Japanese firms are moving into Central Europe with a post-accession passion, "new Europe's" investment agencies report. Japanese veterans on the local market speak of the new oriental ardor for the region, driven by this country's skilled yet relatively cheap workforce, and its recent EU entry.

The foreign direct investment agency, PAIiIZ, boasts of several ongoing projects with Asian and particularly Japanese concerns in auto satellite industries that are following Toyota's lead. There are also projects in high-tech and home electronics, with at least one in food and drinks.

Piotr Grudzien, responsible for Japanese investments at PAIiIZ, says Poland has a distinct advantage over its neighbors when it comes to Japanese investors.

"Our universities offer three Japanese [language] faculties, as compared to just one apiece in our closest accession neighbors," he says. But having just the one university has not held back Slovakian negotiations, says the spokesman for Slovakian investment agency Sario. "We have ten Japanese projects on the go," he says, adding that Mineba, a high-tech concern, is considering shifting its entire European R&D operations from Germany. He attributes the allure of Slovakia to its competitive fiscal and economic conditions.

Katsujuki Kambara, president of car and machinery parts manufacturer NSK Poland, attributes this country's attraction to its recent entry in the EU. Structural funds mean that investment turn-offs, such as poor infrastructure, that put off Korea carmaker Hyundai for example are expected to gradually diminish. With somewhat less conviction, progress is also being made in cutting back the jungle of Polish bureaucracy.

According to Kazna Watanabe, general manager of Tokio-Mitsubishi bank, established in this country in 1998, bureaucracy is not peculiar to this country anyway, and is largely inevitable. "Big country, big bureaucracy," is how he philosophically puts it.

But cheap, skilled labor is not the only issue. Right bang in the middle of stable EU markets to the West, and risky but lucrative Russian and Ukrainian ones to the East, Poland's location is every bit as pertinent. EU entry, says Piotr Grudzin, means Poland is now not just a cost effective operations base for the EU, but also a stable launch pad for the risky - but potentially very profitable - Eastern markets.

The more wary the world grows about developments in Russia, the more Poland, with its new EU stamp of stability, is likely to benefit. Although Poland and Russia are not direct competitors for investors, says Rafal Antczak, macro-economist at the CASE foundation, the country does serve as a safe base for firms wanting to scout the opportunities and risks in Russian markets. Antczak adds that Poland could come to benefit from Russia's current political climate, as the trial of Mikhail Khodorkovsky, former head of Yukos, that country's largest company, gets under way.

(WBJ 21.vi.04)