Early Euro Poland Made Life Difficult For Providers Looking For Growth


Posted on 5th November 2015 by admin in Uncategorized

pchwDistribution In Poland, who you know determines how well you do. The trick is making friends with resellers who don’t just pop up, take your product and then vanish with your zlotys

Even though Lech Walesa has returned to the shipyard and former communists run Poland, the economy of Central Europe’s most populous nation is still growing 8 percent per year. There are plenty of zlotys to go around. So for midsize PC hardware and software makers, Poland is a market to drool over.

It’s no cinch, though. Opening a sales office is a major investment and selling through distributors can cost even more in risk. The problem: Although the majority of the country’s 250 computer companies are resellers of some stripe, these local outfits tend to pop up, peddle your product and go under before paying you back.

So how do you tap into Poland without getting taken? Finding a reliable distributor is the key, says Esther Dyson, a New York-based industry analyst who specializes in Central Europe. One that she recommends is ComputerLand Poland Ltd., a Warsaw-based franchise of ComputerLand Europe S.A. (Little wonder–Dyson is also an investor and on the board of directors.) With seven branches around the country and revenues that jumped more than 50 percent in one year–from $26 million in 1994 to $41.6 million in 1995–the 5-year-old company is deluged with requests from Western vendors looking for a local representative.

Its secret? In 1994, while most distributors were busy securing huge bank loans at rates as high as 40 percent, ComputerLand Poland shunned bank capital and attracted $4 million from Enterprise Investors, a U.S. mutual fund with a focus on a long-term payoff. Now, while competitors who had taken expensive loans have gone belly up, ComputerLand Poland turns away many would-be allies. “It’s impossible to have hundreds of partners–you can’t have technical specialists for everything,” says Pawel Piwowar, general director, whose rule of thumb is not to sign up more than four companies in the same product area. For PC makers, this isn’t good news. ComputerLand’s roster is already full. But there’s still plenty of opportunity for cutting-edge software and hardware makers. Networking, long a sleeper in Poland, is beginning to take off. So Piwowar has been scheduling meetings with companies making bridges, routers and hubs.

He has a hot prospect in Jarek Grabowski, product manager for Gandalf Polska Ltd., the local subsidiary of Gandalf Technologies Inc, the Canadian bridge and concentrator manufacturer with $100 million in annual sales. The company has an office in Warsaw and representatives in Posnan and Gdansk. It wants to expand into four new cities through a distributor. Grabowski says he looks for a combination of financial stability and technical strength. Even at that, he remains cautious. “With the first transaction, we are very careful,” he says. “We give [the distributor] seven days for payment.” Not a long leash. And there’s a severe downside to this method. Grabowski expects it will be two years before the company has a significant presence in his target cities.

Still, moving at a deliberate pace is better than racing ahead and picking the wrong partner. Case in point: Two years ago, a Warsaw-based distributor, Interams, was growing so quickly that most of the big PC companies flocked to sign up. However, Interams’ rapid growth couldn’t offset payments on a high-interest loan. By late 1994, it was bankrupt. Western PC companies were left reeling. They didn’t know who to trust. And customers were worried, too. “It affected the whole market here,” says ComputerLand’s Piwowar.

These problems are exacerbated by Poland’s lack of a credit rating agency. To compensate, PC and software makers often develop a list of banking contacts who can give them inside information about a prospective partner.

Despite the potential for trouble, second-tier computer companies are beginning to make inroads in Poland. Finding a reliable distributor may not be easy, says Piwowar, but, since capital is key, that’s likely to get easier soon. A tantalizing rumor is rippling around Warsaw: A couple of Piwowar’s competitors (whom he wouldn’t name) are about to get a big injection of foreign cash. If that happens, there could be a handful of financially solid partners to pick from.

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