Orthopaedic equipment sales are hindered by the flawed reimbursement system.
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"As we conclude and sign off on the CEE sourcing projects for textile and refinery equipment products, I would like to express my appreciation to you and your team for your support. [...]"
Global Market Development Analyst, One of the top five oil producers globally
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| Why to enter this market? |
- Stable political and economic environment
- Geographical location
- Well developed infrastructure
- Industrial traditions
- Strong local supplier base
- Highly educated workforce – both secondary and tertiary
- Member of the EU
- R&D, designing and educational resources
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Business and economical environment
For some this may sound odd, but prior to World War II the Czech Republic was one of the richest and most technologically advanced countries in Europe. Nowadays, the country has a strong industry which easily competes with Western players. The country is home to key parts of international conglomerates, such as Skoda within the VW group.
Having the second highest GDP per capita in the region, low unemployment and inflation rates, the Czech Republic has nearly managed to catch up with the countries of the old EU despite of the GDP growth rate decrease to 3.2% in 2008. A skilled workforce pool, which easily manages to keep-up with the highest quality standards, an attractive domestic market and unique location, as a neighbour of Germany, Austria, Poland, Slovakia and Hungary, the Czech Republic is one of the best investment locations for high quality production or for logistics centres in the region. The country also has a strong educational and R&D base and a developed infrastructure. One of the drawbacks is a persisting relatively high corporate income tax rate of 20% which is planned to decrease to 19% in 2010.
In 2008 the value of the Czech foreign trade in terms of exported goods reached EUR 99bn in current prices while the value of imports amounted EUR 95.97bn. The balance of international trade reached a surplus of EUR 2.78bn. In the first quarter of the 2009 the value of exports from the Czech Republic decreased by 17.5% compared with Q1 2008 and value of imports followed the trend declining by 18.8%. However, despite worse results that again created a surplus of exports over imports at EUR 1.3bn slightly above the result in the corresponding period of the 2008. The FDI (Foreign Direct Investments) in the Czech economy has amounted at EUR 4.9bn in 2008 while in 2009 forecast is recorded at EUR 3.5bn .
Inflation in the Czech Republic has reached a level of 6.3% in 2008 and the forecast for 2009 is nearly 1.7%. In 2010 the inflation is forecasted to hike again to 6.1%.
In terms of corruption its perception in 2008 has been recorded by Transparency International at the level of 5.2 (CPI – Corruption Perception Index). The same level has been recorded the previous year. However, compared with the other countries in the ranking Czech Republic rank decreased in 2008 by 5 points to the 45th position.
The unemployment rate in the Czech Republic has reached 5.5% in 2008 while in 2009 it is forecasted at the level of 7.6%. In 2010 the number of those registered as unemployed is expected to face a slight increase to the level of 8.2%.
In terms of salaries paid in the Czech Republic their average value was recorded at EUR 944 in 2008 (21% up from EUR 781 in 2007) and is forecasted to decrease by 7% to the level of EUR 963 in 2009.
Within the most attractive sectors of the Czech economy the following might be mentioned:
- Stable political and economic environment
- Geographical location
- Well-developed infrastructure
- Industrial traditions
- Strong local supplier base
- Highly educated workforce
- Member of the EU
- R&D, design and educational resources
Business and economic environment
Prior to World War II, the Czech Republic (Czechoslovakia) was one of the richest and most technologically advanced countries in Europe. Today the country has a strong industry which competes easily with Western companies. It is home to key parts of multinationals, such as Skoda within the VW group.
With the second highest per capita GDP in the region, along with low unemployment and inflation, the Czech Republic has almost succeeded in catching up with the countries of the old EU. With a skilled workforce, which easily maintains the highest standards, an attractive domestic market and a unique location, as a neighbour of Germany, Austria, Poland, Slovakia and Hungary, the country is one of the best investment locations for high quality production and for logistics centres in the region. It also has a strong education and R&D base, along with a developed infrastructure. One of the drawbacks is a relatively high corporate tax rate of 19%. However, the country is working on this: for example, the rate was reduced from 24% in 2007 to 19% in 2010. The small, open, export-driven Czech economy remains very sensitive to changes in the economic performance of its main export markets, and that of Germany in particular. When western Europe and Germany entered recession in late 2008, demand for Czech goods slumped, and this led to double figure reductions in industrial production and exports. As a result, real GDP fell by 4.1% in 2009, with most of the decline occurring during the first quarter. Real GDP has, however, recovered slowly, with positive quarter-on-quarter growth starting in the second half of 2009 and continuing throughout 2010.
In 2010, Czech foreign trade in terms of exported goods was worth EUR 84.4bn in current prices, in comparison with EUR 81.6bn in 2009. Imports were worth EUR 79.1bn, in comparison with EUR 74.7bn the year before. The balance of international trade thus reached a surplus of EUR 5.3bn. The FDI (Foreign Direct Investment) figure in the Czech economy was EUR 4.9bn in 2008, whereas the 2009 estimate is EUR 3.5bn.
Inflation in the Czech Republic has remained low in the past two years, mainly because of the recession: 1.5% in 2010 and 1% in 2009, in contrast to 6.3% in 2008, but it is expected to rise again, to 2% in 2011.
The level of perception of corruption in 2010, recorded by Transparency International, was medium, with the CPI (Corruption Perception Index) standing at 4.6, in comparison with 4.9 in 2009 and 5.2 in 2008. The country fell in the ranking from the 45th least corrupt country in the world in 2008 to 53rd in 2010.
The unemployment rate in the Czech Republic was 7.1% in 2010, an increase in comparison with 5.5% in 2008, but a reduction in comparison with 8% in 2009.
The average salary in the Czech Republic was EUR 944 in 2008 (a 21% increase in comparison with EUR 781 in 2007). However, the average varied considerably during the economic crisis: it increased to EUR 963 in 2009, only to fall to EUR 945 in 2010.
The following stand out among the most attractive subdivisions of the Czech economy:
- The car industry
- Business process centres
- Construction
- Aerospace
- Electrical engineering and electronics
- High-tech engineering
- Life sciences
- Medical appliances
- IT and software development
- Business support services
- R&D
The Czech Republic is expected to become a member of the Eurozone in the next few years.
Social environment
The population of the Czech Republic was 10.2m in 2010, making it the 14th largest country in Europe in terms of population. The average age in 2010 was 40.8, but there was a modest gap between men and women: 39.2 for men and 42.5 for women respectively. In Czech society women outnumber men by 5%. In terms of nationalities, the major groups are: Czechs 81.1%, Moravians 13.2%, Silesians 0.4%, Slovaks 3.1%, Germans 0.5%, Gypsies 0.3%, Poles 0.6% and others 0.2%.
With regard to education, the Czech Republic has a well-developed infrastructure and 15.5% of all students in the 2006/2007 school year were enrolled in further education courses. A majority of people in the country declare themselves to be atheists (unspecified 8.8%, unaffiliated 59%), possibly a legacy of communism and religious dissent. The latter can be traced back to the Middle Ages, when the followers of Jan Hus encouraged the Catholic Church to reform. Of those Czechs who claim an affiliation with religious groups, 26.8% are Roman Catholic, 2.1% Protestant and 3.3% other.
Infrastructure and technological environment
The Czech Republic has considerable research and development potential, because of its advanced technical culture and the vast numbers of diverse organisations providing such services in various areas: private, state-owned and educational activities. For example, Skoda cars (part of the Volkswagen group) are both manufactured and developed at the company HQ in Mlada Boleslav, to the north of Prague.
The Czech energy industry uses nuclear power stations, coal powered plants (both hard coal and lignite), gas and renewable resources (hydroelectric, wind, etc.). There are two nuclear power plants in the Czech Republic, in Dukovany and Temelin, with a combined capacity of 3,760 MW. There are also 10 coal power stations with a capacity of almost 11,000 MW and hydroelectric plants capable of producing more than 2,100 MW. CEZ, the former Czech national company and now a major energy provider, is the eighth largest company of this kind in Europe in terms of the number of customers served and the seventh in terms of market capitalisation. The Czech Republic also has deposits of coal and lignite, which makes it the 14th most prominent country in terms of recoverable world reserves and the 15th in terms of production.
Almost 66% of Czechs had access to the internet in 2009, one of the highest levels recorded in the region. With regard to mobile phone usage, the number of SIM cards already outnumbered the number of citizens by 22% in 2006, and the current figure is 39.2%.
The transport network of the Czech Republic consists of 9,620 km of railways and 128,582 km of roads. The country has an extensive network of motorways and expressways which connect almost all of the country’s major cities. 950 km of the roads are high quality. There are 45 airports with concrete runways, four of which, in Prague, Brno, Ostrava and Karlovy Vary, are international.
Political environment
The Czech Republic is a parliamentary democracy, with well developed political parties and the President as head of state. The last parliamentary elections took place in 2010 for the lower chamber of the parliament. Elections for one-third of the Senate are held every two years. The President is elected for a five-year term, and the next elections will be held in 2013.
In 2004 the country joined the European Union and, as a result, it has access to EU funds which support its development, with almost EUR 27bn being provided between 2007 and 2013. It must also be emphasised that the Czech legal system is harmonised with that of the European Union. Between January and July 2009 the country held the presidency of the European Union.
The country is a member of all major international organisations.
General data
Area: 78,866 sq km
Population: 10.2m (2010)
Capital: Prague (Praha)
Language: Czech
Ethnic groups: Czechs 81.1%, Moravians 13.2%, Silesians 0.4%, Slovaks 3.1%, Germans 0.5%, Gypsies 0.3%, Poles 0.6% and others 0.2%
National boundaries: Austria (362 km), Germany (815 km), Poland (615 km), Slovakia (197 km)
Major economic indicators
| |
2007 |
2008 |
2009 |
2010 |
2011f |
| GDP (EUR bn) |
127.2 |
148.6 |
137 |
139.3 |
143 |
| Population (m) |
10.3 |
10.3 |
10.4 |
10.2 |
10.2 |
| GDP per capita (EUR) |
12318 |
14245 |
13063 |
13656 |
14019 |
| GDP (constant prices y-o-y %) |
6.1 |
2.5 |
-4.3 |
1.7 |
2.6 |
| Exports, real, y-o-y (%) |
14.9 |
6.9 |
-7.8 |
3.5 |
|
| Imports, real, y-o-y (%) |
14.2 |
4.6 |
-7.3 |
6 |
|
| CPI (average, y-o-y %) |
2.8 |
6.3 |
1 |
1.5 |
2 |
| Central bank reference rate |
3.5 |
2.25 |
1.5 |
2.5 |
|
| Monthly wage, nominal (EUR) |
781 |
944 |
877 |
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| Unemployment rate (%) |
6.6 |
5.5 |
8 |
7.1 |
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| Net FDI (EUR bn) |
7.6 |
4.7 |
1.9 |
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| FDI % GDP |
6 |
3.1 |
1.4 |
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| FX reserves (EUR bn) |
23.7 |
26.6 |
28 |
29 |
|
| Exchange rate, USD AVG |
20.25 |
16.96 |
21.05 |
19.77 |
|
| Exchange rate, EUR AVG |
27.76 |
24.94 |
27.3 |
26 |
|
Last update: Q1 2011
Useful data
Currency: CZK
Exchange rate: CZK 1 = EUR 0.04
Time zone: GMT +1
Area code: +420
If you would like to find out more on the Czech Republic market opportunities please do not hesitate to contact us directly:
phone: (48 12) 292 22 50
faks (48 12) 292 22 99
e-mail: info@pmrconsulting.com
PMR Business Solutions in Czech Republic
Market reports Czech Republic
To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Czech Republic.
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Consulting in Czech Republic
PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
Market research in Czech Republic
PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses.
Case studies for Czech Republic
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