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Chinese FDI in Poland


Chinese FDI in Poland

China is investing huge capital in foreign direct investment (FDI) in Europe and North America. In the record year 2017, it was about 100 billion USD! Chinese corporations focus mainly on acquiring technology, know-how, or well-known brands and the most talented employees. However, what is the situation of Chinese FDI to Poland? Is it an attractive location for Chinese giants? Let’s take a look at how Sino-Polish investments have evolved in recent years.

What about Chinese investments in Poland?

Poland became an advantageous direction for the investors after 1989 as the system transformation left the economy to catch up to the other already developed countries. And Chinese FDI to Poland was a vital factor in the process of restructuring. Moreover, Poland was (and still is) attractive for the investors because of cheap and skillful labor and significant market. However, the economy was far-behind Western Europe and Hungary, which already cooperated with China.

In the last decade, China has placed the most funds in the UK (over $55 billion), Germany (about $26 billion), as well as France, Italy, Finland, and the Netherlands. Poland is not a region of intense Chinese infiltration due to its location in Europe’s technical tail. Many large and sizable corporations already have owners who are directly or indirectly linked to the Middle Kingdom’s authorities.

In 2019 Chinese invested about $30 million in Poland, which is less than a year earlier. This amount consisted of two investments identified by analysts – the construction of Bafang Electric’s e-bike factory in Wroclaw, Poland, and the establishment of a joint venture by Poland’s PCC Rokita and China’s Shandong Shida Shenghua Chemical Group. According to the National Bank of Poland’s calculations, China controlled $942 million in investments in Poland at the end of 2018.

Chinese Foreign Direct Investment in Poland

Several greenfield projects are currently underway in Poland, which should result in increased investment outlays. Capchem and GTHR are building electrolyte factories for batteries and lithium-ion batteries in Lower Silesia. The total value of these two investments is expected to reach approximately USD 100 million. In the last decade, about one billion dollars of Chinese FDI was to flow to Poland, which gives Poland 17th position in the EUafter Hungary or Romania.

We also need to answer the question: why don’t the Chinese want to invest in Poland, despite its good location and low costs? Poland is an ideal location for companies looking to build factories or service centers, and it ranks highly among the top greenfield investment recipients. On the other hand, investors prefer to go west of the Odra River in search of companies with cutting-edge technology or well-known brands, resulting in Poland’s lower level in FDI rankings.

Additionally, due to the conservative Polish PiS government, Sino-Polish relations were more intense since 2015. However, the governments were cautious in terms of outcome. After the change of the Polish government and president, China became uncertain and afraid. Moreover, Defence Minister Antoni Macierewicz preferred to do business with the USA than with China. This means that the government, especially at a time of heightened relations between Washington and Beijing, could not agree to an investor from beyond the Wall taking control of any of Poland’s largest companies.

Summary

The results of the Chinese FDI in Poland look bad in comparison to Germany or Hungary. The Polish government should concentrate more on creating a strategy that would attract Chinese FDI more. Chinese attempts to acquire the best technologies are not a threat to us for obvious reasons; we don’t have any. The only thing we could look for in the Chinese is to acquire them abroad. However, hardly anyone likes state-owned companies, which are held in high esteem here, so a hypothetical success in this field would not go beyond pure speculation anyway.

Also check out the fastest growing industries in Poland.

Wojciech Banasik

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