When considering
a nation in
Europe in which
to either expand or locate your business, the odds are probably
pretty good that the Czech Republic isn’t way up on your list of
possibilities. To be honest, prior to spending some time doing
business there recently, I would have said the same thing.
However, having gained some first hand experience in the Czech
Republic, I am now able to see it in a different, far more
positive light.
Located in the
heart of central
Europe, the
Czech Republic (formally part of Czechoslovakia) has a long and
rich history going back well over 1000 years. With the fall of
the Soviet Bloc in the late 1980s and the removal of Communist
rule in the early 1990s, Czechoslovakia peacefully split into
two parts – the
Slovak Republic, and
the Czech Republic, in 1993.
The Czech Republic joined NATO in 1999 and was granted entrance
into the European Union in 2004. Since being accepted into the
EU, the Czech Republic has enjoyed a constant economic growth –
currently well over the EU average. Part of this is due to the
Czech Republic’s burgeoning tourism industry which boasts well
over 6.5 million visitors a year, most of them headed to the
culturally rich and diverse capital city of Prague. Domestic
industry has likewise continued to grow in recent years, which
accounts of an unemployment rate of less than 4 percent in
Prague – although this figure is higher in the outlying
countryside. The current population estimate is 10.2 million
people.
For business, the Czech Republic can be an attractive
alternative to other European Union nations. This is due in
large part to the fact that the Czech Republic government has
worked very hard since it entered the EU to make the country
attractive to foreign investment. Some specific reasons to
consider doing business in the Czech Republic include:
Location, Location, Location:
A
quick glance at a map of Europe is all you need to understand
that the Czech Republic lays in what is essentially the dead
center of the Continent. While offering easy accessibility to
all of the continental EU nations, perhaps the largest advantage
of the Czech Republic’s location is the fact that it shares a
huge border with Germany, the largest and strongest consumer
market in Europe, and one of the largest and healthiest economic
powerhouses in the world. The Czech Republic also shares borders
with Austria, Slovakia, and Poland and provides a gateway to
most of Eastern Europe that is both more accessible and more
convenient than the majority of other heavily industrialized
nations of the European Union.
Growth and Modernization:
Since its entrance into the European Union in 2004, the
government of the Czech Republic has spent tens of millions of
Czech Korunas (CZK) improving and upgrading its
infrastructure. The process of upgrading existing and adding new
infrastructure continues today, making many aspects of doing
business there easier than it was just a few years ago.
Transportation in particular has been very positively impacted.
Additionally, the
Czech Republic boasts some of the most modern and stable
Internet services in the world, allowing for excellent
communications with home or satellite offices in other
countries.
Economy and Population:
Due in large part to a number of governmental programs
specifically designed to increase foreign investment and trade,
the cost of doing business in the Czech Republic is
significantly lower than similar costs throughout the rest of
the European Union. Both in terms of goods and services and the
hiring of local labor, the dollar goes quite a bit further in
the Czech Republic than it does in any of its EU neighbors.
While the Czech Republic has not yet converted to the Euro
(current plans see this as possibly happening as early as 2010)
the exchange rate of the CZK to both the dollar and the Euro is
very favorable to foreign currency and investors. Additionally,
both the government and the population are very welcoming to
foreigners and, unlike some EU member nations in close
proximity, both seem willing to go out of their to get your
business.
Of course, expanding your business operations into any foreign
country will bring with it unique challenges, which your
expansion team will need to overcome. Perhaps the largest
challenge existing currently for businesses looking to expand
into the Czech Republic is language based. In most European
Union nations, English or French allows you to communicate with
the vast majority of people on a business level. This is not
always the case in the Czech Republic. Many of the locals –
aside from the younger generation and particularly outside of
Prague – speak only Czech. This is where an international
consultant is critical to your success. In Global Market
Insight’s case, we were recently tasked by a VC client to
identify engineers specializing in the networking,
semiconductors and software fields. It took some work but we did
find the right skill sets who also spoke English, and who were
available at very economical salaries. Our team, with their
linguistic and multicultural skills, was the key to making this
happen.
Perhaps the most important aspect of any foreign expansion or
endeavor is picking the right location. When looking to expand
into Europe, many businesses look no further than Great Britain,
France, or Germany – simply because these nations are best known
to us as Americans, and with which we have the longest financial
history. But familiarity is not always the best choice as far as
our bottom lines are concerned, and a positive relationship in
the past does not always guarantee healthy profits in the
future. When looking to expand your business in Europe,
certainly keep the tried and true nations in mind, but don’t be
afraid to look at the smaller, less well-known nations. For
location, ease of business, and value for the dollar, the Czech
Republic might be an excellent place to start.
If you want to learn more about Steve McLaughlin click
here
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2006 All content property of European Weekly unless where otherwise
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