Why relocate production to Poland? What are the reasons why experts believe that Central Europe will slowly but surely take over the role of the manufacturing centre of the continent? What investment incentives can be expected when relocating to Poland?
We live in a world that constantly changes. Every day brings a new challenge. The COVID pandemic and the ongoing war in Ukraine have both caused some serious social, business, and economics, as well as political consequences.
Basic information
Low staff costs
Although labor costs are rising, according to Eurostat the cost of hiring an employee in Poland is among the lowest in the European Union.
Poland is mentioned as one of the countries that will benefit the most from moving production outside China.
Polish Investment Zone
Tax exemption is available across the entire territory of Poland, for companies carrying out new investments, on publicly as well as privately owned land.
Poland’s investment incentives include Special Economic Zones as administratively separate areas in Poland where business is conducted under special, preferential conditions.
Qualified personnel
The level of education of Polish workers is steadily increasing.
More than 42 % of Poles between the ages of 25 and 34 have completed higher education. Almost 40% of Poles speak at least one foreign language.
Investment incentives
Poland offers a wide range of investment incentives available at both regional and governmental levels.
Investors who decide to build production plants, warehouses or logistic centers may count on numerous incentives, among others income tax or property tax exemption.
Investment activities are also supported by programs financed by the European Union .
Poland – a link between Eastern and Western Europe
The war between Russia and Ukraine has seen an increase in Poland’s economic importance. Taking into consideration the forward-looking plans for the restoration of Ukraine and the West’s high interest in Poland, the later can be seen as a key link between Eastern and Western Europe. The vicinity of Ukraine and affordable local costs make Poland an ideal investment destination in different kinds of industrial plants. And we’re not talking only about the defence industry. Ones the restoration process begins, industries playing an important part in it, such as broadly understood infrastructure, energetics, transport, and pharmaceutical industries, will need a new place to operate.
Another consequence of Russian aggression on Ukraine is a strategic clash between China and broadly defined West. China is slowly, but consistently, being driven out from the global production chains. In this context, Poland, thanks to its geographical location, is gaining an important position in the block of countries of the West and has the potential to become a key element of the production chains. The experts predict that Poland will play the role of a logistics hub of Central Europe, which means more foreign and domestic investments are expected to be made in Poland.
Central Europe – production centre of the continent
Location is vital if you want to be able to react promptly to fast changing market and trends. It’s especially important for products requiring quick delivery to clients. The coronavirus and disrupted supply chains from China have shaken many industries, such as pharmaceutical, medical, automotive and furniture.
As a result of the ongoing changes, the economists estimate that in the following years Central Europe, including Poland, will take over the role of the production centre of the continent. Almost 70% of foreign trade experts indicate that a partial transfer of production from Asia to Poland and other countries of Central Europe will take place until the end of 2030.
Nearshoring to Poland. Bringing production closer to client
We’ve talked about the effects of the pandemic on product supply chains. In consequence of these effects, production companies and companies offering storage and logistics services, are inevitably reconsidering their production chains, most of them arriving at the same conclusion. Relocating your production to a neighbouring country seems like a wise solution, as it undoubtedly minimises risk factors associated with long supply chains. The pandemic has exposed problems with delivery lags from China and the Far East countries. According to Bank of America, the pandemic has interrupted supply chains of as much as 80% of industries. The reaction of almost 100% of those affected was to consider changing their production location. The word ‘nearshoring’ can be heard ever more often. Nearshoring is a practice of transferring a business operation to a location closer to the business’s country of origin. Companies are beginning to appreciate the value of production situated closer to clients, especially within Europe.
So, what are the benefits of transferring a production to Poland?
Poland is a very appealing location to those thinking of relocating an existing production or starting a new one. A possibility of product distribution not only on the local market, but also on other EU and Europe’s markets, is what draws the investors in. There are many benefits of transferring your investment to Poland, to name a few:
- affiliation with the European market;
- location that allows a prompt and timely delivery to clients and guarantees significant logistics savings;
- large internal market, which means your product can feel here at home;
- relatively lower production costs without having to compromise on high quality of the product;
- broad range of investment incentives, such as instruments co-financed by the European funds, tax credits under the Polish Investment Zone (Polska Strefa Inwestycji) or Innovation Box tax scheme;
- possibility to maintain highest standards and obtain adequate product certification;
- possibility to maintain highest standards and obtain adequate product certification;
- widely available and well-positioned investment plots with good infrastructure.
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