One of the reasons why UK economic growth is so poor is because of the unexpectedly poor export performance. It appears that the British government has woken up to this fact and there are number of initiatives in the offing to do something about it, one of which particularly concerns Poland, a country which is seen to have great export potential. This is particularly important now because the UK’s trade deficit with Poland continues to grow and given the growing links between the two countries, not least by reason of the massive immigration of Poles to the UK since Poland joined the EU, the UK’s relatively poor performance could be vastly improved. This article is not the place for a detailed analysis of what is holding back British exporters or why Poland seems to be more successful at exporting to the UK than vice versa but I thought I would share a few thoughts on the sort of questions UK companies think about when considering trading with Poland.
The other week I was asked to address at the British embassy one of the regular trade missions to Poland sponsored by the UKTI. The participants were from a wide variety of businesses so I suppose their questions were representative of the sorts of issues which business might think about when looking at Poland. (Cynics might well say that for return air travel from the UK, two nights in a good hotel and all costs met for the princely sum of £99 who cares about the market opportunities, it’s cheaper than staying at home, but I make no comment on that).
The first question is what sort of structure to set up. This will depend on the nature of the business relationship and may range from a simple sale or distributorship agreement to setting up a Polish subsidiary or forming a joint venture. All are possible in Poland: limited liability companies, partnerships, limited partnerships. Indeed, it is perfectly possible for a UK company, as a first step into the market, to employ a local representative (and to make the appropriate social security payments, and so on) without a physical presence in Poland. The key point is to take the same care that you would in the UK and to be properly advised. Unlike many jurisdictions there is no nationality restriction on directors or shareholders and nor is there a requirement to have a local person as a partner in any joint venture arrangement (but please see ‘Til Death Us Do Part for the pitfalls of the deadlock joint venture). It does make sense to have somebody involved who is able to work in Polish. Running a business relationship via an interpreter is seldom a good idea whether in Poland or elsewhere. And on the subject of language, it is possible to have agreements both in English and governed by English law although it will depend on the circumstances as to when this is appropriate. There are some more tips for establishing a successful business in Poland in The Method.
Some tasks are easier in Poland. Opening a bank account for a business, for example is very quick – a matter of minutes in some cases and internet banking is widely available. Bank transfers are also very quick and this may be an area where Poland beats the UK which is ironic given the prominence of financial services in the UK’s economy. There is nothing worse than the nonsensical and misused money laundering checks in the UK which seem only to be applied when Mrs. Smith seeks to pay in her Marks & Sparks dividend cheque while being ignored when funds from apparently dubious sources are used by folk from overseas who to buy football clubs, for example, but I digress.
As ever, it is a good idea to have contracts in writing and to spend time making sure what has to be done and by whom and by when is clear. That is common sense anywhere but especially here, since it is fair to say that the Polish legal system is by far from ideally suited to the speedy resolution of disputes. Which is not to say that legal rights are not protected or enforced in Poland but when it comes to litigation prevention is infinitely better than cure.
And finally, from a cultural point of view, to put one cliché to rest – it is not the case that every business negotiation in Poland involves drinking copious amounts of vodka. If it was ever true it certainly is no longer and business is negotiations here, as elsewhere, are generally conducted in a professional way. The secret is to be direct, clear and leave no room for doubt. While there is no guarantee of success in business it is a least possible to reduce the scope for failure.
This may have been only a brief outline of some of the concerns of British business seeking to trade with Poland but it is clear that there is really no reason not to engage with Poland. If the mission is to increase exports to and trade with Poland, there is no good reason why British business should not be equal to the challenge.