20120523 Ceis Poland

CONFIDENTIAL

Internationalization of
businesses to Poland

Warsaw, 23 May 2012

20120523 CEIS - Poland

Key messages

• Internationalization is key for the survival of Portuguese
companies and Portuguese economy as a whole
© Copyright 2012 CEIS – All rights reserved

CONFIDENTIAL
• Central Eastern Europe, in particular Poland, is an actractive
market due to size, proximity and existing opportunities

• Although there are plenty of opportunities, there are also some
obstacles and mistakes have to be avoided

1


Agenda of the meeting

• Why? 20m

CONFIDENTIAL
• Where? 40m

• How? 1h 30m

2h 30m

2


Internationalization is key for companies, special those in
declining markets
Advantages of internationalization (not exhaustive) Importance of internationalization focus

• Bigger market / Increased revenues
% of companies that rely on
international growth /
expansion for success
• Optimized production and capacity

100%

• Better negotiation power with suppliers

CONFIDENTIAL
71%

• Dilution of fixed costs

• Optimization of risk

• Access to other sources of finance
More successful Less successful
companies companies
•

Source: McKinsey Research, CEIS 3


Internationalization of businesses is also a matter of survival for Portugal
CAGR*. Percentage
Portuguese GDP Growth GDP growth levers

Private consumption

3.3
3.6 1.3

Government spending

3.6

CONFIDENTIAL
1.6

Investment
7.5
0.7
-2.6

Trade balance

1993-2000 2000-2010 2010-2020 0.9

-13.0

* At 2005 prices
Source: McKinsey Research, Global Insight; OCDE “OECD Economic Outlook”; EIU 4


Portugal should be able to act on the trade balance lever, following
the example of European pears
World export quota*

2.7%

2.1%

1.7%

CONFIDENTIAL
1.5%
1.4%

0.4%

Portugal Sweden Austria Switzerland Denmark Belgium

* Normalized by the population
Source: McKinsey & Company, IMF; International Trade Center; Global Insight 5



• Why? 20m

CONFIDENTIAL
• Where? 40m

• How? 1h 30m

2h 30m

6


The CEE market is huge and offers strong potential
2010

GDP (Current Prices), GDP Population,
Trillion $ Per Capita Million
(Thousand $)

15 34 47

14

CONFIDENTIAL
11
313
307

268

4

CEE WE* USA CEE WE* USA

* Countries belonging to WE: Austria, Belgium, France, Germany, Ireland, Luxembourg, Netherlands, Portugal, Spain and United Kingdom
Source: World Bank & Central Intelligence Agency (The World Factbook) 7


and there is still space for credit-fuelled growth
2010
DEBT/GDP (%)

70

59

CONFIDENTIAL
39

CEE WE USA

Source: Central Intelligence Agency (The World Factbook) 8


Poland is already a big market in Europe
2010. Current prices
GDP Population GDP per capita
Countries (Billion USD) Countries (Million) Countries (Thousand USD)

Germany 2,960 Germany 82 Netherlands 41

France 2,160 France 65 Germany 36

Spain 1,376 Spain 47 France 33

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Poland 725 Ukraine 45 Spain 30

Netherlands 680 Poland 38 Czech Rep. 26

Ukraine 306 Netherlands 17 Portugal 23

Czech Rep. 263 Portugal 11 Poland 19

Portugal 247 Czech Rep. 10 Ukraine 7

Source: World Bank; Central Intelligence Agency (The World Factbook) 9


and will soon level its economy with EU peers
GDP Growth. 2005-2010, %

29%

CONFIDENTIAL
19%

16%

5%
4%

~1% ~1%
~0%

Ukraine Poland Czech Rep. Portugal Spain Netherlands Germany France

Source: World Bank; Central Intelligence Agency (The World Factbook) 10


Poland, basic info

Area 312,679 km2

Population 38.1 m

Capital Warsaw agglomeration:
population 2.5 million

Administrative 16 Voivodships, 314
divisions Poviats, 2478
Municipalities

CONFIDENTIAL
Legislative Branch Sejm (460
representatives),
Senat (100
representatives)

Executive Branch President (5 year term),
Council of Ministers (4
year term)

Judicial Branch Supreme Court, common
courts, administrative
courts, military courts

Time zone GMT +1

Source: PAIiZ 11


Poland, basic info – Cont.
Poland is characterized as Main financial numbers

GDP Growth PLN. %
• being robust and resilient to external shocks –
mainly due to the country’s significant internal
market and diversified export structure 6.8
6.2
5.3 5.1
3.9 4.3
3.6

• offering safe environment for undertaking 1.8
economic activity and long-term planning (stable
prices, permanent GDP growth)

CONFIDENTIAL
2004 05 06 07' 08 09 10 2011
• having very low risk of a financial crisis (public
sector debt amounts to 55 % GDP while the EU 27
average equals 80% GDP)
GDP 2010 469 Billion USD (2x
Portuguese: 229)
• offering investment possibilities resulting from
Unemployment rate 12.4%
modernization of infrastructure and implementing
2010
modern technologies in corporations
Inflation 2010 2.6%
• being driven by a large number of agile small
Min. salary 1.500 PLN (~375€)
and medium enterprises (over 3 000 000
registered entities)
Avg. salary 2011 3.416 PLN (~850€)

Source: PAIiZ, GUS, NBP, World Bank 12


Wages in Poland are following the growth of the economy
Average monthly gross wages. PLN

3,225
3,103
2,942

2,691
2,477
2,380
2,290

CONFIDENTIAL
2,133 2,201
2,062
1,924

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Polish statistical office (GUS) 13


yet low compared with peers
Labour cost per hour in euros. 2010

41
38 38
36
33
31
29 29

28 28
27 26

23

CONFIDENTIAL
20 20
18
14
12
10
8 8 7 7
6 5
4
3

Source: Eurostat 14


and inflaction is expected stable and low
Yearly price index for consumer goods and services

10.1%

CONFIDENTIAL
5.5%

4.2%
3.5% 3.5% 3.7%
3.1%
2.6% 2.8%
2.5%
1.9% 2.1%

0.8% 1.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 F2011 F2012 F2013

Source: Polish statistical office (GUS); forecast by PMR 15


29% of Polish population is concentrated in big cities
Million. 2010

100%=38 15 Warsaw 4.5%

Lodz 2.0%
39%

Krakow 2.0%
23 12

CONFIDENTIAL
32% Wroclaw 1.7%

11
61% Poznan 1.5%

29% Other 17.2%

Total Rural Urban Cities below Cities above
population population population 100k 100k

Source: Polish statistical office (GUS) 16


Red tape still is a reality in some countries of CEE
2010
Worldwide Corruption Perceptions,
Ranking of Countries

Denmark (1º) 9,3

Germany (15º) 7,9

UK (20º) 7,6

Spain (30º) 6,1

Portugal (32º) 6,0

CONFIDENTIAL
Poland (41º) 5,3

Hungary (50º) 4,7

Czech Republic (53º) 4,6

Slovakia (59º) 4,3

Croatia (62º) 4,1

Italy (67º) 3,9

Romania (69º) 3,7

Ukraine (134º) 2,4

Russia (154º) 2,1

Source: Transparency International 17


Bureaucracy also creates bottlenecks in many transactions

“The Polish state is more IN PORTUGAL:
bureaucratic and exercise more
control than rest of Europe.” Company at the time:
One place,
in Diário Económico, 2007 One company
António Castro, ex-CEO of Group
24 HOURS
Mota-Engil to Central Europe

“Polish bureaucracy is much like

CONFIDENTIAL
the traffic in Warsaw - no end in
sight, but eventually you
somehow get through it.” IN POLAND:

Many bureaucracies,
In Investing in Poland, 2011 Many places
Tomi Ranta, managing director of
Poland Leinonen Accounting 1 MONTH

“We have a good relationship
with local authorities and are
careful not to create conflicts.” 1º Define the type 2º Register company in
of society the registration district
in Diário Económico, 2007 3º Statistical Register FILL 4º Stamp making
José Manuel Cunha, ex- FORM
5º Open account 6º Get tax Id & PIN
administrator of ColepCCL Polska
7º Social Security 8º Notary

18


There are opportunities at all levels

Entry form Sectors

• Infraestructure (roads, railroads,
airports, energy production, transport
and distribution, waste management,
• Mergers and acquisitions water, amoung others)

• Green field entry • Services / customer care

CONFIDENTIAL
• Privatizations • Luxury goods

• Trade / export of products and • Niche markets
services

• Others

19



• Why? 20m

CONFIDENTIAL
• Where? 40m

• How? 1h 30m

2h 30m

20


Some companies failed to enter Poland successfully

Company name Background Possible reasons for exit

• Lack of knowledge of the most direct
competitors
• Year of entry: 2006
• Corebusiness: Collection and transportation of • Lack of investment
Greendays Polska • Lack of knowledge of the Polish

industrial waste
market
• Problems in developing the company's
business (prospecting for new clients)

CONFIDENTIAL
• European leader in the distribution of
technological and cultural assets
• Only brand that offers, in one space, one
competitors (Empik is the leading
selection of product literature, music, image,
FNAC brand in the Polish market, with a
sound and all the technologies
large market share)
• 145 stores in seven countries: Belgium, Spain,
Italy, Portugal, Switzerland, Greece and Brazil

competitors
• Corebusiness: Import and distribution of • Lack of knowledge of the Polish
Portugalia Shoes
footwear market
• Problems in developing the company's
business (prospecting for new clients)

21


There is a cultural and linguistic barrier which makes it
necessary in many cases to adapt business models

IN PORTUGAL:
Pingo Doce
- Chain supermarket of Jerónimo Martins

- Serving small residential areas, specially middle class and
middle/high class population

- Pingo Doce has the competitive advantage of possessing lower
prices regarding the meat, fish, vegetables and fruits

CONFIDENTIAL
- Chain supermarket of Jerónimo Martins
IN POLAND:
Biedronka
- One of the main purpose is to satisfy small areas in the suburbs,
targeting in particular the middle class and the middle/low class
population

- It differs from competitors by its low prices, name, colors and by
it's stores location strategy (single buildings and isolated)

22


But mainly, mentalities have to be adapted REAL COMMENTS, ADAPTED

“I am market leader in
Portugal. Why should I
pay market price for a
location in a shopping “I want very much
mall??” export to Poland, but

I can not invest in
marketing and
publicity...”

CONFIDENTIAL
“This is not how we
do business in
Portugal...”

“If it sells in Portugal
for sure it will sell in
“We do not need a Poland...”
market study. Let’s
just start and see
how it goes...”

23


To have the key business contacts and introductions can
make the difference between success and failure

“In Poland, we saw a local partner that made us
“It is important to have a partner in the field, even if it
think about investing in the country. As a growing
isn’t a local.”
country, we saw a business opportunity.”

In Globes Israel’s Business Arena, 2011 In Diário Económico, 2007

Yuval Avni, GIZA Venture Capital* managing partner António Marques Varela, president of Tiner*

* GIZA is an investment fund in several areas: * Construction company of Logistics and Distribution Centers, Shopping
Communications, Semiconductors, Information Technology, Malls, Retail Parks, Factory Outlets, Commercial and Residential
Enterprise Software, Life Sciences, CleanTech, Media, Buildings

CONFIDENTIAL
Internet & Entertainment

“With the strong development of the transport sector
in Poland, there was a necessity to have a local “When we entered the market it was essential to
partner to help us in the company's growth. resort to a Polish partner in order to immediately
acquire some of the market knowledge.”

In Samskip News, 2009 “Is not required entering in market with a local
Jens Holger Nielsen, CEO of Samskip Multimodal partner, but you have to have a deep knowledge of
Container Logistics the Polish market.”

In Diário Económico, 2007

Francisco Lacerda, ex-administrator of Millennium BCP

24


CEiS aims to be the key partner of new successful
businesses in CEE

Economical opportunity in CEE Entry barriers for companies

• The market is huge and offers • There are examples of
strong potential companies that did not
succeeded in entering CEE
• The economy is growing at a

strong and sustainable pace • There is a cultural and linguistic
barrier which makes it
• Overall the region resisted well necessary in many cases to
(comparatively) to the credit Our Vision adapt business models

CONFIDENTIAL
crunch
To be the key catalyst and
• It is hard to do business without
partner of new and successful
• There is still space for credit- appropriate business contacts
businesses in CEE
fuelled growth and introductions

• The age-pyramid is favourable • Red-tape is still a strong reality
to further growth Our Mission in some countries of CEE

• The education system has To identify and select businesses • Bureaucracy creates
shown proves of great that could succeed in CEE and bottlenecks in many
effectiveness support them with an integrated transactions
offer as their local partner

25


CEiS offer is the combination of several existing services, with
the added value of being integrated

Foundations of CEiS value proposition

• Extensive know-how
and expertise in
management Management
• Profound knowledge consultant
Know-how
of CEE market Interim Private

management equity/
Business
Angel

CONFIDENTIAL
Broad network of
contacts in a
comprehensive set of
Network business fields in CEE Legal adviser Tax adviser

Complete alignment
with the client by
establishing a Outsourcing Start-up
partnership with incubator
Alignment
common incentives Partner

26


CEiS offer is based on 4 integrated solutions, NOT EXHAUSTIVE
tailored to each client

Strategy support Business origination and sales

• Define the entry strategy to CEE • Contact clients
– Analyse segments and pricing • Establish, train and manage the
– Elaborate market studies sales force
– Define product and value proposition • Introduce sales team to potential

– Design the business plan clients and partners
• Support execution of the strategy • Support business development
initiatives

CONFIDENTIAL
Finance Management
and back-office
• Define corporate finance
structure • Manage the day-to-day activities
• Negotiate on behalf or support • Manage the back office (accountancy,
negotiations for funds raising legal, payroll, HR, etc)
• Support project finance design • Design and optimize procedures
and negotiations
• Perform due diligence
• Design metrics and control
mechanisms

27


Who we are - Experience highlights

• CEO Central Europe Integrated Solutions
• Board member Polish Portuguese Chamber of Commerce
• Previously board member EDP Renewables Polska, with
responsibilities in planning and control
• Previously consultant with McKinsey & Company
• MBA from Insead

• Firm commitment to
Bruno success
Ferreira

CONFIDENTIAL
• Solid partnership to
grow the business in
CEE

• Vice President Central Europe Integrated Solutions
• Strong and solid
background to
• CEO AJR Development
guarantee future
• CEO Grill & Co
achievements
• Board member AJR HD Sp. z o.o. (Haagen-Dazs shops)
• Vice President Polish Portuguese Chamber of Commerce
• Previously Member of Supervisory Board – FoodCare Sp. z o.o.
• Previously Board Member Martifer Gestão Imobiliária (Portugal)
João and CEO Martifer Polska
Rodrigues • MBA from IEDE/EUDEM

28


To guide and advise CEIS is supported by an Advisory
board

Advisory board
• His Excelency the Ambassador of Portugal in
Poland, Mr. José Sequeira e Serpa Responsibilities of the
• Chairman of the Polish Portuguese Chamber of advisory board

Commerce, Mr. Pedro Silva
• To give guidance to the
• Partner at Law Firm Domański Zakrzewski
definition of CEIS’
Palinka, Mr. Marcin Krakowiak

CONFIDENTIAL
strategy
• Secretary General of the Polish Portuguese
Chamber of Commerce, Mr. Tiago Silva
• To support the
identification of long-
term market trends that
can affect CEIS
Executive board
• To evaluate and
• Bruno Ferreira, CEO
supervise the quality of
• João Rodrigues, Vice-President
the service provided by
CEIS to its clients and
partners

29


Key messages

• Internationalization is key for the survival of Portuguese
companies and Portuguese economy as a whole

CONFIDENTIAL
• Central Eastern Europe, in particular Poland, is an actractive
market due to size, proximity and existing opportunities

• Although there are plenty of opportunities, there are also some
obstacles and mistakes have to be avoided

30

20120523 Ceis Poland

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