Doing Business In - International Franchise Association

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Chapter 1: Doing Business In the Czech Republic
• Market Overview
• Market Challenges
• Market Opportunities
• Market Entry Strategy
Market Overview Return to top
The Czech Republic boasts one of the region’s most prosperous and
industrialized economies. The country’s strategic location, well-developed
infrastructure, and skilled labor force attracts strong flows of foreign direct
investment (FDI). There is high demand for U.S. products and services, which
are known for their good quality and advanced technology. Economic growth
was a robust 6% from 2005-7, dropping to 3.4% in 2008. In 2009, the Czech
Republic felt the impact of the global economic slowdown with growth dropping to
– 4.2% due to a lack of export orders to Western Europe with the industrial goods
sector particularly hard hit. The outlook for 2010 is improving with growth
forecast to rebound 1.5 percent.
Economic growth is largely based on inflows of FDI and growth in exports.
Foreign investment is boosting productivity, creating new jobs and raising wages
and domestic consumption. In addition to new manufacturing facilities, a
growing number of American companies are establishing R&D and sharedservices
support centers.
The Czech Republic has become a major hub for automotive and electronics
manufacturing in Central Europe. Best prospect sectors for U.S. exports are:
power generation equipment (includes renewable energy); automotive parts and
equipment; electronics; medical products; environmental technologies; and
telecommunications and IT equipment. There is intense competition from
European companies which have close historical and economic ties to the
market.
The Czech government’s recent decision to support the expansion of nuclear
power generation should create opportunities for the U.S. nuclear industry, which
has been active here since shortly after the Velvet Revolution. In addition, the
Czech Republic’s inclusion in November 2008 in the Visa Waiver Program has
boosted the U.S. travel and tourism sector through much greater numbers of
Czech visitors.
The Czech Republic’s economic transformation is not yet complete. The
government still faces challenges such as the slow pace of legislative reforms
and industrial restructuring, lax enforcement of IPR protection, making the public
procurement process more transparent, and a growing shortage of highly skilled
technical workers. In addition, the government’s reluctance to commit to a time