Eastern Europe and Poland Eastern Europe and Poland new opportunities new opportunities for Indian Businessfor Indian Business

INDIA EU BUSINESS SUMMITINDIA EU BUSINESS SUMMITEU-India Trade Relations and Beyond:

Dynamics of Mergers & Acquisitions and the Role of Corporate Governance

Dr. Malgorzata BonikowskaDr. Malgorzata BonikowskaIndia EU CouncilIndia EU Council

EU NEW MEMBER STATESEU NEW MEMBER STATES EU Enlargement :

1 May 2004 : accession of 10 new member states, 8 from Eastern Europe (Poland, Check Republic, Slovakia, Hungary, Lithuania, Latvia, Estonia, Slovenia).

1 Jan 2007 Bulgaria and Romania Full participation in the Single Market and EU

common trade policy Relatively cheap labour force High interest in attracting foreign investors Dynamic economic growth (bigger than in old

member states) Good contacts with India in the past (60-ties, 70-

ties) Presence of several Indian companies already.

EU FUNDS FOR EASTERN EUROPEEU FUNDS FOR EASTERN EUROPE

Considerable amount of EU funds for Eastern European countries for the next 7 years 2007-13.

EU funds for Poland (2007-13): 68 billion Eur - structural funds for

infrastructure, companies investments, human capital, environment etc.)

20 billion Eur funds for agriculture and fisheries

EU funds for Bulgaria (2007-13): 8 billion Eur

WHY POLAND?WHY POLAND?

GDP growth twice than of Western EuropeGDP growth twice than of Western Europe 6,3% in 20076,3% in 2007 5,0% in 2008 (forecast)5,0% in 2008 (forecast)

The highest foreign investments inflow : The highest foreign investments inflow : 16.2 billion USD 16.2 billion USD 2nd place: Hungary, 6.2 billion USD.2nd place: Hungary, 6.2 billion USD.

80% companies 80% companies thatthat have invested already have invested already in Poland are satisfied and ready to invest in Poland are satisfied and ready to invest againagain..

Source: KPMG, report 2006Source: KPMG, report 2006

POLAND AS INVESTMENT LOCATIONPOLAND AS INVESTMENT LOCATION7th 7th position position in top 10 in top 10

global investment destinationglobal investment destination

ChinaChina 4848%% USAUSA 3333%% IndiaIndia 2626%% GermanyGermany 1818%% RussiaRussia 1212%% United KingdomUnited Kingdom 1111%% PolandPoland 1111%%

Source: Source: European Attractiveness Survey 2007, European Attractiveness Survey 2007, Ernst&YoungErnst&Young

POLAND AS INVESTMENTS POLAND AS INVESTMENTS LOCATION - sectorsLOCATION - sectors

First place as most preferred location for First place as most preferred location for investment in the communication sectorinvestment in the communication sector..

Second place as most preferred location for Second place as most preferred location for investment in the electricity and gas sectorinvestment in the electricity and gas sector..

Third place as most preferred location for Third place as most preferred location for investments in agricultural, forestry and investments in agricultural, forestry and fishing sectorsfishing sectors..

Growing potential as a location for service Growing potential as a location for service centers such as financial or call centerscenters such as financial or call centers..

Source: AT Kearney report 2006Source: AT Kearney report 2006

EASTERN EUROPE EASTERN EUROPE HUMAN CAPITALHUMAN CAPITAL

Percentage of population in higher educationPercentage of population in higher education in the 20-29 age groupin the 20-29 age group

CountryCountry Percent of the studentsPercent of the studentsPolandPoland 30,230,2GermanyGermany 27,927,9NetherlandsNetherlands 25,525,5HungaryHungary 23,723,7USAUSA 23,423,4IrelandIreland 22,622,6Czech RepublicCzech Republic 18,918,9SlovakiaSlovakia 14,514,5

Source: Education at a glance, OECD 2006Source: Education at a glance, OECD 2006

POLAND – HUMAN CAPITALPOLAND – HUMAN CAPITAL 20 million young, highly educated, 20 million young, highly educated,

multilingual people.multilingual people. The youngest population in EuropeThe youngest population in Europe::

aaround 47% under the age of 35 years round 47% under the age of 35 years  32% under 25 years of age. 32% under 25 years of age. 

The young generation of Poles is one of The young generation of Poles is one of

the best educated in Europe: the best educated in Europe: over 55% citizens between the ages of 20-24 over 55% citizens between the ages of 20-24

attend higher education courses.attend higher education courses. 2 million citizens attend higher education 2 million citizens attend higher education

coursescourses

EASTERN EUROPEEASTERN EUROPELABOUR FORCELABOUR FORCE

CountryCountry Average Average number of number of hours hours actually actually

worked per personworked per person annually annuallySouth KoreaSouth Korea  2351 2351PolandPoland 19701970Czech RepublicCzech Republic 19231923MexicoMexico 19201920JapanJapan 18291829GreeceGreece 18111811USAUSA 18091809HungaryHungary 18021802SlovakiaSlovakia 17911791

Source: OECD Employment Outlook 2006Source: OECD Employment Outlook 2006

POLAND - LABOUR FORCEPOLAND - LABOUR FORCE The The largest working population in Central largest working population in Central

EuropeEurope 24 million people in working age group 24 million people in working age group

(61% of the population)(61% of the population).. TThe hardest working people after Koreans. he hardest working people after Koreans. Poles work 600 hours more than employees Poles work 600 hours more than employees

in France and Germany.in France and Germany.Source: OECD Employment Outlook 2006Source: OECD Employment Outlook 2006

In the same time - Europe is getting older. By 2030, the number of working-age Europeans will decline by 7%, while those over 65 will increase by 50%.

POLAND - EDUCATIONPOLAND - EDUCATION Over two million young people currently study at the Over two million young people currently study at the

higher education institutions (half of the student age higher education institutions (half of the student age population). population).

About 390.000 students graduate every year:About 390.000 students graduate every year: about 240.000 in social sciences, business and law,about 240.000 in social sciences, business and law, almost 44.000 in engineering, manufacturing  and almost 44.000 in engineering, manufacturing  and

construction,construction, 20.000 in science, maths and computing20.000 in science, maths and computing;; over 3.000 in specialized language studies.over 3.000 in specialized language studies.

A nationwide network of 448 centres of higher A nationwide network of 448 centres of higher education. education. 130 state higher education academies including 17 130 state higher education academies including 17

universities and 18 universities of technology, universities and 18 universities of technology, 318 private schools of tertiary education. 318 private schools of tertiary education. They employ over 100 000 academics; half of them hold They employ over 100 000 academics; half of them hold

a Ph.D. degree.a Ph.D. degree.

POLAND – FOREIGN LANGUAGESPOLAND – FOREIGN LANGUAGES

44% of Polish society is able to 44% of Polish society is able to communicate in a foreign languagecommunicate in a foreign language..

33% speak two foreign languages. 33% speak two foreign languages. 96.3% of students speak English.96.3% of students speak English. The most popular foreign language is The most popular foreign language is

English, followed by German and English, followed by German and Russian.  Russian. 

POLAND AND ICTPOLAND AND ICT Polish Information and Communication Technologies Polish Information and Communication Technologies

(ICT) education centers and specialists are highly (ICT) education centers and specialists are highly recognized worldwide.  recognized worldwide. 

Poles are winning in the prestigious Top Coder Poles are winning in the prestigious Top Coder ranking and also achieving high positions in the ranking and also achieving high positions in the worldwide Google Code Jam Competition and the IBM worldwide Google Code Jam Competition and the IBM Linux Scholars Challenge.Linux Scholars Challenge.

Polish IT specialists are employed by the largest IT Polish IT specialists are employed by the largest IT companies in the worldcompanies in the world They They constitute an important share of managers constitute an important share of managers

responsible for research and development (R&D) activities responsible for research and development (R&D) activities in multinational corporations such as Microsoft and Nokia. in multinational corporations such as Microsoft and Nokia.

In Sillicon Valley there are 300 Polish computer scientists.In Sillicon Valley there are 300 Polish computer scientists. There are 20 information and telecommunications There are 20 information and telecommunications

(ICT)  academic centers with more than 2500 (ICT)  academic centers with more than 2500 students each and 150 000 IT, computer science and students each and 150 000 IT, computer science and telecommunication students overall.telecommunication students overall.

EASTERN EUROPE EASTERN EUROPE BEST CITIES RE: QUALIFIED STAFFBEST CITIES RE: QUALIFIED STAFF

PlacePlace CityCity ScoreScore

1 1 LondonLondon 1,441,44

1717 WarsawWarsaw 0,210,21

2323 PraguePrague 0,150,15

2525 BudapestBudapest 0,130,13

Source: Source: European Cities Monitor 2006, Cushman &European Cities Monitor 2006, Cushman & WakefieldWakefield

EASTERN EUROPE EASTERN EUROPE LABOUR COSTSLABOUR COSTS

Labour costs per hour in EURLabour costs per hour in EUR

CountryCountry Private sectorPrivate sector Production Production sectorsectorPolandPoland 5,95,9 5,25,2HungaryHungary 6,76,7 6,16,1Czech RepublicCzech Republic 7,47,4 6,76,7SloveniaSlovenia 11,911,9 10,810,8UUKK 26,526,5 26,626,6GermanyGermany 28,728,7 32,032,0DenmarkDenmark 33,833,8 32,332,3

ssource: Eurostat, 2007ource: Eurostat, 2007

EASTERN EUROPE - MARKETEASTERN EUROPE - MARKET

POLAND - MARKETPOLAND - MARKET

PPopulation of 38,16 mlnopulation of 38,16 mln:: the largest market in Central Europe the largest market in Central Europe the eighth largest on the Continent, the eighth largest on the Continent, 30th in the world. 30th in the world.

Poland’s  market is larger than the Poland’s  market is larger than the combined markets of all the other combined markets of all the other nine accession countries that entered nine accession countries that entered the EU together with Poland in May the EU together with Poland in May 2004. 2004.

POLAND POLAND SPECIAL ECONOMIC ZONESSPECIAL ECONOMIC ZONES

14 Special Economic Zones created until 14 Special Economic Zones created until 2015-17.2015-17. designated areas in which investment activities designated areas in which investment activities

can be conducted on preferential terms. can be conducted on preferential terms. Investors permitted to operate in the SEZ Investors permitted to operate in the SEZ

can benefit from the following: can benefit from the following: income tax exemption – a form of regional aidincome tax exemption – a form of regional aid land at competitive pricesland at competitive prices free assistance in dealing with formalities free assistance in dealing with formalities

relating to the investment projectrelating to the investment project exemption from real estate taxexemption from real estate tax grants for employee training programmesgrants for employee training programmes grants for the creation of new jobsgrants for the creation of new jobs

INDIA AND EASTERN EUROPEINDIA AND EASTERN EUROPE

Economic growth transforms India into one of Asia's star economies.

The new member states are slowly waking up to the vast business and cultural potential of India.

However, India is still seen However, India is still seen by most by most people in Eeastern Europe people in Eeastern Europe as an as an underdeveloped countryunderdeveloped country source of source of cheap and non educated labocheap and non educated labouur force.r force.

INDIAN INVESTMENTSINDIAN INVESTMENTS

Over 90% of the funds of Indian companies are invested in other parts of Asia and the developing world.

The rest is invested in Europe the United States.

Eeastern Europe has started to be popular after 2004 (the EU enlargement).

EASTERN EUROPE - PROBLEMS EASTERN EUROPE - PROBLEMS FOR INDIAN COMPANIESFOR INDIAN COMPANIES

Not stable political systemNot stable political system Unclear law environmentUnclear law environment Restricted domestic policy towards Restricted domestic policy towards

AsiansAsians Visa problemsVisa problems Crossing bordersCrossing borders

Public opinion against cheaper labour Public opinion against cheaper labour force from Asia.force from Asia.

Stereotyped perception of Indians in Stereotyped perception of Indians in business.business.

INDIA EU COUNCILINDIA EU COUNCIL

The India EU Council was established The India EU Council was established to facilitate contacts between India to facilitate contacts between India and Eastern Europe, also in the field and Eastern Europe, also in the field of business coof business coooperation.peration.

It is registered under the European It is registered under the European law, as an NGO in Poland.law, as an NGO in Poland.

It operates from Warsaw but has It operates from Warsaw but has representatives in Sofiarepresentatives in Sofia, , VilniusVilnius as as well as in New Delhi.well as in New Delhi.

It acts through its partner companies.It acts through its partner companies.

OFFER FOR INDIAN BUSINESSOFFER FOR INDIAN BUSINESS business and investment assistance (legal, taxes, business and investment assistance (legal, taxes,

social dialog etc.).social dialog etc.). Representation offices management.Representation offices management. Public affaiPublic affairrs (central and local government) s (central and local government) Training and coaching programs re: cross-cultural Training and coaching programs re: cross-cultural

relations and human resources management in a relations and human resources management in a different cultural background.different cultural background.

business trips and workshops. business trips and workshops. Feasibility studies and business plans.Feasibility studies and business plans. Financial consultancy (EU funds included). Financial consultancy (EU funds included). Research, analysis and sector dossiers on request Research, analysis and sector dossiers on request

(environment, energy, tourism etc.) (environment, energy, tourism etc.) Business news and features e-services delivered by Business news and features e-services delivered by

email email Business press and internet monitoring.Business press and internet monitoring.

LODZ CHAMBER OF COMMERCELODZ CHAMBER OF COMMERCE

RReactivated in 1990eactivated in 1990.. Its the biggest organisation of economic Its the biggest organisation of economic

government, associating more than 400 government, associating more than 400 enterprises in Lodz regionenterprises in Lodz region..

Its associates companies of all tradesIts associates companies of all trades Mainly textiles, construction and farmaceutical Mainly textiles, construction and farmaceutical

companiescompanies 85% SME85% SME

It is a member of Polish Chamber of It is a member of Polish Chamber of Commerce.Commerce.

OFFER FOR INDIAN BUSINESSOFFER FOR INDIAN BUSINESS

RRepresentation of business interests in front epresentation of business interests in front of the governmental and local adminof the governmental and local adminiistrationstration,,

Participation in goverParticipation in governnmental and EU mental and EU programs supporting business developmentprograms supporting business development,,

Contribution to the member companies Contribution to the member companies development and support to their activitiesdevelopment and support to their activities,,

AAssistance in court casesssistance in court cases,, Organisation of trade missions for Organisation of trade missions for

companies.companies. Information servicesInformation services..

IMPORTANT EVENTS FOR INDIAN IMPORTANT EVENTS FOR INDIAN BUSINESS IN POLAND 2008BUSINESS IN POLAND 2008

INDIA EU business workshops in INDIA EU business workshops in Lodz, spring 2008 (Lodz Chamber)Lodz, spring 2008 (Lodz Chamber)

India EU business workshops in India EU business workshops in Gdansk, May 2008 (India EU Council)Gdansk, May 2008 (India EU Council)

India Days (Indian Embassy to India Days (Indian Embassy to Poland).Poland).

INDIA EU COUNCILINDIA EU COUNCILooffices in:ffices in:

Warsaw (Central Eastern Europe) Warsaw (Central Eastern Europe) Sofia (South-Eastern Europe)Sofia (South-Eastern Europe)Vilnius (Nord-Eastern Europe)Vilnius (Nord-Eastern Europe)

www.indiaeu.euwww.indiaeu.euemail: email: info@indiaeu.euinfo@indiaeu.eu

ŁODŹ CHAMBER ŁODŹ CHAMBER OF OF

INDUSTRY AND COMMERCEINDUSTRY AND COMMERCE

30 Tuwima str.30 Tuwima str.90002 Łódź90002 Łódź

phone: +48 42 250 5450phone: +48 42 250 5450fax: +48 42 630 3979fax: +48 42 630 3979

email: email: liph@liph.com.plliph@liph.com.plwww.izba.lodz.plwww.izba.lodz.pl