Chapter 4: Poland

(continued)

4.6 Advantages and Disadvantages of Foreign Suppliers

This part of the survey focused on examining the purchasing preferences of domestic buyers, determining the strengths of foreign environmental technologies, and identifying the major barriers to their wider entry into the Polish market.

Purchasing Preferences

Table 4.31 presents a summary of the responses to the question on purchasing preferences.

TABLE 4.31: SUMMARY OF RESPONSES TO PURCHASING PREFERENCES
When purchasing environmental technology, does your organization prefer to buy domestic or foreign products?
Only use best-technology or best-practice criteria	63%
Prefer domestic products	30%
Prefer foreign products	4%
Other - ABB prefers its own technologies	4%
When buying foreign-manufactured environmental technologies, are purchases made from local representatives of foreign companies, or directly from the producer abroad?
Purchase is made from a local representative in-country	68%
Purchase is made directly from the producer abroad	32%
Note: Percentages may not add up to 100 due to rounding

Responses indicate that two-thirds of the respondents make purchasing decisions on a case-by-case basis, applying best-technology and best-practice approaches. The key selection criteria for these were quality, reliability and durability of products. About a third of the respondents expressed a preference for domestic environmental technology products - most notably, local authorities.

Two thirds of the respondents clearly preferred to buy from local representative offices rather than directly from the manufacturer abroad. Concerns about the availability of an authorized/reliable after-sales service, and the necessary administration required in the case of direct import were major reasons given for preference to buying from in-country representative offices.

Strengths of Foreign Environmental Technologies

Table 4.32 presents a summary of the responses to the question concerning the strengths of foreign environmental technologies.

TABLE 4.32: STRENGTHS OF FOREIGN ENVIRONMENTAL TECHNOLOGIES
Within your area of expertise, what are the strengths of foreign environmental technologies compared with like domestic products?
High product quality	58%
Reliability and durability of products	50%
Available credit/funding from the foreign country	38%
User-friendly and easy to operate technology	23%
Good after-sales service	23%
Easy to customize and adapt for the specific local needs	19%
Good value for money	19%
Low price	-
Other	-

The key strengths of foreign environmental technology products, as perceived by more than half of the respondents, were high product quality, and the reliability and durability of products. Interestingly, however, only one respondent in five indicated good value for money as a strength of foreign environmental technologies compared with domestic products. This situation indicates that price levels for foreign products are perceived as excessively high, and may also suggest that foreign purchases are considered a last resort option, i.e. when a domestic equivalent is not available.

Importantly, preferential credit from the supplier seems to significantly increase the chances of selling environmental technology products in Poland - some 40 percent of respondents referred to preferential financing as a strength of foreign technologies. For foreign suppliers, this stance should underline the importance of preparing an attractive financing package for improving the sales of their products.¹

Only a small proportion of respondents regarded foreign environmental technologies as user-friendly and easy to customize and adapt to specific local conditions.

Perhaps most importantly, only one in five respondents thought that good after-sales service was a strength of foreign environmental technologies. Problems with ensuring prompt technical service and maintenance by authorized representatives were also ranked high among barriers to purchase. Prompt and reliable after-sales service was clearly identified as an area where foreign companies considering long-term presence on the Polish market should focus their attention.

Barriers to Buying Environmental Technologies from Abroad

Table 4.33 presents a summary of the responses to the question posed on the main barriers to buying environmental technologies from abroad.

TABLE 4.33: BARRIERS TO BUYING FOREIGN ENVIRONMENTAL TECHNOLOGIES
What do you perceive as the greatest barriers to buying environmental technologies from abroad?
High cost	65%
Too little information about suppliers	35%
Difficulty to ensure authorized technical service and maintenance	31%
Products not suited to local conditions and technical culture	23%
Lack of reliable product information	19%
Import restrictions/high customs duty	19%
Communication problems with foreign suppliers	12%
Changing environmental regulations	12%

High price was identified as the most significant barrier to purchasing foreign environmental technologies in Poland - two thirds of respondents perceived foreign products as too expensive. As a result, buyers often opted for domestically designed and produced technologies, with only the most critical components manufactured by a foreign supplier (e.g. water and sewage pumps, specialized air pollution control systems). It is interesting to note, however, that some environmental services (e.g. testing and laboratory services) can already be carried out more cheaply by foreign providers rather than local providers, and a number of users subcontract services outside of the country (e.g. the food industry).

One field clearly identified by respondents as a problem area was the lack of access to authorized technical services and maintenance for foreign-manufactured products. In addition, one third of the respondents thought that too little information was available on foreign suppliers. Based on the above, and bearing in mind that two-thirds of respondents prefer to buy from a local representative, foreign companies should consider setting up local representative offices to increase the sales of their products.

Finally, about a quarter of respondents thought that foreign products were not always suitable for local conditions and technical culture. Two specific cases mentioned by interviewees included compatibility problems with equipment based on metric and non-metric systems, and attempts to implement municipal waste incineration regardless of high moisture content and low calorific value of municipal waste in Poland.

Some 20 percent of respondents indicated import restrictions and high customs duties as a barrier. While this difficulty is expected to be eliminated with respect to EU products by the year 2000, the same does not apply to technology suppliers from other countries.

Finally, given the fact that the level of knowledge of foreign environmental technologies was found to be very low (see the following chapter), it is surprising that only one in five respondents indicated the lack of reliable product information as an impediment to foreign purchases.

1. It is noteworthy that the National Environmental Protection Fund can provide buyers of environmental technologies with financial support to cover the difference between commercial credit interest rates, and a preferential rate applied by the Fund in priority environmental projects.

REC * PUBLICATIONS * ENVIRONMENTAL TECHNOLOGY MARKET * POLAND