The CEE region is known for the expansion opportunities it provides for Romanian firms, and Poland is the country that has been leading the regional market in the last few years. Many Romanian companies have found that doing business in Poland may offer significant advantages, but also pose certain risks. Why is it worth investing in the Polish market and which Romanian firms have chosen to make that move?
By Claudiu Vrinceanu
For many large Romanian companies, including eMAG, the Polish market proved to be much more mature than the entrepreneurs had expected, therefore they would have needed much larger investments than they were ready to make in order to succeed. Only a few hundred Romanian companies are operating in Poland, mostly in the transport sector. Conversely, over 1,500 Polish companies are active in Romania.
Poland ranks 19th among Romania’s foreign investment sources, representing 0.68 percent of the total foreign investments in the country, according to governmental data. Commercial companies with Polish capital are currently involved in the chemical, food, construction materials, light metal packaging, transport, tourism, and service industries. Taking a closer look, we can see that Polish companies have slowly gone from expanding into neighbouring countries to expanding into the wider region, Romania included.
Case studies: Romanian firms expanding into Poland
The processes of mergers and acquisitions (M&A) and creating strategic partnerships following new investments are two key approaches through which Romanian companies are choosing to expand into the Polish market in 2023. A relevant example comes from AROBS Transilvania Software. The company took over a 94 percent majority stake in SYDERAL Polska, a company from Gdansk, Poland specialising in the development of products and technologies for quantum and optical communication, data storage and processing, as well as control of mechanisms and instruments via satellite. A second case study is rental platform Milluu, which announced the completion of a EUR 1 million funding round led by Polish investment fund Cofounder Zone. This partnership will accelerate the company’s expansion on the Polish market. There is excellent potential, as rental needs will significantly increase over the next few years and proptech also constantly growing because of the blooming real estate infrastructure.
Industries represented abroad and new macroeconomic forces
Romanian IT companies are not the only ones being tempted by the Polish mirage. We’re also seeing interest and growth potential from players in other services and product segments. According to Romania’s Ministry of Foreign Affairs, the most important companies with Romanian capital registered in this country are UTI (services), Tohani (wine), Global Food Poland (beverages), Neogen, Teilor (jewellery retailer), Demiuma Comimpex – Nissa (fashion manufacturer and retailer), Electrogrup (civil construction), and Superbet (gambling). For example, luxury jewellery chain Teilor, which has a large presence in the Central and Eastern European region, recently opened its sixth store in Poland, after opening three stores in Warsaw and two in Poznan.
In terms of economic pressures, Romanian companies operating in Poland face high wage growth, likely driven by the 15.9 percent increase in the minimum wage this year (from PLN 3,010 to PLN 3,490). “The increases (also linked to rising inflation, among other things) are expected to be stretched over the first few months of this year. However, wage growth has remained below inflation for months. This is most likely the main reason we are seeing weakness in household spending, in addition to, for example, the deterioration in household sentiment or the rise in interest rates,” ING Bank research says. Moreover, after a successful first half of 2022, prosperity in some manufacturing industries has deteriorated, which can be seen in housing-related sectors such as furniture manufacturing.