions from different countries and private funds, which are looking for opportunities to diversify capital in Europe. We believe that Poland is an attractive investment target. Both infrastructure projects implemented in Poland in the expression joint venture, as well as the anticipation of abroad capital participation in the Innovate Poland programme give investors an interesting, diversified vulnerability to the Polish market, which present belongs to the most increasing in Europe. This program is something completely new, together with Minister Andrzej Domanski we announced it in mid-November, and we treat it as the foundation for financing technological and innovative companies through the ecosystem of funds venture capital and private equity. It received the first starting level of PLN 4 billion, but we presume that the full amount of funds that will appear in the funds as a consequence of this programme will be at least twice as high. Of course, Innovate Poland does not operate alone – we prepared it with partners: BGK, who is the biggest investor here, with PZU as a private sector investor, and with the European Investment Fund, which manages 1 of the parts of the programme. In total, we have 4 partners contributing financially, of which 2 manage individual segments of the programme.
Innovate Poland creates a fresh foundation for financing innovation, mobilising many times more capital than the public funds put in place. The programme combines the possible of public and private investors, directs backing where the most groundbreaking technologies are created.
In fact, this is another PFR initiative aimed strictly at improving the innovation of companies this year – the Deep Tech programme established in May this year operates on akin principles: it mobilises backing and we act as an anchoring investor in the fund sector. In this case, the measures are clearly targeted at funds Deep tech, i.e. those that focus on dual-use technologies.
In addition, while remaining in the field of innovation, we conduct eco-friendly activities: we combine start-ups and technologies with funders and recipients of these technologies, and we besides combine technological teams with challenges facing the Polish army and more broadly with Polish innovation.
