Regional firms outplay international heavyweights
According to consulting company KPMG's report on competitive business models for Central and Eastern Europe, companies in the region experienced an average growth in revenue of 16 percent.
CEE companies operating in at least two markets in the region were key drivers for this growth, edging out both multinational (MNC) and local companies. They have also demonstrated the highest overall productivity, edging out MNCs for the first time.
The productivity of Polish companies in 2004 was over EUR 210,000 (zł.817,000) per capita while the region's average amounted to EUR 145,000 (zł.555,000). Polish enterprises have the same goals as other companies in the region, i.e. introducing new products and looking for new markets. However, firms from other new European states concentrate on competition and cost-related issues. When asked about major challenges, Polish entrepreneurs saw increasing sales as their prime obstaclewhile business people from the surrounding countries tended to see theirs as competition.
Regional gap
However, in a number of areas Polish companies lag behind their regional competitors. According to KPMG's report, they see the quality of products manufactured in Poland as lower than in other countries. Also, Polish entrepreneurs are not so keen on introducing innovations and new technologies.
Apart from the lower quality of products, a reluctance to implement best practices is seen by the authors of the report as a serious hindrance and a lost opportunity to improve cost efficiency.
The report underlines that while the companies operating in the region "are in tune with practices that were cutting-edge a decade ago, they appear less adept at practices which typify world-class manufacturing today." Practices such as lean manufacturing and a balanced scorecard were implemented by less than a quarter of all companies.
Stuck in the middle
In the report KPMG underlines that in 2004 the CEE region attracted $18 (zł.59) billion in foreign direct investment - 70 percent more than a year before. The automotive industry is seen as a sector in which the region can specialize. The report says that Slovakia is the biggest car-producing country in the world per capita, while Poland, the Czech Republic and Hungary are all leaders in auto production, with companies such as Volkswagen, Toyota, Suzuki and GM all present.
KPMG also notes that manufacturers from the EU are trapped between the Far East and the West, with China offering lower labor costs than Western companies, but with European firms competing on quality. Here lies the challenge for the region. As the report states: "In order to find success on the world stage, manufacturers from the region will need to find creative ways to balance the cost/quality equation between East and West."
