Poland sees China links as key to growth

Christopher Werth Dec 28, 2011

Jeremy Hobson: Poland announced today that it is giving almost $8 billion to the International Monetary Fund. How, you ask, does a European country have that kind of money right now? Well, Poland has had a growing economy thoughout the debt crisis. And in the interest of maintaining that growth, the country is trying to establish itself as a front door for Chinese companies doing business in Europe.

Christopher Werth reports.

Christopher Werth: This is GD Poland, a sprawling wholesale market just outside Warsaw. It offers all things “Made in China.” There are about 700 companies here, many of them Chinese owned. They sell everything from blue jeans to toy Santa dolls that glow in the dark.

The center’s manager Felix Wang says this is the largest market for Chinese goods in the whole of Europe, and buyers come from all over the continent.

Felix Wang: Where there’s demand, there’s a need for supply. The Chinese are starting to invest in Poland. And from what I see, the prospects are huge.

Huge because decades after Poland broke with Communism, the country is still hungry for outside investment. It’s still selling off state-owned industries. And it’s building new roads and other infrastructure as it catches up with Western Europe. So far, much of that outside investment has come from the U.S. and European Union. But Piotr Grudzien of Poland’s foreign investment agency says that’s changing.

Piotr Grudzien: Right now the biggest number of projects that we have are from the United States. But recently we observe a huge interest from China.

Chinese firms are bidding to build everything from subways to coal-fired power stations. This month, China’s largest maker of construction equipment, LiuGong Machinery, is working on a $76 million deal to buy one of Poland’s biggest manufacturers.

Radek Pyffel is with the Poland-Asia Research Center in Warsaw.

Radek Pyffel: For Chinese companies, if you invest in Poland, you’ve got access to EU market. That’s a huge market, right? That’s Germany, France. You can set up your production here, and you can export your products everywhere in Europe.

That is if you can meet the EU’s tough standards. In the city of Lublin, Grzegorz Dobiezynski shows me around a showroom full of shiny, new Grandtiger pickup trucks made by the Chinese carmaker ZX Auto.

Grzegorz Dobiezynski: Have a look at this one. They are ready for delivery to our dealers.

Dobiezynski is with POL-MOT Warfama, a Polish company that’s partnered with ZX Auto to produce the Grandtiger in Poland. And as he starts one, he ticks off a long list of hurdles, like coming up with a new engine.

Dobiezynski: The original engines were not very useful because Chinese manufacturer does not comply with European regulations.

But, he says, the investment will pay off for ZX Auto.

Dobiezynski: They will be able to sell these vehicles not only in Poland or Europe, but in other countries — even the United States.

But not every deal here ends in a win-win. In 2009, the Polish government hired a Chinese, state-owned construction company called Covec to build a new highway. Covec stopped paying contractors. So earlier this year the Polish government fired the company. Now it’s looking to China to cover the losses.

In Warsaw, I’m Christopher Werth for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.