Talking Japanese
Statistics lie, the saying goes. But even if they lie a lot, it wouldn't change the general picture that the Polish Prime Minister had to bear in mind when landing in Tokyo.
Marek Belka was accopanied on his trip by a number of political and corporate heavyweights, including: Finance Minister Mirosław Gonicki; Treasury Minister Jacek Socha; deputy ministers of defense and foreign affairs; the PAIiIZ president, Andrzej Adebski; and the president of the Polish Confederation of Private Employers, Henryka Bochniarz.
Poland attracted almost 10 times less direct foreign investment from Japan than the Czech Republic. At the end of 2003, the Czechs boasted a $1.9 (zł.5.88) billion total against the modest $258 (zł.798) million of its larger neighbor.
However, statistics can be misleading and according to the vice-president of the Polish Information and Foreign Investment Agency (PAIiIZ), Sebastian Mikosz, some companies that are Japanese are registered in other countries. This causes them to drop out of the official figures. Mikosz estimates that roughly $1 (zł.3.09) billion found its way to Poland from Japanese pockets, stipulating at the same time: "That doesn't mean we are satisfied with it."
Far East-too far?
Other statistics also reflect badly on the two countries' business relations. Poland stands a low 54th position in its share of Japan's trade volume (export and import combined). Other CEE region countries perform better, with the Czech Republic three slots higher and Hungary at 46th place. Hungarians report twice the turnover in trade compared to Poland.
Last week, in a move that will do little to please Polish politicians, Japan rejected Polish proposals to buy back its debt at a meeting of the Paris Club group of international creditors.
There was also mixed news last week on Polish hopes for Japanese cash. Bridgestone announced plans to invest E12 (zł. 48.75) million in a factory near Wrocław, which will build tire tracks for heavy plant equipment. The new factory will employ 50 people and begin production in 2006.
However, the world's largest car manufacturer, Toyota, which has already built an engine factory in lower Silesia, announced it has no new investment plans for the EU in the next few years, thus denying press rumors about a new car site to be build in Poland. Ironically, the information came as the Polish Prime Minister prepared for a meeting with Toyota's decision makers in Tokyo.
In fairness, the entire EU market accounts for just 14.2 percent of Japan's trade volume. This is not much, considering it is the second-largest economy on the globe. The argument that U.S. and Asian countries have obvious geographical advantages is of little consolation. Simply put, the Far East is not a key market for the Polish government or Polish companies. As Mikosz says: "I cannot imagine lowering the deficit in our trade [now at least some $0.5 (zł1.54) billion], despite our efforts. Poland's trade deficit with the EU is the government's top priority." In his opinion, Polish companies are not strong enough to enter the Japanese market, despite the imminent World Expo at Aichi, Japan this spring, which will be attended by Polish entrepreneurs.
Learning from the neighbors
Yet, with no chances to even the odds in imports and exports, Polish authorities could still be more effective. The list of negligence is long and goes beyond the well-known disastrous road system and overwhelming red tape. According to the third secretary at the Japanese Embassy in Warsaw, Toshio Yamauchi: "Poland did not succeed in advertising itself." For example, the CzechInvest agency has a permanent representative in Tokyo, while Poland has none. In addition, it enjoys wider powers and terms of reference than PAIiIZ and is able to grant tax concessions to investors independently from other government offices.
"In PAIiIZ all you can do is get information; to get things done you need to go higher," says one expert on Japanese investment in Poland, while Yamauchi describes the Czech model as a "one-stop shop" that simplifies the whole process. Foreign investors walk out of the agency with everything they need to launch a company.
Poland appears to be taking some steps to ease foreign investors' worries. On Friday, Prime Minster Belka met with his Japanese counterpart, Prime Minister Junichiro Kozumi, to discuss improving Poland's infastructure and reducing the administrative procedures that investors have to face.
Another issue, which is less economic but equally important, is the quality of life Poland has to offer expatriates. Apart from Warsaw, there is a distinct lack of Japanese schools or restaurants elsewhere in the country. And, according to one financial expert, this could be a crucial factor. "In lower Silesia [where most Japanese investments are situated] there is no such infrastructure. All credit given, Wrocław is no Prague," he says.
The money clique
So what could Prime Minister Belka do to engage the Japanese industrial machine for good in this country? For starters, he could talk one major corporation into a large investment. As in the case of Toyota's factory in the Czech Republic, other, mainly small- and medium-sized enterprises, will follow. Mikosz, who is also secretary for the Japan-Poland Economic Committee, puts his hopes in the phenomenon called 'zaibatsu', or money clique. In this typically Far East cooperation model, major companies bind themselves financially with their subcontractors. These provide services and raw materials at any place the large companies choose to invest in. Thus, smaller scale investments mushroom around Japanese factories. Otherwise, small- and medium-sized companies would be unable to enter the maket.
Overall, Yamauchi says: "Our companies have recently become aware of Polish advantages." The secretary would not disclose any details, but mentions home appliances and electronics producers, Toshiba and Hitachi. Other companies, from food processing, chemistry and electricity sectors, have also shown an interest. Easy access to the EU market is a strong argument in favor of Polish expansion for managers in Tokyo. Poland still offers relatively inexpensive labor and the biggest internal market of all the new EU members. Plus, the culture gap is, according to some, exaggerated.
"Polish employees are very serious about company and business matters, just like us," says one of the Japanese managers from the Bridgestone factory in Poznań, claiming the only disadvantage he sees is that production workers do not speak English.
But the compatibility of natures is never enough; government action is required.
"What can we do, if PAIiIZ has half the budget of CzechInvest for a country four-times larger?" complains vice-president Mikosz. Talks to remedy this have been ongoing for years. A bill that would create a better financed and more powerful Polish Agency of Economy Promotion is currently been prepared by a parliamentary commission. However, the chances of the bill being voted on before the June elections are slim at best. In this case, Prime Minister Belka would be better sorting out the situation in his own yard before flying off into the rising sun.
Marek Belka was accopanied on his trip by a number of political and corporate heavyweights, including: Finance Minister Mirosław Gonicki; Treasury Minister Jacek Socha; deputy ministers of defense and foreign affairs; the PAIiIZ president, Andrzej Adebski; and the president of the Polish Confederation of Private Employers, Henryka Bochniarz.
Poland attracted almost 10 times less direct foreign investment from Japan than the Czech Republic. At the end of 2003, the Czechs boasted a $1.9 (zł.5.88) billion total against the modest $258 (zł.798) million of its larger neighbor.
However, statistics can be misleading and according to the vice-president of the Polish Information and Foreign Investment Agency (PAIiIZ), Sebastian Mikosz, some companies that are Japanese are registered in other countries. This causes them to drop out of the official figures. Mikosz estimates that roughly $1 (zł.3.09) billion found its way to Poland from Japanese pockets, stipulating at the same time: "That doesn't mean we are satisfied with it."
Far East-too far?
Other statistics also reflect badly on the two countries' business relations. Poland stands a low 54th position in its share of Japan's trade volume (export and import combined). Other CEE region countries perform better, with the Czech Republic three slots higher and Hungary at 46th place. Hungarians report twice the turnover in trade compared to Poland.
Last week, in a move that will do little to please Polish politicians, Japan rejected Polish proposals to buy back its debt at a meeting of the Paris Club group of international creditors.
There was also mixed news last week on Polish hopes for Japanese cash. Bridgestone announced plans to invest E12 (zł. 48.75) million in a factory near Wrocław, which will build tire tracks for heavy plant equipment. The new factory will employ 50 people and begin production in 2006.
However, the world's largest car manufacturer, Toyota, which has already built an engine factory in lower Silesia, announced it has no new investment plans for the EU in the next few years, thus denying press rumors about a new car site to be build in Poland. Ironically, the information came as the Polish Prime Minister prepared for a meeting with Toyota's decision makers in Tokyo.
In fairness, the entire EU market accounts for just 14.2 percent of Japan's trade volume. This is not much, considering it is the second-largest economy on the globe. The argument that U.S. and Asian countries have obvious geographical advantages is of little consolation. Simply put, the Far East is not a key market for the Polish government or Polish companies. As Mikosz says: "I cannot imagine lowering the deficit in our trade [now at least some $0.5 (zł1.54) billion], despite our efforts. Poland's trade deficit with the EU is the government's top priority." In his opinion, Polish companies are not strong enough to enter the Japanese market, despite the imminent World Expo at Aichi, Japan this spring, which will be attended by Polish entrepreneurs.
Learning from the neighbors
Yet, with no chances to even the odds in imports and exports, Polish authorities could still be more effective. The list of negligence is long and goes beyond the well-known disastrous road system and overwhelming red tape. According to the third secretary at the Japanese Embassy in Warsaw, Toshio Yamauchi: "Poland did not succeed in advertising itself." For example, the CzechInvest agency has a permanent representative in Tokyo, while Poland has none. In addition, it enjoys wider powers and terms of reference than PAIiIZ and is able to grant tax concessions to investors independently from other government offices.
"In PAIiIZ all you can do is get information; to get things done you need to go higher," says one expert on Japanese investment in Poland, while Yamauchi describes the Czech model as a "one-stop shop" that simplifies the whole process. Foreign investors walk out of the agency with everything they need to launch a company.
Poland appears to be taking some steps to ease foreign investors' worries. On Friday, Prime Minster Belka met with his Japanese counterpart, Prime Minister Junichiro Kozumi, to discuss improving Poland's infastructure and reducing the administrative procedures that investors have to face.
Another issue, which is less economic but equally important, is the quality of life Poland has to offer expatriates. Apart from Warsaw, there is a distinct lack of Japanese schools or restaurants elsewhere in the country. And, according to one financial expert, this could be a crucial factor. "In lower Silesia [where most Japanese investments are situated] there is no such infrastructure. All credit given, Wrocław is no Prague," he says.
The money clique
So what could Prime Minister Belka do to engage the Japanese industrial machine for good in this country? For starters, he could talk one major corporation into a large investment. As in the case of Toyota's factory in the Czech Republic, other, mainly small- and medium-sized enterprises, will follow. Mikosz, who is also secretary for the Japan-Poland Economic Committee, puts his hopes in the phenomenon called 'zaibatsu', or money clique. In this typically Far East cooperation model, major companies bind themselves financially with their subcontractors. These provide services and raw materials at any place the large companies choose to invest in. Thus, smaller scale investments mushroom around Japanese factories. Otherwise, small- and medium-sized companies would be unable to enter the maket.
Overall, Yamauchi says: "Our companies have recently become aware of Polish advantages." The secretary would not disclose any details, but mentions home appliances and electronics producers, Toshiba and Hitachi. Other companies, from food processing, chemistry and electricity sectors, have also shown an interest. Easy access to the EU market is a strong argument in favor of Polish expansion for managers in Tokyo. Poland still offers relatively inexpensive labor and the biggest internal market of all the new EU members. Plus, the culture gap is, according to some, exaggerated.
"Polish employees are very serious about company and business matters, just like us," says one of the Japanese managers from the Bridgestone factory in Poznań, claiming the only disadvantage he sees is that production workers do not speak English.
But the compatibility of natures is never enough; government action is required.
"What can we do, if PAIiIZ has half the budget of CzechInvest for a country four-times larger?" complains vice-president Mikosz. Talks to remedy this have been ongoing for years. A bill that would create a better financed and more powerful Polish Agency of Economy Promotion is currently been prepared by a parliamentary commission. However, the chances of the bill being voted on before the June elections are slim at best. In this case, Prime Minister Belka would be better sorting out the situation in his own yard before flying off into the rising sun.
