WBJ Observer November 2016

NOVEMBER 2016

Number 11 (33)

PLN 24.50 (VAT 8% included) ISSN 2353-3714 INDEX-RUCH-332-127

FOR DAILY NEWS VISIT US AT

wbj.pl

WARSAW STOCK EXCHANGE

Rocking the boat

Can the Warsaw bourse get out of its current slump and once again become a force to be reckoned with?

NOVEMBER 2016

ALSO IN THIS ISSUE:

• C o m m e n t a r y • E co n o m y • Te c h • N ew s • L i fe st y le • Po l i t i c s

IN THIS ISSUE

47-69 35-45

22-24

WSE

TECH INSIGHTS

LOKALE IMMOBILIA

6

18

70-71 Events Expo Real 72 Events EFNI 73 Events PRCH Gala

6-12 In Review Latest news 13 Dateline 14 Economy

18-20 Ryszard Petru 26-27 Mariusz Bober

74

NEWS

15

COMMENTARY

INTERVIEWS

28

FEATURE

LIFESTYLE

74-75 Gadgets 76-77 Lifestyle Palatum Brewery 79-80 Lifestyle Bartek Mejor

28-30 Labor market Invisible barriers

15 Management Passing the torch 16 Law DIY Industry 17 Family business Next generation

WBJ OBSERVER • NOVEMBER 2016

1

Visit our site - wbj.pl For latest news, features and commentaries.

Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Editor-in-Chief, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Michael Evans Copy Editor Journalist Nyegosh Dube Wiesław Galach Graphic Designer wgalach@valkea.com Aleksandra Szydło Graphic Designer aszydlo@valkea.com Contributors Ewa Boniecka Karolina Papros Sergiusz Prokurat Dominika Tkaczyk Alex Webber Sales & Marketing Director Tomasz Pawlak tpawlak@wbj.pl

SUBSCRIBE TO WBJ OBSERVER

Choose by checking the box ❏ Print Edition: PLN 550 Print edition (in Poland only) includes three annuals: • Made in Poland (Polish Export Scene) • Investing in Poland (featuring TrendBook Poland) • Book of Lists (covering more than 60 business sectors) ❏ E-zine edition: PLN 450 Enquiries Magdalena Czopur mczopur@valkea.com +48 22 257 75 00 ext. 245

FOLLOW THE PLAYERS, THE INDUSTRIES, THE COMPANIES, THE PEOPLE WHO ARE MOVING POLAND FORWARD. Subscriber details Name ....................................................................................

Company ...............................................................................

Address .................................................................................

PR & Marketing Anna Augustyniak-Hoffman aaugustyniak@valkea.com Agata Wolny awolny@valkea.com Magdalena Czopur Subscriptions mczopur@valkea.com Krzysztof Wiliński Print & Distribution dystrybucja@valkea.com Magda Gajewska Event Director, Valkea Events mgajewska@valkea.com Contact: phone: +48 22 257 75 00 fax: +48 22 257 75 99 e-mail: wbj@wbj.pl

Postal code ............................. City.......................................

Country .................................................................................

Telephone/Fax ...................................................................... e-mail....................................................................................

NIP (Poland)/EU VAT number (EU countries) ...............................................................................................

Please fax this form to: +48 22 257 7599 or mail it to our office: Subscriptions WBJ Observer • Valkea Media S.A. ul. Elbląska 15/17, 01-747 Warsaw, Poland

2

Sales Magdalena Klimiuk mklimiuk@valkea.com Justyna Lund jlund@valkea.com Katarzyna Pomierna kpomierna@valkea.com Jola Zbieg jzbieg@valkea.com

WBJ.pl WarsawBusinessJournal

@wbjpl

Copyright © 2014 by Valkea Media SA

All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher.

Published by ul. Elbląska 15/17 Valkea Media S.A. 01-747 Warszawa Tomasz Opiela, CEO NIP: 525-21-77-350 www.valkea.com To subscribe through RUCH SA: www.prenumerata.ruch.com.pl, prenumerata@ruch.com.pl, 801 800 803 COVER IMAGE: SHUTTERSTOCK

NOVEMBER 2016 • WBJ OBSERVER

reklam

reklama_OBSERVER_Toyota_10-2016_v2k.indd 1

26.10.2016 14:28:52

COMMENTARY / ON INFORMATION TECHNOLOGY

}

DEAR READERS JACEK CIESNOWSKI, EDITOR-IN-CHIEF, WARSAW BUSINESS JOURNAL GROUP

We continue to cover the situation on the Warsaw Stock Exchange. The bourse, which is celebrating its 25th anniversary this year, has had to face some tough challenges as investors are losing interest in Polish stock and indices are falling. The new CEO has the difficult task of getting it back on track. We investigate what has caused the current situation and how it can be solved.

We also take a closer look at Poland’s job market and how it still differs from those in the West. You can also read interviews with the CEO of Grupa Azoty, and Ryszard Petru, the leader of Nowoczesna – currently the largest opposition party in Poland.

In the Tech Insights supplement we take a complex look at big data. From a business standpoint – why, despite so many advantages and company’s declarations, have only a few decided to implement it. On the other hand, with such an enormous amount

4

FEBRUARY 2014 • WBJ OBSERVER

of information, anyone can easily get lost. We try to help you sift through the useless data and get through to what is important.

Finally, in the Lokale Immobilia supplement, we focus on one sector – retail. With two significant law proposals regarding retail tax and a ban on Sunday trade, we discuss how both proposed laws will affect the retail industry. Even though both regulations are yet to be passed and the retail tax has been suspended for now until end-2017, their shadows are looming large over the sector.

This issue is not the only publication we will be releasing this month. The annual Investing in Poland report should be available soon as well, and as always, we will be holding a conference alongside it. Follow our profiles on social media and our website for more information regarding the event and the annual.

Jagiellońska 55A street, Warsaw An address worth remembering!

A SPA & WELLNESS CENTRE INSPIRED BY THE WISDOM OF NATURE, UNIQUE ON EUROPEAN SCALE!

S

ante Studio City Spa is an exclusive wellness and therapeutic space in the heart of the Polish capital. The relaxing music, dim lights and intimate ambiance of the clubstyle interiors create an unforgettable atmosphere of a place emanating positive energy.

This is the only SPA in Poland where Revitalised Water is used in all pools. It also includes one jacuzzi with Himalayan salt and magnesium and one with silicon water. Ganbanyoku is a unique treatment – you can lose up to 1200 calories within 45-60 minutes spent in this Japanese stone sauna. Goldarium is a rest bay, the only one in Poland lined with 22-karat gold. Our guests can also use the steam bath with the Revitalised Water steam, Finnish bio-sauna with aromatherapy, salt chamber, safe-tanning Sunny Meadow and skin-rejuvenating collagen lamps. Revitalised Water is also available for drinking – free of charge and volume restrictions!

The Beauty Zone offers exclusive rejuvenating treatments: CACI, Yonelle Medesthetic, drepotherapy, relaxing massages and lavish body rituals.

The Treatment Room Zone offers state-of-the-art diagnostic technologies: SCIO, STRD, Tanita, Scenar Cosmodic, and manual therapies: craniosacral, myofascial, reflexology.

The Studio Sante City Spa is a place worth visiting!

HOT COCONUT OIL MASSAGE –EXOTIC RELAXATION A hot coconut oil massage is a sumptuous treatment which warms the body and profoundly relaxes the mind. The subtle coconut aroma, soothing music and the massage itself make this treatment exceptionally relaxing. It effectively reduces muscle tension and pain, soothing the stressed, fatigued body and mind. It has a rejuvenating action, moisturising, smoothing and regenerating the skin. It makes it supple, elastic and radiant-looking. Coconut oil hinders the skin photoageing processes and prevents the adverse effects of UV radiation.

The massage accelerates metabolism, nourishes the skin and promotes the removal of toxins.

Divinely relieves tension and restores vitality, while soothing the mind and promoting deep relaxation.

POWER MAN A treatment set for modern men who like to take care of themselves. A relaxing massage alleviates muscle tension in the entire body. Sauna rituals, including a peeling in the steam bath with Revitalised Water and a steam treatment in a Finnish sauna, stimulate the regenerative processes in the body. They reduce fatigue, improve the quality of sleep and libido. The complex regeneration in the Sante Studio is a guaranteed method of promoting relaxation and well-being. POWER MAN is the time of excellent recreation and recharging the batteries with positive energy!

The set includes: · relaxation massage · unlimited time of relaxation in the zone of saunas and pools with Revitalised Water · complimentary snacks · free beer!

Studio Sante Uzdrowisko Miejskie ul. Jagiellońska 55A, Warsaw tel. 691 603 611, 605 130 152 www.studiosante.pl

lll INREVIEW NEWS

News highlights of the past month

Oscar-winning Polish film director Andrzej Wajda died aged 90 on October 9. The Polish Filmmakers’ Association confirmed the news the following day.

He made more than 40 films in a career spanning 60 years. Wajda had recently been taken to hospital, with reports saying he died of lung failure.

Many of his films, including “Kanał,” (1956) “Człowiek z żelaza,” (Man of Iron,1981) and “Katyń,” (2007) were

6

NOVEMBER 2016 • WBJ OBSERVER

inspired by Poland’s turbulent wartime and communist history. His father was among the victims of the 1940 Katyń massacre. Other films, such as “Wesele” (The Wedding, 1972) and “Ziemia Obiecana” (The Promised Land, 1974), were inspired

by Polish literature. In 2000, Wajda was awarded an honorary Oscar for his contribution to world cinema.

Wajda’s last film – “Powidoki” (Afterimage), released this year, is Poland’s entry

for best foreign-language film at the 2017 Oscars. Four of Wajda’s earlier works were also nominated for that category.

“Man of Iron” won the Palme d’Or at Cannes in 1981.

“I never thought I would live to see the moment when Poland was a free country.

I thought I would die in that system. It was so surprising and so extraordinary that I lived to see freedom,” Wajda said in a 2007 interview with the Associated Press.

Image: Shutterstock

Renowned film director Andrzej Wajda dies

NEWS

WBJ OBSERVER • NOVEMBER 2016

7

NEWS

RETAIL TAX SUSPENDED UNTIL THE END OF 2017 Poland’s cabinet has approved the suspension of the country’s new retail tax until the end of 2017, the government press center (CIR) said in a statement following a cabinet meeting on October 18.

The tax on large retailers, which took effect on September 1, was quickly suspended after the European Commission announced that it would begin an inquiry into the tax. The suspension aims to give the Commission time to conduct its inquiry.

The government will work on a new version of the tax, top Polish officials have repeatedly signaled.

KACZYŃSKI: GOVERNMENT DOES NOT SUPPORT RE-ELECTION OF TUSK In an interview with Polska The Times, the head of the Law & Justice party (PiS) Jarosław Kaczyński declared that the Polish government does not support the election of Donald Tusk for a second term as President of the European Council.

“Tusk is a big problem,” Kaczyński said. “In Poland, proceedings are underway against him in the Sejm and in the prosecutor’s office, which could lead to charges against him. Should such a person be the head of the European Council? I have serious doubts.

We have to warn the EU about potential problems,” he explained. The PiS leader added that Poland has not benefited from Tusk being the head of the Council.

The American online retail giant plans to hire 12,000 workers in Poland for the Christmas season. They will work at Amazon’s three Polish distribution centers.

“Currently, at the Poznań center and the two in Wrocław, we employ more than 10,000 people, 5,700 full-time. We are in the process of pre-Christmas recruitment, and plan to hire an additional 12,000 workers. Some of them will be offered full-time positions,” said Robert Stobiński, board member of Amazon in Poland. Last year, two-thirds of workers hired for Christmas got full-time jobs.

Products from Amazon’s Polish centers are sent to 40 countries worldwide, including the five European countries where Amazon has online stores: Germany, Italy, the UK, Spain, and France. A sixth European store is to be launched soon – which could be in Poland.

8

NOVEMBER 2016 • WBJ OBSERVER

T

housands of women across Poland went on strike on October 3 to protest against proposals for a total ban on abortion. They marched through the streets of Warsaw and other Polish cities wearing black as a sign of mourning for their reproductive rights. Women opposed to the ban stayed away from work and school and refused to do domestic chores, in a protest inspired by a women’s strike in Iceland in 1975.

If the law - which has cleared one parliamentary hurdle so far - goes through, it will make Poland's abortion laws as restrictive as those in two other European countries: Malta and the Vatican. Women found to have had abortions would face a five-year prison term. Doctors found to have assisted in an abortion would also be liable for jail time.

Abortion is already banned for the most part in Poland. “If I perform a Caesarean section and the child dies, I may go to prison for three years, because the child was premature,” said Romuald Debski, who works at a hospital in Warsaw. While prochoice activists marched in black, anti-abortion activists chose white for the color of their counter-protests.

Images: Shutterstock

AMAZON TO HIRE 12,000 IN POLAND FOR HOLIDAY SEASON

Black Monday: Polish women go on strike against abortion ban

NEWS

Poland cancels chopper tender

The Ministry of Development has ended offset talks with Airbus Helicopters regarding the contract to buy multipurpose Caracal helicopters.

“The differences in the negotiating positions of both sides preclude a compromise, so further negotiations are pointless,” a statement from the Development Ministry said. A few days later, Poland’s Defense Minister announced that the Polish Army would buy 21 Black Hawk

helicopters.

This means that the €3.14 billion deal is now off.

The contract to buy 50 multipurpose helicopters was signed in 2014 by the previous government. Airbus beat Italian AgustaWestland and American Sikorsky in a tender. However, the new Law and Justice (PiS) cabinet questioned the deal soon after coming into power.

“We have never been treated by a govern-

ment client the way we were treated by this government,” Airbus Director General Tom Enders stated, adding that Airbus will seek compensation. The company also published an open letter to the Polish government, in which they declared that the talks had been broken off by the Ministry of Development. A few days later the defense ministry announced that it would begin a new tender and invite all three companies to participate in it.

00-810 Warszawa ul. Srebrna 16

WBJ OBSERVER • NOVEMBER 2016

9

NEWS

S

outh Africa-based Naspers Limited has sold Allegro, Poland’s largest online shopping and auction website, to funds managed by private equity firms Cinven, Permira, and Mid Europa for $3.25 billion. The transaction is subject to standard antimonopoly consents.

Among the reasons cited by the three firms for their acquisition are: the prospects of strong structural growth in the Polish e-commerce market, Allegro’s position as a leading e-commerce platform on the market with cult brand status, and an excellent management team with impressive successes.

“Allegro is a great business. It’s the clear leader, well-prepared to take advantage of the development of the e-commerce market through a superb technology platform and excellent reputation among users,” Cinven fund partner David Barker said.

Founded in 1999, Allegro has more than 20 million registered users, who make 14 million transactions a month.

The Allegro Group includes Ceneo, the most popular price comparison website in Poland. It is based in Poznań and employs 1,275 people.

LOT to be first airline to fly Boeing 737 MAX 8 Next year, LOT Polish Airlines will receive four used Boeing 737s, and in 2018 will start receiving new Boeing 737 MAX 8 aircraft, LOT announced on October 13 at a press conference at which it presented plans for the development of its fleet.

As part of the agreement signed with Boeing, LOT will lease four used Boeing 737-800 NGs. But this is only the beginning, as the national carrier has also signed a contract with Boeing for the delivery of six Boeing 737 MAX 8s by 2020.

10

NOVEMBER 2016 • WBJ OBSERVER

LOT will be the first airline in the world to fly this new Boeing plane. The aircraft will be delivered in stages every year from 2017 to 2020. LOT also has the option of ordering another five 737 MAX aircraft. This model has a capacity of 186 passengers.

These are not the only aircraft that will bolster LOT’s fleet. Next July, LOT will receive its seventh and eighth Boeing Dreamliners to be used for long-haul flights.

Sejm lifts immunity of the head of NIK

The Sejm has voted to waive the immunity of Krzysztof Kwiatkowski, President of the Supreme Audit Office (NIK). A proposal to this effect was submitted to the Sejm by the National Prosecutor’s Office, which wants to file charges against Kwiatkowski for abuse of power in filling positions in NIK. His six-year term as head of NIK began in 2013.

The Sejm voted on two proposals regarding the immunity of Kwiatkowski. The first was submitted by the Łódź police regarding a traffic offense, while the second is a more serious accusation from the Department for Organized Crime and Corruption of the National Prosecutor’s Office.

The prosecutor wants to file four charges linked to manipulation of appointments for directors of the NIK offices in Rzeszów and Łódź, and for deputy director of the environmental department at the head office of NIK. However, Kwiatkowski rejects the accusations. “I want to clarify the untrue and unfair charges before an independent court. I have never committed any crime,” Kwiatkowski said.

Images: Shutterstock, Boeing

Allegro sold for $3.25 bln to private equity firms

NEWS

Gowin: Lowering the retirement age can wait until fall 2018

G

iven the deepening economic crisis in Europe, the lowering of the retirement age can be postponed until fall 2018, the Minister of Science and Higher Education Jarosław Gowin told PAP in an interview.

“I’m not an enthusiast of lowering the retirement age, but from the beginning that was one of our election promises,

so it will be lowered. The question is whether this should happen in the fall of 2017 or – in view of the deepening economic crisis in Europe – should it be postponed by six months or even a year, until fall 2018,” Gowin said.

He added that the minimum length of service for retirement pension eligibility should be changed to 35 years for

FIAT TO INVEST OVER PLN 1 BLN IN BIELSKO-BIAŁA?

SŁAWOMIR NOWAK TO HEAD UKRAINE’S STATE AGENCY FOR ROADS

Fiat Powertrains Technologies will invest over PLN 1 billion on the production of innovative engines at the Fiat plant in Bielsko-Biała, the daily Rzeczpospolita reported on the basis of unofficial information.

“Company representatives did not want to comment on our information. However, the Ministry of Development has unofficially confirmed to us that the Italian company has already filed the appropriate documents, and the details of the investment will be determined in the coming weeks,” the newspaper stated.

This was the third investment in automobile engines in Poland to be reported in October.

The government also successfully concluded negotiations with Daimler on an engine factory in Jawor. And it was announced that Toyota is to invest PLN 650 million on the production of hybrid transmissions in Wałbrzych and JelczLaskowice.

Sławomir Nowak has become the new head of the State Agency for Roads of Ukraine (Ukrawtodor). This is equivalent to Poland’s General Directorate for National Roads and Motorways. The former Polish transport minister will be responsible for the development of Ukraine’s road network. This is yet another Polish politician or official who has been hired by institutions of Poland’s eastern neighbor. Ukrainian Prime Minister Volodymyr Hroysman announced the appointment on Twitter.

In 2011-2013, Sławomir Nowak was Minister of Transport in the government of Donald Tusk. For years, he was one of Tusk’s closest collaborators, and for a while headed the political cabinet of the prime minister. He also worked in the Chancellery of President Bronisław Komorowski, where he served as State Secretary.

women and 40 years for men. “Simple lowering of the retirement age in conjunction with the demographic slowdown would lead to the departure of around 1.5 million people from the labor market within five years. That would definitely have a negative effect on the growth rate of the Polish economy,” he explained.

WBJ OBSERVER • NOVEMBER 2016

11

NEWS / SNAPSHOT

Black marches

Image: Shutterstock

Thousands of women across the country went on “black strike” on October 3, to protest proposed stricter abortion laws. The biggest demonstration took place in Warsaw, where between 17-30,000 women gathered at pl. Zamkowy. After the protests, parliament voted against a proposal brought forth by a citizens initiative which would have made all abortions illegal, with prison terms of up to five years for women seeking an abortion and doctors who perform them.

12

NOVEMBER 2016 •

WBJ OBSERVER

Calendar November

NEWS / ECONOMY

November 9-11

II Innovative Manufacturing Forum Event: Industrial manufacturing is the pillar of economic

competitiveness and serves to build lasting foundations based on stable growth. Nowadays, as a result of globalization, trade liberalization, innovation and thereby constantly increasing competition, it is necessary to develop new solutions in order to help optimize manufacturing processes and improve the domestic market position of companies.

Location: Radisson Blu Hotel, Warsaw Web: en.forumprodukcji.pl

November 16

November 29

Investing in Poland 2017 Conference Event: This conference is devoted to presenting the

eighth edition of the Investing in Poland annual published by Warsaw Business Journal Group. It features panel discussions and an awards ceremony.

The publication aims to promote Poland as an attractive investment landscape for FDIs. Location: Warsaw Stock Exchange, Warsaw Web: wbj.pl

Prix Gallien Polska Event: The Prix Galien prize is awarded as an appreciation for innovative solutions in the field of medical devices and medicinal products

offered by pharmaceutical companies. It is also an award for scientific breakthroughs, achievements and discoveries. The creator of the Prix Galien is French pharmacist Ronald Mehl, who founded the prize in 1970. Over time, it has gained worldwide prestige and now it is one of the most significant awards in the field of pharmaceuticals and medicine.

Location: Hilton Warsaw Hotel and Convention Center Web: prixgalien.syskonf.pl

November 9-10

November 21

Chemical Industry Summit & Awards Gala Event: The numerous topics

EuroPOWER Event: The 24th edition of

the EuroPOWER Energy Conference is focused on the most current challenges and problems of the energy sector. Every six months, all the key industry representatives gather together to discuss the most important issues for the sector.

Location: Radisson Blu Hotel, Warsaw

discussed this year will include the future of the chemical industry, wise innovation policy, and perspectives for the Polish petrochemical and petroleum industry. The conference will culminate in the “Polish Chemistry Diamonds” award ceremony.

Location: Sheraton Warsaw Hotel Web: executive-club.com.pl/en/

Web:

November 2223

en.konferencjaeuropower. pl

November 29

FinTech Digital CEE Congress Event: The congress is an

exclusive forum for exchanging ideas with key players and the creators of the dynamically growing FinTech industry.

Participants include: representatives from mature Financial Sector firms, startups, companies that challenge traditional business models, investors, private equity funds, and the capital market.

Location: Westin Warsaw Hotel Web: fintechdigitalcongress.com

Home Zone 2016 Gala Event: A competition for

November 22-23

Big Data: Think Big CEE Congress Event: In recent times, information has become the most basic, and the

everything home related, from construction to vacuum cleaners. The contest aims to promote innovation and unique solutions. The winning products or projects will be awarded special distinctions.

Location: Palace of Culture and Science, Warsaw Web: homezone.pl

main resource that guarantees functionality and development not only for modern companies, but also for public administration and scientific institutions. How acquire data? Where can we obtain it? How can we analyze it in an optimal way?

Location: Westin Warsaw Hotel Web: en.bigdatacongress.pl WBJ OBSERVER • NOVEMBER

2016

13

NEWS / ECONOMY

FACTS AND FIGURES Data overview for September

Warsaw Stock Exchange as of September 2016 Number of listed companies:

-0.5%

486

was Poland’s CPI inflation

TRADE VOLUMES

8.3%

3.2%

y/y industrial output growth

SHARES

registered unemployment rate

PLN 144.17 billion BONDS

PLN 959 million

52.2 pts

Purchasing Managers’ Index result for Poland

FUTURES

5.52 billion Delayed growth

14

1.33%

PLN 936 billion

public debt after Q2

Deflation drops

Year-on-year CPI inflation in Poland, September 2015 – September 2016 -0.5

Keeps falling

Poland’s registered unemployment rate September 2015 – September 2016 10.5 10

-1

9.5

9

-1.5

8.5

Sep. ‘16

Jul. ’16

Aug. ‘16

May ’16

Jun. ‘16

Apr. ‘16

Mar. ‘16

Jan. ’16

Feb. '16

Dec. ‘15

Oct. ‘15

Nov. ’15

Sep. ‘16

Jul. ’16

Aug. ‘16

May ’16

Jun. ‘16

Apr. ‘16

Mar. ‘16

Jan. ’16

Feb. '16

Dec. ‘15

Oct. ‘15

Nov. ’15

NOVEMBER 2016 • WBJ OBSERVER

Sep. ‘15

8

-2 Sep. ‘15

Data source: Central Statistical Office (GUS), Warsaw Stock Exchange

According to revised figures from the Central Statistical Office, the GDP growth for 2015 stood at 3.9 percent, 0.3 higher than previously estimated.

“The biggest impact on the revision of GDP growth figures came from revised NBP data on foreign trade, and purchases by foreigners in Poland,” said Olga LeszczyńskaLuberek, Deputy Director of the Department of Accounts at GUS.

“I am a very nuanced supporter of CETA. Let’s ask ourselves: has Poland benefited from trade integration with the EU? Every entrepreneur and 80 percent of society says yes. CETA should be treated similarly. Trade with Canada will also definitely pay off.

But I have very serious reservations about the second part of CETA on investment, especially the mechanisms of international arbitration and the very strong position of corporations in disputes with states,” Deputy PM Mateusz Morawiecki

COMMENTARY / MANAGEMENT

MATEUSZ GRZESIAK ENTREPRENEUR, BUSINESS ADVISOR, UNIVERSITY LECTURER AND EXPERIENCED TRAINER.

THE MULTI-GENERATIONAL MARKETPLACE AND HOW TO COMMUNICATE WITHIN IT A 60-year old CEO advises his 45-year old manageress, assisted by 25-year old intern, to implement a certain procedure.

The manager wants to understand the reasons for the CEO’s choice, so she asks - why this one? Her boss feels offended by this question. Do you doubt my experience? He angrily enquires. Meanwhile, the 25-year old has already checked out the CEO’s Facebook profile.

Image: Shutterstock

The CEO is a baby-boomer – the generation born between 1945-1964. He follows a patriarchal and hierarchical way of thinking. That is why he feels offended by the query from his manageress, who is younger, female and of lower-status. His actions are intuitive and not divided into processes, he largely bases decisions on his own experience and has a tendency to micromanage. He values stability, loyalty and strength.

When communicating with baby boomers, show respect, as you would to your own parents. Appreciate what they have achieved and express gratitude. Tell them they are necessary. When suggesting something, start with: as you have probably noticed, X (X-message you want to put across).

Tell them about how stable the company is and how strong it is becoming.

The 25-year old is a Millennial – the generation born between 1980 and 2000. They know capitalism and were brought up in the internet era. Life, therefore, has the structure of a computer game – they change jobs more often than previous generations since there is always an extra life, if there is no next stage they get bored, what drives them is relationships, using instead of owning, and the vision of the company.

When communicating with Millennials, praise their achievements and use lots of positive reinforcement. Organize cooperative and supportive teams. Motivate by vision and self-development rather than by negative consequences or monetary gain.

Tell them about how the company will change and in which direction it is heading. Offer flexibility and fun. Give positive feedback. u

The manageress is from generation X – born between 19451964. This era of deep communism in Poland developed the personality of homo sovieticus – one who is distrustful, individualistic, rebels against procedure and values being smart over following rules. With a profound work ethic and personal sacrifice, these people are motivated by challenges, tasks and overcoming difficulties. They remember what poverty is.

When communicating with generation X, challenge them with new tasks. Give them freedom to operate individually and tell them you count on them. Be direct and precise.

To gain respect, earn it by deeds and achievements, not positions. Tell them about how the company will remove bureaucracy and develop family-friendly programs that offer flexible schedules. Encourage their independence and ability to manage multiple priorities. Give lots of direct feedback.

WBJ OBSERVER • NOVEMBER 2016

15

COMMENTARY / LAW

MARTA MIDLOCH, MEMBER OF THE M&A / CAPITAL MARKETS PRACTICE WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

REFLECTIONS ON THE APPLICATION OF THE MARKET ABUSE REGULATION On July 3, 2016, MAR1 was fully implemented, which brought significant changes to the EU capital markets. On the same day, the deadline to implement the directive MAD II2 expired, which is a supplementary regulation to MAR in the field of criminal sanctions.

The Polish legislator did not adapt MAR and implement MAD II to the national legal order in time, which implies a number of problems related to the functioning of the Polish legal system in which some of the provisions are contrary to MAR. Moreover, because of the current state of works on the draft law that, among others, aims to remove these contradictions and implement MAD II, it seems that this undesirable state of affairs will last longer. It is difficult to realistically assess whether the national legal order will be adapted to the MAR regime before the first anniversary of the full application of these provisions.

In this situation, in the opinion of the Office of the Polish Financial Supervision Authority (“FSA”) dated June 28, 20163, market contributors should apply to the provisions of MAR together with the provisions of the Act on Trading in Financial Instruments, the Act on Public Offering and their implementing acts, but exclude those provisions which are contrary to MAR. Being aware of the complex legal situation in which issuers exist nowadays, the FSA is trying to overcome the practical problems of legal interpretation concerning the application of MAR by posting on its website, among others, answers to frequently asked questions submitted by market contributors via email, which nevertheless are not binding interpretations of MAR, because the FSA is not entitled to issue such interpretations.

Considering the discrepancy between the Polish legal order and MAR and the lack of implementation of MAD II provisions, there was a discussion whether during the transition period, with which we are dealing now, there is a legal basis for imposing any punish-

ment for violations in the field of i.e. information obligations. In this respect, the FSA stated4 that the existing provisions of both the Act on Public Offering and the Trading Act remain in force and may give rise to the imposition of penalties on entities that violate their standards, insofar as they are not contrary to MAR. The above position, although of significant importance, does not remove all doubt. A question still remains as to what rules will apply to administrative proceedings concerning violations of MAR, committed after July 3, 2016, before the appropriate domestic regulations enter into force.

In this regard, a suitable regulation should be present in the transitional provisions of the amending act of which the final shape and the moment of entry into force are uncertain. The current statutory provisions that impose sanctions for certain violations committed by the issuers, even if they correspond generically to the behaviors prohibited by MAR, determine penalties for infringements by reference to the provisions of national laws establishing certain obligations which were partially replaced by MAR and should not be applied starting from July 3, 2016. In this regard, there are no simple solutions or clear answers. u

Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC 2 Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (Market Abuse Directive) 3 https://www.knf.gov.pl/Images/przepisy_uchylane_przez_MAR_stanowisko_28_06_2016_tcm75-47398.pdf 4 https://www.knf.gov.pl/Images/kary_za_narusznie_przepisow_MAR_tcm75-47790.pdf

16

NOVEMBER 2016 •

WBJ OBSERVER

Image: Shutterstock

1

CO M M E N TA R Y / FA M I LY B U S I N E S S

ŁUKASZ TYLCZYŃSKI, FAMILY BUSINESS INSTITUTE POLAND IBRPOLSKA.PL

THE NEXT GENERATION OF POLISH FAMILY BUSINESSES According to Jerzy Buzek, there are more than 11 million family businesses in the EU, which generate 60 percent of our GDP and 60 percent of the work places in the private sector. Surveys have shown that countries which create beneficial circumstances for the innovative development of SMEs have become economic leaders. A combination of flexibility, the ability to react quickly to market changes, and social responsibility has created the key to spectacular success for many SMEs. A similar situation is occurring in Poland. The vast majority of family businesses were established in the early 1990s. The founders of such companies are inevitably approaching retirement age and frequent questions from owners are simple: What is going to happen to my company after my retirement? And are any of my children suitable to take over my company into the 2nd generation?

advantages they have over their parents in business are IT knowledge, foreign languages, and a global contact network. Unfortunately, one of the major problems for the next generation is inter-generational dialogue and communication between the 1st and 2nd generation during the succession process. According to Adrianna Lewandowska, a properly conducted succession process should consist of four integral parts (Model 4W™): Wiedza (Knowledge); Władza (Management); Własność (Ownership); Wartości (Values).

As studies from countries with a much longer tradition of family business than Poland have indicated, only 30 percent of family businesses can be successfully transferred into the 2nd generation and only 10 percent of them will survive into the 3rd generation. Generational transfer may cause problems in Poland and may bring some major changes in the ownership structure of private capital. Thousands of SMEs that are well known in their local surroundings could disappear from the business scene.

Knowledge transfer While raising a successor, it has to be remembered not only to ensure management competences and industry knowledge, but also to explore the historical background (stories, successes, interesting projects) of the family business. Another important issue is to establish contact with business partners and key clients, or simply to build positive relations with coworkers.

Fortunately, awareness of the importance of taking care of inter-family succession is growing and instances of preparing a successor to take over the family business are increasing in Poland. More and more children undertake internships and perform basic tasks in their parents’ companies from the earliest age.

The Family Business Institute from Poland provided survey results (GUESSS survey) which indicated that only 6.3 percent of successors were interested in taking over from their parents. A series of activities concerning education in terms of family entrepreneurship has produced positive results and in 2016 the succession index has shown constant growth. A significant increase in the potential succession rate shows that thousands of Polish family-owned companies will make inter-family generational changes.

The next generation of entrepreneurs is from the so-called Millennial generation. Its representatives have a different business approach to their parents. Millennials also share different values. Some of the

Succession is a dynamic process between generations. Its aim is to transfer the four elements to the younger generation: knowledge, management and ownership whilst maintaining individual business and family values which are important for the family enterprise.

Management transfer The next generation needs to have an opportunity to use their knowledge in practice. It is preferable for the successor to have the ability to make a few initial independent decisions before taking responsibility for the entire company – starting as a hands-on worker through middle management, and finally to the head of the company.

Value transfer The identity of a family business defines values. These in turn determine the long-term actions and have real impact on the internal and external organizational environment. During the succession process, it is most successful when the owner, family, and key workers share similar values.

Poland is now facing the challenge of generational change. Experts from all over Europe are carefully observing the phenomenon of succession.

Without proper preparation, Poland may lose many popular brands, foreign capital may consolidate markets and we may lose something that has become a signature of Poland – large-scale family entrepreneurship. u

WBJ OBSERVER • NOVEMBER 2016

17

INTERVIEW / RYSZARD PETRU

RISING IN OPPOSITION RYSZARD PETRU, THE LEADER OF NOWOCZESNA, SPOKE WITH WBJ OBSERVER ABOUT HIS PARTY’S ACTIVITY, THEIR FIGHT WITH LAW AND JUSTICE’S (PIS) POLICIES IN THE NAME OF RESTORING CONSTITUTIONAL ORDER IN POLAND, PUSHING THE PARTY’S LIBERAL APPROACH TO THE ECONOMY AND ETHICAL ISSUES, AND HIS REALISTIC STRATEGY TO BUILD POLAND’S POSITION IN THE EUROPEAN UNION

WBJ Observer: Nowoczesna is currently leading among opposition parties in the latest opinion polls, but many analysts claim that that is due to the fact it is a new party, and unburdened by years of governing like Civic Platform (PO).

While your program is in many ways similar to old PO, is it not better to look forward to the present economic and political challenges that lie ahead for our country?

Ryszard Petru: I am not denying that one of our assets is the fact that we are a new party on the political scene, but our position and role is to build on our clear identity as a liberal, energetic, bold opposition party. It is true that we are garnering the support of many people who in the past voted for PO – those who have become disillusioned and

18

NOVEMBER 2016 • WBJ OBSERVER

are looking for a party that can present new leaders and who are determined to respond to the present and future expectations and aspirations of Poles. Our main task now is to shine a light on the antidemocratic activity of PiS – and we are doing just that. It is not an easy task when you consider that parliament, government and the presidency are all controlled by PiS – a party that is exploiting the fears and complexes of some parts of society, but our actions are bringing some results.

One such example is Stop Misiewicz, which refers to the appointment of PiS members to state posts and state-owned companies, regardless of the fact that they have no relevant qualifications.

And what is your view on PO, which has much larger parliamentary represen-

tation than your party. Do you cooperate when it comes to restricting the government’s actions?

Yes, we cooperate in many domains, but we are parties independent from each other and I treat PO as a competitor. Maybe there will be a time when we would like to build a coalition of opposition parties, and even present a common list of candidates for the next parliamentary election if that is necessary to defeat PiS. But there is still time for such decisions. I now want to strengthen Nowoczesna; enlarge the number of our members from, at present, over 4,000 to maybe 10,000-15,000. We are an open party; we invite all people who share our liberal views. So in my view, the most important task for Nowoczesna is to convince Poles

Images: Nowoczesna

I N T E R V I E W B Y E WA B O N I E C K A

INTERVIEW / RYSZARD PETRU

disaster to our economic performance. I am not saying that the state should have no influence on economic development, but it cannot replace the private sector. Involving that sector in economic development requires a transparent tax system, a functioning civil service and a democratic structure of law. That is now being violated by the ruling party. We have to defend the free market economy that still exists in Poland.

My party wants to reduce CIT and PIT taxes and I am afraid that the government’s suggestion of creating one joint tax based on consolidating all fees will, in practice, result in increased taxes. Introducing different tax rates would only lead to chaos and corruption.

that there is a clear alternative program to the right-wing philosophy and dictatorlike behavior of PiS. You are critical of Mateusz Morawiecki’s plan for Poland’s development and the overwhelming role of the state in pushing investments and innovation. You stress the importance of the private sector, privatization, a liberal economy and free market principles. But liberal capitalism is often challenged in the European Union and the plan set out by the chairman of the EU Commission Jean-Claude Juncker to create a European Fund of Strategic Investments to push economic development is based on state funds and governments’ involvement in spending. Does that not correspond with Morawiecki’s strategy?

Debates concerning the problems of contemporary capitalism are not new, and discussions in the European Union about Juncker’s plan are ongoing and it is still being evaluated. He wants to support economic ventures and development in the EU using public money and that brings with it huge risk. In my view, it will lead to wasting that money. The economic, financial and budgetary situation is different in each of the EU members, as are levels and ways of investing.

In Poland, the situation is such that Deputy Prime Minister Morawiecki and the ruling party are introducing full control over the economy and public investment. The government is appointing their own people to run public economic ventures, not apolitical professionals, but ruling party members, people without qualifications and PiS is in control of their performance. It will bring

How, in such a liberal party as Nowoczesna, do you want to conduct social policy?

In a responsible way, which is how it is conducted in many other EU countries. It means qualified criteria in introducing social benefits. Social policy has to be linked to the tax structure and tax payments to the state budget and its condition. Making populist promises that it is possible to make all citizens rich in a short time, and spending budget funds on ad hoc projects is a quick route to disaster. What is needed is the provision of functioning nurseries for small children of working mothers, the development of various forms of care and sports facilities for older children, and the adjustment of social policy to the economic development of the country. It is a realistic approach, which I believe many Poles accept. There is a growing understanding that social benefits cannot be provided at the cost of enlarging the state deficit and obtaining more foreign loans.

Civilized social policy requires the development of social culture, which will spread to various groups of society and involve nongovernment organizations, the private sector, and businesspeople in supporting cultural and educational activity and access to it. It is visible in some Western countries where it is not only the state that is concerned with helping people in their economic and social needs. The results of unwise, uncontrolled spending on social benefits can be seen in Greece.

Is Nowoczesna also liberal in its approach to such matters as abortion, in vitro, and same-sex partnerships, which are currently the subject of harsh confrontation with PiS policies?

WBJ OBSERVER • NOVEMBER 2016

19

INTERVIEW / RYSZARD PETRU

Nowoczesna’s leadership consists of a significant number of women. They are young, educated and bold in their political conviction. Some have taken to calling them “Petru’s Angels” and they participated in recent protests against the violation of their rights and the proposed anti-abortion law. Why is the presence of women in the party so important?

I am proud that we have so many young women in our party. We were happy that the “black protest” by women in so many cities resulted in the rejection of the total ban on abortion and it was a great victory for women over PiS. I think that in our troubled times, we need an influx of young political leaders and especially women into our political parties. The young generation brings a new energy to politics and a better understanding of how the world is changing around us. I value the experience of older politicians and those who fought for a free and democratic Poland. Those people later worked to change the political and economic system in our country and helped us join the Western structures of NATO and the European Union.

And what challenges do we have now in our foreign policy?

Now we have to deal with the crisis in the EU, the situation in Ukraine, and the threat from Russia. So we need a great mobilization of our efforts to secure Poland’s strong role in the European Union and our position in NATO. Nowoczesna and PO have cooperated in holding back some of PiS’s more unreasonable ideas – and there are many of them. They are harmful to Poland’s interests and are evident in political, defense and also economic domains.

We reject PiS foreign policy; we advocate a policy of strengthening the position of the European Union and Poland’s participation in resolving crises and building cooperation with the strongest Western partners.

20

NOVEMBER 2016 • WBJ OBSERVER

What is your view on dealing with the refugee crisis that the EU is currently facing?

I am not a supporter of Poland opening up to a huge number of refugees, because we do not have the ability to accommodate them in a safe way. But we have to participate in EU discussions on how to help those people, and how to contribute to ending the conflict. But at the same time I reject attacking refugees as aliens in our society, that whole nationalistic rhetoric delivered by PiS politicians is harmful for our society.

Is Nowoczesna thinking about presenting a candidate in the next European Parliamentary elections, and what are you views on Poland adopting the euro?

Yes, we will present our party’s candidates at the next election for the European Parliament, and as far as joining the euro is concerned, I think that it will come when we are ready for it.

You are an economist, so how did it occur that your party had difficulties with accounting for the funds received from the budget for your electoral campaign?

It was human error. It happens, and the punishment that came in the form of withdrawing the funds is unjustified. It is unreasonable and we will turn that case over to the European Court of Human Rights in Strasbourg. But for the time being, we will survive without those funds and we are raising financial support from our members and supporters.

Do you agree with the opinion that we are a “deeply conservative” society?

It depends on how you define that.

I think that people in Poland are reasonable and look at various problems separately.

I would say that we are a “conservative-light” society and we are able to qualify our views and long-term interests. Our history and experiences make us value democracy.

Do you believe that Nowoczesna will gain more parliamentary seats in the next election and that it will open the way for victory over PiS, especially if opposition parties unite?

Yes, I believe it, but it requires wisdom on our part. And I am certain that Nowoczesna will act accordingly. u

Image: Nowoczesna

Yes, we are consistently liberal in our approach to these ethical issues, and we are much more vocal in expressing it than PO. We want to develop sex education in schools, secure access to contraception products, and fight against the sexual and racial prejudices upheld by nationalistic right-wing organizations, which are tolerated by the government.

That atmosphere of fear is linked with PiS’s narrative of dividing Poles into “good patriots” who support the party, and “bad ones,” who are critical of government policy.

INTERVIEW / RYSZARD PETRU

9 listopada, 2016 Hotel Marriott, Warszawa Zainteresowany uczestnictwem?

SKONTAKTUJ SIĘ Z NAMI tel: +48 22 629 23 81 mail: edukacja@prch.org.pl www.prch.org.pl

Organizator:

>> Wyzwania i zagrożenia bezpieczeństwa współczesnych obiektów handlowych >> Piramida zagrożeń >> Obowiązki zarządców nieruchomości w kontekście zmian ustawodawczych >> Rola firmy ochrony w systemie bezpieczeństwa obiektu handlowego

Patroni merytoryczni:

WBJ OBSERVER • NOVEMBER 2016

21

COVER STORY / WSE

B Y S E R G I U S Z P R O K U R AT

HOW MANY TIMES DURING A DISCUSSION WITH FRIENDS ABOUT INVESTING HAVE YOU HEARD SOMEONE UTTER: “INVESTING IN THE STOCK MARKET IS JUST LIKE GAMBLING IN A CASINO?” MEANWHILE, IN POLAND WE CAN OBSERVE A CONTINUOUS DROP IN THE STOCK INDICES OF THE WARSAW STOCK EXCHANGE. THIS TIME IT IS NO COINCIDENCE BUT A DIRECT SHOT IN THE INVESTOR’S FOOT

S

tieg Larsson, the author of the “Millennium” trilogy – the bestselling crime novels, wrote that the stock exchange has nothing to do with reality. There is no economy, no production of goods and services. There are only fantasies, because every hour one can decide that this or that company will now be worth billions more or billions less. Although on the grounds of economics this view is completely unjustified, the last few years on the Polish stock exchange have made it difficult to argue with such an idea.

A number of arbitrary decisions made by Polish governments over the last few years have led to a crisis on the Warsaw Stock Exchange and its substantial attenuation, compared to other competitive exchanges.

The first changes impacted the pension scheme, and the government grabbed pension savings from the Open Pension Fund,

22

NOVEMBER 2016 • WBJ OBSERVER

which had invested on the Warsaw Stock Exchange for almost two decades. While currently, we are dealing with increasingly bolder ideas, including the taxation of banks and retail networks, attempts to rescue mining with the participation of the state, and finally a recent gift for people who pay off their mortgage in Swiss francs, which will lie heavy on the banks, plus the political conflict around the Constitutional Court lingers on. All this has led to the downgrading of Poland’s credibility in January 2016

by Standard & Poor’s credit-rating agency.

Political decisions have huge influence on the Polish stock exchange.

The stock exchange is the place for companies to raise capital and for many investors it is a way of life. Polish listed companies represent the strength of the Polish economy.

They employ 800,000 people and are responsible for 23 percent of the total value

of investments realized by the corporate sector. Their annual revenues exceed PLN 500 billion. The Warsaw Stock Exchange includes innovative companies because the expenditure of listed companies on research and development is higher than the expenditure of non-listed companies. Listed companies pay taxes and dividends. In 2015, shareholders received dividends amounting to a total of over PLN 20 billion. The stock exchange is also the place where the beginning of a crisis can be noted. Unfortunately, for more than one year, the Warsaw Stock Exchange has been on a downward trend.

Since May 2015, the main index, WIG, has lost more than 20 percent. The prospects for the future are not promising. After a weak year in 2015, this year, in terms of revenues of the biggest Polish companies, has been a quarter worse than in the same period of the previous year.

Images: WSE, Mateusz Gołąb/WBJ

CUTTING THE THROAT OF THE POLISH STOCK EXCHANGE

COVER STORY / WSE

Economists blame political reforms for this gloomy situation, in particular, the decision dictating transferring the money gathered in OFEs to the public pension system – ZUS. It is moving quite slowly.

Open Pension Funds pay out several billion PLN to ZUS each year. If the whole pension capital gathered in the fund was paid out to ZUS, which is obliged to provide pensions, it might lead to a situation in which the stock exchange takes a nose-dive and after that date our savings would become less valuable. The gradual transfer of funds was to prevent the possible impact of the reform on the WSE. Nevertheless, the total value of the major stock exchange bigwigs, i.e. Orlen, Lotos, Pekao SA, PKO BP, PZU, PGE and several other companies, has decreased by a few billion PLN over the last year. “Open Pension Funds – apart from direct purchases of shares followed by money inflow to the Warsaw Stock Exchange – provided liquidity, which helped investors enter or exit a transaction, mainly through investments in WIG20. Currently, after the reform, barriers of entry and exit are higher,” said Andrzej Tomczyk, Eastern-Central Europe Regional Director at Admiral Markets.

The mandatory presence of OFEs on the stock exchange had some flaws, such as artificial inflation of the stock exchange, contributing to abnormal price changes,

which would not have taken place if the funds might have freely invested in whatever they wanted, but it also had a substantial advantage – a large amount of capital that usually flowed to long-term and stable investors. This significantly contributes to the development of strategic business within telecommunication or energy, but also a number of smaller companies that simply look promising in terms of their strategy.

But, as it results from the analysis of the Polish Chamber of Pension Funds, OFEs have obtained an internal rate of return at 4.65 percent and if not for the changes of 2014, the OFE would have become one of the most effective Polish funds.

Political reforms were followed by the message of the media. Over the years, the WSE was a credible place for investing in the Polish economy and also a lounge where politicians held court. Upon the implementation of the OFE reform, suddenly the credibility of the capital market was undermined with the message that it was not the best place to save money. Allegedly, it was supposed to be reigned by speculators. Such irresponsible statements, suggesting that remaining on the WSE and in OFE was not the best choice for pensioners’ money, have led to a significantly lower credibility of the capital market. What is perfectly true about trust is that it is built for very long time, but it

can be easily and quickly damaged. Now the Polish government is considering merging 14 OFE funds into one fund managed by a state institution. This consolidation is about much more than just lowering management costs. This, in practice, would mean taking the next step and nationalizing private savings and companies. Companies such as: LPP, Cyfrowy Polsat, Asseco, CCC, Magellan, Robyg, Agora, ATM, Intercars, Kruk, Amrest, Pelion, Synthos, Vistula, Integer and many others would have to divide their shared ownership with the state. Current concerns about the stability of this structure and risks associated with nationalization give private entrepreneurs a headache.

Therefore, each new entrepreneur willing to enter the Polish capital market may perceive the stock exchange as risky. In addition, negative external factors had an effect – the Greek crisis, and the outflow of capital from emerging markets. “We also must be aware that the currently strong dollar pushes down the prices of raw materials, such as copper, which accompanied by the poor złoty, makes it an explosive mixture. This relationship makes investing in Poland less attractive than before, which is also affected by the political conflict over the Constitutional Court.

This, on the whole, is not creating a positive image of our exchange,” claimed Tomczyk.

He added: “Politicians could improve the

WBJ OBSERVER • NOVEMBER 2016

23

Image: Shutterstock

PR of the Warsaw Stock Exchange. However, they lack understanding of the role of the capital market in the economic development of the country, and Poles are not interested and do not feel the need to invest, including on the stock exchange. There are also no concessions or preferences, such as collecting taxes on capital gains starting from a relatively high amount, which would invite more small investors like Polish families.

Other preferences might offer exemption from capital gains depending on expanded investment period length.”

Moreover, the strategy of the Polish state being present on the stock exchange recalls the idea of “having your cake and eating it” – in the case of coal mining the shares were sold in order to introduce taxes on certain minerals and assets and the investments in public companies, in which the state holds shares, were controlled manually. In the meantime, aggregation of measures, risk management and risk weight constitute the fundamental purpose of stock exchange

24

NOVEMBER 2016 • WBJ OBSERVER

existence in the framework of the financial market.

Today, the stock exchange is very different than it was a quarter of a century ago. In the past there were many acts of privatization, which attracted individual investors.

Today, we observe a small number of large debuts, which the WSE has had to face in recent years. We hear increasing considerations of entrepreneurs regarding a potential debut in London. This applies in particular to tenders above PLN 500 million. This shows that Warsaw is straying off the course towards being the first choice, even for Polish entrepreneurs. Today’s center of European finance is London, however, once the UK exits the EU, we will witness a completely new situation, and the effects are difficult to predict. “Apart from the potentially negative impact of Brexit on the economic slump of Great Britain and the European Union, Brexit itself will not have serious implications for Polish business.

Brexit could even be an opportunity for the

Polish financial market. Thus, authorities are kindly expected to respond rapidly and implement a package of incentives. France, Germany and Ireland will seek to take advantage of the London banking sector,” said Łukasz Wardyn, Director of CMC Markets, Eastern Europe. “If Kraków can become the European capital of outsourcing, and little Luxembourg is able to produce thousands of different investment funds, it seems that Poland could also have a piece of London’s cake. Unfortunately, the inaction of authorities is accompanied by the lack of a specific strategy over the Polish capital market. It is not the domain of the current government but of more long-term negligence in this respect. Warsaw could become the center of Central Europe significantly sooner. And for years it has been repeated as a tag line that the WSE would dominate all stock exchanges in the region, even Vienna,” Wardyn explained.

Foreign investors have the greatest impact on what happens on the Warsaw stock exchange. It is primarily investment funds that are normally interested in buying shares of the largest Polish companies. The stock exchange in Warsaw resembles a “conveyor belt” that relocates capital investments to Poland. Foreign investors are here and it is largely up to them whether share prices go up or down. “Global institutions still do not look at taking a risk in emerging Eastern markets with a favorable eye. It is difficult to hope for a serious injection of capital in the WSE. The only hope is that when global investors decide that the level of risk in mature markets is too high, they are going to take a short-term risk and invest on the WSE,” added Wardyn. Small players as a whole are the smallest force on the stock exchange.

They are responsible for exchanging some 10 percent of shares in terms of the turnover value. It is them, however, who are mostly affected by the stock market crisis, because about 350,000 individual investors, actively investing money on the WSE, represent the majority of individual savings of Poles. Without capital market development we will not see the development of the economy and investments in the economy. The scale of damage on the Warsaw Stock Exchange is growing from month to month and all of this is in accordance with the popular saying from Warren Buffet, the guru of American investors, who in such situations used to say: “Only when the tide goes out do you learn who’s been swimming naked.” u

Image: Mateusz Gołąb / WBJ

COVER STORY / WSE

COVER STORY / WSE

WBJ OBSERVER • NOVEMBER 2016

25

INTERVIEW / MARIUSZ BOBER

I N T E R V I E W B Y JAC E K C I E S N OW S K I

WBJ OBSERVER SAT DOWN WITH MARIUSZ BOBER, CEO OF GRUPA AZOTY, POLAND’S BIGGEST CHEMICALS GROUP TO TALK ABOUT THE CURRENT STATE OF THE INDUSTRY, WHAT CHANGES CAN BE MADE TO AVOID THE CYCLICAL NATURE OF THE BUSINESS, AND CETA, AMONG OTHER TOPICS

CONTINGENCY PLANS 26

NOVEMBER 2016 • WBJ OBSERVER

INTERVIEW / MARIUSZ BOBER

WBJ Observer: The Polish chemical sector has not been doing well in recent months. The WIG-Chemia index at the Warsaw Stock Exchange has lost over 10 percent in the last six months. This is, on one hand, positive information for a company like yours which has lots of capital for potential takeovers and can use the current landscape to buy more cheaply than before the crisis. Do you plan any acquisitions both in Poland and internationally?

Mariusz Bober: The current situation does not only concern the Polish chemical sector. The biggest international companies in our field are also having problems due to the global downturn, which is a normal thing in every cyclical industry. The key thing is to enter the downturn period in relatively good condition, which we have. The current situation is very favorable when it comes to acquisitions. We’ve not had the last word yet, we’re analyzing various possibilities, but of course we won’t comment on the matter until we’ve made any biding decisions on this matter.

Images: Grupa Azoty

Is there still a place for Africa in your investment landscape? Recently, Grupa Azoty had to write down several million from one of your African investments.

That’s true. When I was appointed CEO of Grupa Azoty I had to analyze the situation in all of our subsidiaries and I came to the conclusion that not everything was as good as everyone thought, hence the write-down.

Still, Africa is very important to us. We want to have our own raw materials and that’s why we are currently analyzing the wealth of the phosphorus deposits in Kebemer in Senegal.

We’re also applying for an excavation concession there.

factor is fuel prices. The main raw material in the chemicals industry is natural gas, which often constitutes up to 50 percent of all the costs. We’re dependent on OPEC which will announce its decisions regarding production quotas for its member states soon. If they curb it, the prices and costs will go up.

This all affects the fertilizer market. On the other hand, Grupa Azoty’s evaluation is in line with the trends on foreign markets, the decline is about the same.

Two-thirds of the fertilizers segment is cost-dependent on the price of raw materials, which is a factor we cannot control. We can only improve the effectiveness of our installations to consume as small an amount of materials as possible.

Some of our figures, for example the natural gas consumption per metric ton of ammonia, are below the EU average. The other factor we can improve is to concentrate on more high-margin products in both the chemical and fertilizer segments.

Another thing that might hurt your revenues, by as much as 20 percent according to some experts, are proposed EU regulations on Cadium.

We think that any decision should be made after extensive and impartial research is carried out. We propose a 90 mg Cd per kilogram P2O5 limit (the EU is proposing an initial 60 mg limit, which over the course of 12 years would drop to 20 mg), which based on the tests done so far, does not cause accumulation in soil.

This is a level which could be done technologically. The EU proposal would make fertilizers very expensive and in turn curb demand, which would be hurtful to our farmers.

How important is the $700 million investment in the propylene factory in Police?

The scale of the project indicates that this is a strategic investment for the company, and for the Polish economy. This will help us develop new products and new segments with different cyclical periods, which will result in more diversified revenue streams, not so dependent on fertilizers but on chemicals and plastics. It will spearhead propylene processing in the region. It’s a challenging project with great perspectives and we’re still doing calculations on it.

What do you think about CETA? How would it affect the chemicals sector, even though the chances of it passing now are much lower than they were even a few weeks ago. When I asked your predecessor about TTIP, he was optimistic about its influence on the market.

Indeed, CETA talks were a little bit overshadowed by TTIP. Even though if it wasn’t for the Walloon region in Belgium, we would have probably signed it already.

We don’t expect any problems stemming from the CETA deal. Canada is not a major producer of the products that we offer and it exports very little of them to the EU. But CETA trade would be the most liberal deal, at least for our sector, signed by the EU so far, and could set some dangerous precedents. So, on one hand the deal itself wouldn’t have any damaging effects due to Canada not being a major trade partner with us, but some of the deal’s aspects, if replicated in other deals, could be hazardous for Grupa Azoty and the whole highly processed products industry in Poland and the EU. u

The fertilizer segment is very important for your company and is responsible for some 60 percent of all revenues. Yet, because of high crops in many countries, the demand for fertilizers is way down. According to forecasts presented by stockwatch.pl, this will affect Grupa Azoty’s evaluation, which has already dropped by over 30 percent this year. Do you have any contingency plans?

As I’ve said, every business is cyclical. Currently, and in the upcoming months, we will experience a negative impact on the sector.

The oversupply of fertilizers and low demand is one of them. On top of that, agricultural products are priced very low due to oversupply of grains, which in turn means that the demand for fertilizers is also very low. Another

WBJ OBSERVER •

NOVEMBER 2016

27

FEATURE / XXXXX

Invisible barriers on the Polish labor market B Y S E R G I U S Z P R O K U R AT

28

NOVEMBER 2016 • WBJ OBSERVER

FEATURE / LABOR MARKET

Images: Shutterstock

The era of capitalism and even post-industrial economy is gradually becoming history, and a society of knowledge is being formed. More and more depends on the growth in the level of the economy’s innovation and human capital, simply knowledge and skills. Since the future starts today, what still distinguishes the European labor market from the Polish one in this regard?

Work, according to Edmund S. Phelps, the Nobel Prize winner in economics, is the center of human life and is the key element of human identity. The majority of us define our lives through work. We become what we do. A person without a job feels useless, cannot provide for themselves or their family and falls out of their social circle. This is nothing new – human misery is not about a lack of money but a lack of work – as Montesquieu’s philosophy of the Enlightenment-era constituted.

It is still valid today in the sense that work awaits workers. The labor market in Europe is mature but not uniform.

Currently, unemployment both in Europe and Poland is at a low level. In June 2016 the unemployment rate in Poland amounted to 8.8 percent. It’s the lowest figure since 2008. Although Poles, after joining the EU, no longer dream of living in the West, hundreds of thousands of compatriots have taken up a journey to find a better life and the labor market has changed. It is still characterized by a great territorial diversity. We are still witnessing the historical breakdown into Poland A, economically the stronger one and Poland B, the poorer one. The borderlines of this breakdown move from year to year but it is still apparent. In the eastern territories average unemployment is higher than in the whole of Poland and the situation of workers is also worse. After over a decade of membership in the European Union the income gap between Poland and other EU countries is still a relevant fact.

Residents of the country with the highest average income earn €4,000 monthly.

The poorest, including Eastern Europe, receive 20 times less for the same amount of work. At the same time, Poland is one of the busiest countries in the world. The gap between earnings and productivity clearly indicates that work in Poland is undervalued.

Where does this difference come from? In Western countries an employee is not seen as a servant but as a business partner. An employer pays a salary and employees provide a service based on their acquired knowledge and skills.

In Poland, in many places we still deal with “an animal farm culture,” based on the former great farms focused on cereal production, where the landlord maximized his profits at the expense of peasants. This situation has persisted on the labor market, dominated by a mindset in which there is one who rules and the rest who obey the master. This happens in public institutions and in modern enterprises. It is the landlord’s will, his whim and mood that decide the future of the company and its workers. The landlord says authoritatively what should be done and how it should be done. He can shout and blackmail workers with the threat of

firing them. The majority of employees in Poland prefer a manager who does not require them to have their own opinion but instructs precisely what should be done and how it should be done, just like the historical peasant, who was expected to follow commands and be obedient.

In the West, where the labor market is more transparent, employees have a permanent choice – they are accosted by recruiters or headhunters, striving for employees’ competencies. We observe a phenomenon, which was unknown several decades earlier: massive bidding for workers and fighting for those with the greatest potential. We also deal with an increasing role of services and processes focused on acquiring, training and maintaining an employee. “Professional HR Services in Poland are only just appearing,” said Piotr Jabłoński, CEO at Career CV Expert. Processes of recruitment in Poland and in the West vary. Application documents are different in Poland, where the emphasis is put on a long application, rather than the ability to recap the form and content. The lack of regulations on antidiscrimination, or compulsory submittal of address and a photograph is also an inseparable element of the Polish labor market.

Employers want to know as much about employees as possible. Appearance and origin are as important as experience and knowledge. The level of receiving feedback is also lower than in the West. Companies often do not answer applications and do not give thanks to those interested in the

WBJ OBSERVER • NOVEMBER 2016

29

FEATURE / XXXXX

offer. This is due to the personal culture of managers and education in the abovementioned animal farm culture. There is an obvious lack of understanding that the potential candidate may one day become a customer.

Employers looking for new employees in Poland through recruitment announcements skillfully skip over the subject of salary. When opening any service with job offers and going through the first 30 announcements, you are unlikely to come across any salary range. As Jabłoński remarked, when we are already employed, employers oblige use to keep our earnings secret: “Companies’ own internal regulations often follow the policy of nondisclosure of remuneration. It is so for several reasons. Firstly, in Poland there is no culture of talking about money. Poles are ashamed to speak about earnings.

Secondly, this helps employers defend against employee poaching. Thirdly, public confidence among people is low. It is also because Poland was for a long time overwhelmed by a communist regime.

Lack of confidence often makes Poles feel ashamed of speaking about success.

They cannot communicate.” The level of communication between employers and employees in Poland is at a low level. So how can we know how much we should earn when going to a job interview or talking about a pay rise? What is worse, this way of thinking is firmly rooted in corporate culture and no one intends to oppose it.

The important role of internal communication and communication between companies is also mentioned by Julita Dąbrowska, employer branding consultant and CEO of consultancy firm

30

Kalitero, who believes that in Poland emphasis is put on caring about the employer’s image and in the West they build the brand. This is not the same.

Companies operating in Western markets use communication strategies. “The same language should be used when communicating with job candidates as when communicating with existing employees.”

Such an approach to communication and well-organized processes lead to increased job satisfaction and building knowledge and skills of workers, who can dedicate their time to personal development.

This is confirmed by Kamil Sabatowski, SCCD think-tank expert and CEO of praktycy.pl, who claims that the recruitment market in the West is more mature.

“Companies knowingly make use of social media to contact potential job candidates, in order to speak their language, and try to automate all HR processes, including recruitment, which saves time and money.”

“Today’s Western labor market is based on two pillars: automation supported by human creativity,” said Sabatowski. The former allows cost reduction and reducing unnecessary work; the latter triggers pro-innovative behavior, which leads to better products and services.

After the defeat against the Napoleonic Army in the battle of Friedland, Prussian commanders realized that they could not win the war by maintaining terror amongst their people. Napoleon’s soldiers were independent, they were able to make decisions without waiting for orders.

After that defeat the Prussians started to reform their army. Certain repeatability remained, as is the case in the army, however, more freedom contributed to the performance of the whole army.

A mental reform would also be useful in the labor market. For example, Poles living in the eastern-located Poland B could reconsider their mobility. They do not have to be like peasants chained to the land. In Eastern Poland the lack of investments leads to a lack of work, which is due to longstanding market conditions and investment circumstances. And so they emigrate.

Many residents of those regions have left for Western Europe. When they come back, they will bring new cultural patterns.

Since the labor market changes, organizations that co-create it change as well.

A labor market researcher, Charles Handy, predicts that companies of the future will take the form of a three leaf clover. The first leaf will be occupied by professional employees, with a permanent contract, well paid due to their competencies; the second leaf will involve specialists and outsourcing businesses, which perform delegated, routine operations; the third will concern temporary workers, hired for special operations and projects or in order to meet extraordinary demand. However, this change will fail if we still have to face barriers. Paradoxically, it is not about transferring the European or the American model to Polish soil but about introducing elements characteristic for enlightened absolutism. Market processes and management logic can turn the organizational culture towards respect for qualifications and work, activation of pro-innovative attitudes and getting rid of practicing dictatorial, animal farm management. Unfortunately, we have to remember that currently a Polish worker, a bit like a peasant on a farm, has to provide not only for himself and his family, but also for 2.5 million people employed in the budgetary sector and for 7 million pensioners. u

Image: Shutterstock

68%

NOVEMBER 2016 • WBJ OBSERVER

78

events / xxxxxxxxxxxx CO FEATU RM E M/ ELNA TBAORRY M/ A LR EKGE AT L

TO ADVERTISE: TOMASZ PAWLAK, TPAWLAK@WBJ.PL, +48 501 W B791 J O 461 BSERVER

• february 2016 WBJ OBSERVER • NOVEMBER 2016

78

APRIL 2015 • WBJ OBSERVER

WBJ OBSERVER • JUNE 2014

73 31

17

WBJ Observer presents

100 YEARS OF BMW This year, BMW celebrates its centenary. What is, in your opinion, the key success of the company?

Over the last century, BMW Group has brought many innovations and exciting products to the automotive world. But, as we value our past and heritage greatly, BMW has always been a company that looks to the future – and I believe this is our key to success. That is why, in our centenary year, we are presenting four concept vehicles – one for each of our core brands – BMW, MINI, Rolls-Royce and BMW Motorrad. These concept vehicles, which we have named VISION NEXT100, represent our idea of future mobility.

So how will it look according to BMW? Without doubt BMW of the future will stay true to our philosophy: it will be driver-oriented and as great to drive as it is today. And it will be much, much more – the car will be packed with digital intelligence and state-of-the-art technologies, which will make it our assistant in daily life. It will also give the driver the possibility of autonomous driving, if he so decides, for example in heavy traffic. And it will be sustainable. Simply put, it will be a computer on wheels, and at the same time it will make the driver smile, just like every other BMW. You mentioned autonomous driving – there is a lot of hype about this. When do you plan to implement it in BMW vehicles?

We expect to present a market ready solution by about 2021. We’ve joined forces with two other companies – Intel and Mobileye and we want to build an open platform for the next generation of cars to create the safest autonomous solutions. Wouldn’t it be great to have the possibility of being driven by autopilot in city traffic and then grab the wheel on a winding mountain road? Future solutions should make our lives easier, but without taking the joy out of driving.

That is our goal.

32

How many of these technological solutions are pure futuristic ideas, and how many can we see in our cars today?

It’s hard to tell exactly, but our job is to gradually implement the technologies our experts develop at research centers.

And what we know is that our clients love it. Our new 7 series limousine, packed with technologies such as gesture control, laser lights and remote parking, is more popular than any other car in its segment.

their desired location in a fully automated way and it will adapt itself – design included – to the driver’s individual tastes, interests and preferences. At the heart of this concept is fully connected digital intelligence.

You often say that BMW is changing from a car manufacturer to a mobility services provider – what does that mean? Will you stop making cars?

Oh no, of course not! We love making cars, but the automotive industry is becoming much more than just manufacturing and selling cars. At BMW we wish to provide answers and solutions for both mobility and social trends. Let me use the example of the future concept for the MINI brand, presenting a new form of car sharing. The MINI of the future will be available 24/7, able to pick up its driver from

It sounds like science fiction. Are you sure it will work?

Car sharing is already happening! In big cities, with no place to park and highly developed urban infrastructure, young people in particular prefer not to own a car. They just want to use a car, and only pay for the time they need it. In 2011, we launched DriveNow – a carsharing company.

Today we operate in 10 European cities. A couple of weeks ago, we partnered a similar initiative in Poland – 4mobility. I am confident that carsharing will be one of the major solutions for urban mobility.

NOVEMBER 2016 •

WBJ OBSERVER

BROUGHT TO YOU BY BMW

PAUL DE COURTOIS, GENERAL MANAGER BMW GROUP POLSKA

Poland A.M. gives you the biggest Polish stories of the day.

Have the most valuable news delivered to your inbox each weekday morning.

S i g n u p f o r a 2 - w e e k f re e - t r i a l ! w w w. p o l a n d a m . p l

• G e r m a n v e r s i o n : w w w. p o le n a m m o rg e n . p l

IT / BODY LEASING

22nd-23rd November 2016 Westin Warsaw Hotel

Welcome to the world of Smart Data STRATEGIC PARTNERS

PARTNERS

Your Partner in Digital Transformation

Red C 0 M 100 Y 90 K 5

zgloszenia@mmcpolska 34

+48 22 379 29 43

en.bigdatacongress.pl

FEBRUARY 2016 • WBJ OBSERVER

11.22-23 V BIG DATA_Think Big CEE Congress.K0658_reklama drukowana 210x280.indd 1

2016-10-14 16:22:03

22:03

Tech Insights

BIG DATA FLOPS POLISH FIRMS CLAIM TO HAVE BIG PLANS FOR BIG DATA TECHNOLOGIES, BUT SOMEHOW THEY FAIL TO MATERIALIZE, OR ARE DIFFICULT TO MONETIZE LATER ON > 36 TOO MUCH INFORMATION CAN MACHINES COME TO OUR AID IN DEALING WITH THE EVER-GROWING INFORMATION LOAD? > 40 WORST-CASE SCENARIOS FACED WITH NEW AND MORE SOPHISTICATED CYBERATTACKS, POLISH FIRMS NEED TO TIGHTEN THEIR SECURITY. INTERVIEW WITH THE HEAD OF INTEL FOR EMEA > 44

section partner

TECH / BIG DATA

By Beata Socha

UNDERSTANDING IS NOT THE SAME AS KNOWING

WHILE COMPANIES CLAIM THEY WILL SPEND MORE ON BIG DATA SOLUTIONS, FEW ACTUALLY FOLLOW THROUGH WITH THEIR PLANS. EVEN IF THEY DO, MOST FAIL TO MONETIZE THE DATA THEY MANAGE TO COLLECT. MEANWHILE, GLOBAL GIANTS HAVE ALREADY BOARDED THE BIG DATA TRAIN, WHICH IS PICKING UP SPEED, INCREASING THE GAP BETWEEN BIG DATA LEADERS AND LAGGARDS. IS IT REALLY WORTH TRYING TO CATCH UP WITH THEM?

Promises, promises Reports abound about how many companies are planning on investing in Big Data solutions. According to Capgemini’s study of IT firms, 54 percent of them have declared they will significantly increase investment in Big Data over the next three years.

“The leaders in digitization are industries that are the closest to the end consumer – banking, telecommunications and retail. These sectors need to customize their products to reach very different age groups,” said Marek Woźny, managing director of Applica-

36

NOVEMBER 2016 • WBJ OBSERVER

Image: Shutterstock

The amount of data available for analysis is overwhelming. By 2020, it will reach a zettabyte, which equals 1 trillion gigabytes, and the rate at which new data is produced will be 44 times faster than seven years ago. Already, a third of companies cannot handle the information overload, according to a report by the CIMA Institute. As much as 80 percent of high-level managers of multinational corporations have made at least one significant business decision since 2013 that was based on incomplete or false data. “This shows how compromised data flow can determine the future of an organization,” commented Jakub Bejnarowicz, head of CIMA for CEE.

TECH / BIG DATA

tion Services at Capgemini Polska. In a PwC report, as much as 80 percent of company CEOs stated that Big Data analytics is an important part of their firm’s strategy.

Yet, despite all these declarations, the reality appears less spectacular.

According to Gartner, only 13 percent of the international companies that declared their plan to get on board with Big Data actually did it. The picture is similarly disheartening in Poland, where only 18 percent of large companies in Poland use Big Data, which is far fewer than in other Central European countries, like Czechia (33 percent) and Slovakia (31 percent), and below the average for Central and Eastern Europe (25 percent), according to a report by Intel released in 2015.

“We keep hearing that practically every company is using Big Data. However, the declaration and media buzz around Big Data does not correspond to how common the technology is in the business world,” said Piotr Prajsnar, CEO of Cloud Technologies. He added that, “It is evident in Gartner’s study, which stated that even up to 60 percent of Big Data endeavors will fail to materialize. Companies’ declarations will never translate into concrete actions.”

Prajsnar also agreed that the biggest obstacle in turning Big Data theory into Big Data practice is the problem of insufficient competences. “Companies don’t know how to approach the analysis of such vast volumes of information and how to select data that is the most valuable business-wise,” he explained. But even if they knew how to analyze, there is another ingredient missing. Understanding data does not mean you can make money on it.

As much as 58 percent of companies that are already using Big Data have admitted they have encountered problems in monetizing it, according to KPMG’s research. It’s no surprise then that so many CEOs keep asking themselves if it is really worth investing in Big Data. “Many organizations and companies interested in Big Data platform implementation have problems with taking the ‘go’ decision,” admitted

Playing the Big Data game All major IT companies have started playing the Big Data game – there’s more information than ever from a vast array of sources: databases, text files, e-mails, multimedia, IT logs, web logs, social media and machine data from equipment sensors. Traditional analytics focus on historical data, designed against a static data model. This approach is now ending; many companies are aware of the value locked in these data assets but they have no way of actual data mining and running intelligence by combining unstructured data from a variety of sources.

It’s only by using Big Data technologies that users can identify previously unknown correlations and interdependencies. Some IT companies actively support customers facing Big Data challenges, providing either needed know-how, or even complete end-toend, powerful and scalable solutions.

Many organizations and companies interested in Big Data platform implementation have problem with taking the “go” decision, for many reasons (and myths): project complexity, highly expensive (because it’s Big Data), business risk estimation. Simply, Big Data often sounds like a big headache to them. Indeed, many companies run into problems when they choose to carry out Big Data projects with DIY (Do-ItYourself) deployment. However, if a project is based on complete HW/SW/Service solutions, as readyto-run or reference architecture, most of the risks, like high costs and excessive complexity, disappear entirely. Unlike vendors with a “one size fits all” approach, Fujitsu focuses on delivering as much flexibility and customization options as possible so that it can guarantee the best business alignment and rapid switching to production mode.

The economic value of Big Data depends on resilient knowledge and replicable analysis from multiple sources. If you are a business, finance or IT Manager, integrated systems designed for Big Data analytics can really help you digitalize your business very efectively.

Wojciech Wróbel, presales manager, Fujitsu Poland Wojciech Wróbel, presales manager at Fujitsu Poland.

Why is it worth the hassle?

How, after all, can knowing so much about your clients help you expand your business? First of all, it could help personalize internet ads. Despite a growing number of people using ad

blockers, there is still a big market for well-suited, personalized ads. If you don’t believe that, ask Google where the bulk of its revenue comes from.

Personalization is particularly important for retailers operating in niche markets. Reaching their potential customers is much more difficult.

Instead of casting a wide (and costly)

WBJ OBSERVER •

NOVEMBER 2016

37

fishing net, it might be cheaper, and possibly also more effective, to use a well-targeted fishing rod. It is not rocket science that if you sell teddy bears, advertising on parenting portals is more efficient that on sports news websites. The better you identify your target customers, the better chance you have of reaching them.

Granted, you don’t necessarily need Big Data to know where your clients hang out and what they read, and common sense is oftentimes sufficient. However, the biggest edge Big Data can offer is by recognizing patterns where you wouldn’t expect to find them. One well-known example is the effects of weather patterns and lunar cycles on shopping behavior.

Company InsideSales found that deals closed on a new moon are 43 percent higher than during a full moon, The Wall Street Journal reported. Another interesting finding was that there was a correlation between how productive

38

NOVEMBER 2016 • WBJ OBSERVER

an employee was and which internet browser he or she was using to send their job application.

Big Data allows for so-called “clonemodelling,” also called “look-alike modelling.” “Based on the behavioral profile of a company’s best client, which is a set of unique parameters determining his or her behavior and interests, the company can ‘clone’ the profile and search for similar profiles among new users, who are not yet the firm’s clients,” explained Prajsnar.

Amazon is one of the leaders in this area. It has already mastered ultimate profiling and cross-selling techniques. Its data analytics knows that if customer A purchased product X, he will likely also buy products Y and Z, while customer B, sharing several key characteristics with client A is more than likely to choose the same set of goods.

Then, there’s one of the holy grails in FMCG retail – customer loyalty. Say

you are a beauty product retailer. If you want your one-time clients to visit your store again, you will likely add them to your mailing or texting list. Only then you risk that your message will either arrive at the wrong time or will simply be sent too often, thus annoying even the most loyal of customers. However, if you record how frequently your clients purchase your products, you can send them individualized reminders, vouchers and special offers at the exact right time, instead of mass mailings at random times. It seems impossible for a person to keep track of every single client, but it’s relatively simple for a computer program.

According to the Direct Marketing Association, the average return rate on mass mailing is less than 4 percent.

US-based grocery retail chain Kroger managed to push that number to 70 percent thanks to personalizing its direct mailing system, according to informationweek.com.

Images: Shutterstock

TECH / BIG DATA

TECH / BIG DATA

Car rental company Avis has another success story of data analytics: by determining the value of each customer and segmenting them based on their rental history, service issues, demographics, corporate affiliation and feedback, they have managed to increase customer loyalty and make hundreds of millions of dollars in additional revenue.

Big money Those who have succeeded in mastering Big Data analytics are likely to have an increasing edge over those who are still struggling with it. According to Forrester, the revenue of data-driven businesses will grow at 27-40 percent annually, which is ten times faster than the growth rate of the global economy.

This forecast is supported by the findings of the Computing Technology Industry Association, which reported that 72 percent of managers in IT companies claim Big Data and cloud computing have met, or even exceeded their expectations. “Meanwhile, three out of four IT experts believe their business would develop faster if they could utilize the full potential of the data they have,” said Prajsnar. PwC’s research also indicates that Big Data is an effective cost-reduction tool. Data storage costs in companies that have implemented Big Data technologies have decreased by 38 percent. Meanwhile, Capgemini reported that six out of 10 firms that have decided to test Big Data analytics admit it has become their main revenue generator.

Figures such as these are what encourage companies, including in Poland, to dip their toes in the Big Data ocean. For now, Polish firms seem to have mastered the art of gathering information. What they still need is to turn data points into real, valuable insights you can act upon. “While Polish firms are very good at collecting data, finding the right interpretation of the information to make business decisions still poses a great challenge,” said Kinga Piecuch, CEO of SAP Polska. Hopefully, they will learn how before the Big Data train leaves the station. u

WBJ OBSERVER • NOVEMBER 2016

39

TECH / INFORMATION OVERLOAD

By Dominika Tkaczyk

OVERWHELMED

BY INFORMATION

Crucial for our very existence, information processing plays a significant part in our everyday lives. Each second, huge amounts of information of a varying nature are exchanged in order to spread ideas and propagate knowledge, improve our quality of life,

40

NOVEMBER 2016 • WBJ OBSERVER

warn about danger, and serve many other purposes. Good quality information, used at the right moment, and in the right way can make all the difference – both in our personal and professional lives.

Some of the greatest achievements

and inventions grew out of the need to facilitate the process of information dissemination. The emergence of spoken language allowed for fast communication, including exchanging abstract ideas. The invention of writing made it possible to spread

Images: Shutterstock

IN MARCH OF 2016, THE NUMBER OF WEB PAGES REACHED 1 BILLION. THE GROWTH RATE OF THE AMOUNT OF SURROUNDING KNOWLEDGE CONTINUES TO OUTPACE ALL PAST PROJECTIONS. YET THE RATE AT WHICH WE ABSORB INFORMATION HAS NOT CHANGED. CAN MACHINES HELP US WITH THIS INFORMATION OVERLOAD?

TECH / INFORMATION OVERLOAD

information between people who never met in person, or didn’t even live at the same time. In turn, printing enabled easy reproduction of written text on a massive scale.

Each of these breakthroughs took information exchange to the next level by overcoming certain natural limitations, in turn greatly affecting the volume of available information. For example, before the invention of the printing press, the number of copies of a book was naturally limited by the time needed to manually rewrite it.

However, all these leaps in volume pale in comparison to the results of the digital revolution we have witnessed within the last few decades.

Among other changes in almost every aspect of our lives, the digital revolution resulted in a major shift in the way information is exchanged. A large portion of communication has moved to electronic media, making it much easier to produce and store all kinds of content. Today, we can easily use a small device to carry thousands of electronic books everywhere, we have access to digital libraries with documents on every possible topic without even having to go out, and publishing new information is as easy as a mouse click. All this has resulted in yet another major increase in the volume of available information, on a scale never before observed, or even imagined.

Curse of abundance According to Google’s estimates, nearly 130 million books have been published in all of modern history, with over 2 million new titles published every year. The number of existing web pages is estimated to have reached 1 billion in March of 2016, which is three times as many as five years ago, and 13 times as many as 10 years ago, according to InternetLiveStats.com. Over 220 million new pages appeared within the past year alone. A printed copy of the entire internet would use roughly 136 billion sheets of paper, which would require 16 million trees to be

cut down, according to an estimation made by George Harwood and Evangeline Walker, students at the University of Leicester in the UK. Stacked one on top another, the column of paper would be over 13 km high. Every day, internet users publish four million blog posts and 600 million tweets.

At the same time, our information consuming abilities have not changed much, thus becoming a significant bottleneck in the information dissemination process. It still takes us roughly the same time to read and understand a book, a story, or even a

THE BEST PLACE TO HIDE A DEAD BODY IS ON PAGE TWO OF GOOGLE SEARCH RESULTS. short note, and the time needed is far too long in comparison to the growth rate of the information surrounding us.

For example, we would have to be able to read 46 blog posts per second to keep up with all the data being produced. And reducing the information only to topics we find interesting is not good enough anymore. A search for “global warming,” for instance, results in over 54 million documents (this includes web pages, images, books, videos and other document types). Even if we were able to understand a single document in one second, we would need 20 months of nonstop work to read and watch everything. And what about other interesting topics? Life suddenly seems extremely short.

Computers to the rescue In cases of scale-related emergencies we typically turn to machines for help, and the problem of information overload is no exception. Luckily, we have already invented sophisticated algorithms for assisting people in consuming information. How can this

be done? The top two approaches are information retrieval and information extraction.

In general, information retrieval aims at limiting the number of documents a person needs to read by intelligent filtering, and as such is the very task solved by modern search engines.

The idea is as simple as employing machines to select relevant documents from a large document collection in response to a free text query entered by the search engine user, in other words – googling. Ideally, the query is an exact specification of the user’s information need and selected documents indeed contain the relevant answer.

Unfortunately, the filtering model is not sufficient anymore, as often the number of relevant documents is still too high to be useful for a human. The key functionality that search engines provide nowadays is in fact sorting the selected documents by their levels of relevance so that the most relevant documents are presented at the top of the resulting list. The sorting is typically based on the content of the documents (a document containing a large number of the input query words will be more relevant), the network of links between the web pages (a web page with a lot of incoming links is more likely to be relevant), and also user’s personal preference, which especially helps when the query is ambiguous: is a user who typed “python” into a search engine interested in zoology, buying a new pet, or learning a programming language?

Sorting the results allows the users to focus on a small number of the most relevant documents. The quality of relevance-based sorting can be indirectly assessed by examining a search engine’s click-through statistics, which show how often the documents at various positions in the result list are clicked. In Google’s search engine, about one-third of all the clicks are on the first search result, and 92 percent of them are related to the first 10 results, or the

WBJ OBSERVER •

NOVEMBER 2016

41

TECH / INFORMATION OVERLOAD

Less is more Information retrieval aims at limiting the fraction of the collection presented to the user, while keeping the documents themselves intact.

Extraction techniques adopt a different approach, trying to downsize the information volume by manipulating the content of the documents.

One example of this approach is automatic summarization, which selects a subset of sentences and phrases that captures the essence of the original text precisely, while keeping the selected set small. This is done by examining various aspects of the sentences, such as: their position in the document (first and last few sentences of the document might be more important than others), their length (simple sentences are usually preferred over complex ones), the presence of key words related to the main topic, or specific phrases (such as “this document describes”).

Such a short, automatically compiled summary is usually not enough to understand every aspect of the document, but lets the user quickly decide whether the document is worth further examination, thus saving time spent on reading useless or irrelevant content.

Automatic summarization techniques can also be observed in action in Google’s search engine. When a user searches for a certain topic, intelligent algorithms extract a short fragment from one particular source and this summary is presented above the result list. In some cases, the user does not even need to click on any specific web page to obtain the information they seek.

Other examples of automatic information extraction techniques include answering the questions posed by people in natural language, sentiment analysis (aimed at detecting subjective traits in the text in order

42

NOVEMBER 2016 • WBJ OBSERVER

to determine the writer’s opinion about something) and extraction of the mention of specific facts from the text written in natural language (such as “Bill Gates founded Microsoft,” or “Microsoft is based in Redmond”).

Do you speak binary?

Unfortunately, all these tasks are based on reverse engineering principles and require computers to have some level of understanding of human languages. In practice, despite the decades of intensive research, natural language processing still poses a major challenge for automatic algorithms.

Natural languages, as developed by people and for people, are contextdependent, full of ambiguities and lack rigorous mathematical structure or foundations. Understanding subtle information like sarcasm or subjective opinions is a long way out of a machine’s comfort zone. As a result, the effects of automatic processing of documents written in natural language are not always satisfactory.

Is there another possibility? Instead of focusing on the consumer part, a

136 billion SHEETS OF PAPER WOULD BE NECESSARY TO PRINT THE ENTIRE CONTENT OF THE INTERNET. completely different approach might be a global change in the way the information is produced and shared.

Right now, the vast majority of the information produced uses formats intended for humans, usually free text documents. But since we already produce far too much information to consume directly without the assistance of machines, maybe the information should be exchanged in a machinereadable form, allowing computers to efficiently and more accurately help users fulfill their information needs?

A simple idea is switching from

exchanging unstructured information to machine-readable formats starting from the very beginning of a document’s life, when the meaning of various information pieces can be provided directly by the document’s author.

For example, all the following sentences: “Johannes Gutenberg developed the first printing press in 1450,” “The first printing press was made by Johannes Gutenberg in 1450,” “What do we know about the life of Johann Gutenberg, the inventor of the printing press?” could be represented by a machine-readable tuple (data structure): “<relation:invent, inventor:Johannes Gutenberg, invention:printing press,

Images: Shutterstock

first result page. The second result page rarely gets the user’s attention.

As one popular meme says: “The best place to hide a dead body is on page two of Google search results.”

TECH / INFORMATION OVERLOAD

UNDERSTANDING SUBTLE INFORMATION LIKE SARCASM OR SUBJECTIVE OPINIONS IS A LONG WAY OUT OF A MACHINE’S COMFORT ZONE.

time:1450>,” without much loss.

The information in this form can be directly used by a computer to answer the question “Who invented the printing press?”

Some areas of activity are already structured in a machine-friendly manner. When you place an advert to sublet your apartment, you don’t generally type in a colorful description in a free text format. Instead, you usually fill out the form with data such as price, location, storey, furniture, year the building was built etc. Otherwise, a system (or a person) would have to dig this data out of the text, which is not always easy.

#semanticweb Ideally, if internet resources were impeccably structured, your Google searches would yield an executive summary rather than a collection of more or less useful links. For instance: if you typed in “homeopathy” you could get: first, a brief summary with a definition of the term; second, a table summarizing the results of all scientific studies ever carried out, complete with dates, sample sizes and an estimation of their credibility; then, the most relevant press releases both supporting and rejecting homeopathy, and finally, some social media output as the voice of the “regular people.”

The idea of disseminating information with directly specified structure and semantics is not new. The concept of the so-called Semantic Network Model, allowing the representation of semantically structured knowledge, was formed in the early 1960s.

Tim Berners-Lee, the director of the World Wide Web Consortium, coined the term “Semantic Web,” which refers to enriching the network of web pages with machine-readable metadata about the pages and how they are related to each other. BernersLee defines the Semantic Web as “a web of data that can be processed directly and indirectly by machines.”

Switching from human-readable to machine-friendly representations for exchanging information is currently our best shot at curing the world’s information overload problem. We are already doing it in many cases. When searching for information, people usually type in keywords rather than full sentences, whereas employing hashtags is an attempt at grouping and structuring social media content.

Should we be afraid that machinereadable formats will entirely replace free text forms, effectively wiping out natural language? As long as people enjoy reading a good novel on a cold winter evening, natural languages should be safe. Even though “the times they are a-changin’,” a machine-readable version of Bob Dylan’s timeless classic would still sound ridiculous at a concert. u

WBJ OBSERVER • NOVEMBER 2016

43

TECH / INTERVIEW

SECURITY – A BUSINESS PROBLEM I N T E R V I E W B Y B E ATA S O C H A

DDOS, SPEAR PHISHING, RANSOMWARE, BIOMETRICS – THESE WORDS STILL BAFFLE MOST MANAGERS AND CEOS. AND YET, THEY HAVE AN INCREASINGLY SIGNIFICANT IMPACT ON THEIR DAY-TO-DAY ACTIVITIES. WITH OVER A QUARTER OF POLISH COMPANIES HAVING BEEN THE TARGET OF CYBERATTACKS OVER THE PAST SIX MONTHS, WBJ OBSERVER ASKED RICHARD CURRAN, SECURITY OFFICER EMEA AT INTEL, IF BUSINESS LEADERS IN POLAND ARE READY TO TAKE THE NEXT STEP TO ENSURE THEIR COMPANY’S SECURITY

Which kind of attacks are the most costly for an enterprise?

It is difficult to say which security

44

NOVEMBER 2016 •

WBJ OBSERVER

threats are the most costly as most companies do not report the direct and indirect costs associated. One might interpret this as an indication that they don’t really know the true cost of the breaches.

We’ve all heard of DDoS attacks in the US and in Western European countries. How frequent are DDoS attacks in Poland?

DDoS (distributed denial of service)

“THE FIRST MISTAKE IS THINKING THAT SECURITY IS A TECHNOLOGICAL PROBLEM. attacks are very frequent. Some only cause limited damage and some are very serious. As an example, in May 2016 some Polish banks were attacked by hackers who were looking to receive a ransom.

What can a company do if it becomes a target of a DDoS attack?

There are a number of types of DDoS attacks and they are becoming more sophisticated. Companies can use products from several vendors including Intel Security, but one also needs to ensure that the infrastructure can cope.

A lot depends on how your DNS servers are designed in your network.

What are the most common mistakes people make that can expose their firms to cybersecurity threats?

The first mistake is thinking that security is a technological problem. It’s a business problem. The second most common mistake is not having a security culture with regards to the governance of data protection and having passwords

Images: Intel, Shutterstock

WBJ Observer: According to your latest report, 40 percent of companies in Poland have no emergency protocols in case of a cybersecurity breach. How frequent are cyberattacks in Poland?

What are the most typical security threats that companies encounter?

Richard Curran: According to the research commissioned by Intel and conducted by Ipsos, 27 percent of Polish companies admit to having had a security incident in the last six months, with some having experienced more than three such events.

In another recent report from PWC conducted this year their results showed that employees’ imprudence and procedural disobedience (70 percent), anonymous attacks (67 percent) and organized crime groups (41 percent) were the most common causes of cyberattacks. What they also reported was that cyberattacks in Poland grew by 47 percent from 2014 to 2015.

TECH / INTERVIEW

as the only authentication method.

According to our research conducted in Poland, 62 percent of companies still use only one technique for user authentication. Another common mistake is not having up-to-date infrastructure and solutions. It leaves companies highly vulnerable and exposed to malware and breaches.

There are two new types of attack that are on the rise: hardware attacks and so-called ransomware. Which industries do hackers target with such techniques?

Ransomware is growing at a rate of over 150 percent per annum. It will become more serious as we move into a more interconnected Internet of Things world.

Hackers attack all businesses and institutions, from government, to SMEs and SMBs. SMBs and SMEs are highly vulnerable, as they do not report the attacks, do not have the right investment and knowledge and usually pay the “ransom” due to their lack of backup and recovery plan.

What exactly do these attacks entail?

Hackers use the Spear Phishing method. Multi factor authentication would reduce this along with a more security minded culture – do not open the attachment unless you know it is safe!

Once hackers inject the malware, they can lock the company’s business until a fee is paid, usually in Bitcoins.

Your report says that half of Polish firms are planning on increasing their spending on security. Do you think that will yield tangible results, or is it just something that companies say to appear more security-conscious?

47%

IS BY HOW MUCH THE NUMBER OF REPORTED CYBERATTACKS IN POLAND GREW BETWEEN 2014 AND 2015, ACCORDING TO PWC.

27%

OF POLISH FIRMS ADMIT TO HAVING HAD A SECURITY INCIDENT OVER THE PAST SIX MONTHS.

40%

OF POLISH COMPANIES HAVE NO EMERGENCY PROTOCOL IN CASE OF A CYBERATTACK.

50%

OF LARGE COMPANIES IN POLAND ARE PLANNING TO INCREASE THEIR SPENDING ON CYBERSECURITY WITHIN THE NEXT TWO YEARS.

Our report shows that the decision makers are aware that security is not an area where a company can afford to make savings. Every second company in Poland intends to increase its IT security expenditure within the next two years. In my opinion it is good to see this investment growing because it shows that Polish customers are beginning to take it seriously. However, investment alone is not going to fix the problem.

It requires other imperative steps with a threat assessment included in their governance procedures.

The report also stated that 55 percent of Polish IT managers consider biometrics as the most secure method for data protection. How many do you think actually use biometrics?

Probably very few. One has to remember that some are nervous about using biometrics as they believe that your data is stored somewhere and could be compromised. This is not how it works, as it is a point reference capability that is encrypted. We all have identity numbers – in banking etc. By using various biometric authentication solutions, the authentication of the user will be enhanced. One other reason is that in the past biometrics were difficult to implement, now they are much easier and cheaper to use.

Do you think the actual state of cybersecurity in Polish firms will improve in the next few years?

Yes, I believe so, and with our and your support in creating more awareness in business and consumers, and with the resilience of Polish customers to succeed, I believe they will embrace change and use it as a competitive advantage. u

WBJ OBSERVER •

NOVEMBER 2016

45

LOKALE IMMOBILIA / ON INFORMATION TECHNOLOGY

46

NOVEMBER 2016 â&#x20AC;¢ WBJ OBSERVER

210x280 Fintech dla Observer V1 KRZYWE.indd 1

2016-10-14 15:41:22

November 2016

20 pages of real estate content

THE SUNDAY DISPUTE TRADE UNIONS ARE PUSHING FOR A SUNDAY TRADING BAN. CAN THE POLISH MARKET HANDLE IT, ESPECIALLY WHEN COUPLED WITH AN EXTRA LEVY ON RETAIL?> 56 REVAMP AND EXPAND DESPITE LOW VACANCIES, DEVELOPERS OPT FOR REFURBISHING SHOPPING MALLS RATHER THAN BUILDING NEW ONES > 62 TO TAX OR NOT TO TAX AFTER SUSPENDING A PROGRESSIVE TAX ON RETAIL, THE GOVERNMENT IS MULLING OVER A RETURN TO THE IDEA OF TAXING FLOOR SPACE. INTERVIEW WITH THE HEAD OF THE POLISH COUNCIL OF SHOPPING CENTRES > 60

15:41:22

LOKALE IMMOBILIA / NEWS

>LOKALE IMMOBILIA

NEWS

NICKLAS LINDBERG, CEO OF ECHO INVESTMENT AND HADLEY DEAN, CEO OF EPP

l INVESTMENTS

E

cho Investment has signed a preliminary agreement to sell seven office buildings to Echo Polska Properties, totaling almost 112,000 sqm of GLA for nearly €264 million, the companies announced at the Expo Real trade fair in early October.

The properties being sold are: O3 Business Campus in Kraków (phase I, II, and III), Tryton Business House in Gdańsk, A4 Business Park in Katowice (phase III), and Symetris Business Park in Łódź (phase I and II).

“We sold off seven buildings to EPP: three in Kraków, two in Łódź, one in Gdańsk and one in Katowice. It is important for tenants that when we sell, we sell to someone who is going to take care of the product. The outsourcing industry is the main tenant in regional cities and it is not going to change. With Brexit, more and more advanced services will be moved to Poland,” said Nicklas Lindberg, CEO of Echo Investment.

The transactions are part of EPP

48

NOVEMBER 2016 • WBJ OBSERVER

executing its right of first offer (ROFO) to purchase 10 properties developed by Echo Investment.

Tryton, O3 phase I, A4 Business Park III, and Symetris I are ready; completion of O3 phase II and Symetris II is planned for the end of 2016; and the last of the sold buildings – O3 phase III – will be ready in 2017.

“Demand for office space in regional markets is huge. We have projects under development in Wrocław, all of them are almost fully leased. In Łódź we have two buildings ongoing, both will be fully leased by the time they are delivered. Łódź is still a shallow market, but an interesting one. It’s still not among the top tier markets, like Wrocław and Gdańsk, but it’s moving up,” Lindberg added.

Apart from the office deals, the two companies have jointly purchased a 6.5-hectare land plot from Griffin Real Estate at ul. Towarowa 22 in Warsaw, west of the city’s CBD. The companies are planning to develop 100,000 sqm of retail space on the property.

“First, there’s going to be a public square, secondly, a leisure section offering some 20 restaurants. We’re also recreating a high street that used to be there but which hasn’t existed since World War II,” said Hadley Dean, CEO of EPP. The buyers will pay a total of €120 million, €78 million of which will be paid immediately after signing the contract. Echo Investment and EPP will create a joint venture in which EPP will hold a 70 percent share and Echo Investment the remaining 30 percent. Echo Investment will also be the developer of the project that will be built on the property, while a subsidiary of EPP will manage the project. The contract requires approval from the Polish anti-monopoly watchdog UOKiK. Towarowa 22 is a property consisting of several dozen plots consolidated into five independent transactions, which now constitutes the largest piece of land undergoing commercial development in the center of Warsaw. u

Images: Echo Investment, Griffin Real Estate

Echo Investment and Echo Polska Properties unveil big deals

LOKALE IMMOBILIA / NEWS

l INVESTMENTS

l R E TA I L

FM submits draft bill on Polish REITs

Retail market slows down in Q3 2016 – Colliers

The Ministry of Finance has submitted a draft bill on Polish Real Estate Investment Trusts. The legal form of such companies will be called Spółka Rynku Wynajmu Nieruchomości (SRWN).

SRWNs will have to meet several conditions: their share capital will have to exceed PLN 60 million, with real estate constituting at least 70 percent of their assets and leasing activity or real estate sales making up at least 70 percent of their net revenue. Dividend payouts will have to constitute at least 90 percent of the company’s profit in each fiscal year. SRWNs will have to have at least three properties on their balance sheet, none of which can be residential. u

No new retail schemes of more than 5,000 sqm have been delivered to the market in Q3 this year, compared to 103,300 sqm last year.

At the end of Q3 2016, there was around 640,000 sqm of retail space under construction, with completion planned up to the end of 2017, according to a report by Colliers International summarizing the Polish retail market in Q3 this year.

Colliers also reported that the number of new brand debuts was limited, while several retail chains have disappeared from the Polish market, including the Tallinder fashion brand and US gastronomy operator Dairy Queen. u

Q22

l OFFICE

Q22 opens

HALA KOSZYKI

l R E TA I L

Echo Hala Koszyki in Warsaw completed Griffin Real Estate has finished the revitalization of Hala Koszyki and officially opened the retail scheme. Built in 1906-1908, Hala Koszyki was used as city market. Now it houses 18 restaurants, 11 grocery stores, a pharmacy, a book store and a home decoration store.

JEMS Architekci architectural studio was responsible for designing the scheme, interior design was carried out by Medusa Group, while Erbud was the general contractor of the project. u

Warsaw’s newest high-rise office tower Q22 opened in mid-October.

The building consists of nearly 10,000 metric tons of iron and 34,000 cubic meters of concrete, and has a glass surface four times larger than Pilsudski Square.

“In July, we received an occupancy permit, having successfully completed the probationary period of all installations and equipment in the building. Now we can celebrate the success of this project,” said Rafał Mazurczak, member of the board of Echo Investment, the developer of Q22.

Q22 has 38 floors of offices, is 155 meters tall, and has a GLA of 53,000 sqm. It will house the headquarters of Deloitte, Allegro, and several major law firms and R&D centers, among other tenants. Q22 is Echo Investment’s most spectacular project thus far in Warsaw. u

WBJ OBSERVER •

NOVEMBER 2016

49

LOKALE IMMOBILIA / NEWS

l H O S P I TA L I T Y

l OFFICE

OVO Wrocław delivered

Strong demand for office space in Warsaw, stock exceeds 5 mln sqm – JLL

A new 189-room Double Tree by Hilton hotel has officially opened in the OVO Wrocław mixed-use project, located near the Old Town area of Wrocław. Hilton Worldwide has announced it will open nine new hotels across Poland, adding to the 14 hotels it already operates in the country (including four under the Double Tree by Hilton brand).

“Poland’s overall development over the past few years is impressive.

The market has great potential. First, we are interested in the largest metropolises, however many smaller cities are also excellent locations for our hotel brands,” said Jochem-Jan Sleiffer, vice president of Hilton Worldwide for Northern, Central and Eastern Europe.

The investors behind the project are: Asaf Gottesman, concept architect of the project; Shuckie Ovadiah, CEO of OVO Wrocław; Ron Ben Shahar, partner at Angel Poland Group, as well as Hoche Partners. u

l RESIDENTIAL

Apartment sales grow 10.3% in Q3 Sales of apartments by residential developers listed on the WSE grew 10.3 percent in Q3 of 2016, from 4,110 to 4,533 units. The top three developers in this category each sold over 700 apartments.

Murapol tops the list with 744 units, up 14.3 percent y/y, followed by Robyg with 736 units, up 15.4 percent y/y, and Dom Development with 705 units, up 10.2 percent y/y.

Total apartment sales by WSE-listed developers in Q1-Q3 of this year stood at 13,610 units, a y/y rise of 15.3 percent. u

50

NOVEMBER 2016 •

WBJ OBSERVER

Between Q1 and Q3 2016, 531,000 sqm of office space was leased in Warsaw, 182,500 sqm of which was leased in the capital’s central districts, according to a report by consultancy JLL. “Almost 243,000 sqm of the office space leased in Q1-Q3 was down to new deals in existing buildings, with a further 73,200 sqm generated by pre-lets,” the report read.

“The positive market sentiment is likely to continue to the end of 2016 and into 2017.

Recently, global brands such as Credit Suisse, DLA Piper and William Demant have decided to either start their operations in Warsaw or expand their footprint in the city,” said Anna Młyniec, head of Office Agency and Tenant Representation at JLL. The delivery of HB Reavis’ West Station I in Q3 put the entire Warsaw office stock over the 5 million sqm threshold. There is currently 550,000 sqm of office space in the pipeline in Poland’s capital, with Sienna Towers (Ghelmco Poland), Business Garden III-VII (Vastint), West Station II (HB Reavis) and D48 (Penta Investments) among the largest projects under construction. The city’s central districts account for 40 percent of the space under development.

The limited new supply in Q3 against the strong demand has pushed the vacancy rate down, from 15.4 percent to 14.6 percent as of the end of September. u

Images: Angel Poland Group, Unimor Development

OVO WROCŁAW

LOKALE IMMOBILIA / NEWS

l OFFICE

Zefir in Gdańsk delivered

D

l WAREHOUSE

Warehouse stock nearing 11 mln sqm – Colliers According to real estate consultancy Colliers, the amount of modern warehouse stock in Poland has reached nearly 11 million sqm, after 350,000 sqm were delivered in Q3.

In the same period, some 930,000 sqm were leased.

The region with the most new warehouse space was Silesia (86,000 sqm), Warsaw (74,000 sqm), Poznań and Kraków (47,000 sqm and 46,000 sqm respectively). Demand has also gone up. The amount of leased space has increased by 35 percent (q/q), including 224,000 sqm in Silesia and 160,000 sqm in Szczecin.

The vacancy rate stood at 5.7 percent with some 625,000 sqm of space still waiting for tenants. u

eveloper Unimor Development has delivered the Zefir building, a 5,000sqm class-B+ office project. The new office scjeme is currently 65-percent leased, with a company called GACA system as the main tenant (1,700 sqm leased).

The project is the first stage of the Pommerania Office Park, which will ultimately comprise 17,000 sqm of GLA within the refurbished former Unimor electronic goods manufacturing complex.

The investment is located on ul. Żabi Kruk, close to Gdańsk’s Old Town area. “We are hard at work preparing for the second phase of the Pomerania Office Park complex – the Anatol office building,” said Krzysztof Paul, CEO of Unimor Development. u

29 NOVEMBER

THE GREATEST EVENT The final show of Home Zone Project is one of the biggest and main priority event in building, renovation and arrangement trade in Poland. For our ceremony comes three hundred participants including presidents, managers of greatest trade company, celebrities, medias patron, representant of jury, government and public institucion.

This year our event take place in 29 november 2016 in palace of culture and science in Warsaw. Whole ceremony will be transmitted live.

WWW.HOMEZONE.PL

WBJ OBSERVER •

NOVEMBER 2016

51

LOKALE IMMOBILIA / NEWS

l OFFICE

Polnord plans to sell two office buildings in Wilanów by mid-2017 Polnord is expecting to find investors for two buildings in its Wilanów Office Park complex by the end of Q2 2017, company president Dariusz Krawczyk informed.

“After the termination of the lease contract in Q2 with Pol-Aqua for the B1 office building, we began the process of leasing out the building. At the same time, I’d like to point out that building B3 is almost entirely leased out. We expect to find tenants in Q1 of 2017, and by the end of the second quarter, to find an investor for the two buildings,” Krawczyk explained.

Building B1 of Wilanów Office Park offers over 7,100 sqm of space, while Building B3 nearly 9,200 sqm.

Based on Polnord’s strategy, which was announced in March, sales of real estate should bring the company a total of PLN 239 million by 2019, of which PLN 168 million will be in 2016-2017. The funds earned from these sales will help the company reduce its debts. u

l R E TA I L

Over 6,000 new apartments to be built under Mieszkanie Plus program BGK Nieruchomości, which is implementing the Mieszkanie Plus pilot program, has signed 17 letters of intent and agreements with local governments. On this basis, the company has acquired property on which 6,000 apartments may soon be built, BGK Properties announced.

Properties for investment activities were identified in Biała Podlaska, Chorzów, Dębica, Gliwice, Katowice, Kobyłka, Nowa Dęba, Pelplin, Poznań, Radom, Skawina, Stalowa Wola, Starogard Gdański, Trzebinia, Tychy, Wałbrzych, and Września.

At the end of September, the Council of Ministers adopted a resolution concerning Mieszkanie Plus. The government plans for the number of apartments per 1,000 inhabitants to reach the EU average of 435, compared to the current average in Poland, which is 363. u

52

NOVEMBER 2016 • WBJ OBSERVER

Posnania shopping mall opens with 100,000 sqm of retail space The Posnania shopping center, a PLN 1.2 billion investment, was opened in Poznań on October 19. Its construction lasted 28 months.

The mall’s 100,000 sqm of retail space consists of 40 large and mediumsized stores, 220 smaller units, and 40 restaurants, representing 300 local, national, and international brands.

Tenants include Carrefour, Sphinx, Leroy Merlin, Vistula, Adidas, iSpot, Starbucks, and Helios cinema.

“Posnania has an Interim BREEAM certificate with an assessment of ‘very good,’ indicating the center’s energy efficiency and cares for the environment. The construction was accompanied by modernization of the surrounding streets. The cost of investment in road infrastructure and undeveloped land reached over PLN 100 million,” shopping center management stated in a press release. u

Images: Apsys Group, Shutterstock

l RESIDENTIAL

LOKALE IMMOBILIA / NEWS

BRANDED MEDIA

Rynek Branded Media

MEDIA BRANDS

Custom Publishing Aktivist Branded Content Gaga Social Media Warsaw Business Journal Group PR & e-PR Warsaw Insider Strategia Digital Eventy Kreacja 360

Media Brands

BJ OBSERVER • NOVEMBER 2016 Valkea Media S.A. ul. Elbląska 15/17, 01-747 Warszawa, tel: 22W257 75 00, www.valkea.com

53

L O K A L E I M M O B I L I A / INNETWESR V I E W

THE NEW CBD WBJ Observer talked with Hadley Dean, CEO of Echo Polska Properties about EPP’s recent purchase of a 6.5-hectare plot in Warsaw’s city center and its plans to deliver 100,000 sqm of retail space there, as well as the Warsaw retail market and what impact the planned Sunday trading ban could have on it

What’s the catchment area?

It’s practically the entire city. The medium-term is the west of the city, and the more local catchment area is the offices and residential buildings located nearby.

Are you going to cut into Złote Tarasy’s catchment area?

Yes and no. Złote Tarasy has extremely high footfall figures, partly because there’s a train station located there. But if you are on the west side of Al. Jana Pawła II, there is no way to cross the street between Rondo ONZ and the roundabout next to the Marriott hotel.

It’s sort of a natural barrier between Złote Tarasy and the western part of the city. It will be easier for people living west of Al. Jana Pawła to go to Towarowa.

54

NOVEMBER 2016 •

WBJ OBSERVER

Will the market be able to absorb so much new space?

Absolutely. Warsaw is definitely underserved when it comes to retail. The city could easily accommodate another three shopping centers right now. In five years’ time there could be room for a fourth one, because spending power keeps going up. That’s also why we are building Towarowa. Retailers want to have another choice. If you are an established retail chain, like Zara, and you want to open another flagship store, or you’re a new entrant and you want to launch your first flagship, there isn’t a better place. Złote Tarasy and Arkadia are full. What we’re doing is creating a new flagship store area where you’ll probably have six 4,000-5,000-sqm stores.

Besides, there hasn’t been a major development since 2007. The vacancy rate is less than 3 percent. Only a couple of shopping malls have changed hands since then and the reason for that is simple: if you have a shopping center in Warsaw, you hold on to it. You don’t sell it.

“THERE WILL BE MORE THAN 100,000 PEOPLE WORKING DURING THE DAY IN THAT AREA..

The site of Towarowa is located on the CBD fringe. Do you think the area will be considered CBD core in the future, given the scale of development happening there?

Yes, absolutely. There’s currently over 300,000 sqm of office space in the district and with the amount of development happening in that area – between Ghelamco, Skanska, and Karimpol,

we’re forecasting that there’s going to be around 1 million sqm of modern office stock there by the time we’ve developed Towarowa. There will be more than 100,000 people working during the day in that area. More importantly, 85,000 residents will be living there as well.

The whole of the CBD has been picked up and moved one kilometer west. I believe Wola will become the new CBD. Will a ban on Sunday retail hit shopping centers, or will Poles change their retail habits and shop more during the week?

What we saw in Hungary after the ban on Sunday trading was that shopping centers took a short-term hit.

But people changed their habits very quickly. Instead of going shopping on Sunday, they went on Saturday or during the week. Ironically, turnovers in city center stores were actually higher than they had been before the ban. But what actually got hit was the destination centers in the suburbs. People decided it wasn’t worth it to travel an hour or so to visit stores. Instead they started shopping more in the city center. u

Image: EPP

WBJ Observer: EPP has just purchased a plot on ul. Towarowa designated for retail development. What are your plans for this area?

Hadley Dean: It’s going to be one of the most exciting city center developments in any European city in the next five years. How often do you get a 6.5-hectare site in the middle of the CBD? We’re going to deliver 110,000 sqm of retail space combining four elements. First, there’s going to be a public square, secondly, a leisure section offering a variety of restaurants. We’re creating a destination where people will spend their entire day. We’re also recreating a high street that used to be there but hasn’t existed since World War II. The high street will be roofed, which is the optimal solution for the climate in Poland. Finally, we’re going to have flagship retail outlets: less product, more show. It’s going to be more of an experience.

LOKALE IMMOBILIA / NEWS

The definitive guide on how to invest in Poland

u Up u u

to date information on Poland’s voiviodships, biggest cities, their investment potential, special economic zones and technology parks Trendbook section describing the trends shaping the Polish business landscape Created by Warsaw Business Journal’s editorial team Available soon WBJ OBSERVER •

NOVEMBER 2016

55

RETAIL / SUNDAY TRADING

56

NOVEMBER 2016 â&#x20AC;¢ WBJ OBSERVER

RETAIL / SUNDAY TRADING

Polish Sunday dilemma B Y K A R O L I N A PA P R O S

In September the Polish trade union “Solidarity” submitted a draft bill to the Polish Parliament to ban trading on Sunday and impose restrictions on trading on Christmas Eve and Easter Saturday. All of this in the name of improving the quality of life for families employed in the retail sector, as well as those who spend those particular days of the week shopping.

Is this ban really so beneficial?

C

onsumption is the main pillar of Polish economic growth and “Solidarity” seems to target it, reported portal France24. “Hypermarket employees are poorly paid, over-worked, and their family life suffers as a result,” said “Solidarity” official Alfred Bujara, and added: “In Poland, capitalism and consumerism have gotten out of control.” The bill was inspired by Hungary, which introduced a similar ban in 2015, as well as taxes on banks and retailers.

Image: Shutterstock

All for the family

Members of “Solidarity” collected more than half a million signatures – five times more than are required to submit a bill to parliament. They are convinced that the ban will bring benefits to Polish employees, especially that similar restrictions have been successfully introduced in other countries of the European Union, such as Austria and Germany.

The bill is claimed to focus on the interests of Polish employees and Polish families because it wants to balance the freedom of businesses to operate, and the interests of employees who work on Sundays. It is also aimed at helping them strike a better worklife balance, as it gives one “extra” day to be with the family – the most important building block of society, according to Eurofund.

People will find new ways of spending free time other than going shopping. Restaurants and services that are allowed to operate on Sundays will gain from the ban.

Moreover, it will protect retail sector workers from working overtime and ensure that they are physically and mentally healthy due to more hours of rest. It is a chance for cultural, city center and park venues to become more popular and attractive than suburban shopping malls. In addition, smaller shops, petrol stations, outlets in railway stations, airports etc. are exempt from the ban. As a result, small and independent retailers may have a chance to gain an advantage over bigger retailers.

WBJ OBSERVER •

NOVEMBER 2016

57

RETAIL / SUNDAY TRADING

Potential problems

However, according to government statistics from a few years ago as reported by law firm Noerr, a general Sunday trading prohibition could reduce Treasury income by up to PLN 1.5 billion. Up to 70,000 employees, most of them lowqualified women in their foutiess, could lose their jobs. On the other hand, unions claim that no one will be laid off. However, this opinion is not shared by employers, who have protested and warn that the new bill may cause a surge in unemployment.

“There will be a number of consequences, some of which are difficult to estimate. We know that 75 percent of Poles shop on Sundays. If a store has shorter opening hours, it is natural it will need fewer employees,” said Radosław Knap, Chief Operating Officer of the Polish Council of Shopping Centres (PRCH).

Bloomberg reports warnings from employers’ groups that such a regulation would eliminate a quarter of the 400,000 jobs in shopping centers across the country. Marek Lewandowski, a spokesman for “Solidarity” rebutted: “one shouldn’t believe in those alarming voices saying this will lead to job cuts and losses. They have been proved completely false.” Still, almost a decade ago, Poland banned shopping on

13 holidays which led to about 40,000 job losses, according to estimates of Klub Jagiellonski, a think-tank lobbying for employers’ groups. Polish shopping centers employ the fourth largest number of workers in the EU after those in the UK, Germany, and France.

The Catholic Church in Poland considers Sunday a day of rest and spiritual pursuit, and believes that shopping on Sundays is against traditional values. However, such a bill restricts a consumer’s choice of when to shop. Those who usually work non-standard hours, e.g. students or part-time workers, will also be among the disadvantaged if the ban becomes reality. Intellinews added that the bill, not unlike other recent government proposals, is likely aimed at curtailing the large international retailers that dominate the markets and offering smaller domestic competitors an advantage.

Many agree that Poles could simply adjust their shopping habits to the new reality, though some revenue losses are inevitable. “People will continue to buy the same amount of food. But other stores, those selling electronics, house furnishing materials, furniture, fashion, footwear etc. – they will likely see their revenues drop. Besides, in the case of shopping malls, synergy with entertainment is vital. No one will buy extra coffee on Saturday because the café is closed on Sunday,” said Knap.

The ban could also have an impact on the real estate investment sector, especially if coupled with the recently introduced, then suspended retail tax, which is currently being reconfigured once again.

“Investors will see it as another risk.

Closing down retail on Sundays may translate to lower investment volumes. I hope that the government will not want to introduce two risk factors at once – the tax and the Sunday retail ban. They could create unforeseeable repercussions for the retail sector,” Knap explained.

Learning from others’ mistakes

In March 2015, Sunday trading was prohibited in Hungary. Eurofund reported that the idea had already been proposed in 2011 by the Christian Democratic People’s Party, but only after some amendments were added to help small stores did it gain the support of the government in 2014. Pharmacies, stores at airports, railway and petrol stations, hotels, and restaurants were all exempt. Small family-run shops were allowed to stay open, as well as shops needed to satisfy tourists’ needs, e.g. located at world heritage sites and major tourist areas. The government favored smaller Hungarian shops over large international retail companies.

The introduction of the bill had no direct negative impact on the economy.

Image: Shutterstock, Agnes Kantaruk/Shutterstock

“IN HUNGARY, THE INTRODUCTION OF THE BILL HAD NO DIRECT NEGATIVE IMPACT ON THE ECONOMY. RETAIL SALES REMAINED STEADY, NO MAJOR LAYOFFS OR CLOSURES TOOK PLACE.

58

NOVEMBER 2016 • WBJ OBSERVER

RETAIL / SUNDAY TRADING

Retail sales remained steady, no major layoffs or closures took place. Shops simply stayed opened longer on all other days of the week with more money paid to the staff for overtime during the week. Shoppers switched to Thursdays and Fridays to do their big weekly shopping – as they were forced to adjust their shopping habits.

“What we saw in Hungary after the ban on Sunday trading was that shopping centers took a short-term hit. But people changed their habits very quickly. Instead of going shopping on Sunday, they went on Saturday or during the week,” said Hadley Dean, CEO of Echo Polska Properties. “Ironically, turnovers in city center stores were actually higher than they had been before the ban. But what actually got hit was the destination centers in the suburbs. People decided it wasn’t worth traveling an hour or so to visit stores. Instead they started shopping more in the city center,” he added.

From the start, the idea was very unpopular and it was regarded as inconvenient and

“NO ONE WILL BUY EXTRA COFFEE ON SATURDAY BECAUSE THE CAFÉ IS CLOSED ON SUNDAY. as an intrusion into private affairs and freedom of choice. The majority of Hungarians disagreed with the bill as people did their shopping on Sundays, and in April 2016 Victor Orban’s government backtracked on the policy.

Such a piece of legislation was also introduced in Germany. However, Sunday trading there is tightly regulated on a local level, e.g. Berlin allows stores to remain open eight Sundays a year for seven hours; Munich: four Sundays a year for five hours.

“In Germany the ban on Sunday retail has been in force since 2006. However, in-

dividual areas have the power to override the regulation and only two chose not to.

Most areas did and liberalized the ban. It was simply necessary, especially in major cities,” explained Knap. “Finland and Denmark are also moving away from the ban,” he added.

The Berlin-based left-leaning Die Tageszeitung, wrote, as was reported by the France24 portal, “Sunday as a day off is a great gift. The treadmill is closed for 24 hours. The court has given relaxation, rest and ‘spiritual elevation’ precedence over the thirst for profit and the right to a consumer fix. However, it made it clear in its ruling that Sunday was not just for those who wanted to practice their religion undisturbed. It is also to play cards, go for a walk, or simply to laze around. After all, even the strictest atheist needs the downtime that Sundays allow.”

The idea clearly has both its supporters and enemies – each group is equipped with some solid arguments. But each country’s case is different – all we can do is to sit back and wait for the situation to unfold. u

WBJ OBSERVER •

NOVEMBER 2016

59

LOKALE IMMOBILIA / INTERVIEW

Taxing boomerang It has been a year of uncertainty for the retail market in Poland. Flat tax, progressive tax, tax based on floor space – ideas about the shape of the levy have been coming, going and resurfacing all year. WBJ Observer talked to Radosław Knap, Chief Operating Officer of the Polish Council of Shopping Centres (PRCH) about how the tax could affect retailers, their employees, and the real estate investment market I N T E R V I E W B Y B E ATA S O C H A WBJ Observer: The government experiment with the progressive retail tax lasted less than three weeks. It was launched on September 1 and suspended on September 20. Was the tax a good idea?

Radosław Knap: We were against the idea of a new retail tax, an industry tax, pointing to the fact that it seems unreasonable for companies in one industry to pay it when those in other sectors don’t. Any industry regulation leads to disputes and divisions within the industry. Retail is a very important part of the economy. It is one of the biggest employers and constitutes 17 percent of GDP. Any activity in this field should have been thoroughly analyzed.

Since the progressive revenue tax was first announced, several retail chains have opted to divide their structure into a number of smaller entities. Who in fact would pay the revenue tax?

There were talks about franchising during the consultations but it is not an easy topic. It was clear from the start that the tax would not apply to chains, where each store is a separate limited partnership and the integration of all the stores happens outside Poland. In the end, the government

60

NOVEMBER 2016 •

WBJ OBSERVER

Images: PRCH, Shutterstock

And it wasn’t?

No, it wasn’t. From the very beginning of the consultations, we said that this solution could be on the European Commission’s radar. Hungary ended up with a flat tax.

The decision makers knew about it but still gave it the go-ahead. On September 20, the Commission signaled the tax could be in breach of European law as illegal public aid and launched an investigation. On the same day, Minister Szałamacha said the tax would be suspended.

LOKALE IMMOBILIA / INTERVIEW

decided on a sort of a compromise: only two tax rates and a large allowance of PLN 17 million.

What will happen next?

Despite this lesson, the government has not abandoned the idea of a retail tax.

A new project will be introduced at the beginning of 2017.

What kind of tax are we talking about now? Earlier this year there was a plan to implement a tax based on store size.

The idea is now being revisited. Tax based on floor space was heavily disputed at the time. But since the tax was part of the pre-election draft bill, the government is working on implementing a solution similar to what was implemented in France.

Another option is a flat tax with a large tax allowance.

What type of stores would this type of tax apply to?

The allowance could potentially mean that about 200 entities will not pay any tax at all. About 60-70 percent of retail is FMCG. Polish retail is very diversified. Discount stores are no longer discount, price competition is killing the industry. If implemented, the burden of the tax would be, and in some cases it already has been, shifted to the suppliers and later onto clients.

In the case of the floor tax, there were ideas that local governments would be in charge of collecting it. Naturally, that poses other problems. If local governments are the ones who issue permits for stores and collect tax depending on their space, one could expect they might start favoring larger stores.

Could the tax mean retailers will try to move their business to the virtual world?

To some extent it might. There were also ideas to impose the tax on internet stores. But due to the global nature of this segment, it would be impossibly difficult to implement. It’s not hard, after all, to move your website abroad. Some ministers proposed a duty paid on every parcel. But the Digitization Ministry criticized this idea.

Retail tax is not the only problem retailers will have to deal with in the coming years.

There are plans to introduce a Sunday trading ban, like the one implemented in Germany, Finland and Hungary. How could that affect the market?

There will be a number of consequences, some of which are difficult to estimate.

We know that 75 percent of Poles shops on Sundays. If a store has shorter opening hours, it is natural it will need fewer employees.

Investors will see it as another risk. Closing down retail on Sundays may translate to lower investment volumes. I hope that the government will not want to introduce two risk factors at once – the tax and a Sunday retail ban. They could create unforeseeable repercussions for the retail sector.

If stores are closed on Sundays, will Poles’ retail habits change as they did in case of Germany?

In some cases, yes. People will continue to buy the same amount of food. But other stores, those selling electronics, house furnishing materials, furniture, fashion, footwear etc. – they will likely see their revenues drop. Besides, in the case of shopping malls, synergy with entertainment is vital. No one will buy extra coffee on Saturday because the café is closed on Sunday.

In Germany the ban on Sunday retail has been in force since 2006. However, individual areas have the power to override the regulation and only two of them have chosen not to. Most of the areas have liberalized the ban. It was simply necessary, especially in major cities. Finland and Denmark are also moving away from the ban. u

WBJ OBSERVER •

NOVEMBER 2016

61

LOKALE IMMOBILIA / RETAIL

Major makeover B Y K A R O L I N A PA P R O S

With e-commerce gaining importance and changing shopping habits, contemporary shopping centers have to adapt to current trends. It is expressed in the growing number of modernization and redevelopment plans of existing centers and the rather slow progress in terms of new openings. However, the largest projects are yet to come 62

NOVEMBER 2016 â&#x20AC;˘

WBJ OBSERVER

P

olish shopping center space reached 10.9 million sqm in the third quarter of this year, according to a recent report prepared by Colliers International.

If we add retail parks and warehouses as well as outlet centers, this number grows to 13.11 million sqm, according to JLL. Warsaw remains the largest retail market in Poland with almost 1.5 million sqm of space, followed by the Katowice agglomeration (over 1.1 million sqm). At the opposite end of the scale is Szczecin with a mere 273,000 sqm.

LOKALE IMMOBILIA / RETAIL

completed, while Wroclavia in Wrocław, Galeria Północna in Warsaw and Forum Gdańsk in Gdańsk are still under development.

“The market will continue to grow at 250-300,000 sqm annually. More space is being delivered in small cities as well as within smaller projects. So far, we have not kept track of schemes of less than 5,000 sqm, but this will change,” Knap added.

(Old) new projects

Instead of building new centers, developers are now focusing on revamping existing shopping center space. The first half of 2016 was dominated by redevelopment and extensions of older retail schemes, e.g.

Atrium Promenada (Warsaw), Auchan Gdańsk (Gdańsk), Galeria Sudecka ( Jelenia Góra), Morena (Gdańsk) and Galeria Leszno (Leszno). “There are fewer new schemes being built, more are being modernized, refurbished and expanded. There are still many 20-year-old malls that need to be revamped. Naturally, they shouldn’t all be done in the same way. Modernizing a mall is a great opportunity to redefine the project, find out what people need and cater to their tastes,” Knap said.

Posnania, APSYS Featuring 300 brands on over 100,000 sqm of GLA

Developers are well aware of the increasing competition in the market and focus on optimizing their properties. “Increasingly, we can see the development of mixed-use projects combining different

functions and formats: residential, office, hotel and retail – including, for example, hybrid outlet centers with an extensive range of sports amenities, restaurants and various forms of entertainment,” said Anna Wysocka, head of Retail Agency, JLL. The shopping centers we knew 10 years ago must be revamped as their role and functions in the contemporary world are changing. Wysocka summarized it as follows: “different retail channels are gaining momentum – e-commerce, biobazaars, fashion fairs, mixed-use projects – and becoming more popular, therefore, investors and developers, apart from the usual shopping proposition, need to offer additional experiences to attract customers.” Savills’ latest report adds that making sure that the client gets the best customer experience and the highest quality of client service seems to be crucial in attracting more visitors. Moreover, the onestop-shop rule is something worth taking a closer look at, as it is aimed at increasing the comfort of shopping and combining online and offline sales with new media.

What we have

Park Handlowy IKEA Janki was the first shopping center built in the Warsaw agglomeration and has been expanded a few times ever since. Arkadia Shopping Center has the greatest offer for customers

Images: Apsys, Atrium Poland Real Estate Management

At the end of Q3 2016, there was approximately 640,000 sqm of modern shopping center space under construction with completion dates planned up to the end of 2017 and almost 50 percent of them scheduled to be delivered by yearend 2016, according to data compiled by the Polish Council of Shopping Centres (PRCH).

“New supply is smaller than it was a few years ago. In H1of 2016 there was 80,000 sqm of new space added to the market, in H2 there will be another 300,000 sqm,” said Radosław Knap, Chief Operating Officer of the PRCH. The eight largest Polish agglomerations accounted for the largest share in the development pipeline (82 percent) in Q3 2016. The biggest project this year, Posnania in Poznań, comprising over 100,000 sqm of retail space, has recently been

Atrium Promenada, Atrium Opened in 1996, the center has undergone a recent extension that added an additional 4,200 sqm of GLA

WBJ OBSERVER •

NOVEMBER 2016

63

LOKALE IMMOBILIA / RETAIL

which was completed in 2012. There is one more shopping center under construction located close to the main railway station – Wroclavia – with an area of almost 65,000 sqm. However, except this project, the next two years will be devoted solely to modernizations, expansions and renovations of existing shopping centers.

Bonarka, Roland Investments Bonarka City Center is the largest mall in Kraków with 91.000 sqm of GLA

The first shopping center in the Katowice conurbation was M1 Czeladź, built in 1997. However, the largest project so far is Silesia City Center in Katowice. In 2015 two new shopping centers were opened: Galeria Galena in Jaworzno and Supersam in Katowice. The second half of 2016 will witness the completion of Quick Park Mysłowice.

Kraków also started its adventure with shopping centers in 1997 with Krokus, Tesco Wielocka (formerly HIT) and Carrefour Witosa. However, the largest center is still Bonarka City Center, which was commissioned for use in 2009.

Galeria Sudecka, Echo Investments Galeria Sudecka in Jelenia Góra underwent major redevelopment and extension in 2015 and 2016

If we take a look at the space saturation levels in Poland, it seems that in the biggest Polish cities the average saturation level (e.g. for Wrocław it is 600 sqm per 1,000 people) is at least double the average for Western Europe (260 sqm per 1,000 people). Could this mean we are at the end of the line for new shopping centers? Since Poles are increasingly interested in leisure rather than shopping, perhaps high streets will start replacing big malls in major Polish cities? To some extent, maybe, but the odds are in favor of shopping malls as the primary retail destination.

“We need to consider such down-toearth factors as weather. The further south you get in Europe, the more high streets

with a wide array of commercial, service and gastronomy outlets. It has also undergone several revamps over the years, focusing predominantly on its food and entertainment area. The year 2015 and Q1 2016 brought almost 60,000 sqm more of retail space thanks to the expansion of Wola Park, Factory Ursus, MODO fashion house and Ferio Wawer, along with with the expansion of Atrium Promenada.

Future large-scale projects include Galeria Pólnocna and Galeria Młociny.

In Wrocław, the first shopping center, Tesco Długa (formerly HIT), was built in 1995 and the most recent is Sky Tower

64

NOVEMBER 2016 •

WBJ OBSERVER

Forum Gdańsk, Multicorporation Forum Gdańsk, set to be completed in 2017 features 62,000 sqm of GLA

Images: Roland Investment, Multi Corporation, GTC, Echo Investment, Unibail Rodamco

Are malls here to stay?

LOKALE IMMOBILIA / RETAIL

Rents and vacancies

W

Galeria Północna, GTC Galeria Północna in Warsaw will add 64,000 sqm to the capital’s retail market

you find. Shopping center saturation rates are much higher due north and due east. In Scandinavian countries it reaches 600-700 sqm per 1,000 people,” said Knap.

The first half of 2016 also witnessed a precedent in the Polish market: the closing down of the Centrum Sosnowiec shopping center in Sosnowiec (17,000 sqm) in the Katowice conurbation. The center was closed after the main tenant backed out. “In that case, the main tenant – Real – had to be closed down, as a result of the sale of Real stores to Auchan and [competition watchdog] UOKiK’s decision to close down some former Real stores. It occupied two-thirds of the center. That’s why the mall was also closed down,” explained Knap.

However, the West is slowly getting fed up with these temples of consumption,

therefore it is interesting to wait and see what the future holds for the Polish retail market.

Where money comes from

The Polish Council of Shopping Centres draws attention to the fact that sales revenues of shopping centers reflect the slowly changing habits and needs of consumers. Average sales revenue of each leased sqm was PLN 838 (net), therefore, for almost 11 million sqm, revenue amounted to PLN 9.3 billion.

The biggest revenue since the beginning of the year has been enjoyed by services, restaurants and food courts, which indicates that customers are eager to visit these places more and more often and proves that consumers go to shopping centers not only for shopping, but also to spend their free time.

They need to be provided with different forms of entertainment so that a visit to a shopping center is an enjoyable event rather than a chore. u

Wroclavia, Unibail Rodamco Wroclavia in Wrocław is scheduled for completion in 2017

arsaw has 45 shopping centers and over 130,000 sqm of space under construction. It constitutes the most diversified retail market with the highest prime rates up to €130 per sqm per month (for a prime 100 sqm unit, fashion & accessories). In other large agglomerations in Poland, monthly rates are much lower – €45-€55 per sqm per month, e.g. Wrocław: €45-€47 per sqm per month, Katowice conurbation: €43-€45 per sqm per month, Kraków: €43-€45 per sqm per month, Łódź: €37-€39 per sqm per month.

The Warsaw Agglomeration also enjoys the lowest vacancy rate in Poland – 1.6 percent, probably due to the fact that the majority of international brands start their expansion journey in Warsaw. “Warsaw is definitely underserved when it comes to retail. The city could easily accommodate another three shopping centers right now. In five years’ time there could be room for a fourth one, because spending power keeps going up,” said Hadley Dean, CEO of Echo Polska Properties.

Other major cities have slightly higher vacancy rates of around 3 percent (as of the end of June), which is still very low compared to Western Europe. Poznań, which has the highest saturation rate had the highest rate of vacant space at 5.2 percent.

Wrocław, the capital of Lower Silesia, is a city with 18 shopping centers and a vacancy rate of 3 percent. The Katowice region has 44 shopping centers and a 3.3 percent vacancy rate. Kraków has 15 shopping centers with a vacancy rate similar to the Katowice conurbation.

WBJ OBSERVER •

NOVEMBER 2016

65

WBJ Observer presents Ghelamco, a Belgian developer which has been operating in Poland for 25 years, is an attractive partner for investment funds and banks. As part of its last bond issue, the company easily found investors for 200,000 securities worth PLN 20 million.

Between 2002 and 2015, the company sold 20 commercial projects in Poland with the value of more than €1.3 billion. And that is not the end…

66

NOVEMBER 2016 •

WBJ OBSERVER

Belgian Ghelamco Group is one of the biggest commercial developers operating on the Polish market. The company implements its projects using own funds, through loans, or by issuing corporate bonds. Ghelamco already has projects of more than 1,100,000 sqm of space in its portfolio in Poland. The company invests both in Warsaw and on regional markets and continues to operate based on a proven business model: it builds, commercializes, and sells. Ghelamco Group operates mainly in the office property segment, but also in the area of residential and commercial properties as well as logistics and warehouse centers. The group operates in Poland, Belgium, Russia, and Ukraine. It has been present on the market for 30 years.

Ghelamco has been doing business in Poland since 1991.

The group’s operations mainly include a variety of office projects – from business park concepts, such as Mokotów Nova or T-Mobile Office Park, to skyscrapers such as Warsaw Spire.

Around five years ago the company issued its first bonds, and since then it has financed all of its projects using its own funds, bonds, and bank loans. The developer has successfully conducted several bond issues in Poland.

The obtained funds are used to finance both current and planned investments, purchase new land, and increase stakes in investments. As part of the last issue in October 2016, the company found investors for the next issue and sold 200,000 securities worth PLN 20 million.

Ghelamco Poland is also present on the Polish investment market, which after a record 2015, continues to grow dynamically. The company successfully sells its completed and commercialized projects, renting to both Polish and international tenants. Recently, the company has mainly delivered office projects. According to reports, in H1 2016 the office sector had a 40 percent market share (€0.8 billion) and came second only to the commercial sector (€1 billion). Major transactions made by Ghelamco Poland in recent years include the sale of the Senator office building to Union Investment Real Estate GmbH for the price of €120 million, the sale of the Mokotów Nova complex to Curzon Capital Partners, which bought the property for €121 million, and a one-off sale of three properties: T-Mobile Office Park, Łopuszańska Business Park, and Katowice Business Park to Starwood Capital Group for the total amount of nearly €200 million. In total, the sales volume of Ghelamco’s completed projects in Poland has exceeded €1.3 billion.

The Belgian investor is closely monitoring the market and implementing other projects in attractive locations. Last decade, when the company was operating in the Służewiec area, it turned its attention to the Wola district by building the Crown Square complex in the vicinity of the Warsaw Uprising Museum. Back then, the location was still an investment desert, with abandoned factories and derelict tenement houses. Today, Wola is a vibrant fragment of Warsaw’s business center in which other major players on

BROUGHT TO YOU BY GHELAMCO

GHELAMCO LURES INVESTORS

WBJ Observer presents

the development market have started to invest.

It is here where Warsaw Spire was erected, Ghelamco’s flagship investment and the biggest office building in the country. It is 220 meters tall, with an area of 109,000 sqm and almost fully leased by prestigious tenants before the building was even commissioned. Warsaw Spire is now a fully completed project, more than 90 percent commercialized. It is worth noting that Warsaw Spire was also financed by bank loans to the amount of PLN 904 million.

Ghelamco Poland obtained the funds for implementing the project from a consortium of four banks: Bank Polska Kasa Opieki, Bank Zachodni WBK, PKO BP, and BRE Bank.

Leveraging Poland’s stable economic situation and the country’s popularity among investors, which see it as a reliable and safe bet for investing, the developer has planned subsequent investments – mainly in Wola. Seeking to attract the interest of so-called core funds, which look for safe investments in the city center, Ghelamco is developing its portfolio in the expanding CDB region. The appeal of Ghelamco’s investment products on the capital market

is proven by, for example, the interest in its projects on the part of investment funds during the recent Expo Real trade fair in Munich.

Following Warsaw Spire’s commercial success, the developer launched the construction of subsequent towers at Rondo Daszyńskiego. As part of the project with the working name Sienna Towers, 113,000 sqm of space will be delivered – three towers in a multi-functional formula: offices and a hotel, and a conference and commercial area.

And this is not the end. Ghelamco is already planning other projects around the roundabout, and investments in other regions of the capital and on Poland’s regional markets.

The developer is already building Przystanek mBank, an office project in Łódź, which is fully leased. For the near future, Ghelamco is planning another huge and spectacular project in Warsaw – in the area of Dworzec Gdański, in association with Polskie Koleje Państwowe (Polish Railways). Ghelamco is observing the market and continues to expand its land bank. The Belgian developer is also planning more bond issues.

WBJ OBSERVER •

NOVEMBER 2016

67

LOKALE IMMOBILIA / INTERVIEW

Through the architect’s eye

Polish cities are often criticized for being overrun by cars, while city authorities are blamed for urban sprawl and the neglect of inner-city, post-industrial real estate. WBJ Observer asked Maria Saloni-Sadowska, architect at the renowned Kuryłowicz and Associates architectural studio, to comment on these issues from an architect’s perspective I N T E R V I E W B Y E WA B O N I E C K A

WBJ Observer: There is an ongoing public discussion in many countries, including Poland, about transport problems in major cities, about the increase in pollution it causes and the link between those issues and architectural activity and urban planning. How does it affect your work?

Maria Saloni-Sadowska: I am well aware of those problems, as are my colleagues.

We understand the need and demand for balance in the architectural development of cities, also in terms of resolving ecological matters and improving infrastructure. In our designs we pay attention to achieving lower energy use in architectural objects.

But architects are only one of the players in the process of city development. We have limited tools at our disposal to shape the policy of city planning. First of all, it is in the hands of city administrations and I have to say that in Poland the policy of developing city spaces leaves a lot to be desired. There is now much more awareness of the subject and cities are making progress in that domain. I think that what is needed is effective cooperation between architects and urbanists, city organizations, and residents’ groups in order to build mechanisms to create better city fabric and reduce the (often chaotic) activity of developers in suburban areas.

Jan Gehl, the famous Danish architect who advises urban planners in many cities, said that “happy cities” should be designed for people, not cars. Furthermore, he stated that while Western Europeans are now rediscovering the pleasure of walking, Poles are still “in

68

NOVEMBER 2016 • WBJ OBSERVER

Images: Kuryłowicz and Associates

Would you say that architects play a part in urban sprawl that can be observed in Polish cities?

I think that architects should have more influence on reversing that trend. But urban sprawl is not only a Polish problem. It is a common problem of city growth driven by market trends. Land in the suburbs is cheaper than in the city, and so are the buildings and apartments built on it. That’s why so many people choose to live in such places. Market forces are fueling this trend.

I consider it to be the wrong direction – one that has a very negative effect on the fabric of a city and the quality of urban life. Not only Warsaw, but also other big cities are paying the price for urban sprawl.

I think that city administrations and local governments should make efforts to stop, or at least limit, urban sprawl.

Images: Kuryłowicz and Associates

LOKALE IMMOBILIA / INTERVIEW

love” with their cars. He warned Poles not to replicate the mistakes of Western cities with their overwhelming privileges for drivers instead of providing spaces for residents. Do Polish cities have a chance of becoming “happy cities?”

I think that Polish architects think about it, but Gehl’s dream of creating “happy cities” ignores the difficult problems of the developing economy and urban reality in our country. Regarding his statement about us making the mistake of following Western cities in urban planning, it is true that we have made a few. But one has to remember that a market economy has been in operation in Poland for a relatively short time, so we wanted to catch up with the West in city development and also made mistakes in other fields. Still, I think that the scale of mistakes we made in architectural planning and building various objects in the cities is smaller than it could be in our difficult situation. Now we have a lot to do in this area.

Many cities in Europe have transformed former industrial areas into attractive and modern neighborhoods. This process is only now beginning in Poland.

Gdynia, for instance, has presented plans to transform its former seaport. How fast is the revitalization progressing?

I wish Gdynia success in realizing such a wonderful project. The goal of this program is to create a new city space integrating some historical buildings with modern architecture and should be realized over the course of several years.

But generally, Poland is late in reshaping its post-industrial sites into attractive neighborhoods – these are places where architects can create modern dwellings and integrate them with the city center, offering people apartments, working places, cultural institutions, local centers and green spaces.

Undertaking such costly ventures is connected with economic development and how much a country can afford. City authorities must first prepare strategies and plans for post-industrial areas that are fit for revitalization, secure the money necessary for the project and then attract investors to carry out the projects. The entire process takes years, so a city administration has to be determined to see it through, but it is worth the effort. There are several examples in Poland of successful post-industrial revitalization projects, and the trend is growing.

Which of these examples are located in Warsaw?

In Warsaw there are many run-down and post-industrial sites and redeveloping them into multi-functional areas is a great opportunity to strengthen the city’s fabric. It will also provide an opportunity to appreciate many new architectural designs. Many places like this are located in Warsaw’s eastern district of Praga. The Koneser and the Soho Factory multifunctional develop-

“POLAND IS LATE IN RESHAPING ITS POSTINDUSTRIAL SITES INTO ATTRACTIVE NEIGHBORHOODS. ments located in old factory areas are good examples. These projects are creating diverse architectural objects and refurbishing and adopting some of the historical buildings to preserve the atmosphere of the place. Also, in Praga, Warsaw city authorities are carrying out a revitalization program which aims to improve the quality of life and space in the most neglected areas of the city.

When you visit the world’s major cities, you might think that their centers all look alike, with metal and glass high-rise buildings. You may wonder why contemporary architects do not want to include some local elements in their designs. What is your view?

We are living in times of globalization, which also influences architecture. But I think that saying that all contemporary big cities look alike is a simplification. I do not look at it in that way. There are similar trends in architecture, but each city still has its own character, its own architectural designs.

I also think that there are some local elements in architecture designed by Polish architects. It is visible, for example, in many objects built in Silesia and Gdańsk, where traditional local materials are often used, like red brick. In Warsaw, in certain parts of new architectural complexes, you can see the influence of the classic modernist style, which was characteristic of the designs in our city in the 1920s and 30s. But in my view, it is possible to sum up the character of a given period in art – and in architecture, which is also art – only after a certain number of years. There are several concurrent trends in modern Polish architecture, some also connected to the city’s local character and tradition.

What are the dominant trends in architecture? Does the legacy created by modernist visionary Le Corbusier have an influence on architects working today?

In a way it does, classical modernism is still a very popular trend. But there is also a strong trend for creating human architecture concerned with ecological and social demands. Personally, I am inclined to design in the climate of modernism, with attention to clear form and with respect to sustainable development. u

WBJ OBSERVER • NOVEMBER 2016

69

LOKALE IMMOBILIA / EXPO REAL

Unsurprisingly, Brexit, and the uncertainty it is creating in real estate was definitely topic number one at this year’s International Trade Fair for Property and Investment, held as always at the Messe München exhibition center in Munich.

The exposition, more commonly known as Expo Real, is Europe’s biggest trade fair and this year took place October 4 and 6, 2016. “Europe has to stick together, because either you swim together or you are going to sink together,” said US star economist Nouriel Roubini.

Some foresee challenges ahead for the UK and Europe, “The uncertainty around what Brexit actually means is going to continue,” explained Brexit opponent Sir Howard Bernstein. However, more than three months after the vote, the sector in most European countries is doing very well, with money flowing in from all directions. No wonder then that most of the voices heard at Expo were in fact quite optimistic, at least for the continental part of Europe. “[The Brits] have been cherry-picking for 30 years. Now perhaps that is over. And that would be good for Europe,” said Max Otte from

70

NOVEMBER 2016 • WBJ OBSERVER

Images: Expo Real

BREXIT DOMINATES EXPO

LOKALE IMMOBILIA / EXPO REAL

the IFVE Institut für Vermögensentwicklung in Cologne.

Even the UK itself is (understandably) split as to what long-term consequences the exit from the EU will have. “Brexit is a fantastic opportunity for the UK, and the economy will do very well in the long run,” said Brexiteer Gerard Patrick Lyons, former chief economist at the bank Standard Chartered and an advisor to Boris Johnson.

Brexit or not, real estate is where returns are, and investors are well aware of that.

“Everyone is chasing yields. With interest so low, you can’t make money in the bank,” scommented Hadley Dean, CEO of Echo Polska Properties.

Logistics and proptech

Another interesting development at Expo seen over the past few years has been the increasing interest in the warehouse and logistics segment, which was evident by how packed most of the logistics sessions were. “In the past, people shied away from logistics, due to fears of obsolescence and technology changing so quickly,” said Ben Bannatyne, president of Prologis for Europe. Now, this asset class is clearly in the center of the spotlight. After years of looking skeptically at the sector, investors are now drawn to it en mass by predictable riskadjusted cash returns. “This is the first time since I joined the company in 2008 that all countries in Europe are performing well. We are about 96 percent occupied across Europe, which is a historic high. … There’s lots of capital coming into logistics,” Bannatyne concluded.

suddenly, a lot of these things are becoming a reality,” said Richard Betts, associate publisher at PropertyEU, at a logistics real estate panel. Real estate may be still lagging behind finance, telecoms and retail in terms of employing digital solutions, but it has finally decided to catch up.

Nearing 40K

Altogether, 39,101 participants from 77 countries came to the 19th edition of Expo Real, 1.9 percent more than a year

earlier. While the majority of visitors were German (over 70 percent), companies from Germany accounted for less than a quarter of all exhibitors present at Expo.

The top ten countries of origin among the visitors were, after Germany: the UK, the Netherlands, Austria, Switzerland, Poland, France, Czechia, the US, Luxembourg and Spain. If the growth rate continues, in two years’ time Munich will welcome over 40,000 real estate professionals. u

Proptech, which stands for any modern and digital technologies that can be applied to real estate, is also gaining traction. This year’s Expo devoted several panels to modern technologies in the industry. In fact, many seemingly unrelated panels have touched upon tech issues.

Apart from the evergreen topics of money and location, panelists discussed driverless cars, robotics and drones. “I remember having the same conversations two years ago, when I asked, ‘What about driverless cars? What about drones?’ And the majority of responses were: ‘Are we really sure any of this is going to happen?’ And

WBJ OBSERVER • NOVEMBER 2016

71

EVENTS / EFNI

Running out of jobs?

This

year’s discussion at EFNI (European Forum for New Ideas) concentrated on the labor market. The future of work and the flexible labor market were just few of the discussions that took place. Other topics included: economic patriotism, spearheading innovation and the general state of the EU. “Although the current unemployment rate in Poland is on the fall, it must be emphasized that this trend is currently slowing down and will soon start to reverse. Automation of work will make it more economically feasible to hire machines in five years’ time. Some groups of employees may be made completely redundant on the market and disappear. Work will become a scarce commodity to be fought over,” stated Zbigniew Gajewski, Director of the European Forum for New Ideas. His words are corroborated by, among others, data collected by PwC which claims that by 2020, drones will replace people in certain jobs, thus taking over labor worth about $127 billion. Drones will not only deliver parcels or food to areas that are difficult to access, they will also handle work at heights.

This concerns not only production, but also services. Soon, simple bookkeeping or database entry tasks may no longer be done by humans. Until a few years ago, many such services were offered by large outsourcing centers in Poland. Currently, these units are taking over more advanced jobs, which offers a chance to maintain the dynamics of this sector’s development in Poland.

This year’s EFNI concluded with the adoption of the Sopot Declaration 2016, in which Forum participants asked for a “united, strong and secure” Europe “that belongs to its citizens.”

“For over a decade now, Europe has been losing momentum, overwhelmed by mounting challenges. We have been hit hard by the migration crisis and by acts of international terror. Politics is awash with populism, bringing fateful effects, best illustrated

by Brexit. Nationalist and protectionist attitudes are resurfacing, and successes are appropriated by politicians. Many Europeans are asking themselves: What does the future hold for us? Is European integration still a viable project?” the declaration signee asked.

72

NOVEMBER 2016 • WBJ OBSERVER

EVENTS / PRCH GALA

RECOGNIZING THE BEST PROJECTS ON THE COMMERCIAL MARKET

Images: PRCH, EFNI

As part of the 7th edition of the PRCH Retail Awards, the Polish Council of Shopping Centres selected the best shopping centers and networks operating on the market in 2014/15. According to the competition jury, Costa Coffee and 4F clothing company are the best retail chains in Poland, while Warsaw’s Złote Tarasy won the title of best commercial center

The PRCH Retail Awards competition is addressed to chain stores, developers, managers, investors and professionals dealing in retail marketing. During this year’s PRCH Retail Awards final gala, which was held in the Warsaw Capitol Club and Theatre on October 13, more than 400 representatives from the sector selected the best shopping center and chain store projects. A record number of 80 applications were submitted to this year’s competition.

The competition jury granted the highest award in the “shopping centre of the year” category to Złote Tarasy in Warsaw. Ogrody shopping center in Elbląg proved to be the best among the centers that had most recently

been the subject of a thorough conversion or reconstruction. Two winners were selected in the retail chain category: clothing brand 4F and coffee shop network Costa Coffee.

The jury also granted special awards to Kraków's Bonarka City shopping center for their marketing activities and to the Magnolia Park center for its model functioning. The Play network and the Costa Coffeee and Księgarnia Autorska retail chains were recognized and awarded for the high quality of customer service, which was tested by Dekra Certification specialists.

The PRCH Retail Awards competition and gala is organized by the Polish Council of Shopping Centres (PRCH).

WBJ OBSERVER • NOVEMBER 2016

73

GADGETS WE LIVE IN AN AGE OF GADGETS: some are useful, but most are just a waste of time and money.

We sift through the latest available tech to pick those that we believe will help you live your life more comfortably and confidently.

Olloclip

>>

TECHNOLOGY TO MAKE YOUR LIFE EASIER

In an era when many newspapers are replacing photographers with journalists equipped with smartphones, the 4-in-1 lens add-on from Olloclip makes perfect sense. This handy device offers four quick-change lenses: fisheye, wide-angle, 10x and 15x macro. Perfect for your Instagram posts and skateboarding videos. It only works with the iPhone 6 at the moment and you also need a special case compatible with these lenses (which is conveniently made by the same company).

Price: $80

A few years ago, a company called Soylent (based on the B-cult classic SF movie Soylent Green) introduced pre-packaged food (spoiler alert – It’s NOT made out of people), that promised all of the nutritional values without any taste. Because if there’s one thing people hate about food it’s the taste. The people behind it are introducing the Coffiest, which is basically a 400-calorie breakfast (and a coffee) in a bottle. It’s a healthier alternative for those who eat breakfast at gas stations or drive-thrus.

Price: $40 (for 12 bottles)

Price: $50

Soylent.com

NOVEMBER 2016 • WBJ OBSERVER

Sega.com

Images: Sega, Waverlylabs, Soylent, Olloclip, Hover Camera Passport, Hereplus

>>

Sega

The nostalgia gaming craze is in full swing. After Nintendo announced its retro-console, its biggest competitor from the 1980s and 90s – Sega is releasing its own. The company is reviving its iconic Mega Drive in two forms (a two-player plug and play device, and a portable handheld) just in time for the 25th anniversary of Sonic the Hedgehog.

Both versions come with 80 built-in games and additional titles can also be loaded onto an SD card (portable version only). The desktop version also supports original cartridges so it’s time to dust off the old Sonic games if you still have them.

Soylent

74

>>

Olloclip.com

Here One

Apple’s decision to ditch the headphone jack on the new iPhone 7 has sparked a lot of controversy. Whether you agree with it or not is beside the point now, as wireless earphones are here to stay. The Here One earbuds are, according to their producers, “the last thing you’ll ever put in your ears,” which hopefully is true as they come with a $300 price tag. Paired with an app, these buds can filter out certain frequencies, thus eliminating noises like that chatty co-worker who sits right next to you. You can also adjust levels so you can hear both your Spotify playlist and the vendor you’re buying your hot coffee from.

Price: $300

Hereplus.me

>>

Hover Camera Passport

The Hover Camera Passport is basically your flying selfie stick.

The tiny drone (weighing in at 242 grams) can fly above you and recognize your face or body and snap pictures whenever you like. It can even orbit around you and snap a 360-degree panorama. All with its 13-megapixel camera that takes up to 100 pictures per second. It even folds up so you can keep it in your pocket. The only drawback is the battery, which lasts up to 7 minutes, so you have to choose carefully when to use it.

Price: $600

Gethover.com

Images: Sega, Waverlylabs, Soylent, Olloclip, Hover Camera Passport, Hereplus

>>

Pilot

Even though various apps have made it very easy to communicate with people even if you don’t speak a word in their language, they all deal with written text. You can snap a photo of a menu or road sign and it will translate it for you. But what if you want to talk to someone or ask a question? That’s where the Pilot earpiece comes in handy. This device is basically a universal translator from Star Trek. It translates speech in real-time, although both sides have to wear the earpiece (it will be sold in two-packs), which is the gadget’s biggest obstacle, as you can imagine convincing a stranger to put something in his ear won’t be an easy task.

People eager to test out the device have to be a little patient as its scheduled for release in May 2017, so we have to wait a little bit to see how accurate it is.

>>

Price: $300

Waverlylabs.com

WBJ OBSERVER • NOVEMBER 2016

75

LIFESTYLE / INTERVIEW

By Alex Webber

HOP, HOP HURRAY! After years spent waiting in the wings, Warsaw has a craft brewery to call its own. The man behind it, Łukasz Kojro, reveals his story

What’s the Browar Palatum story?

It began nine years ago when my dad and brother gave me a home brewing kit for my birthday. I started exploring different techniques online and soon realized you could achieve better results brewing your own beer than by buying the mass-produced stuff in the shops.

The idea of a proper brewery all grew from that. Considering it cost PLN 200, I think my dad realizes his present was the best investment he ever made – now he gets free beer for life!

Is this your full-time job?

No way. I work as an analyst for an international cosmetics company and really enjoy it. Brewing is just a hobby and I prefer it that way – there’s no pistol to my head or pressure to deliver results.

At the same time, my professional background has helped get the brewery off the ground, as I’m able to understand the business side better than many of the newer breweries.

What’s in the name?

Finding a good name is harder than you think. There are so many breweries out there that many of the good names are gone – fully booked! Among other ideas, I toyed with naming the brewery after my old dog, but eventually settled for Palatum, which is a Latin word meaning “palate,” or “sense of taste.” My wife’s a vet while my own family has a pharmaceutical background, so while we don’t exactly sit around the dinner table speaking Latin, it’s not uncommon for Latin words to crop up. I think the name fits the philosophy and it also works in different languages – it’s not something a foreigner will struggle to say, pronounce, or remember.

You mentioned your philosophy – what is it exactly?

76

NOVEMBER 2016 •

WBJ OBSERVER

I think of my beers as homebrews.

They’re the kind of beers I want to drink at home. I only brew what I like and think that “drinkability” is key. We’re at a stage of the beer revolution where some people are getting obsessed with exotic, strange beers, but for me the most important thing is simply for it to taste good.

You’re not a fan of this shift towards weird, wacky tastes?

There’s maybe one or two hundred people in Warsaw that are telling people that’s what they should drink, but their opinion is largely irrelevant to the rest of the market. These people have forgotten about the everyday, standard consumer.

I think there needs to be more focus on normal, quality beers. While there needs to be room for exceptions and experiments, I’d like to see a bit of a retreat from all of the “crazy stuff.”

Palatum is Warsaw’s first craft brewery – what took so long for the capital to join the craft brewing industry?

I couldn’t really say. I imagine cost – as a capital city, starting any business in Warsaw is always going to be more expensive. But for all I know, maybe others just haven’t thought about doing so.

There must be loads of people with bigger garages or spaces than the one I use, but maybe they’ve just never thought of taking the jump. On top of that, launching a brewery isn’t as easy it sounds.

What problems do you face?

There are multiple regulations to deal with. When the authorities hear you’re opening a brewery they immediately assume it’ll be a Żywiec-style operation with trucks and lorries arriving 24/7. You’ve got all manner of laws to deal with, and a basic problem that people don’t really know how to treat craft breweries – a craft brewery isn’t the same as a pizzeria, yet many of the same legal standards are applied. There need to be barriers in place but also a bit more common sense. These aren’t the only considerations: raising capital is hard,

LIFESTYLE / INTERVIEW

and there’s also a shortage of American hops – you don’t really get the chance to sample them beforehand, so you’re usually buying them “blind.”

How come you’re not bottling your beers?

At 74 sqm I’m guessing this is the most compact commercial brewery in Poland – I don’t have space! But it goes beyond that. Once you start bottling your beers you need to think about logistics, marketing, etc. You create more problems. Most importantly, you lose quality. With bottled beers there’s a bigger risk of oxidization. I don’t have that worry – as things stand, when beer leaves this brewery I know it does so in optimum condition: it makes me proud to know there are times you’ll find it on tap in central Warsaw quite literally within two hours after it has left the tank!

What’s next for Polish craft beer?

This is still a niche industry – I’m positive 99 percent of Poles have never even tried a craft beer. In this respect, there’s still a huge amount of room for the industry to grow – and I’m sure it will. On a personal level, I’d love to see more Belgian-style beers hit the market. In fact, that’s what I’m going to try brewing next week.

How are your beers best enjoyed?

The Imperial Russian Porter is all about fire in the hearth and a dog by your side.

The APA is an evening out with friends: good conversation and losing count of what you’ve drunk. The wheat beer, meanwhile, that’s best saved for after a hard day at work stood around a barbeque in the garden! u

Images: Kevin Demaria

Keep up-to-date with Browar Palatum on: fb.com/BrowarPalatum

News, Reviews aNd CultuRe... the Capital’s Original City Magazine since 1996 www.warsawinsider.pl

Exquisite drinks at Bar and Books

The above text is a reprint from the Warsaw Insider archives

WBJ OBSERVER •

NOVEMBER 2016

77

IT / body leasing

LIFESTYLE / INTERVIEW

Filled with news and views covering food, drink, culture and local interest: Poland’s No. 1 English-language city magazine www.warsawinsider.pl www.facebook.com/warsawinsider 78

NOVEMBER 2016 • WBJ OBSERVER

WBJ OBSERVER • march 2016

35

LIFESTYLE / INTERVIEW

THE PRINCE OF PORCELAIN A ceramic designer and producer, Bartek Mejor is at the forefront of a new wave of designers who are getting Poland noticed

What inspires you at this current moment?

Right now, I want to concentrate more on the tactile qualities of ceramics and develop objects that look soft and organic but also have a certain manmade, “digital” aesthetic. I am continuously inspired by 3D modeling programs and the endless possibilities of manipulating forms within them – they free your imagination by allowing you to control shapes in ways that would be difficult to achieve without computers. Another source of

inspiration is, of course, nature. I like to pick up a detail observed in nature and then use it to create new work. For example, the idea for the Surf centerpiece produced by Vista Alegre came when I was sitting on a beach and looking at patterns left by waves on the wet sand. After taking some photos, I traced the lines in a 3D modeling program to create the irregular shape of the centerpiece.

Where is the line between form and function?

As a designer/maker with a strong background in craft, I operate within applied arts and see a strong relationship between form and function. Every form I create needs to be useful in some way: it could be a lamp, a plate or something else. Having said that, I am not focused entirely on the functionality of the object. It has to be functional, but at the same time it needs to inspire with its form – it has to be desirable.

How do you think international audiences view contemporary Polish design?

I hope people are getting gradually accustomed to seeing good design and beautiful objects made in this part of the

world. Nowadays, everything is interconnected and I don’t think you can identify a specific style or character to “Made in Poland” design. Many designers, including myself, were educated abroad and work in other countries as often as they work here.

What constitutes “good design?”

When it comes to industrial design and consumer goods I agree with the influential designer Dieter Rams, who said: “less but better.” This philosophy guided Jonathan Ive and his team when they designed Apple products. Good design means being true to the material and showcasing its characteristics and potential beauty, be it stone, wood, metal or plastic.

The color white dominates your collections…

The material dictates this austere color choice. I want to showcase the qualities of porcelain and prefer not to cover it with shiny glazes. Another reason is the sculptural nature of the pieces: the whiteness of porcelain helps to bring out the texture in contact with light.

This is particularly visible in geometrical

WBJ OBSERVER •

NOVEMBER 2016

Images: Bartek Mejor

WBJ: How do you define your work, and how has it progressed and developed?

BM: My work is a combination of traditional handcraft and 3D modeling and manufacturing. I started by learning to make shapes on a potter’s wheel and built my first ceramic kiln from a discarded oil drum. After taking part in an international ceramic festival in Wales, I started to look for apprenticeships with established potters and worked for one year in the studio of the London artist Daniel Reynolds. This was the beginning of my fascination with porcelain – this ancient, white, translucent material.

79

LIFESTYLE / INTERVIEW

collections such as Matrix and Quartz.

Nevertheless, I don’t rule out using color and have recently designed pieces for clients that feature decorative patterns in several different hues.

What’s next for Bartek Mejor?

I’m looking forward to a second year of working with students at the Warsaw Academy of Fine Arts, where I teach a course in ceramic design. Also, a line of objects is currently taking shape that will form the core of a new design collection/ brand I plan to launch next year. Stay tuned. u

Images: Bartek Mejor, Ela Lempp

Try before you buy! Bartek Mejor’s Matrix tableware is used at the Michelin starred Atelier Amaro. Purchase your own piece of Bartek from the Długa Showroom (ul. Długa 8/14), or online at decosalon.pl.

For more info, see: bartekmejor.com

80

News, Reviews aNd CultuRe... the Capital’s Original City Magazine since 1996 www.warsawinsider.pl The above text is a reprint from the Warsaw Insider archives

NOVEMBER 2016 •

WBJ OBSERVER

Asian street food feast at Fokim

LOKALE IMMOBILIA / ON INFORMATION TECHNOLOGY

ZAWSZE BĄDŹ O KROK DO PRZODU. DACHSER European Logistics

■ ■ ■ ■

46

MAY 2014 • WBJ OBSERVER

2009_03_13_Logistika_a_Jakosc.indd 1

Międzynarodowa i krajowa sieć drobnicowa Zarządzanie łańcuchem dostaw Logistyka kontraktowa i magazynowanie Innowacyjne technologie informatyczne

www.dachser.pl 13.03.2009 22:30:03 Uhr

MB_Klasa_E_Warsaw_Business_Journal_Observer_210x280.indd 1

17/10/16 10:41