November 2009nr 5(5)

Fast 50: 9 Polish firms win Technology awards Globe Forum stirs up Gdańsk

The Business ofDeath in Poland

Real Estate: Grey market bazaars squeezed by authoritiesNews: Canada welcomes new Ambassador

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Cover Story_

4 The Business of Death in Poland

News_

6 Globe Forum held for first time outside Sweden – in Gdańsk

8 Nine Polish fast-growing technology firms awarded in Technology Fast 50 contest

10 Canada welcomes new Ambassador

13 Hi5 CEO emphasizes exponential versus lineargrowth

14 BMW Inchcape

14 GOYELLO receives “Young EntrepreneurAward”

15 BizPoland VIP Cocktails

Real Estate_

12 Grey-market bazaars squeezed by authorities and new discount retailers

Events_

12 Meeting Point in Barcelona disappoints

13 Reinhold Center opens

13 Magda Gessler opens Bellini in Warsaw’s OldTown Square

November 2009 Table of Contents

4

Cover Story

November 2009

Poland’s growing funeraryservices industry – over379,000 deaths registered in2008 – is relatively recession-proof, yet the fragmentedsector might be ready forconsolidation

“There’s really no good reason why cemete-ries should be non-profit,” said Robert Fells,General Counsel of the Cemetery, Crema-tion and Funeral Association in the UnitedStates, as quoted in the Wall Street Trans-cript. “This restriction handicaps cemeteries’ability to function fully.”

The business of death services in Polandis very much a private affair, with most fu-neral parlors functioning as private family-run operations and many producers ofaccessories entering the market. But in acountry where most cemeteries are ownedby the church and the remainder sitting onmunicipal land, reforms would be neces-sary before opportunities open up for in-vestors.

As most countries go, Poland is not abad place to die. The national insuranceoffice ZUS reimburses families a proportio-nally large lump sum for funeral costs in-curred, usually about 200% of thedeceased’s monthly salary - one of the fewcountries in the world to give such a gene-rous payout.

Once you go, there is no shortage oflocal firms vying for the business. Andthe recent national holiday devoted to pa-ying respect to the dead assures the de-ceased plenty of attention after the finalfarewell.

It is a business that includes funeral plan-ning, refrigeration, cremation, casket sales,and the ubiquitous funeral candles thatPoles light in cemeteries, national monu-ments, or wherever a loved one has met hisor her demise.

There are approximately 11,000 cemete-ries in Poland, about 3,000 of which are“communal,” or public or state-owned. Therest are controlled by the church, which char-ges fees for 20-year cemetery plot leases andfees for conducting funeral services, altho-ugh such fees often depend on a family’s in-come. Plots in default are dug up, theremains disposed of, and replaced with anew “tenant”.

If a priest is aware that a family plan-ning a funeral is in a tight economic spot,he often lowers the fee significantly. Bu-rial plot fees depend on location. War-saw’s prestigious Powazki Cemeterycharges around PLN 30,000 for a spot ofeternal rest.

Over 2,500 funerary firms operate in Po-land, most of which are private. Some aremunicipal, such as Warsaw’s Miejskie Przed-siebiorstwo Uslug Komunalnych (MPUK),basically making them state-owned. MPUK

is owned by the City of Warsaw, offers a fullrange of funeral services at 11 locations aro-und the city, and controls 18% of the capi-tal’s market.

“This is a specific business, and it is diffe-rent in that not only the expertise of wor-

kers has meaning, but also the necessity toshow a specific amount of emotional em-pathy toward clients,” said MPUK directorMagdalena Rogozińska. “Patience and sym-pathy combined with calmness and profes-sionalism are called for.”

MPUK is Poland’s largest funerary servi-ces provider. Its history reaches back to1945, when the rubble-strewn Warsaw citys-cape held an improbable number of corpseshurriedly buried all over the city. MPUK wascharged with organizing the reburial ofthese hastily buried unfortunates.

The services offered by MPUK and othersuch firms on the market are diverse, andthey are getting increasingly better at offe-ring services catering to a wide variety ofbudgets and tastes.

Cremation, once considered taboo in Po-land, was legalized in 1993. Now there are11 cremation facilities in the country. Cre-mation in Poland runs approximately PLN

1,500 and the ashes of the deceased are so-metimes placed in urns resembling soccerballs, luxury cars, or beer bottles.

Poland’s cremation rate is just seven per-cent. By way of comparison, 72 percent ofBritons are cremated. In the United States,

The Business of Death

5

November 2009

about 35 percent of deaths are followed bycremation.

For traditional burials, caskets run anyw-here from PLN 20 to over PLN 1,000 for bet-ter models, or tailor-made caskets can bemade for those with extravagant tastes.

Poland’s largest producer, run by the Lind-ner family, produces over 130,000 casketsannually, with many being exported to otherEuropean Union countries. The companywas founded in the 1940s and has expandedto the position of industry leader in Poland.Lindner produced over 11,000 coffins permonth in 2008.

Lindner is a good example of a Polish firmwhich is family-owned, successful, and inno-vative. Many of the firm’s coffins are regu-larly shipped to Germany. The excess woodshavings which remain as a result of the cof-fin production process are compressed intowood-chip briquettes, a product which isthen resold as stove fuel.

Another popular product that the Lind-ner firm pushes is a racy calendar whichfeatures different scantily clad modelsand coffins every month. Although the ca-lendars reportedly sell like hot cakes, noteveryone is amused at this controversial

and unconventional sales and marketingtactic.

Hearses, funeral attire, and decorationssuch as flowers add to the variety of busi-ness opportunity. The list of suppliers is al-most endless, with Chinese players trying toenter the market with products such as plas-tic and silk flowers, the kind which cope wellin Poland’s cold climate.

Among the many new innovations on thefunerary services market are gravestoneswhich feature plasma screens for the vie-wing pleasure of the bereaved.

Trade fairs are organized regularly in Po-land, giving producers and service providersthe opportunity to show off their wares.

In the city of Kielce, the NecroExpo is oneof Poland’s largest venues for showing offthe funerary business opportunities whichwere unheard of in Poland a generation ago.Foreign dealers join Polish firms in highlig-hting their products and services.

Warsaw will host the MEMENTO tradefair in November 2010 at Warsaw’s ExpoCentre, and will draw the usual range of fu-nerary service providers (the last event washeld in November 2008).

Of the 2,500 or more funeral parlors ope-rating in Poland, only 300 belong to the na-tional funeral parlor association, PSKACIPP.The rest are more informal family-run affairsor fly-by-night cowboy outfits.

The industry has suffered a setback to itsalready dark reputation following a well-pub-licized Cash-for-Corpses scandal, which in-volved ambulance drivers in the city of Lodzfinishing off emergency room patients ontheir way to the hospital. The ambulance dri-vers, only recently convicted of murder char-ges, had been bribed by local funeral homes.

Overcoming the stigma tied to these grimpast events are one of the many challengesfacing the industry in Poland. Although pri-vate firms are doing well, a fact highlightedby recent trade fairs, privatization has yet toreach the levels seen in other countries.

Private cemeteries may be common in theUnited States, but in Poland popular opinionmay not easily embrace such developments.In the US, there are approximately 10,000 ce-meteries that are private and profit-oriented.

With 2.4 million people dying in the USin 2008, the business potential is obvious.Service Corporation International, the lar-gest funerary services company in the co-untry, owns 485 cemeteries. Carriage

Services, the smallest of the publicly tradedfirms, operates 151 funeral homes and 31cemeteries.

In addition to taxes, the only other surething in life is death. People will keepdying and the deceased will have to be bu-ried somewhere, or cremated. Poland’s de-mographic indicators point to an increasein deaths as the population ages (makinggeriatric care an associated businessopportunity).

Funeral parlors should therefore continueto do well, for the cycle of life and death doesnot care whether markets are bearish or bul-lish. But private cemeteries? In a countrywhere the privatization of hospitals and me-dical care has met with skepticism among alarge share of the population (particularlythe elderly), it may prove to be too much toswallow.

The church will likely prove to be anotheropponent, as the majority of Poland’s ceme-teries are church-owned. The church hasbeen a formidable opponent to reforms be-fore, and it will surely balk at the idea of pri-vatizing Poland’s cemeteries.

But funeral parlors and other associatedbusinesses are ripe for consolidation. Thereis no reason why they should not be. Manybusinesses are passed from generation to ge-neration, but in situations where a familymember may choose to go into a differentline of work, private buyers would offer awelcome exit strategy. n

in PolandCover Story

Funeral Costs in PolandCoffin: PLN 1,100–3,000 (average)Transport from funeral home

to cemetery: PLN 200Gravestone: PLN 2,000–10,000Plot rental at church cemetery, 20 years:

PLN 173Grave site excavation: up to PLN 380Chapel fee: PLN 70Cremation: PLN 700

6

News www.bizpoland.pl

November 2009

Johan Gorecki brought hisGlobe Forum roadshow toGdańsk, drawing a mostlyimpressive list ofinternational speakersaddressing the issue ofbusiness innovation.

The conference series was launched in 2003in Sweden and has so far only been held inSweden – its inclusion of Gdansk furtherreinforces Gdańsk’s emerging economic sig-nificance as a key Baltic city.

Unlike many other standard conferencesin Poland, the Globe Forum - with morethan 1000 participants - had a distinctiveScandinavian flavor, and attracted top poli-ticians such as Latvian Prime Minister Val-dis Dombrovskis and insightful speakerssuch as Mark Lee of Air Protection Techno-

logies. Workshops and sessions addressedissues such as sustainability in business, in-novation, the energy market, investing inPoland, the “Baltic Sea Strategy” and the“Swedish model” of energy sustainability forcities and regions.

The two-day conference included an “On-stage Innovators’ Contest”, in which new, in-novative companies gave “one-minutepitches”, vying to win the audience’s vote ofconfidence in their business model. With thedisciplined timing of the Hanseactic tradi-tion, the one-minute rule was vigorously en-forced. Companies that presented included:

• Visimind, Krzysztof Gajdamowicz• Mabion, Maciej Wieczorek• Promar, Bartosz Marciniak• Molport, Janis Oslejs• Siepomaga.pl, Patryk Urban• Optiguard, Bartosz Pilitowski• EnergoPlasma, Daniel Bandachowicz• SIGardenAnd the winner was Ewa Blazejewska of

Aton-HT, which has developed a micro-wave technology that burns householdwaste and converts it into energy that canbe used to power the home, or sold on theopen market.

During the forum two Globe Forumawards were given within the categories sus-tainable cities and sustainable innovation toStargard Szczeciński, and Danone Poland,

Innovation - How do youactually create it?Innovation might seem random attimes, and the truth is that usually onecrazy idea connects to another crazyidea but how do you create this process?

During this session the speakers KajMickos (Mälardalen University), ColinCarlile (ESS Scandinavia Secretariat atLund University), Hans-Jacob Bonnier(Bonnier Business Press CEE) andJohan Gorecki (CEO of the GlobeForum) pointed out a couple of must-have’s for the innovation process.1. DEFINE: Don’t start out with comingup with the medicine before you knowwhat to cure. The process should startout with defining the problem and thenstarts the trial-and-error period.2. OPEN: Tap into not only a couple dif-ferent networks but lots of networks -the times of the lone “renaissance ge-nius” are over.3. COMMUNICATE: Listen to the youngones - today 3 year olds know how tospell google, teenagers only e-mailwhen they have to write very old people,are you old? Communicate with thecrowd: when you have a crowd workingon your clearly-defined problem it beco-mes your source of innovation.

Polish Sustainability ChampionsThe Globe Forum Gala Dinner at theSheraton in Sopot recognized two ac-tors for their efforts in sustainability inPoland. The Responsible BusinessForum in Poland (FOB) together withthe international sustainability award -Globe Award - did a national search forgreat sustainability cases in Poland.The two winners were:

Danone Poland was recognised fortheir innovative project “carbon foot-print”. The jury chair Mirella PanekOwsianska said: “The project is compre-hensive due to the fact that the actionstaken allow monitoring and reductionof carbon emission throughout the pro-duction process. In this context, the im-provement of cooperation in the supplychain should be particularly apprecia-ted.”

The Polish city of Stargard Szczeciń-ski was recognised for pursuing thecity’s development strategy consis-tently and diligently. The city has over-come substantial obstacles inrevitalizing the area, and the jury alsoappreciated that the city’s authoritiesdeliberately planned social integrationinto the realized projects.

Globe Forum held for first time

7

www.bizpoland.pl News

November 2009

respectively. The winners are now candida-tes for the International Globe Award, theannual awards event held in Stockholm.

The Energy Markets session, featuringlead speakers Marek Sokołowski, DeputyCEO of LOTOS S.A. and Roman Szyszko,Deputy CEO of Energa, and moderated byMonika Richardson, concluded that Polandhas huge losses in the distribution ofenergy, as a result of an inefficient and out-dated grid, and that the country shouldopen up further its “closed” energy system.Sokołowski said that the country needs amore robust energy trading market, andcomplained about the collapse of profits inthe refinery business, which have dropped

from $12 in mid-2008 to a recent level ofjust $2. Mark Lee, GM of Air ProtectionTechnologies, said „there is no single band-aid fix for solving our energy needs. Wemust pursue multiple solutions and ba-lance our energy mix by using regionalenergy resources, like coal, as well as moredispersed sources such as wind”.

Gdańsk’s Alan Aleksandrowicz, MD of theGdansk Economic Development Agency,was keen to promote the city’s developmentpriorities, such as the „Young City” project(a massive and long-term project to redeve-lop parts of the Gdansk Shipyard), the BalticArena, and a new hi-tech start-up incuba-tion project. n

Jerzy Buzek’s comments to theGlobe Forum:Demographic problems, the currenteconomic crisis and climate changes areour main challenges, according to thePresident of the EU Parliament, Mr.Buzek. Due to their complexity solvingthese issues requires worldwide coope-ration. “Europe on its own won’t ma-nage.”

Mr. Buzek said we should no longerdiscuss whether humans are respon-sible for the climate change. We shouldjust do something about it. In Copenha-gen (the December United Nations COP15 meetings) an agreement should leadto dramatic reduction of emissions.This cannot be achieved without inno-vation. The demand for energy will in-crease in the long term. But we shouldincrease our energy efficiency, becausethat is the most efficient and politically-easiest solution.

The current crisis means less short-term energy demand but doesn’t negatethe need for research and innovation tochange the climate. Buzek said that thetransfer of knowledge between univer-sities and businesses must be improved,and said that Europe can learn a lotfrom the US in this matter.

Buzek said that the Globe Forummeetings are a useful contribution to-ward boosting innovation and the deve-lopment of new technologies. Heemphasized that “a country can emergefrom a crisis only if it is better thanothers in creativity, productivity and itsservices are reasonably priced”.

outside Sweden – in Gdańsk

“We chose Poland to be the

host country because it was

the most interesting

country in the heart of

Europe with positive GDP

and 38 million citizens, and

Gdansk because it was here

that Lech Wałęsa started

the fight against

communism”

Johan Gorecki,

Founder and President, Globe Forum

(top) David Kay, GE Money Bank, and Alan Ale-ksandrowicz, Gdansk Economic DevelopmentAgency(bottom left) Mark Lee, Air Protection Technolo-gies and Rafael Sandra, IPC Petroleum Consul-tants(bottom right) Marek Sokołowski, LOTOS, andRoman Szyszko, Energa

8

News www.bizpoland.pl

November 2009

Deloitte’s 10th annual Fast 50CEE contest - part of thefirm’s larger Fast 500competition aimed atdistinguishing fast-growingtechnology companies -awarded 9 prizes to Polishcompanies.

But the formula needs to be changed to re-ward not only those who build companiesbut also those that build value - efficientlyand with a judicious use of capital - for sha-reholders.

Nine Polish fast-growingawarded in Technology

Company Country Sector Growth

1 Netmedia Polska Internet 7210%

2 TeamNet International Rumunia Programming 3317%

3 Kompan.pl Polska Internet 2411%

4 Sunrise System Polska Internet 2364%

5 Telerik Corp. Bułgaria Programming 2327%

6 Investor.BG Bułgaria Internet 2130%

7 Agito Polska Internet 1744%

8 AROBS Transilvania Software Rumunia Programming 1663%

9 AITIA Int’l Informatics, Inc. Węgry Programming 1399%

10 EXECOM Serbia Programming 1127%

11 ESET Słowacja Programming 951%

12 SOITRON Słowacja Telecoms 880%

13 Grupa Pracuj Polska Internet 864%

14 Semilab Semiconduktor Physics Laboratory Co. Ltd.Węgry Electronics 837%

15 INSIA Czechy Internet 789%

16 Arkon Węgry Internet 727%

17 CROZ Chorwacja Programming 691%

18 INVIA.CZ Czechy Internet 686%

19 Millennium 000 Słowacja Programming 670%

20 Universal K Ltd. Bułgaria Telecoms 664%

21 ExterNet Nyrt. Węgry Telecoms 659%

22 StringData Czechy Programming 653%

23 Tau on-line Chorwacja Internet 622%

24 Carnation Węgry Internet 601%

25 eo Networks Polska Programming 596%

Company Country Sector Growth

26 BalaBit IT Security Węgry Programming 562%

27 Net Mäil Węgry Internet 538%

28 Webmedia Group Estonia Programming 507%

29 Lasting Software Rumunia Programming 487%

30 M2 Net Polska Programming 480%

31 Infomatix Węgry Programming 469%

32 Trask solutions Czechy Programming 457%

33 Kancellaar.hu Węgry Programming 456%

34 Interconsult Bulgaria Bułgaria Programming 447%

35 The Red Point Rumunia Programming 430%

36 XAPT Hungary Węgry Programming 389%

37 Datasys Czechy Programming 389%

38 Advatech Polska Comp’s/peripherals 388%

39 MadNet Serbia Telecoms 383%

40 Klising Chorwacja Programming 370%

41 MadNet Słowacja Internet 361%

42 Mobiliju telefonu techninis centras UABLitwa Telecoms 356%

43 Algotech Serbia Telecoms 352%

44 LMC Czechy Internet 352%

45 Advantage Software Factory Rumunia Programming 350%

46 HaziPatika.com Węgry Internet 323%

47 Romanian Soft Company Rumunia Programming 312%

48 Cygni Software Czechy Programming 302%

49 home.pl Polska Internet 300%

50 WDF - Web Design Factory Czechy Internet 298%

Full list of winners – Deloitte Technology Fast 50 CEE

9

www.bizpoland.pl News

November 2009

NetMedia S.A. took the top prize in cen-tral and eastern Europe, with revenuegrowth of 7210% over the five-year period.Other Polish companies that were distinguis-hed included Kompan.pl, Sunrise Systems,Agito, Pracuj.pl, eoNetworks, M2 Net, adva-Tech, and Home.pl.

While NetMedia won the contest - desig-ned to highlight innovative and rapidly-gro-wing technology firms - the company couldeasily have won in another category of inno-vation: creating a capital structure so com-plicated that it would make Wall Street’swizards proud.

Its Class A, B and C shares - four moreclasses of shares exist with different rights -were listed on the Warsaw Stock Exchangein November 2006 at a price of 9 pln, andhave since lost 36% of their value. For acompany that posted 4,7 million pln profit

in 2008, the complexity clouds an otherwiseinteresting company. Since June 2007, Net-Media has had three secondary offerings ofshares, raising about 25 million pln of addi-tional capital.

On the basis of Deloitte’s rigid ranking ofrevenue growth, NetMedia surely deservedthe accolades and attention from the awardsevent. But shareholders in the publicly-tra-ded shares are not sipping champagne -while the WIG has bounced back nearly 30%over the last six months, shares in Netmediahave lagged significantly, up just 10%.

It’s time for Deloitte to change the for-mula for the awards.

We suggest that the revenue crieria re-main in place - as it shows a rapid acceptanceof the firm’s services in the marketplace -and supplement it with an objective capital-efficiency criterion and a subjective criterion

that places a premium on financial transpa-rency.

Given that the roots of the financial crisisare generally agreed to be a result of misun-derstood risks and opaque financial structu-res, a „corporate awards” contest shouldincorporate recent lessons learned - and en-courage companies that grow efficiently.

Some arbitrary ideas about capital-effi-ciency might include that the company hasgenerated more profit in the last five yearsthan external capital raised. If publicly-tra-ded, it should have outperformed its peergroup or the general stock-exchange index.If the firm is underperforming its peergroup at the expense of rapid revenuegrowth, it might suggest that the firm isactually destroying value, or that manyshareholders have serious doubts abouttheir strategy. n

technology firmsFast 50 contest

The Deloitte Technology Fast 500Awards are run and moderated by De-loitte, and they recognize the 500 fastest-growing technology companies in regionsaround the world. Winners cover all areasof technology - from Internet to life sci-ences, from computers to semiconductors- and include both public and private com-panies.

The awards were created in 1997 duringthe dotcom boom to illustrate the successof growing U.S. technology companies.Today, the Fast 500 has expanded beyondthe United States and covers North Amer-ica; Asia Pacific; and Europe, the MiddleEast and Africa.

The Fast 500 examines companies ontheir relative growth in revenue over a five-year period. The Fast 500 seeks to rewardcompanies that have demonstrated cuttingedge business strategies, vision and solidmanagement. Deloitte’s Fast 50 awardsdistinguish companies from central andeastern Europe.

Jacek Bochenek and Ewa Rzeczkowska of Deloitte

10

News www.bizpoland.pl

November 2009

Daniel Costello has replacedDavid Preston as the newCanadian Ambassador toPoland, as of July 2009.

Costello, a philosopher by education, is takingover the top job at a time when economic anddiplomatic relations between Poland and Ca-nada are building momentum, with trade ofC$ 1.2 billion in the last year, heavily in favorof Polish exports to Canada.

Just 18 months ago, Canada lifted visa res-trictions for Poles, and the result has been asubstantial increase in business and tourismtravel between the countries.

In an exclusive interview with BizPoland,Costello outlined some of the steps Canada istaking to strengthen relations with Poland.

„Just last week I visited the Canadian Exe-cutive MBA program at the Warsaw Schoolof Economics, and it’s just great to see its de-

velopment”, said Costello, who is 47 yearsold and moved to Warsaw with his Frenchwife and two young daughters.

„We’re working on a couple of bilateral ag-reements, such as „youth mobility”, which isbringing in 500 people (aged 18 to 35 years)with pre-approved „work authorization”.We’ve got six Canadian studies centres in Po-land. And Ottawa is in negotiations withBrussels on a broad deal that we hope to signwithin two years”, said Costello, with a breat-

Canada welcomes new

Key events between Canada andPoland:1) Economic Forum: The Corporation de

développement économique Bois-Francs in cooperation with Wielkepol-ska Marshal’s Office is organising anEconomic Forum, November 22-29.

2) Globe 2010, a bi-annual internatio-nal event held in Vancouver focusingon the environment (www.globe.ca).A number of Polish representativesfrom the public and private sectorwent in the past years.

3) 2010 Vancouver Winter Olympics. Alarge delegation of Polish athletes isexpected to represent Poland.

Investing in Poland?

www.bizpoland.pl

Ambassador Daniel Costello

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hlessness that reflects the energy he bringsto the position. „We have also reached an ag-reement on pension benefits between the co-untries, which is important since there aremore than 1 million Canadians of Polish ori-gin.

Costello lauded the recent deal betweenLOTOS Kolej, a private freight railway ope-rator, and Bombardier Transportation of Ca-nada. The contract is valued atapproximately 18.6 million euros ($27.4 mil-lion US) for the delivery of six diesel-electricTRAXX locomotives. Delivery will start inmid 2011. The agreement includes an optionfor four additional locomotives

In addition to strong aerospace and trans-portation business potential, Canadian busi-nesses see opportunities in Poland ininfrastructure development and agricultural.Canadian potato giant, McCain, for example,has an increasing presence in Poland.

“And of couse our famous Canadian maplesyrup”, said Costello, smiling broadly. n

AmbassadorAmbassador Daniel Costello• Honours B.A. [Political Science], McGill Uni-versity, 1984; M.A. [Philosophy], University ofMassachusetts-Amherst, 1991; Ph.D [Philos-ophy], University of Massachusetts-Amherst,1995) taught for several years at the Universityof Massachusetts-Amherst and l’UniversitéFrançois-Rabelais de Tours (France ).• Returned to Canada to serve as Policy Ad-viser and Executive Assistant (Chief of Staff)to the Director of Policy and Research in theOffice of the Prime Minister (1996-1999), Ex-ecutive Assistant (Chief of Staff) to the Minis-ter of Citizenship and Immigration (1999-2002), and Chief of Staff to the Minister ofForeign Affairs (2002-2004). • He then returned to teaching at the Univer-sity of Ottawa (fall 2004) prior to joining theMinistry of Foreign Affairs in early 2005. Atthe Ministry in Ottawa he has served as Direc-tor General for Intergovernmental Relationsand Domestic Outreach (2005-2006), andmore recently in the Bilateral Relations Branchas Director General for the European Union,North and West Europe (2006-2008). • He was appointed Ambassador to the Re-public of Poland in July 2009. • He and his wife, Nathalie Zaquine, havetwo daughters, Clara and Mariane.

Roger Belanger, Senior Trade Commissioner

Real Estate • Events www.bizpoland.pl

November 2009

“The city has been pursuing the informal sec-tor including illegal street vendors and localbazaars, which traditionally have been cheapplaces for locals to shop,” said Tadeusz Mar-kiewicz, a Warsaw-based commercial realestate advisor. “But now is a good time forlow-cost retailers to come in and fill some ofthe void.”

The doors of Warsaw’s budget marketsand grey-market shopping centers havebeen closing in recent weeks, often force-fully as local merchants refuse to leave theirpremises.

In August 2009, 35 persons were hospita-lized when authorities forcefully executedthe closing of Warsaw’s KDT, a popular cen-trally-located budget market selling clothingand cosmetics. KDT’s merchants, conduc-ting operations next to the Palace of Culture,continued to occupy their spaces despite acity order commanding them to vacate oneof the capital’s most strategic locations. Inan opaque deal with the city, KDT mer-chants will lease space at Millenium Plaza,owned by Atlas Estates.

And in September, street brawls broke outbetween authorities and the sidewalk tra-

ders near Sadyba Best Mall. Since then, thetraders have disappeared.

Yet another initiative on the part of War-saw city authorities to close down open-airbazaars is the Okęcie transit loop near War-saw’s airport. The city says most of theseoperations are illegal.

“The merchants were illegally occupying asection of a city thoroughfare,” said CityRoads Authority spokesman Adam Sobieraj,as quoted by Times Polska. The merchants di-sagree and counter that they had been pa-ying rent for the space occupied.

However, the most recent high-profile clo-sure is Warsaw’s Galeria Centrum, a centrallylocated retail center featuring over 11,000square meters of leaseable space. The last re-mains of floor displays and unsold merchan-dise have been cleaned out, and preparationsare underway to welcome new tenants.

“When the new tenant list is filled we willrelease it,” said Centrum Development & In-vestments’ Anna Kniaginin.

Speculations abound whether one of thenew tenants will be TK MAXX, a successfulbudget retailer operating in the United Kin-gdom, Ireland and Germany. TK MAXX has

been a mainstay on the US budget retail mar-ket for years under the name TJ MAXX.

Currently the retailer is planning up to fiveretail locations across Poland, although theretailer has yet to announce its entry ontothe Warsaw market. TK MAXX has openedtheir first shop in the Silesian city of Czeladź,with locations in Olsztyn, Wrocław, and Biel-sko-Biała to follow. According to TK MAXXofficials, early results are exceeding their pro-jections. Cushman & Wakefield is handlingTK MAXX’s expansion across Poland.

Now is a good moment for off-price retailersto enter the market. Jones Lang LaSalle ana-lysts stated in a recent report that “discountbrands will gain in importance” in the near fu-ture, while King Sturge analysts stated that“What for most are difficult times may createopportunities for some, such as budget brandsTK MAXX, Takko, and Charles Voegele.”

As thrift-conscious shoppers in Warsaw losesome of their mainstay shopping locations,opportunities for low-budget retailers will su-rely grow. Warsaw authorities have been eagerlately to rid the city of informal markets andbazaars. Although the bazaars offer locals theopportunity to bargain shop, they are oftenseen as a blight on the cityscape.

Of course, as long as Warsaw city authori-ties turn a blind eye toward the informal sec-tor, tolerating one bazaar while forcinganother one across the city to close, thegame of cat and mouse will continue.

Regardless of the outcome, off-price retai-lers have a void to fill, and in the opinion ofmost analysts, now is a good time as any toenter the Polish market. n

Warsaw city authorities have been challenging the legality ofopen-air markets and bazaars in an effort to shore updevelopment and clean up the city, often to the chagrin ofbudget-conscious shoppers. Meanwhile, budget retailers are scouting locations all overPoland in a search for appropriate retail locations

Grey-market bazaars squeezed byauthorities and new discount retailers

Meeting Point in Barcelona disappointsBarcelona's Meeting Point investment fairwas mostly irrelevant for Poland, as thenumber of Polish exhibitors dropped fromlast year's 6 to just one this year - the City ofCzestochowa. Nevertheless, Dr. Jarosław Fe-renc of Częstochowa's Economic Develop-ment department said the fair was worth it,and that Częstochowa may have direct inves-tment results from participation in the fair.Barcelona Meeting Point attracted morethan 8,000 attendees, and a large number ofexhibitors from Latin America - as well asthe City of Moscow. n

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www.bizpoland.pl Events

November 2009

Swedish developer Reinhold celebrated thenearly-open Class A office building in Kato-wice. The Reinhold Center will have 8635square meters of space and will be ready foroccupancy in December 2009. The biggest te-nant signed so far is Edelmed. The develop-ment, backed by financing fromStraumur-Burdaras Investment Bank. MichałBorowski, former chief architect for the Cityof Warsaw, has joined Reinhold as COO. Rein-hold’s top management team from Stockholm,including Andre Rosberg, Vicepresident, andMichel Fatechnia attended the Katowice event,which featured musical entertainment by JOY,and acrobatic stunts by Fly Cube.

Reinhold is a Stockholm-based developerand in Poland other projects - residential andoffice - include Karpacka-Wrocław, Terenowa-Wrocław, Reinhold Lipinski-Warszawa, Jero-zolimskie 21-Warszawa, Reinhold Pulaskiego-Katowice, Reinhold Center-Katowice, andReinhold Plaza-Krakow. n

Reinhold Center opens

The Internet Advertising Bu-reau held its annual confer-ence focusing on innovationand marketing in the Internetspace. Top speakers in-cluded Ramu Yalamanchi,CEO of Hi5 Networks andNorm Johnston of Mind-share Worldwide.

Yalamanchi, who founded Hi5 and has built itinto the 11th largest website in the world with48 million visitors per month said that businessbuilders and marketers should focus on threethings: leveraging data; getting permission from

your users; and viral marketing – by expandingthe number of new prospects and „tuning viral-ity” to increased the conversion rate perprospect.

He said that Hi5 spends virtually nothing onmarketing but instead relies on its users to shareapplications and experiences with their friendsand networks. He also said that Web 2.0 wasabout Collaboration, but that the new Web 3.0is about Platforms and Sharing data.

Winning new technology and start-up Inter-net firms will find „brand ambassadors” insidesocial networks, which will drive viral marketingand exponential growth. n

Magda Gessleropens Bellini inWarsaw’s OldTown Square

The paparazzi swarmed around Magda Ges-sler and her friends at last week’s opening ofthe newest “Magda Gessler-branded” restau-rant Bellini. This Italian-style restaurant isthe next in a long line of exclusive restau-rants owned by the firm Food Zone, whichalso operates Ale Gloria, Gar, and Polka. Bel-lini brings an Italian flair to the typicallybland restaurant scene in Warsaw’s OldTown. The restaurant will cater to businesssexecutives on an expense-account and high-end tourists – as well as up-scale events,such as wedding parties and corporateevents. Aleksandra Furmankiewicz mana-ged the development and opening of the res-taurant. n

Hi5 CEO emphasizes exponential versus linear growth

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Events www.bizpoland.pl

November 2009

Published by: BiznesPolska Media Sp.z o.o.ul Sw. Bonifacego 92, lok 13, 02-920 Warszawa

General Manager and Editor: Thom Barnhardt (tb@bizpoland.pl)0-508 143 963Publisher: Craig Smith (cs@bizpoland.pl)0-604 144 769

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GOYELLO receives “YoungEntrepreneur Award”

The Polish ambassador in the Netherlands,Mr. Janusz Stańczyk, awarded the ‘YoungEntrepreneur Award” to GOYELLO IT Servi-ces, one of the nominees for the Dutch-Po-lish Trade Award.

The “Young Entrepreneur Award” is a newcategory within the Dutch Polish TradeAward competition. The category was espe-cially created in order to honor relativelyyoung companies yet actively operating inthe Polish market and committed to promo-ting Polish-Dutch economic relations.

GOYELLO was founded by Peter Hor-sten and Arie de Bruin in November 2006,when two offices were set up in Gdanskand the Netherlands. Within 3 years of bu-siness activity GOYELLO has grown up toalmost 50 employees and opened anotheroffice- in Gliwice. GOYELLO mainly sup-ports Dutch companies in realizing theirundertakings and offers consulting servi-

ces in the IT area. The company specializesin providing tailor-made business applica-tions, websites, and portals. However, be-fore starting the implementation processit assists the clients by providing creativebusiness counseling.

Their main development operation is inPoland and the commercial operation andsales are close to their clients in the Nether-lands. Polish office mainly consists of profes-sional software developers, graphicdesigners and business consultants. Undo-ubtedly, GOYELLO promotes the Tricity re-gion as an attractive location for IToutsourcing mainly through organizingstudy trips for Dutch students and hostingclients.

The DPTA is a joint initiative of the Net-herlands Polish Council for Trade Promotion(NPCH) and the Netherlands Polish Cham-ber of Commerce in Warsaw. n

BMW InchcapeBMW Inchcape has shutte-red its first location in Warsaw at ul. Prosta,and relocated to a sparkling new showroomin Wola at al. Prymasa Tysiąclecia. The ope-ning party was held in late October. Accor-ding to the auto industry research firmSamar, BMW sales in Poland for the first 9months of 2009 were 3312, up 12,2 % fromthe comparable period in 2008. This resultexceeds the overall new-car sales sector re-sult, which increased 1,5 % for the 9-monthperiod ended 2009. BMW Inchcape belongsto the Inchcape group, which has been listedon the London Stock Exchange since 1958,is headquartered in London, employs over15,000 people. n

BMW Inchcape

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www.bizpoland.pl Events

November 2009

BizPoland VIP CocktailsBizPoland held its October VIP cocktails onthe top, 40th floor of the Marriott Hotel,with a special focus on the petroleum sector.The event continues a new tradition of quar-terly business mixers, focused on specific in-dustry sectors. The next event will be held inJanuary – exclusively for subscribers to Biz-Poland Magazine (subscribe@bizpoland.pl)and industry-specific executives. Marriottalso recently celebrated its 20th year in ope-ration in Warsaw. n