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Executive Report on Strategies in Poland
ICON Group International, June 2007, Pages: 394
How to Strategically Evaluate Poland
Perhaps the most efficient way of evaluating Poland is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
Relative Accessibility
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities.
Latent Demand and Accessibility in Poland
This report provides an extremely detailed overview of factors driving latent demand and accessibility in Poland. Latent demand is largely driven by economic fundamentals. But, latent demand only represents half of the picture. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks.
Chapter 2 deals with macro-accessibility. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Poland:
Openness to Trade in Poland
Openness to Direct Investment in Poland
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are also covered in Chapter 2, which is presented from the perspective of an American firm, though it is equally applicable to most firms entering Poland. This chapter has been authored by local offices of the U.S. Government. I have included a number of edits to clarify the provided information as it relates to the general strategic framework.
In Chapter 3, I summarize the economic potential for Poland over the next five years for hundreds of industries, categories, and products. The goal of this chapter is to report my findings on the real economic potential, or latent demand, represented by Poland when defined as an area of dominant influence. The data presented are the result of various spatial econometric and time-series forecasting models which, for each category presented, are applied to forecast and allocate latent demand across all countries of the world and major distribution centers or centers of dominant influence within each country. This is accomplished knowing that economic fundamentals (e.g. income) generally vary from one country to another within a given country over time. In this chapter, I report the allocation for each category for Poland as an area of dominant influence in Europe and, potentially, the world.
The report concludes with trade indicators for Poland. Often, the amount of trade flowing into and out of a country is a strong indicator of trading partners, trade openness, and related latent demand. Trade indicators are purely statistical in nature. Although international trade is not a direct measure of latent demand, it does provide an indicator of general market conditions with respect to trade flows and trade openness in Poland.
As a whole, this report presents a strategic assessment of Poland by considering an extremely broad set of factors affecting both latent demand and accessibility, as outlined in the following chapters.
MACRO-ACCESSIBILITY IN POLAND
Economic Fundamentals and Dynamics
Poland was one of the leaders of the economic transformation of Central and Eastern Europe in the 1990s, reflecting its early adoption of an aggressive program of market-oriented reforms (“shock therapy”) following the fall of communism in 1989.
Government Intervention Risks
Poland has made remarkable progress in transforming itself into a private-sector-led market economy. However, a frequent complaint of business executives operating in Poland, both foreign and domestic, is the sluggishness, inconsistency, and unpredictability of regulatory decision-making.
Taxes in Poland have been relatively high, particularly for a country at its income level. The constitution prohibits the government from borrowing from the central bank. The constitution also mandates that public debt cannot exceed 60 percent of GDP.
Balance of Payments Issues
The rapid expansion of domestic demand in the latter half of the 1990s, combined with the Russian financial crisis of 1998, led to a worrisome deterioration in Poland’s external finances. Poland greatly benefits from the 1991 Paris Club and the 1994 London Club debt-rescheduling agreements, which roughly cut in half Poland’s foreign debt. In 1995, Poland paid back all IMF drawings.
Infrastructure Development
Communications, banking, insurance, accounting, and distribution systems are still developing in Poland. Communications services are adequate. Domestic long-distance service is open to competition; in January 2003, TPSA’s monopoly on international service was ended. Internet usage is low compared to U.S. and Western European levels, but increasing rapidly. The high cost of telecommunications services, coupled with the continued dominant position of TPSA, have slowed the introduction of new services, including e-commerce. Cellular phone usage is high and service reliable.
Companies establishing branch offices find office space and housing relatively expensive. Foreign companies can acquire small parcels of land without obtaining government permission, but the government has moved slowly in granting permits to acquire large parcels and some companies have complained there still are unnecessary delays in acquiring small parcels. There is a shortage of personnel with training and experience in some fields, particularly in finance, marketing, and human resources.
The banking system is relatively well developed and well regulated. Foreign-owned banks control over 80 percent of the banking sector’s equity. Banks set their own lending and deposit rates.
Poland’s road system is poor. The number of cars on the roads is more than double that of 1990, but highway construction has not kept pace. There is especially a lack of adequate highways between major cities capable of carrying the increased volume of trucks necessary for the growth of Poland’s distribution systems. Rural road travel is particularly difficult and very dangerous at night.
Poland’s air and seaports are structurally adequate for receiving and shipping cargo. All are in need of expansion and modernization to facilitate the growth of Poland’s economy. The existing rail network in Poland is extensive.
Regional Economic Integration
Poland became a full member of the EU on May 1, 2004. Despite the major reorientation of the economy reflected in EU accession, Poland has maintained strong trade ties with Russia and the countries to the east.
Economic Relationship with the United States
Every post-1989 Polish government has been a strong supporter of a continued American military and economic presence in Europe, and has identified active participation in NATO since joining in 1999 and accession to the European Union as Poland’s principal foreign policy priorities. Poland cooperates closely with the United States on such issues as nuclear non-proliferation, human rights, regional cooperation in Central and Eastern Europe, and reform of the United Nations. Poland served successfully as the Chairman in Office of the Organization for Security and Cooperation in Europe (OSCE) in 1998 and chaired the Community of Democracies Initiative (CDI) and hosted CDI’s first conference in Warsaw in 2000.
From 1989 until the closure of U.S.AID’s Polish program in 2000, Poland was the largest recipient of U.S. assistance to Central and Eastern Europe. Since 1989, the U.S. has committed more than USD 4 billion to such areas as debt reduction, privatization, financial stabilization, financial institution building, entrepreneurial training, support for a free press and other democratic institutions, and efforts to improve Poland’s environment. Until its closeout in 2001, the Peace Corps program in Poland was one of the world’s largest.
Poland’s close cooperation with the United States is reflected in the large number of high-level visits exchanged between the two countries in recent years.
Political Risks
Leaders of Poland’s major political parties have repeatedly expressed strong public support for foreign and specifically U.S. investment. Substantial foreign direct investment is considered essential to Poland’s achieving its overarching goal of raising the standard of living to the levels of Western Europe. A particularly sensitive issue for many Poles, for historic reasons, is the EU-mandated liberalization of the sale of land to all EU citizens. Although all of Poland’s major political parties at one time or another have exhibited some reservations about allowing foreigners to acquire dominant positions in strategic firms
As for trade issues, political parties’ support for reducing tariff and non-tariff trade barriers varies from the avowedly open-market stance of the Civic Platform (PO) to the generally protectionist position of PSL and the extremist parties of the left and right. However, overall, Poland has lowered trade barriers in accordance with its international obligations to WTO.
Trade unions are also an element for foreign business to consider. The Polish trade union movement, the engine of the social movement that precipitated communism’s collapse in the 1980’s, has occasionally been problematic for foreign investors, particularly when managers of newly privatized state enterprises have instituted management changes. Resistance has also come from often-bloated middle management in such enterprises. But considering the growth and magnitude of U.S. investment, few American investors have encountered significant difficulties with Polish unions.
Relations between National and Provincial Leaders
Poland’s January 1, 1999 administrative reform divided the country into 16 provinces (wojewodztwo) headed by governors (wojewoda) appointed by the Prime Minister. Provinces are subdivided into counties (powiat) at the intermediate level, and into municipalities (gmina) at the local level. Every four years the Poles elect local assemblies (Sejmik) at the provincial and county level. Each Sejmik is headed by a Marshall.
Local government manages public finances, health care, schools, social welfare assistance, and police. It also functions as the owner of local public assets including unutilized land. Local government is financed largely from the state budget, but also draws a small portion of its revenue from local taxes and fees, which according to the constitution it has the right to determine.
The Political System
Poland is a parliamentary democracy. The Constitution adopted in 1997 enhances several key elements of democracy including judicial review and the legislative process, while continuing to guarantee the wide range of civil rights, such as the right to free speech, press, and assembly that Poles have enjoyed since 1989.
Poland has a bicameral Parliament, comprised of a Lower House (Sejm) and Upper House (Senate). Within the legislative branch of the government, the Sejm has preeminent power. The Senate’s authority is limited to amending or delaying legislation passed by the Sejm. Both bodies are elected simultaneously. Elections to the Sejm are proportionate from multi-member districts ranging in size from seven to nineteen deputies. Elections to the Senate are by plurality, from two- to -four-member districts.
The Polish President is the commander-in-chief of the armed forces and may veto legislation passed by the Parliament. According to the new Constitution, Presidential vetoes can be overturned by a three-fifths vote in the Sejm.
Orientation of Major Political Parties
The Polish political parties are described below. They are commonly referred to by the Polish acronyms given in parentheses.
Democratic Left Alliance (SLD). The left-of-center SLD is comprised mostly of successor parties to the communist-era Polish United Workers Party (PZPR). The party’s leadership generally supports liberal economic policies but stresses the importance of cushioning the harsher effects of economic reform.
Civic Platform (PO): Center-right grouping established in January 2001 by three influential politicians: Maciej Plazynski, former Marshal of the Sejm (left PO in May 2003), Donald Tusk, former Vice Marshal of the Senate, and Andrzej Olechowski, former Minister of Finance and Foreign Affairs. PO advocates flat taxes, American-style parliamentary elections in single-member districts, and direct election of local government executives.
Law and Justice (PiS): Established in June 2001 from elements of the then ruling Solidarity Electoral Action (AWS). Rightist, first led by popular former Minister of Justice Lech Kaczynski. Stresses law and order and a “strong and just society.”
Polish Peasant Party (PSL): Headed by former Deputy Prime Minister Jaroslaw Kalinowski. Communist-era supporter of the Communist regime. After 1989 the PSL announced a return to its pre-1945 agrarian centrist tradition. The PSL highlights its declared mission of protecting Poland’s small family farmers, but its senior leaders include a number of agribusinessmen.
League of Polish Families (LPR): Far-right, strongly nationalistic Catholic party (established in June 2001). Staunchly anti-Communist radicals with affinity to the Catholic Radio Maryja and its associated newspaper, Nasz Dziennik. Strongly opposed to Polish membership in EU and sale of Polish real estate to foreigners.
Self-Defense (SO): Radical populist party. SO organizes street protests and media stunts to highlight a variety of social concerns.
Union of Labor (UP): Bills itself as an “ideologically pure” social-democratic party advocating a broad social safety net. It is the smallest of the major parties in Poland.
Conservative-Peasant Alliance (SKL): Originally established in January 1997.
Marketing Strategies
Opportunities for doing business in Poland are, like the population, dispersed throughout the country. Twenty-five percent of the population resides in rural areas, and urban dwellers are widely spread among a number of population centers.
The largest Polish cities include:
CITY
POPULATION
Warsaw
1,632,500
Lodz
812,300
Krakow
740,500
Wroclaw
639,400
Poznan
580,000
Gdansk
461,300
Szczecin
419,000
Bydgoszcz
386,300
Lublin
356,000
Distribution Channel Options
Consumer Goods Distribution
Competition in the consumer goods sector, particularly non-durable consumer goods, is intense in Poland. The previously insatiable demand for western goods has been replaced by more pragmatic attitudes about price and quality. Polish consumers and importers are selective about the products they buy. Locally made brands have improved immensely in quality. Brand name recognition is still important, but it is sometimes a challenge for U.S. firms to develop brand images and loyalty, as the market has been introduced to hundreds of new western and Polish brands.
Despite the expansion of international chains of supermarkets, hypermarkets and large specialty stores, the retail market in Poland continues to be fragmented. Many small local independent retail shop owners are losing business to the large international chains and therefore protest establishment of new large stores. Smaller shops are also joining merchants associations to petition authorities to preserve small, independent Polish retailing. In 2000, 11 Polish retail networks founded the Union of Polish Retail Networks (UPDS), an organization with nationwide coverage. Despite the fact that the organization unites retail business owners, it intends to cooperate with Polish wholesalers. Small companies continue to dominate the Polish retail market. Ninety-eight percent of retail companies own no more than two outlets. The wholesale market is also fragmented. Ten foreign wholesale companies produce 70% of total wholesale sales.
The number of hypermarkets is expanding rapidly in Poland. The top ten retailers in Poland are foreign, and include such chains as Macro, Geant Casino, Auchan, Jeronimo Martins, IKEA, Carrefour, HIT, Castorama, OBI, Leclerc, and Tesco. Twenty four percent of Poles do their shopping in hypermarkets, 45% in small stores, 20% in miscellaneous, and 9% in discount stores. According to survey data 52% of customers shopping in the large-scale retail outlets cite the wide range of products as an attraction, 44% believe prices are lower, 25% are attracted by promotions and discounts, 23%note convenience, and 19% seek the “hands-on” experience.
More than ten western hypermarket and supermarket chains operate in the food retail market. All large supermarket chains doing business in Poland report aggressive plans for expansion over the next two years. Foreign retail chains invest not only in hypermarkets but also in smaller, discount store types of retail chains situated near customers’ homes or work places. There is a considerable amount of development in specialty and do-it-yourself (DIY) retail chains. The fastest growing chains are OBI, IKEA, Euro-net, Media Markt, Stinnes, Castorama, Praktiker, Nomi, Leroy Merlin and Bricomarche. The major local DIY chain is Komfort (with about 100 outlets).
Currently there is growing activity in constructing large shopping centers (“shopping malls”). Companies including Globe Trade Center, ING Real Estate, ECC, TK Development, Apsys, Cefic and Metro are the most active in Poland. Globe Trade Center was the investor in Warsaw’s Galeria Mokotow, the first integrated shopping and entertainment center in Poland (it has 60,000 sq meter of retail space and 240 stores). Large shopping centers are also located in other locations in Poland. The most important feature of a successful shopping center is a proper and functional selection of stores, in terms of goods range and prices.
There are over 50 foreign retail clothing chains in Poland. The rapid growth of these chains is a result of the expansion of shopping malls. Very popular are Part Two, Carly Gray (Cottonfield, Jackpot, Inwear), Olsen, Cubus, KappAhl, Claire, Max Mara, Deni Cler, Morgan, and Benneton. Well-known foreign apparel brands have been introduced into Poland by two companies, Ultimate Fashion (Esprit, River Island, Wallis, Celio) and Young Fashion (Zara).
Most large retail chains offer customers credit cards. Usually the cards involve participation in loyalty programs. Although credit cards are becoming a major means of payment and most shops now accept them for payment, Poland is still largely a cash economy. Checks are almost unheard of, but cash machine networks have sprung up throughout the country.
Smaller U.S. companies usually enter the Polish market by partnering with a small, regionally located distributor and then developing a network from there. Larger firms may initially establish a regional warehouse system with a series of trucks and distributors in order to branch out to assorted markets across Poland. This requires a significant up-front investment.
Industrial Goods Distribution
Imports of equipment and technology have remained steady as Polish industry modernizes and restructures to compete with the West. However, some industries in Poland rely mostly on imports. Poles are familiar with the technical parameters of U.S. products, even prior to the actual introduction of those products in the marketplace. This reflects the fact that serious Polish importers do their homework.
Industrial distributors may therefore be part of a network that developed from former foreign trade organizations (that handled imports during the Communist period), or may be individuals with significant connections to their industry (frequently former employees of the large foreign trade firms). As industries and companies continue to privatize in Poland, distribution networks are expanding in scope and complexity.
Many distributors of industrial equipment are very specialized and have very specific technical expertise. Because of this, some are better able to represent foreign manufacturers on a national level than most consumer goods distributors. However, exporters should be aware that large industrial enterprises when looking for heavy machinery would rather have direct contact with manufacturers.
As with consumer goods, importers and other companies that represent foreign companies are becoming more sophisticated and selective. The number and variety of imported goods available on the Polish market play an important role here as well. Polish agents or distributors increasingly look to foreign partners to provide marketing and promotional support, training and financing. Polish trade fairs, which have become more and more specific in scope, are a good place to look for possible distributors.
Also, it is advisable to consider having one exclusive distributor. Potential channel partners in this sector tend to prefer exclusive arrangements because often they bear the marketing costs of new products and do not want potential competitors to reap the benefits of their promotional activities.
Agents and Distributors
Polish companies tend to act more as distributors (importing, taking possession of, and reselling a good) than as agents. Expensive equipment is an exception to this, since many Polish companies do not have the financial capability to make such purchases. Also, heavy industrial equipment tends to be sold directly to end-uses due to the inability of most distributors to purchase the equipment prior to re-selling it to end-users.
There are no laws imposing roles for Polish importers. Distributor and agent agreements may take any form beneficial to the parties involved.
It is best to find a distributor who is experienced, knowledgeable, and well-connected to existing distribution channels for the product. Polish companies tend to be younger and less experienced than their western counterparts. In most cases, product and marketing training must be provided to new distributors.
Franchising Activities
Poland remains ripe for the continued growth of franchising. Poland has worked to develop a strong commercial infrastructure by focusing on telecommunication, banking services, media and advertising.
The most popular and largest U.S. franchises arrived in the early 1990’s and helped to introduce the concept in Poland. Their success over the last decade has proven to be the best advertisement for the promotion of franchising in Poland. McDonald’s, the first franchiser to Poland, established its first operation here in 1992. Currently there are over 180 McDonald’s restaurants, including 45 operating in their franchising system. McDonald’s franchise network is developing very fast and is the most popular fast-food chain. Other U.S. fast growing franchise networks include:
The Athlete’s Foot (TAF)
Kodak Express
Pizza Hut
KFC
Coca Cola Services
T.G.I. Friday
Blimpie
Sbarro
Midas
New York City Pizza (located at Statoil stations)
Collagena
Subway
Levi’s Strauss
Budget Rent-a-Car
Futurekids
Lee Cooper
The latest U.S. franchise system that entered the Polish market is MBE Mail Boxes ETC.
The largest foreign franchisers active in Poland (excluding the U.S. franchise systems) are:
TelePizza (fast-food)
Adidas-Salomon and Adidas Poland (sportswear and equipment)
Intersport (sportswear and equipment)
Aral (oil stations)
Afga (photo laboratories)
Whittard (tea-shops)
Spar and Rema (food supermarkets)
Body Basics (body care cosmetics retail chains)
Yves Rocher (perfumeries and beauty salons)
Petit Beteau (children clothes retail network)
Marks & Spencer (apparel)
Jean Louis David (hairstyling salons)
Jean-Claude Biguine (hair and beauty salons)
Jean Algue Paris and Camille Albane (hairstyling salons)
Costcutter (food shops)
EE English First (language schools)
HDS (stationery)
Cyberland (Internet clubs)
Mamuska-The Cheescake Shop, Denmer’s Teahouse, Grupa Muszkieterow (Intermarche and Bricomarche )
Ann Rent a Car Poland and Yamaha Szkola Muzyczna (music schools; master franchise purchased by Promusica from Yamaha Europa GmbG)
Ritz Collection (jewelry retail chain)
Tivoli, Pizza Express, and Pizza Pai (fast food)
Mobil’ Affiche Polska (moving advertising)
Polish franchise firms began to operate in 1991-1992, that is, simultaneously with large western franchisers entering the Polish market. The pioneers of Polish franchising are:
A. Blikle (luxury cake-shops-since 1991)
Pozegnanie z Afryka (“Out of Africa” gourmet coffee shops-since 1992)
They were followed by:
American-style Chicken, Mr. Hamburger, Lesne Runo (fast-food)
A.D. Dragowski (real estate offices)
Gabriel Hair and Beauty Salons, Chata Polska, Groszek, Piotr i Pawel (food retail)
Drogerie Natura (drugstores)
Saloniki Prasowe (owned by Kolporter - press distribution)
U Szewczyka (footwear retail chain)
Debica Dekart (tire sales and replacement)
Laboratorium Kosmetyczne DR Irena Eris (beauty salons & retail)
Orbis Travel, (tourist services)
YES Bizuteria (jewelry)
Zielona Budka (ice-cream shops)
Sklepy Familijne (food stores)
CCC (footwear retail chain)
Rafineria Gdanska, PKN Orlen (gas & oil stations)
There are over 120 franchise systems operating in Poland including local and foreign franchising systems. About 58% foreign franchising systems operating in Poland are franchises from the EU countries. The franchising sector employs over a half million people. The major franchising employers are:
Retail distributors (48%)
Gas stations (13%)
Catering & hotel services (10%)
The largest number of franchises are American, French, and German. The major sector shares in the franchise market are retail trade, services, and catering.
Financing is the most critical element for successful entry and penetration by U.S. franchisors. Although it has generally been difficult for foreign companies to locate Polish investors capable of becoming master franchisees, the number of local candidates interested in becoming master franchisees is on the rise.
There are no Polish laws or regulations that specifically address franchising. A franchise is subject to general commercial law. The contract between two parties is therefore the sole legal platform for the franchise agreement. It usually contains not only elements of civil law, but also elements of intellectual property and trademark protection.
The best franchise concept prospects are in retail trade, services (automotive, maid and personal services, commercial cleaning, laundry and dry-cleaning), mid-range and low-end hotels/motels, and fast-food chains. Business services, currently not represented within the franchising sector in Poland, holds great potential.
Direct Marketing Options
The direct marketing concept is still relatively small in Poland and is mostly practiced by joint ventures or foreign companies selling consumer products and services. Several years ago the first foreign companies began to sell a very limited assortment of products through catalogs. This form of marketing is growing rapidly, but one factor limiting the spread of direct marketing is the fact that cash is still used for most sales transactions. Nevertheless, the Polish market offers enormous potential, especially for the expansion of mail-order companies. Mail order customers are predominantly women. Mail-order companies selling books, CDs and cassettes have become popular in Poland.
Presently, the most popular method of direct marketing is direct mail, advertisements in printed media, and telemarketing. Electronic media is opening new opportunities. Cable television companies have introduced new shopping channels. The number of Internet users is growing very quickly, resulting in expanded Internet on-line “shopping malls.”
The Direct Marketing Association, Stowarzyszenie Marketingu Bezposredniego (SMB), was established in Poland in 1995. Currently SMB has 87 members including catalog and mail order, fulfillment, telemarketing, advertising, direct marketing, production services, Internet, electronic media, financial, database, broker, administration, insurance, and distribution companies. The members of SMB have established a code of ethics and guidelines in order to establish effective methods of operations in direct marketing, protecting consumer’s rights and preventing illegal business practices. The organization participated in the drafting of legislation for the protection of privacy, which was adopted in 1998. SBM provides training and educational activities on a regular basis. SMB is a member of FEDMA (European Federation of Direct Marketing) and IFDMA (International federation of Direct Marketing).
Joint Ventures and Licensing Options
Joint ventures as a form of business are abundant in Poland. Many U.S. businesses in Poland take the form of joint ventures, with Polish companies set up to handle sales in the market. Joint ventures are an excellent way to facilitate export sales to the Polish market.
Most joint ventures are set up so the American partner contributes capital and technology. The Polish partner typically contributes land, distribution channels, trained workers, access to the Polish market and introductions within the local government and business community that could take years to develop for an American company on their own. More and more, American firms participating in joint ventures are asked to provide marketing, training, and promotional support to their Polish partners.
Licensing of products, technology, technical data, and services is practiced less in Poland, due to concerns about intellectual property protection. Licensing is particularly prevalent in the industrial manufacturing, consumer goods, and textile sectors.
Creating a Sales Office
The choice of business entity that U.S. companies choose to establish is often determined by the scope of activities that the company plans to undertake in Poland. If a U.S. company only plans to sell its products and services in Poland through its own office, it usually establishes a representative office. If a U.S. company plans to invest in Poland, there are generally only two legal forms available, a limited liability company or a joint stock company. The entity most commonly employed by foreign investors is that of a limited liability company. The following are the two forms of entities used by investors and information on establishing a representative office:
Limited Liability Companies
Limited liability companies (Sp. z o.o.) require at least one founder and a minimum initial capital of 4,000 PLN. This capital must be paid in full before the company can be registered. A limited liability company may be 100 percent foreign-owned. Reserves are not required to be taken out of after tax earnings, audits are only obligatory in certain situations, and assets can only be distributed six months after liquidation is announced.
Joint Stock Companies
Joint stock companies (S.A.) require a minimum of 100,000 PLN minimum initial capital, of which 25% must be paid prior to registration. There are no maximum limits and in-kind contributions are exempt from customs duty. After
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