DLA Piper: Poland attractive destination for shortening supply chains
DLA Piper: Poland attractive destination for shortening supply chains
Poland’s highly skilled workforce, growing pool of environmentally compliant buildings and developed IT services market make it an attractive destination for foreign investors who want to shorten their supply chains, according to experts on nearshoring at law firm DLA Piper, who urge the country’s government to promote investment more actively.
Nearshoring, or relocation of manufacturing, logistics, warehousing and office centres to countries closer to their target markets, began with the COVID-19 pandemic and the resulting disruption of supply chains. The trend has been further fuelled by geopolitical instability arising from wars in Ukraine and the Middle East, as well as the trade war between the US and China. The strengths of Poland and the CEE region include access to the large European Union market and the security guarantees that come from NATO membership. These advantages mean Poland remains an attractive destination despite rising labour costs, the law firm said.
“Competing for investments using the low costs argument is no longer an effective strategy for Poland and the Czech Republic, and may only be a short-term solution for Hungary and Romania,” says Jacek Giziński, Co-managing Partner, DLA Piper Poland. “The key to success today is to invest in the future through education, technology and promoting the region as an attractive place to invest.”
Data from the National Bank of Poland for 2022 show European countries account for the largest share of foreign direct investment in Poland (96%). IT and real estate investments in recent years are of great importance for companies interested in relocating, and the government should stress them in its promotional activities, DLA Piper’s experts said.
“Increased investment in IT infrastructure and a growing number of data centres can make Poland a key player in technology and cybersecurity,” says Ewa Kurowska-Tober, Partner and Head of IPT, DLA Piper in Warsaw. “The importance of IT security will continue to grow, favouring countries with a high data protection culture and advanced technological solutions. Poland offers mature forms of intellectual and industrial property rights protection that are important for investors in building competitive advantages.”
Poland also stands out against the rest of the region with its competitive commercial property stock, offering the fourth-largest amount of warehouse space in the EU, but with rental and operating costs half those of Spain and two-thirds of Germany’s. This creates a solid foundation for strengthening Poland’s position as an international logistics and production centre. Both the greenfield investment sector and brownfield projects, involving the renewal of existing assets, have the potential to accelerate. Furthermore, newly developed office and warehouse properties meet high environmental criteria, which is of increasing importance to investors.
“ESG requirements for companies and commercial real estate continue to expand and influence the decisions of investors looking to relocate their logistics and office centres,” says Michał Pietuszko, Partner and Head of the real estate practice, DLA Piper in Warsaw. “Poland is now favoured not only by its geographical location and the large availability of land, but also by the quality of its real estate stock.”
Central and Eastern European countries are mostly perceived as investor-friendly and their governments have actively supported companies seeking new locations in recent decades by offering grant schemes, tax incentives and subsidies. As a result, Poland, the Czech Republic, Romania and Hungary have attracted important investors from sectors including IT (Google, Microsoft, IBM, Oracle), advanced manufacturing (Samsung, Siemens, Foxconn), automotive (Audi, Mercedes, BMW, Skoda, Stellantis, Ford, Renault), electric vehicle manufacturing (LG Chem, BYD, CATL) and shared services and business process outsourcing (Deloitte, Accenture, Citibank).