Growing the Polish Apple

NOWY STYL, a Polish company that is Europe’s fourth-largest maker of office furniture, recently bought two small German rivals. The firm’s boss, Adam Krzanowski, was asked by a German friend if he was pleased with his purchase. “I told him that I was not happy with the quality of the workers. His jaw dropped,” says Mr Krzanowski, with a grin. He had to send a team from his factory in Poland to bring his new German workers up to speed on the latest manufacturing methods.

Polish firms have grown in size and confidence along with the economy, which after years of expansion is twice the size, in real terms, that it was when democracy was restored in 1989. Now, at last, some of its firms are looking beyond the domestic market and going global. InPost is rolling out its automated parcel lockers in nine countries, including Britain (see picture), to grab a share of the rapidly growing business of making deliveries for e-commerce firms. Comarch, a Polish IT firm, has set up two data-processing centres in Germany.

Polish businesses are making more efforts to conquer export markets. Pesa, a trainmaker, won a $1.5 billion contract in 2012 to supply Germany’s Deutsche Bahn with up to 470 new diesel locomotives. “Nobody believed we could sell the Germans such a high-tech product,” says Tomasz Zaboklicki, the firm’s chief executive.

A decade ago the most notable foreign ventures by Polish businesses were the result of a strong prod from the government, usually applied to state-controlled firms with political objectives in mind. The results were dire. In 2004 PKO Bank Polski was encouraged to invest in Ukraine, Poland’s poorer neighbour to the south-east, during its Orange revolution. In Ukraine’s subsequent economic slump, the small bank PKO had bought, Kredobank, suffered a drastic rise in bad loans, eventually forcing PKO to bail it out.

In 2006 PKN Orlen, a state oil refiner, invested $3.7 billion in a Lithuanian plant, with the aim of helping the Baltic states loosen their dependence on Russia. After years of losses, Orlen has written off most of its investment.

Now, the Polish firms venturing abroad, even the state-backed ones, are driven by profits rather than politics. In September KGHM, a copper miner in which the state has a 32% stake, began shipments from a Chilean mine jointly owned with Sumitomo of Japan. This follows KGHM’s purchase, in 2012, of Quadra FMX, a Canadian copper and silver miner. In October Grupa Azoty, a fertiliser-maker, announced a plan to make up to ten foreign acquisitions, in Africa and South America as well as in central Europe, to maintain its position in an industry that is consolidating rapidly.

Although a few Polish firms are gaining a profile outside their home country, they are still the exceptions. Of those local manufacturers that export, many are producing materials or parts that end up deep in German cars or consumer products. One problem is that even the largest Polish firms are small by global standards. Another is that most have been reluctant to invest in the research and development needed to take on sophisticated foreign rivals.

“I ask myself, ‘Why is there no Polish product which is internationally famous? Why is there no Polish Apple or Google?’,” says Andrzej Kozminski, founder of Kozminski University, the country’s leading business school. He hopes it is simply a matter of time. In another decade, given Poland’s rapid economic growth compared with western Europe’s, its businesses may become large enough that foreign ventures like those of Nowy Styl will become common. If so, more German workers will have to get used to Polish bosses.