20 April 2011
3.8 Practical recommendations
Target Poland but not Poland alone
Apart from opportunities in Poland’s domestic market, Hong Kong companies may explore Poland’s potential as a regional centre for distributing products in Europe, especially the Eastern European region. Serving as a gateway and vital conduit for trade, Poland’s steadily improving infrastructure with respect to warehousing and logistics can somehow help Russia and other landlocked CEE countries to cope with the increasing intra- and inter-regional trade. On the other hand, riding on the historical linkage and geographical proximity, Poles are used to doing business with Europeans, especially Germans across the western border and Russians across the eastern border, and are therefore very knowledgeable about the differences across the Eastern and Western Europe. Therefore, finding the right partner or gaining a foothold in Poland may also facilitate market penetration across Europe.
Get ready and strive for ODM and OBM orders
Instead of their traditional strength in doing OEM orders, Hong Kong brand owners should take heed of the huge potential in the Polish market for foreign brands. Also, many Polish companies do not have their own design capability, meaning that they usually rely on products supplied by overseas designers and brands. In this context, sagacious Hong Kong designers and brand owners are advised to get themselves prepared with well-designed collections featuring decent designs and branding to set out ODM and OBM businesses. Instead of providing designs and placing OEM orders, it is increasingly common to see Polish and CEE buyers and retail operators looking for good buys of foreign collections and brands.
Never settle for inferior quality
While Polish consumers are likely to trade down amid recession, Hong Kong exporters should not regard the Polish market as a dumping place for their unsold products. Although shoppers are expected to focus more on prices and comparing prices during economic hard times, Polish consumers are still reluctant to sacrifice quality for cheap prices, especially for fashion products. Quality in general remains a decisive factor in the Polish market. While Polish consumers are less willing to buy high-price and big-ticket items, there is not yet a significant switch to cheap or low-quality products. In other words, Polish consumers still look for quality at affordable prices (or discounts). Hong Kong companies should bear this in mind and “surprise” the market with products of good price/quality ratios, perhaps with reduced features and product content, but never poor quality. This could be a golden time for Hong Kong companies to gain reputation by establishing images and/or brands that promise quality to consumers.
Leverage on Poles’ good perception of Hong Kong
Prior to the 2007 Chinese export recalls and 2008 milk scandal, goods bearing a label “Made in China” were recognised for good quality in Poland. While Poles are not hostile to Chinese products, some of them require more thorough tests of Chinese products, especially food and fertilisers. This gives Hong Kong a role to play as regards quality control as well as third-party testing. Moreover, quite a few Polish importers have expressed that they still find it more reliable and convenient to make use of Hong Kong professional services such as accounting, legal and banking services, even when they avoid Hong Kong traders and do their own sourcing directly on the Chinese mainland. Direct benefits aside, a better perception of Hong Kong traders and service providers would also give Hong Kong an advantage over indigenous Chinese competitors when Polish exporters are targeting the mainland and greater Asian markets.
Win business by taking reasonable risks and increasing flexibility
After all, Poland remains an emerging market of which Hong Kong companies should be wary regarding the challenges arising from payment risks and small orders. It should be noted that except for some large buyers, letters of credit are not yet common for imports by Polish distributors. Polish buyers usually ask for open credit when sourcing from Asia. To overcome this obstacle, alternative payment terms, such as D/Ps (documents against payment), and limited open credit for some credible buyers, should be considered. Hong Kong companies therefore have to take some risks for such deals, and a certain commitment is required to open up the Polish market, for instance, giving credit or longer credit terms to Polish buyers that have a favourable track record and sound credit background. This goes without saying that Hong Kong exporters should be more flexible in suiting the needs of importers and traders by accommodating smaller orders. This is extremely important when approaching potential buyers that might want to test the market and product quality before placing large orders.