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Poland and Czech Republic offer 'great potential' for trade
by Jeff Horwich, Minnesota Public Radio
June 21, 2004

This statue of a mermaid sits in Old Town Square, a restored historic section of Warsaw, Poland. Gov. Tim Pawlenty and his wife, Mary, toured the area when they arrived in Warsaw. (Photo courtesy of www.warsaw1.net)

Gov. Tim Pawlenty, along with 20 Minnesota business leaders, is spending the week in Poland and the Czech Republic for the first overseas trade mission of his administration. The reason for the destination is not obvious at first glance -- the two countries are far down on the list of Minnesota's trading partners. But officials say the trip gets Minnesota in on the ground floor of the next big thing.

St. Paul, Minn. — Let's look down the list of Minnesota export destinations. Start at Canada, go past Germany and Mexico, the Philippines, Chile and Morocco. A ways down at number 39 you'll find Poland, and then the Czech Republic -- immediately to the south on the list, just it is on a map of Eastern Europe.

Last year Minnesota exported $22 million to the two countries combined -- not much, in the grand scheme of things. But it turns out numbers 39 and 40 are worth a little attention.

"If you find the right partner, go ahead and do business, because the economy is developing very fast," says Irina Roytman, eastern Europe coordinator for Northern Technologies International Corp, based in Lino Lakes.

The company makes protective packaging for high-tech metal parts and industrial equipment. The company has operations in 49 countries, including small offices in Poland and the Czech Republic.

	Prague

"Many international companies are moving to eastern Europe. Many have moved from Germany, as you may know, so we would definitely advise to go into Poland and the Czech Republic," says Roytman.

A bigger operator like Maplewood-based 3M -- which has been in both countries for decades -- also confirms there's something big going on. Post-communist eastern Europe in general is an increasingly tantalizing market. But these two countries in particular have something big going for them, according to state employment and economic development commissioner Matt Kramer. In May, both joined the European Union.

"It's absolutely huge. Belonging to the EU puts in place those legal, financial, and ethical business practices that any business needs on a worldwide basis," says Kramer. "It's certainly huge for those two countries, but it allows our companies to go in there with a sense that things are reputable and standardized -- thanks to the European Union."

Among the most important developments: Banks are adopting western investing and accounting practices, and the currency exchange process is streamlined.

Kramer says the trip is not just about boosting exports of Minnesota companies. It's largely about getting Minnesota noticed by the Poles and Czechs -- so their growing companies will reach out here for business partners and new markets.

"What we're trying to do through the itinerary is try to provide as many opportunities as possible for the local people, the local business people, and the local media to get exposure to Minnesota and the trade delgation. A lot of what we're doing is education," says Kramer.

The communist legacy in the two countries left behind some promising business opportunities. One is a highly-educated population -- and hence a strong demand for information technology products and services. Another is decades of environmental degradation.

Poland and the Czech Republic have been the most adept of the central and eastern European countries at moving toward a market economy. There's lots of potential there, and we want to beat the other states to it. - Gov. Tim Pawlenty

"Years of neglect, a lot of industrial waste that hasn't been discarded properly," says Bob Isaacson, an economic analyst for the state of Minnesota. "A lot of western countries saw this in the '70s and '80s, now these countries are getting it as well."

Officials say business relationships built around restoring the filthy east European environment will last for the years, or even decades, the cleanup could take.

Poland, in particular, has some of the most environmentally devastated areas in Europe. Years of Communist rule that emphasized heavy industry with little regard for environmental preservation inflicted serious damage on the environments of both countries.

In rural Poland, more than 90 percent of sewage remains untreated. Coal mining has added to the devastation of an area between Poland and Germany dubbed the "Black Triangle."

The Czech Republic fares little better on the environmental score.

Widespread use of highly sulfurous brown coal made for one of the worst air-quality standards in Europe at one time. On bad days, children wear masks.

Meanwhile though, Czechs and Poles have become voracious consumers of high-tech hardware, with cell phones outnumbering land lines and high-speed Internet access sprouting everywhere.

Computer electronics make up one-third of Minnesota's worldwide exports.

"Poland and the Czech Republic have been the most adept of the central and eastern European countries at moving toward a market economy," Pawlenty said. "There's lots of potential there, and we want to beat the other states to it."

Josef Mestenhauser, honorary consul for the Czech Republic in Minnesota and president of the Czech-Slovak Cultural Center of Minnesota, said many corporations are locating their European headquarters in the two countries because of their lower cost of living and easy access to the rest of the continent.

"These are dynamic, emerging economies," Mestenhauser said. After two days in Poland, Pawlenty and his 30-person entourage leave Tuesday for meetings with Czech business and political leaders. They return Friday -- having left, they hope, a large Minnesota-shaped impression on these two expanding economies.

(The Associated Press contributed to this report)

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