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Business Profile |
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Prague
Economy
The Czech Republics’ main industries are power engineering
and fuels, metallurgy, glass, engineering, wood and armaments. The
fast growing service industry is a major source of income, with
the related tourist industry providing invisible income to help
redress the trade deficit. Global recession in 1996 revealed just
how fragile their ‘economic miracle’ actually was. Increased
domestic demand and poor export performance have created a growing
deficit.
Prague is the headquarters of
Czech business – 20per cent of the country’s
GDP is created here – although there is no central business
district and companies are located in all parts of the city and
suburbs. As heavy engineering moves outside the city, service industries
(financial, retail and telecommunications) and manufacturing industries
(electrical, transport and food processing) are increasingly prevalent.
Companies based in Prague include ABB,
Siemens and Philips.
Megalithic conglomerates, unchanged from their days as nationalised
industries, have been a constant drain on bank reserves.
Banks were hit by the collapse of the Russian economy in 1999, through
bad debts in the former USSR. Banks are still cautious about making
loans without sound collateral and sources of venture capital are
still very low. This has led to a squeeze on the small and medium
enterprises (SMEs), which should be the base of a dynamic economy.
The EU have identified four problem areas: the
need to reform financial markets, weak disclosure regulations and
a lack of enforcement have led them to be plagued by insider dealing;
the restructuring of the banking system; tightening of national
borders to reduce smuggling; and the need to deal with the rights
of the Roma (gypsy) minority.
Current unemployment in the Czech Republic is at approximately 9.3
per cent. The strong Czech Koruna is also a factor – although
good for tourism (and therefore certainly for the Prague economy),
exports, especially to the United States, have decreased in the
past years. Prague’s rate of unemployment is around 3 per
cent. Unemployment figures show regional variations and some areas
of the country, notably those in coal mining and steel production
areas, are above 20 per cent.
All is not gloom since much of the Czech workforce is well trained,
intelligent and hard working. Opportunities for venture capital
investment, especially in the SMEs, could produce rich rewards,
while low share prices offer some attractive bargains. Large conglomerates
are being split up and the companies that emerge should be leaner
and better able to compete in a global market.
Business
Etiquette
By and large the Czechs are people who value hospitality. In some
cases, when dining with Czech business colleagues, it will emerge
that the bill has quietly been settled. If this happens, visitors
should accept gracefully and try to find means of showing appreciation
at a later time.
Czech society is largely male dominated and, especially with older
businessmen, it is unheard of for a woman to pay for a meal, even
if she is the senior member of the team. If invited to a colleague’s
home, a small gift is appropriate – a bottle of wine or flowers
are best.
Initial business meetings are usually serious affairs, during which
even business partners refer to each other by title and surname.
The use of forenames is a mark of friendship. Using them without
permission is seen as insulting. Degrees are considered important
and should be used in addressing correspondence (only the doctorate
is used in direct address). Meetings can take longer and be more
formal than the average Western businessperson is used to. As the
old Communist bureaucratic ways give ground to capitalism, business
lunches are gaining popularity, especially with the younger generation.
Office hours are generally 08:30–17:00
and punctuality is essential – colleagues should always be
informed of any delays. Dress is conservative for older businesses,
while new companies are usually more relaxed. A jacket and tie for
men or smart suit for women is best for first time business visitors.
A firm handshake and eye contact are seen as signs of honesty and
sincerity, while overloud talking and interrupting are construed
as attempts to obscure issues. At first meetings, business cards
will be exchanged and an offer of coffee or drinks is commonplace.
Commercial Information
The following can offer advice and information:
The
Economic Chamber of the Czech Republic (HKCR), Freyova 27, 190
00 Prague 9 telephone (2) 2409 6111; fax (2) 2409 6222; e-mail:
info@komora.cz. |
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