The role of subcontracting for Finnish and Polish SMEs in bilateral cooperation

Tomasz Orłowicz,
Head of Helsinki Office,
Polish Investment and Trade Agency,

There is still a lot of untapped potential in the cooperation of small and medium-sized enterprises on both sides of the Baltic Sea today. Poland used to be known as a low-cost country and that makes it favourable when it comes to subcontractors’ selection. Polish subcontractors are also famous for high quality skills and expertise. This situation, however, is changing. For the better. In the next few years Poland will undergo the process of its economy transformation. The low-cost economy is increasingly becoming a thing of the past. The future is innovation and the knowledge-based economy. Nowadays Poland is perceived as a country which offers good quality products and services for reasonable prices. Parallelly, and what is even more important, it proposes well-educated and talented professionals. In the year 2016 Poland has implemented the strategy that is supportive for science, research and development and therefore playing the crucial role for the modern economy.

In the middle of 1990’s, Poland was one of the fastest-growing economies in the world. In 2018, the average level of income in Poland exceeded two thirds of the euro area, the highest in history. Also in 2018 Poland has become the first country from the Central and Eastern Europe to be ranked a “developed market” on the FTSE Russell index list.

Many of today’s Polish SMEs champions launched in the 1970s and 1980s. At that time especially crafts and small workshops served a significant function, being noticeable suppliers of parts and components to the industry. After 1989, when the free market allowed their progress, and as the result of economic transformation, powerful growth of entrepreneurship took place. Fathers of the production companies were mainly graduates of technical schools, giving very often foundations for long-lasting family business.

A wide variety of Polish industrial products have already been exported to Finland during the last years.

It resulted in over 2 million SMEs, active currently in Poland. Furthermore, one can find many “Hidden Champions”, in different fields.  The ones are very leaders in their branch or local markets, but as the mid-sized are not widely known to the general public, let alone other countries, turn up propensity to find partners for cooperation and to diversification of  their portfolio – namely clients and/or cooperants, even partners in joint businesses.

A wide variety of Polish industrial products have already been exported to Finland during the last years. These embrace various components, yachts, buses, ships, electric engines, machines, as well as auto parts and chemicals. All of them enjoy a well-deserved favourable reputation in Finland. Most of these products were made in Poland, as the result of cooperation with the network of local subcontractors. Many of those companies are the best partners for Finnish enterprises, not only to produce but also develop products, that either are no longer profitable to be manufactured in Finland, or it is too difficult and complex to order them in Asia.

Current economic growth in Finland has shown a great demand for specialists in technological  industries. Finnish consumers also expect positive changes in the market – first of all those stemming from diversification of suppliers and competitive variety of products – simple, modern, esthetic, practical. Metal industries leaders develop dynamically. They try to be as competitive as possible, especially when they operate outside, expectably in global scale. They also need and can  keep-up standards of high quality of their products, but at the same time they know they must reduce costs of manufacturing, delivering and selling. In these circumstances, there is a need to link different knowledge and very professional, innovative skills of engineering and managerial kind; both require and absorb top specialists and well educated people of wide imaginary visions. On the other hand Poland needs wise cooperation. After living through three decades of transformation, simple machinery transfers and direct financial supports ceased being sufficient, here in Poland. Conclusion is obvious – there is a great chance for complementary cooperation and programs – Poland fits in this gap perfectly, alike Finland on the other side. This is best possible match – one can hope.

Current economic growth in Finland has shown a great demand for specialists in technological  industries.

Evidently, it is only half the battle to find a company that meets our manufacturing needs. To the same extent important, or maybe more,  is the human factor, as always people do the business with other people – personalities and cultures intervene inevitably. If so, Polish manufacturing sector can do much more it has been doing so far.  How to have it done? On the one hand, for most of European SMEs opening factories in Poland proves impossible – from both financial and organisational perspective. But… borderless set-ups created by the EU, legal framework of the acquis, proximity of the countries, better and better infrastructure for logistical operations, etc. – bring hope and instruments to join businesses without direct “hard” investments. Consequently, the good, accessible and reliable partner with own resources plays the decisive role in a matter. System similarities, geographical location makes many things easier – to meet, to talk and do business face-to-face, sharing obligations and work in own countries. This convenience adds up easier access to the neighbouring markets, as well – beginning in Germany, landing in Russia. Nowadays we have more and more flight connections between Poland and Finland, including constant improvements on Via Baltica and the construction of Rail Baltica. All of that improves the regional transport and communication network.

To sum up, having a business partner from Poland indicates a great opportunity to enter the market with your products easily and cheaply. In comparison to Sweden, Germany, Russia and the Baltic countries – Poland has both a huge, absorptive market and resources that could be fruitfully utilised. It would also be worthwhile for the Finnish SMEs to benefit from the Polish market production capabilities and keeping two-partite business relations in the long-term. Also Polish distribution system, abundant and varied wholesale and retailing add also a  perspective.

The strategy related to Poland, carried out wisely, could contribute to the rapid growth of many, especially small, Finnish companies. Through the synergy effect the Polish manufacturers and companies would also benefit a lot. Ultimately, such joint effort would pay to all contracting parties.

Finding a good partner is not easy, it requires an effort and time, but in the long run it would turn out to be very profitable and would let both sides thrive.


Expert article 2522

> Back to Baltic Rim Economies 2/2019