Modern business operations in the Czech

Republic

…..since 1989

An appreciation of dates• Pre 1914

– Austro-Hungarian empire; Czechoslovakia created 1918

• 1918-1939• 1939-1945

– German occupation

• 1945-1989– Communist regime (Influenced by Russia)– “Prague spring” 1968– “Velvet revolution” November 1989

• Post 1989

Traditional industries (1)

• “Heavy industry”– Engineering

• Skoda• Tesla

– Mining• “Black” coal• “Soft” coal• Clay• Graphite• Silver Uranium

Traditional industries (2)

• Specialised– Chemical– Medical– Shoes– Glassware– Contact lenses– Films– Musical instruments

etc, etc, etc………

Traditional industries (3)

• Other– Brewing

…….also, wines and spirits

– Agribusiness• Livestock milk/cheese/meat• Timber• Fruit/vegetables

etc, etc, etc………

During the years up to 1939

• Czech business was oriented towards the west

• Czechoslovakia was the 10th most developed industrialised country in the world

After 2nd World War:

• Communist era

• Czechoslovakia became the “workshop of the Soviet bloc”

• 70% of exports went to Soviet bloc

• Series of yearly and 5-yearly plans

In more detail….in 1974:

• Skoda

• Tesla

• Bata

In more detail….in 1974:

• Skoda

• Tesla

• Bata

Europe in the 1970’s

Europe in the 1970’s

Exports toSoviet bloc

Other exports70%

30%

Europe 1978: Czechoslovakia was considered the workshop of the Soviet bloc

Europe in 1990

Exports toSoviet bloc

Other exports70%

30%

Europe in 1990

Exports toSoviet bloc

Other exports70%

30%

Europe in 1993

Exports toSoviet bloc

Other exports70%

30%

Lostexports

eastwards

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

Europe in 1993

Czech (and Slovak) Republics have to look for other markets

After 1989

• Local companies needed to find new business partners

• Foreign trade re-oriented towards western markets

Nowadays

• European Union is the biggest trade partner

• In 2005, more than 84% exports went to the EU-15 countries

• Sharp increase of foreign investment, especially from Germany

Current Czech manufacturing industries include:

• Automotive

• Aerospace

• Electrical engineering and electronics

• High-tech engineering

• Life sciences

• Medical devices

Automotive industry in the Czech Republic

Automotive industry in the Czech Republic

Passenger car production (per 100 residents)Source: Automobile Industry 4/2006

Some recent foreign investments in the Czech automotive industry

• Volkswagen – sole owner of Skoda

• Toyota-Peugeot-Citroen

• Iveco

Some Czech automotive component suppliers

Current Czech manufacturing industries include:

• Automotive

• Aerospace

• Electrical engineering and electronics

• High-tech engineering

• Life sciences

• Medical devices

Aerospace industry in the Czech republic

• 10,000 people working across the country

Current Czech manufacturing industries include:

• Automotive

• Aerospace

• Electrical engineering and electronics

• High-tech engineering

• Life sciences

• Medical devices

Electrical engineering and electronics

Examples of who does what:(1) consumer electronics

• Panasonic– flat-panels

• TVHitachi– flat-panels

• TVIPS Alpha– LCD modules

• Bang & Olufsen– various consumer electronics

• Candy– refrigerators

Examples of who does what:(2) automotive

• Kostal– electronic modules

• Visteon/Autopal– lighting

• Tyco Electronics– various components

• Siemens VDO – Automotivecontrol modules, sensors, panels

Examples of who does what:(3) IT

• Foxconn– PC routers

• Asus– PC– High-tech repair centre

• FIC– PC

• Inventec– PC

Current Czech manufacturing industries include:

• Automotive

• Aerospace

• Electrical engineering and electronics

• High-tech engineering

• Life sciences

• Medical devices

High-tech engineering

• Between 80% and 90% of production is exported

• R&D driven

• Includes:– Instrumentation– Machine tools– Railway industry

Instrumentation

• Around 4,000 specialised workers in this sector, eg:– Central Bohemia region 13.9%

• Siemens and Linet

– Olomouc region 12.5%• Meopta – optics and Invensis appliance controls

– Prague 12.4%• Honeywell

Machine tools

• Approx 50 companies• About 90% of production are specialist

cutting machines. Approx 80% are exported to:– (mostly) Germany– Other EU countries– US & Canada– and: China, Russia, India and South America

Railway industry

(Includes tramways)

• Three large factories: Prague, Plzen and Koprivnice

• 30% turnover is exported worldwide

Current Czech manufacturing industries include:

• Automotive

• Aerospace

• Electrical engineering and electronics

• High-tech engineering

• Life sciences

• Medical devices

Life science and Medical devices

• Life science– Especially Biotech and pharmaceutical industries

• Medical devices, eg:– Hospital beds– Ventilators– X-ray equipment– Dental technology– Mobile hospitals– Technical gases

Modern “Service businesses” in the Czech

Republic

A few statisticsYear 2005

Agriculture

Industry and construction

Service industries

Other

A few statistics

•56% of all employees are

in the service sector

•53% of those are women

The main service industries

• Tourism

• Retail

• Accommodation

• Boardingie: Restaurants and catering

• Banking & Finance

• Post and Telecommunications

Jachymov Radon Spa

Karlovy vary spa

Beer spa

Czech chata

Other service industries• Information services, guides, translators• Cultural (Concerts; castles; programmes)

• Health (Private & public; insurance; prescriptions; “alternative” treatments)

• Transportation (city transport; taxis; car rentals; international logistics)

• Libraries (including e-government)

• Cleaning (Public and private; buildings and households)

• Education (includes specialised education)

• Consultants (entrepreneurial opportunities – eg: HR)

• Legal• Real estate

Some service businesses in Prague

• Business process outsourcing– Accenture; Ariba; Infosys

• IT and Logistics– DHL; Fedex; IBM; Tesco

• Customer support centre– GE Bank; Icon; Lufthansa; Phillips; Team Trackers

• Shared services centre– Exxon Mobil; Johnson & Johnson; Siemens; Tesco

• High-tech repair centre– Symbol technologies

Links

• Czech Statistics Office: http://www.czso.cz/eng/redakce.nsf/i/home

• Czech Republic (Official website): http://www.czech.cz

• About Czech service industries (you can open

this website with confidence – Richard):http://tinyurl.com/35wdx5

Thank you!