DOING BUSINESS IN CZECH REPUBLIC
Czech Republic (CZE) has been reporting trade surplus for several years, which in regard of 2013 country posted a record surplus (nearly $18bn). In other words, growth in exports is main reason of economic health. Country’s exports are largely to EU countries which Germany itself accounting for one third of it. (See Figure 1 & 2) FDI-inflow also boosts country’s productivity.
World Economic Forum reported Czech Republic as an “Innovation driven” economy, although country remained below average in Global Competitiveness Index sub-rankings compared to its Western neighbors.
After being ranked in 36th in GCI back in 2010, country gradually dropped to 46th in 2013. The main reason of this drop is that other countries rising up in a swifter pace. Additionally, corruption and inefficient government stated as two most problematic factors affecting country’s poor ranking. On the other hand, based on Heritage Foundation’s Economic Freedom list, CZE improved including investment freedom, business freedom, and freedom from corruption.
Due to recovery in Euro zone, country has been outlook 3.3% GDP growth for 2015.
It is an economy in transition. In the Doing Business web-site country’s challenges stated as “..slow pace of legislative reforms and industrial restructuring, planned healthcare and pension reforms, making the public procurement process more transparent, and a growing shortage of highly skilled technical workers.”
Demand has been increasing in a fast pace in couple of “prospect sectors”.(See Figure3) Although country’s population being very low, country has the highest per capita GDP of any nation in Central and Eastern Europe.
As a result; country is representing business opportunities for many exporters.
Market Entry Strategy:
First of all, export-market is more than a new-to-export can swallow. In other words, if one is targeting to enhance its global reach, CZE representing a potential including its disperse population and high usage of English among community.
In-country agent is a plus such as a distributor or an agent. Communication network is well-developed. Also finding an local agent is an easy step to conduct and they manage many activities including custom clearance, marketing or after-sales services.
Access to financing is becoming a problem for Czech firms and creating a possibility that firms from more developed economies will have a competitive edge. Currency fluctuations reported minimal in 2013. Country having EU regulations is a plus for Turkey right now.