3.3 Polish enterprises in Germany

Owing to the high location costs, Polish firms are still exercising restraint with regard to direct investment in Germany. Recently, however, there has been growing interest by Polish enterprises in opening branches across the border. For example the TWG has helped a textile producer and an office furniture manufacturer to establish sales offices in Berlin. Even though such moves are limited to small enterprises, predominantly in the trade, construction, maintenance and service sectors, Polish investment in the eastern part of Germany is highly welcomed. The City of Berlin, for example, has set up a competition in which a prize will be awarded to the Polish enterprise that presents the best export concept for the German market.

Direct Polish investment in Germany has so far been relatively modest for two reasons: Polish foreign engagement in general is small, and the focus has recently shifted from Western Europe to Eastern European countries . Total Polish foreign investment amounted to little more than US$550 million between 1994 and 2001. At the end of 2000 only 58 Polish companies were registered in Germany, with an accumulated capital expenditure of C=128 million, up from C=118 million in 1997 (Deutsche Bundesbank, May 2002).

Until 1997, 65 per cent of Polish foreign investment was predominantly targeted at Western countries (Britain, the United States, Belgium, Luxembourg, Switzerland and others), but now almost 80 per cent is directed eastwards, with Russia, Ukraine, the Baltic States and Belarus being the main recipients. Despite the higher risks involved, Polish enterprises seem to appreciate the comparatively low investment costs and dynamic market conditions in these countries. At least for the time being, high location and administrative costs are preventing Polish businesses from investing in Germany.

Note

The data in this section are drawn from a series of empirical studies by the German “Polish organization for business promotion (TWG) on German investors and their experiences in Poland.