WARSAW — Poland intends to use some of the almost 60 billion euros, or $72 billion, in structural funds it is to receive from the European Union between 2007 and 2013 to enhance the performance of small and medium-size textile and apparel firms.

Finance Minister Zyta Gilowska said the government is determined to remove impediments to business and design a modern infrastructure for the economy “so that investors have better conditions to do business.”

Gilowska and Prime Minister Kazimierz Marcinkiewicz, meeting with a small group of foreign reporters in Warsaw last month, said that the country is in no hurry to begin talks to join the euro currency zone, consisting of 12 EU nations.

“We might be ready to start serious discussions in about two-and-a-half years, when the country would be in a better position to evaluate the convergence tendencies,” Gilowska said.

“We are still not prepared, or ready, to join the euro zone,” the prime minister said, adding that Poland’s adoption of the euro currency should be done “in a seamless and smooth way…for the benefit of Poland, not as a symbolic gesture.”

Moving to the euro too quickly could hurt exports, since Poland’s zloty is currently valued lower. There are also other fiscal requirements that Poland needs to meet in order to adopt the currency, which the prime minister said takes time.

Marek Pietras, Poland’s Secretary of State for European Affairs, said the country’s entry in to the EU in May 2004 “was [an] opening to global competition” from low-cost international rivals, especially from Asia, and from efficient European companies, because of the currency and trade rules.

EU entry also presented new opportunities for Polish exporters in the lucrative EU market, and funds to overhaul and modernize segments of the former state-controlled economy.

In addition, Poland is to get 22.5 billion euros, or $27 billion, in agricultural subsidies over the seven-year period and 3.9 billion euros, or $4.69 billion, for investment-linked strategies. In 2005, the value of Poland’s exports increased 21.1 percent to 71.4 billion euros, or $89.3 billion, and EU countries were the destination for 77.2 percent of shipments, government data shows.

This story first appeared in the March 21, 2006 issue of WWD. Subscribe Today.

Poland has experienced growth, unlike other European textile and apparel exporting nations that have posted decreases in exports as a result of the high euro and intense competition from Asian suppliers.

Polish exports of textiles and apparel posted gains between 2000 and 2004, and perfumes and cosmetics notched more than a threefold increase. Exports of textile yarns and fabrics increased to $233.7 million in 2004 from $92.7 million in 2000, while “made-up” textiles such as towels and curtains advanced to $563.7 million from $366.6 million.

Exports of men’s and boys’ wovenwear inched up to $594.3 million from $572.8 million last year, and women’s and girls’ wovenwear also registered gains, to $844.6 million from $784.9 million, according to International Trade Center statistics. Women’s and girls’ knitwear expanded to $162.4 million from $144 million, while exports of clothing accessories doubled to $108.2 million.

Leather goods exports more than doubled to $119 million. Perfumes and cosmetics delivered the biggest export gains, with shipments reaching $806 million in 2004 from $228.4 million in 2000.

With unemployment standing at 17.2 percent, the country has little choice but to push ahead with reforms, experts said. The government plans to slash the cost of doing business in Poland by reducing red tape and upgrading infrastructure.

Poland’s highly skilled but low-cost labor force, especially compared with EU members like Germany, France and the U.K., helped the former communist nation of 38.2 million attract $84 billion in foreign direct investment in 2004.

Meanwhile, the prime minister said last year Poland posted a $10 billion increase in foreign direct investment.

“Our expectation is in 2006 to have a similar level,” he said, adding that new anticorruption laws should help facilitate investment.

A study by Boston Consulting Group said the wage differentials between Western Europe and reform economies such as Poland “will not change fast” and could take at least several decades before they converge.

The decision 16 years ago to abandon the planned economy system and opt for a “shock therapy” transformation to a market economy regime boosted Poland’s attractiveness early on.

According to estimates by Poland’s foreign investment agency and the consultancy group Deloitte Poland, foreign direct investment in manufacturing of fabrics and textiles totaled $350 million. Textile and apparel companies that have invested in the new Poland include U.S. outerwear firm Lee Bell Inc., as well as firms from Germany, France, Italy, the Netherlands, Turkey and South Korea.

German investors include textile weaving operation Sopp, apparel manufacturer Lothar Radomski, textile firms ADO and Berger, and outerwear maker ETC Couture Netherland. Among the French enterprises that have set up production in Poland are underwear firm Chantelle and cotton weaver International Ducatel. Other foreign enterprises include Italian outerwear brand Binaca and textile mill Freudenberg, Japanese zipper firm YKK and Turkish apparel manufacturer Dallas International.

Large investment commitments have been made by international cosmetics and retail groups.

Avon International Operations of the U.S. has invested an estimated $176 million in wholesale perfume and cosmetics. Other investors are L’Oréal SA of France, Catzy of Sweden and Solvay of Belgium, among others.

Poland’s youthful population — average age 34 years — is also a factor for many retailers that have established operations, such as Groupo Nico of Italy, Marks & Spencer of the U.K., and Decathlon and Go Sport of France. Global retail giants Carrefour, Metro and Tesco also have invested in networks of stores.

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