Eastern European countries – macroeconomy facts.
For decades, we’ve been seen “Made In China” labels on almost every product. But is it always convenient and rational? It is well known that a lot of European brands have relocated their production to European countries, especially in Eastern Europe.
Driven by the entrepreneurial spirit, Eastern European countries have succeeded in building an engine for manufacturing goods.
The Czech Republic is the most globally competitive country in the researched Eastern Europe region, maintaining its position with the support of a strong education system and high levels of tech readiness among businesses and individuals. It has a growing innovation ecosystem; ranked 31st globally.
Poland (39th globally) and Hungary (60th) lag behind the Czech Republic and other European countries but are still favourable overall.
Macro-economy facts of Poland:
- Since 2004 economy growth average rate of 3.9% per annum,
- Growth forecast for the next years higher than the EU average,
- Stably anchored, the EU’s main growth engine,
- The sixth-largest EU state in terms of economic output,
- Convenient hearth of Europe location,
- Growing manufacturing hub
- Established exporter of industrial products
- Infrastructure investments, modern road network,
- Highly skilled, motivated workforce, labour cost,
- Attractive Public Aid Programs
Eastern European countries – investments in the region.
There are many examples of large companies choosing the region for their production relocation. Looking at only the 2016 and Transportation Technology market in Poland, please find the examples of investment below:
- LG Chem South Korea – factory of hybrid cars batteries, the 2nd largest factory in the world after Chinese – 300 mn EUR
- Daimler (Mercedes Benz) – engine factory – 18mn EUR
- Ideal Automotive (Tier 1) – interior furnishing for Lamborghini, Bugatti, Porsche factory – 17mn EUR
- VW – VW Crafter assembling factory – 800mn EUR, 1300 employees
- Toyota – transmissions for hybrid drivers – 150mn EUR
- Borgers – 50 mn EUR
- Japanese Boshoku Automotive Poland – upholstery parts – 13mn USD
And examples of investments in Eastern Europe:
- Volkswagen making its cars in Poland
- Hyundai opened its first factory in the Czech Republic,
- Phillips producing its lighting equipment in Hungary
If it was not favorable, no brand would decide moving its production to Eastern Europe.
Eastern European countries – a manufacturing hub
Especially for the premium brands, the region offers high-quality manufacturing hub, low work & row material cost, cheaper and highly qualified workforce, well-developed supply chain, shorter transportation distance reducing cost and time at the same time offers more flexibility, choosing the road transport they avoid also high humidity conditions and expensive consequences of that, respected European labour law and reduction of CSR audits cost.
The quality of the production can easily compete with the best and most established countries. While many Italian factories rely on a reputation built on past success, most Eastern European factories are eager to offer high standards and do not hesitate to go the extra mile.
Eastern European counties – available incentives.
Eastern European countries offer many incentives to attract foreign investment and encourage companies to build new factories. Below are listed some of them, but every case is different and shall be evaluated individually:
- Corporate tax exemption in Special Economic Zones (SEZ)
- Governmental cash grants (MASP)
- Real estate tax exemption (RETAX)
- R&D Tax Relief
- Cash Grant from EU Funds
If you think about production relocation to Eastern Europe and are looking for the factory in Poland we are the best choice company with the wide experience in industry, well known the market and the culture of the country, not mentioning about the native tongue professionals, who make your business easier to finalize avoiding all traps may happen due to a lack of necessary know-how and saving you time.