The Thais that bind
Economic ties between Poland and Thailand, while perhaps not apparent at first glance, are getting stronger, though not entirely in Poland's favor. In 2007, two Thai firms made the country's first ever direct investments in Poland and imports from Thailand grew to record levels. Polish exports to Thailand, meanwhile, fell to an anemic 12.5 percent of total trade between the two countries.
Trade deficit
Over the first nine months of 2007, total trade between Poland and Thailand grew by 44.9 percent, compared with the same period of 2006 and reached $392.9 (zł.962.7) million. Polish imports from Thailand accounted for the lion's share of this figure - $343.5 (zł.841.7) million - while exports to Thailand amounted to just $49.45 (zł.121.1) million.
This represents a general trend which has only emerged over the last few years. In 2004, for instance, Polish exports to Thailand were worth more than imports, standing at $111.8 (zł.273.9) million and $106 (zł.259.7) million respectively.
Poland's principal exports to Thailand in Jan-Oct 2007 included machinery and parts, fertilizer and pesticides, electrical machinery and parts as well as milk and daily products. The main imports from Thailand during this period consisted of electrical and air-conditioning equipment and parts, data-processing machines as well as televisions and radios.
A tasty destination
Although Poland faces an increasingly negative trade balance with Thailand, it is starting to attract direct investment from the country. According to the Thai Trade Center (TTC), an organization promoting Thai business interests in Poland, two Thai firms - S.Khonkaen and Lucky Union Foods-Euro - have recently invested in Poland. By contrast, no Polish firms have officially invested in Thailand according to Tadeusz Ignasiak, the head of the economic section at the Polish Embassy in Bangkok.
Both Thai investors are from the food industry, and other companies from the sector have expressed interest as well. "Why food? Because the EU has strong regulations restricting food imports, so [Thai firms] have problems exporting food to the EU," said Chanthapat Panjamanond, assistant director of the TTC.
Crab sticks and sausages
The first Thai firm to invest in Poland, Lucky Union Foods-Euro (LUF-Euro), is a producer of crab sticks. Construction on its greenfield factory investment, located in the Goleniów Industrial Park near Szczecin, began in February last year and is scheduled for completion this month. The 7,500-sqm plant is expected to launch production in February.
According to Tipawan Taechaniratsai, vice president of LUF-Euro, the cost of investing in Poland amounted to around zł.12 million, much of which came from EU funds. The firm chose to invest in Poland because it provides good access to EU markets.
Meanwhile the second company, meat and seafood-product manufacturer S.Khonkaen, has invested in Katowice. The firm plans to market its Thai-style sausage products in the EU, but not immediately in Poland. According to Jaraspon Rujirasopon, general manager of S.Khonkaen's Polish operation, a market for Asian food needs to be developed first.
"We consider Poland a potential market as well, since there are not so many alternatives for people ... However, it will take some time to educate consumers and to introduce them to our products," Rujirasopon said.
Ease of access to other EU markets, competitive labor costs and the fact that the firm found a reliable business partner - Polish firm Paruzel - were all reasons why S.Khonkaen invested in Poland. The cost of investment was fairly low due to this partnership. The main expenses were employment and marketing. Around 10 people will be involved in production, which is expected to begin soon. The firm is currently completing work on adapting its sausage recipe to the local climate and facilities, as well as harmonizing labelling and packaging design with EU standards.
Entering the Polish market has not been easy, however. "Material sourcing, administrative matters and the language barrier seem to have been the main difficulties during our operation. Some Thai herbs and spices are quite costly and take time to transport. However, we anticipate the launch of our products in the EU market by the end of the first quarter, 2008," said Rujirasopon.
Room to grow
Although Thai firms are now expressing an interest in investing in Poland, obstacles remain. According to Vannaporn Ketudat, director of the TTC, a lack of information is a major impediment. "In Thailand, we don't know much about Poland. It's far away and there isn't enough widespread information about Poland," she said. For their part, Polish businesspeople know little about Thailand and its products.
To combat this, the TTC holds promotional events every few months around the country to boost the profile of Thai food products. It is also working to bring the Polish Information and Foreign Investment Agency (PAIiIZ) to Thailand to hold a seminar about investment opportunities in Poland. In May, the TTC will host a "Thailand Exhibition" at the Palace of Culture, to which it plans to bring at least 60 firms from Thailand.
Some see potential for cooperation in industries besides food. Thai Ambassador to Poland Thakur Phanit noted that Poland's entry to the Schengen zone would make it easier for Thai tourists visiting Germany, for example, to visit Poland by land. He suggested education and culture as industries with potential for growth.
"If you promote culture, then people get to know each other, so Poland becomes less strange for Thai people and Thailand becomes less strange too, and other interaction will follow," he said.
