Poland attracts investment from cosmetic giants
European Union have helped to attract increasing levels of
investment from leading cosmetic and personal care companies
looking to increase their footing in Europe's emerging markets. But
as the Zlotty continues to strengthen questions arise as to how
much longer investment levels will continue to rise. Simon
Pitman reports.
According to the Polish Consulate services, the strong economic and political position currently enjoyed by the company is combined with an ideal geographic positioning in central Europe, which is attracting a host of international companies to invest in and open offices for expansion into European markets.
In the cosmetics and personal care field leading big names such as Gillett, Colgate-Palmolive and Proctor & Gamble have all increased their presence in Poland during the course of the past few years. Other business areas to benefit from increased investment have also included the food and drink, automotive, IT and banking sectors, indeed US corporations alone have invested a total of over $10 billion (€7.6bn) in the country since 1990.
"Many US and international companies are finding Poland a very attractive and advantageous country to establish manufacturing and operational centres for Europe," stated Krystyna Tokarska-Biernacik, consul general of Poland in the United States.
One of the biggest magnets has been Poland's continued economic growth, which in 2004 stood 5.7 per cent, but with the rising value of the Polish currency, this is forecasted to reach 5.2 per cent for 2005.
However, even with the forecast dip, the figures are much stronger than the 1.3 per cent growth rate in the Euro zone as well as being significantly higher than the average for the 25 European Union members, which stands at 1.6 per cent.
Investment analysts say that this impressive growth has been driven to a significant extent by exports, industrial production and investment. With the advent of accession making export of goods to the huge European Union market, cosmetic and personal care manufacturers have been rushing to up their production levels in the country in an effort to take advantage of the advantageous conditions.
Poland's corporate tax rate, which currently stands at 19 per cent, is among the lowest in the EU, providing investors and companies with incentives that, if well managed, can lead to a higher profit margin.
Poland's labour costs are much lower than in the leading EU countries and it has the largest working population in Central Europe. Poland also has one of the youngest populations on the continent, with 50 per cent of the Polish society under the age of 34 and 35 per cent under the age of 25.
In 2002 Polish higher schools provided education for 1.8 million students. In the same year more than 340,000 people graduated from colleges and universities. This has made a positive impact on the availability of highly qualified employees as labor for foreign companies.
Another added bonus of the high level of young people in Poland is the fact that younger people tend to have spend more on cosmetics and personal care products, a factor that is likely to spur domestic growth of the industry.
Many industrialists also believe that Poland's centralised location provides a bridge between the west and the east, the north and south of the European continent, making it an ideal launch pad for direct access to the markets of the EU and Central and Eastern Europe. According to the Polish Consulate, investors and international companies gain access to a 500 million population in Western Europe and a 250 million population in Eastern Europe.
Market size is another reasons why foreign investors are drawn to Poland. With its population of almost 40 million, Poland is the largest market in Central Europe and the eighth largest in the European Union. Its population makes Poland a market larger than the combined markets of all the other nine accession countries that entered the EU together with Poland in May 2004.
However, caution is also being shown by companies as economic growth continues to slowly ebb off following the country's accession to the European Union. Since April 2004, a gradual strengthening of the Zlotty has made the export market increasingly challenging for many manufacturers. Indeed this is one of the main reasons why most analysts are forecasting a small dip in economic growth during the course of 2005.
With continued growth almost a certainty, further investment from the cometics and personal care looks likely, but indications are that the best days may well be over.
