Formerly socialist Poland wants to be a bridge between China and Europe, says Dominik Bledzki of the Polish-Chinese Chamber of Commerce.

Dominik Bledzki, project manager at the Polish-Chinese Chamber of Commerce in Kunming.

MOST foreign businesses consider Beijing or Shanghai their natural administrative bases in China. Guangzhou, Shenzhen and Chengdu are the manufacturing capitals. But Polish business sees the south-west city of Kunming as the smart place to be. The capital of Yunnan Province, Kunming is a green, laid-back city popular with tourists from Southeast Asia. “We all know it’s time to go west,” says Dominik Bledzki, project manager at the Polish-Chinese Chamber of Commerce (PCHIG) situated in the city.

“Since we were late starting we have to go directly, taking our small and medium enterprises with us. Yunnan will be the heart of East Asia. Kunming will be connected to Singapore by a highway via Thailand. There will be a highway to India from there. We are looking long term…We all know what Shanghai looked like 50 years ago and look at it today.”

The PCHIG promotes Polish-Chinese business ties from an office on Kunming’s Renmin Road. “For most of them China is a new market, so we take them to fairs and advise them on marketing steps,” explains Bledzki. The Chamber provides translators for visiting businessmen, as Polish and Chinese entrepreneurs “are not always capable of handling the numerous obstacles involved in doing a deal in China.”

The biggest Polish corporate presence in China is mining company KGHM, who import steel and iron ore to China from as far away as South America. Pharmaceutical firm Bioton is opening a factory near Shanghai to produce Hepatitis C vaccines. But most of the firms seeking to do business in China are in food processing.

As one of the EU’s largest, but less mechanized, agricultural producers, Poland has plenty to share with Yunnan. Agricultural plantations growing tobacco and coffee thrive in the province. The PCHIG was born out of a visit to Yunnan by the Polish Prime Minister and a trade delegation. “The Chamber signed a contract with the province’s Ministry of Agriculture to establish trade relations, and now Yunnan and Polish agricultural companies are talking,” says Bledzki.

One of those keenest to invest is Duda, who are amongst the biggest meat producers in Poland. The company wants to introduce their bottled and tinned meats to Chinese supermarket shelves. But Duda, who produce 250 tonnes of pork and beef products per day at a modern plant in Poland, cannot export beef to China because the country banned EU beef products following outbreaks of BSE disease in several EU states. The company will circumvent the red tape by producing locally, says Bledzki. “It [Duda] wants to build and invest here, import and produce locally.”

Producing locally is also more profitable. “Many of the businesses traveling to China are just sourcing here… They buy tea and mushrooms in Yunnan,” explains Bledzki. “Investing in local production provides a long term advantage.” One of the firms being advised by the PCHIG is frozen food packager Iglo Tex. The company imports dried mushrooms from Yunnan, but seeks to build a local factory to introduce its products to the Chinese market. “They think frozen pizza will really take off in China”, says Bledzki.

Though meat prices and consumption are both rising in China, meat importers face a tedious process negotiating the protocol China requires of exporting nations before admitting meat imports. “Polish companies exporting to the world are used to standards and certifications,” says Bledzki. Yet Poland lags behind fellow EU member states who have already secured certification. “European competitors have been active in China since the 1980s,” concedes Bledzki. “Poland is only discovering China now.”

The Poles are catching up however. Bledzki claims that in 2000 there were less than 3,000 Chinese visas issued to Polish nationals. Those figures increased 20 fold in 2006. “Now you hear Poles at every fair, before it was a novelty!” Created in April, the PCHIG is now looking at Chengdu and Changsha as possible cities for expansion. “Polish businessmen don’t want to go to the Canton Fair. They want to go to smaller cities where you can find agricultural products.”

EU membership has brought Poland closer to the Chinese market. Ten Chinese companies had booths earlier this year at an expo of recycling machines in the Polish town of Kielce. “Dozens of guests came to see machines and technology from Germany and other EU countries,” explains Bledzki. “They were there to do business with French, German and Polish companies. It’s a good example of what EU membership can do.”

Selling Poland as the gateway to the EU is also the job of the PCHIG. Since Poland joined the EU we’re getting a lot more questions than before, says Bledzki. Yet confusion remains among Chinese investors, used to the Poles’ former position within the Soviet sphere. “A lot of businessmen we meet say ‘oh yes, but we are exporting to the EU.’ And we have to say ‘we are in the EU too!’”

The chamber is coaxing Chinese corporations to follow the lead of Western companies, who have already taken advantage of lower costs in Poland to build factories there. “We’re trying to get through to the Chinese that if you come to Poland you don’t need to pay customs duties into the rest of the EU… it’s a perfect production or logistics base."

EU membership will also help Poland attract Chinese tourists. "Poland is quite new to Chinese people. When you go to London and Paris there are dozens of Chinese on the street. Poland has been behind those places...” Interest has increased since the country’s entry into the EU. “We’re getting a lot of questions like ‘Are there organized tours?’”

Bledzki is betting on Poland’s entry into the EU's Schengen zone in 2008, which would allow travelers to Poland to move throughout the zone on a single visa. In the meantime the PCHIG is helping to popularize the country in China. “Most Chinese people have no knowledge of Poland, they remember it as it was prior to 1989. China and Poland had good relations then, but Chinese people have had no information about modern Poland which is welcoming, modern and young,” says Bledzki, who offers Chinese travel companies a Mandarin-subtitled film with scenes of the Tatra Mountains, cantering Polish horses and snow-dipped country mansions.

With a population of 38.6 million and a gross domestic product of US$230 billion, Poland accounted for over half of the total population of the ten new member states that joined the EU last summer. It also made up 41 percent of the ten's total GDP. Precedents suggest EU membership will be prosperous for the Poles. Spain, similar in size to Poland, boomed after joining in 1986.