Poland sees big rise in exports to Russia

Political relations between Warsaw and Moscow are frayed but economic ties are strengthening, with Polish exports to Russia jumping by 40 per cent in the first six months of this year, according to recently released figures.
The increase in exports is in large part due to companies such as Opoczno, a ceramic tile maker, whose sales last year to Russia jumped 27 per cent.

"The market in Russia reminds us of the Polish market . . . in the early 1990s," said Monika Chmielewska, a company spokeswoman. "The Russian market is very needy. We are looking to eventually set up a factory or to buy a Russian producer."

Although not all Polish companies have had an easy ride in Russia, the lure of its market is proving irresistible.

During a conference on Polish investments in Russia and Ukraine, Marek Pastusiak, a director of Atlas, a Polish industrial glue maker, described the difficulties of setting up a factory outside Moscow. He talked of impenetrable Russian bureaucracy, corruption and underground factories producing thousands of tonnes of counterfeit glue. But he believes Russia is too important to ignore.

Russian exports to Poland consist mostly of oil and natural gas. In the first half of this year Poland exported 5.7bn zlotys (£966m) of goods to Russia and imported 11.8bn zlotys' worth.

Russia now accounts for 4.1 per cent of Poland's exports, up from a low of 2.8 per cent following Russia's economic crisis in 1998.

The figure is still far below that recorded in Poland's last full year as a communist nation; in 1988, 24.5 per cent of its exports went to the Soviet Union.

Most of what Poland sells in Russia is made by small and medium-sized companies whose owners lived through the transition from communism to capitalism in 1990, and later had to guide their companies through the economic stagnation of 2001-2002. Exporters also had to deal with the aftermath of Russia's financial collapse.

Now that Poland is a member of the EU, its companies can export freely to the west. But many are finding that they have the expertise to operate in the old markets.

"It's easier for Poles to figure out how to do business in Russian than for west European companies," said Bohdan Wyznikiewicz, an economist with Poland's Gdansk Institute for Market Economics.

The buoyant economic ties come despite strained political relations. Poles were offended by the May 9 Moscow celebrations marking the end of the second world war, which avoided mentioning Soviet collaboration with the Nazis in 1939 and Moscow's rule over Poland for half a century after the war.

Russia was enraged at Poland's intervention in Ukraine during last year's Orange Revolution, and Moscow fears Warsaw will try to influence EU policies in an anti-Russian direction.

But while politicians snipe, business is looking up. "The emotional tensions aren't affecting us," said Ms Chmielewska.

(Source: Financial Times)

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