Focus2001 1
Focus2001 1
Focus2001 1
Good News from Czech Commercial Offices in the USA • February 2001
→ Editorial Note
Czech Trade Focus is designed to provide practical information on trade and investment opportunities with the Czech
Republic. The newsletter is published every other month for free circulation. We hope that it will meet your interests, and
would appreciate your comments, feedback on the contents, and interesting contributions, which we might publish in the future.
- Economic and Commercial Section, Embassy of the Czech Republic in Washington, D.C.
→ Economic Outlook
• Year 2000: Economic Turnaround
In the United States, the year 2000 was marked by disappointment with the new economy, concerns about slowing growth,
and stock markets on the downward slope. On the other hand, many industries with e-commerce at the forefront seem to be
booming in the Czech Republic. The last quarter of 2000 was the most successful period ever for Czech electronic trade with sales
totaling more than $2 million. For the whole year 2000, on-line sales exceeded $5 million. The year 2000 also saw a large volume of
green-field foreign investment in the Czech Republic in high-tech industries.
The consumer price index grew only 0.2 percent in December, suggesting that there will be no near-term rate hike by the
Czech National Bank. Yearly inflation rate reached 4.0 percent in December and the average 12-month inflation rate reached 3.9
percent.
The government's investment scheme seems to be paying off: the state-run CzechInvest agency announced that it had
succeeded in attracting 1.5 billion dollars of direct foreign investment in 2000, a rise of almost 120 percent as compared to 1999.
CzechInvest said the projects would create almost 18,000 new jobs in the country over the next few years.
Following is a list of the TOP 20 Czech products exported to the United States by Harmonized Tariff Schedule (HTS)
according to the U.S. International Trade Commission, ranked by 2000 exports:
1) electrical capacitors: HTS 8532 11) flat-rolled iron or non-alloy steel products: 7208
2) glassware for table, kitchen, indoor decoration: 7013 12) taps, cocks, valves and similar appliances: 8481
3) glass beads, imitation stones, ornaments: 7018 13) furniture and parts thereof: 9403
4) apparatus for electrical circuits: 8536 14) diodes, transistors, semiconductor devices: 8541
5) footwear of rubber, plastic, leather: 6403 15) machines, knitting, stitch-bonding machines: 8447
6) parts for tractors and public-transport vehicles: 8708 16) pianos, harpsichords, other keyboard instruments: 9201
7) automatic data processing machines: 8471 17) pumps for liquids, liquid elevators: 8413
8) ammonium salts and hydroxides, lecithins: 2923 18) seats, whether or not convertible into beds: 9401
9) electronic integrated circuits and microassemblies: 8542 19) lathes for removing metal, turning centers: 8458
10) lamps and lighting fittings, illuminated signs: 9405 20) spark-ignition parts for combustion engines: 8409
Czech Trade Focus No.2 (February 2001)
• GenCorp - GDX Automotive, the industry leader in sealing combined, none of the networks experienced any significant
technology for sport utility vehicles based in Farmington Hills, problems.
MI, announced that it acquired Draftex International, making the
company the second largest automotive vehicle-sealing supplier • Brisk Tabor has introduced a revolutionary new spark
in the world. The acquisition added 2 manufacturing facilities plug "Silver", suitable for use in natural gas combustion
in the Czech Republic - in Odry and Pribor to their list of engines. The plugs have a silver-covered electrode and their
production plants in 8 countries. The Czech branches will production costs 30 percent less than the conventional spark
supply the company's European customers, including plug. Brisk plans to export up to 65 percent of the total
Volkswagen, BMW, Ford, Mercedes and Renault. According to production. Unlike gasoline combustion engines, natural gas
GenCorp Senior Vice President Thomas Peoples, the company engines produce minimum toxic waste and 25 percent less
appreciates the high technical skills of the employees in both carbon oxide.
Czech facilities and is pleased to have included the Czech • Czech software developer Qbizm Technologies
Republic into the GenCorp global marketing strategy. revealed its new business plan to outsource Internet
• Czech beer "Budweiser-Budvar" (Budvar Brewery) was software development from the U.S. to the Czech Republic.
awarded the "Best Czech Lager" and Hostan the "Best Beer The project is based on the simple fact that the cost of software
Brewed by a Small Brewery" (production up to 200.000 development in the Czech Republic is significantly lower than in
hectoliters) in the competition by the Beer Courier Magazine. the United States, while the quality can easily be the same.
Qbizm ranks among the best Czech developers and recently
"Velkopopovicky Kozel" (Brewery Velke Popovice) was voted
opened a small office in Silicon Valley.
the best dark beer and "Velvet" (Prague Breweries) was voted
the best boutique beer. The Czech brewing tradition hosts a • 2000 was the most successful of the last ten years for
large variety of high quality beers offered by more than 60 the Czech Republic's tourist industry. Czech newspapers
breweries in the country, as noted by several U.S. importers attribute the record-high sales to the lasting favorable financial
and distributors. Beer specialties including the famous "Pilsner situation in the United States and throughout Western Europe,
Urquell" brand has become one of the fastest growing exports as well as stabilized economic environment in the Czech
from the Czech Republic to the US. Republic. Experts also noted that Czech catering and
accommodation facilities are now comparable to the most
• The Litovel brewery has become the first brewery in the
developed countries. The Czech Statistical Office was quoted
world to use highly pure water based on Bio-Control as saying that the number of overnight stays in Czech hotels for
technology developed by Japanese and Hungarian scientists. the year 2000 rose by over 18 percent, as compared to 1999.
• Citibank is launching retail services in the Czech Almost 90 million foreign tourists reportedly visited the country
Republic to complement its corporate division, which has been from January through October 2000.
active in the country since 1991. The bank says it expecs to • Flight tickets were the best-selling on-line commodity in
attract 50,000 to 75,000 clients within a year. Citibank has the Czech e-commerce industry in the year 2000, with sales
confirmed that the bank will rely on new distribution channels exceeding $1 million. These sales account for approximately 20
such as phone and Internet banking, but would also build up a percent of the total turnover in Czech electronic trade.
network of approximately 10 branches. The bank will gradually According to a survey conducted by Deloitte & Touche, home
build its own network and is not planning any acquisitions of appliances came second, followed closely by music recordings.
local banks. Representatives said at a news conference that
Citibank would not compete in prices. The Czech market is • The Czech Republic intends to join the world's most
dominated by Erste Bank's Ceska Sporitelna, KBC' unit CSOB developed countries in the World Bank and start
and the soon-to-be-privatized Komercni Banka. At least three participating intensively in the World Bank's development
other smaller banks recently launched a retail drive. programs. At the same time, the country will stop using the
World Bank funds. According to Czech Finance Minister Pavel
• A sharp increase in exports to the EU helped
Mertlik, the Czech Republic will sign an agreement regarding
Volkswagen's Czech unit Skoda Auto to raise sales by 13 entry to the graduation process at the World Bank and the IMF
percent yearly to 435,403 cars in 2000. Skoda sales in Western Spring Meetings in Washington, D.C.
Europe rose 19.2 percent to 229,109 cars, while domestic sales
grew 6.5 percent to 80,882. Skoda had earlier reported that it • Winterthur, a Credit Suisse Group business unit, paid
raised production by 21.5 percent to 450,911 cars last year. The $70 million for a 93 percent stake in the largest Czech
Economist magazine recently rated Skoda Auto as the most pension fund, Vojensky Otevreny Penzijni Fond (VOPF). The
successful company in post-Communist Europe. Skoda's purchase was made as a part of Winterthur's strategy to
unassailable position on the domestic market is due to their become the pace-setting insurance company in its major
best-selling brands such as Octavia, Felicia and the highly markets. The move gives Winterthur a share of about 25
successful new compact Fabia, which came in fourth at the percent in the Czech supplementary pensions market, including
European Car of the Year 2000 awards. VOPF's 340,000 clients. Winterthur will have 550,000
customers and about 450 million Swiss francs worth of
• U.S. digital imaging leader Presstek is negotiating with mahaged assets in the Czech Republic.
Czech Adast Adamov to purchase 400 ADAST 507DI printing
machines. According to Adast representative, the Czech • A unit of the Austrian wood, paper and pulp trader
company is also prepared to negotiate a possible acquisition by Heinzel will take over the dominant Czech pulp producer
the U.S. partner. The merger would radically change Adast's Biocel. Heinzel will pay CZK 1.93 billion ($51 million) for the 94
chances on the world market. percent stake, or CZK 620 per share. The stake was mainly
held by investment funds controlled by a unit of Czech bank
• Cellular phones were perhaps the most popular gift in
CSOB. The sale remains subject to the approval of the Czech
the Czech Republic this Christmas. According to estimates, Anti-Monopoly Office.
there were 4.4 million mobile phone users among the Czech
Republic's 10 million citizens just after Christmas. All three • Moody's Investors Service announced an affiliation
Czech mobile operators had expected a steep rise in the with the Prague-based Czech Rating Agency CRA), the
number of clients and had reinforced their networks to handle largest credit rating agency in the nation. CRA is a subsidiary of
increased traffic around the end of the year. Although the 4 Pragocontact Corporation, located in Washington, DC. The
million Czech mobile phone users exchanged an incredible 43 primary activities of the new relationship will include technical
million text messages on Christmas Eve and New Year's Eve
assistance, joint research production, and the promotion of • Otis Elevator Company plans to increase its current
credit analysis awareness in the Czech Republic. escalator production in its plant in Breclav, Czech Republic.
Otis, the U.S. subsidiary of the company United Technologies
• Vishay Intertechnology plans to build a new plant for Corporation, will transfer a part of its production to Breclav from
ceramic capacitors production in the Czech Republic within Germany. The company will have a world market share of
the next two years. Vishay, a manufacturer of passive electronic approximately 30 percent in escalator production. Otis has
and semiconductor components based in Malvern, PA, already invested about 15 mil. USD in Breclav and plans to
currently has 5 manufacturing plants and 1,700 employees in manufacture 1,500 escalators a year in the town.
the Czech Republic. The new plant will be located in Dolni
Rychnov and will employ 400 people. Vishay is the world's • UNI CZ Sobeslav signed a long-term contract with the
second largest manufacturer in its sector with sales last year U.S. company Teleflex Automotive Group, based in Troy,
exceeding $1.5 billion. Michigan. Under the contract, Czech engineering company UNI
CZ will supply 1.5 million brake system components by 2003.
• Akuma, a successful manufacturer of automobile Their parent company Teleflex employs 16,000 people
batteries in the Czech Republic, intends to invest 620 worldwide.
million euros into its new production facilities and
machinery in the United States. The company plans to add
batteries designed for use in telecommunications to its product
range. Akuma is part of the Italian concern Fiamm.
Precision engineering is one of fundamental manufacturing sectors in the Czech economy. Many of the world's leading
specialist suppliers have Czech subsidiaries; the country now hosts more than 40 percent of Europe's leading firms in the
automotive components sector. Many U.S. and European companies and associations, such as the U.S. Association for
Manufacturing Technology, run their regional offices from Prague. Czech engineers are both highly skilled and resourceful. Many
multinational firms are performing leading edge R&D and product & software development work either directly or through sub-
contracted Czech partners. Following are only a few examples of why foreign engineering firms rely on the Czech Republic to deliver
product innovation or to provide manufacturing cost benefits:
• Czech workers have established a track record of implementing flexible & innovative working practices.
• Surveys suggest that well over half of the foreign-backed manufacturing firms have non-unionized labor.
• A quarter of the firms are operating seven days a week, while almost a quarter do significant R&D.
• Czech wages and 'on costs' are just a fraction of the EU levels, while quality of the final output is equal or comparable.
• The Czech Republic spends more on R&D than other competing countries.
In addition to favorable manufacturing conditions, the CzechInvest Agency offers investors a number of incentives, including
tax relief, customs & labor grants, and other state or local benefits. The agency's database of over 150 greenfield & brownfield sites
is able to satisfy the stringent logistical, infrastructural and environmental requirements. A new "Supplier Development Program"
helps foreign manufacturers identify the most suitable local suppliers.
Kovosvit manufactures vertical machining centers, CNC two-thirds of its staff are deployed to work on product
lathes, lathe centers & radial drilling machines. It exports more development. Working primarily in the automotive sector,
than 70% of its products, mainly to OECD countries. The south Amest's biggest customer is VW-Škoda Auto. The company
Bohemian company uses an Internet-based diagnostic system also works for "first-tier" component suppliers such as Meritor,
to speed up the servicing of its machines in the USA, using Visteon & Kolbenschmidt Pierburg.
automatic remote diagnostic units to pass service data to
Kovosvit. Simultaneously, fault analysis and the correct TOS Varnsdorf is a manufacturer of horizontal drilling
response is then sent back to the technician in the USA during machines and work centers. TOS Varnsdorf has responded to
his service call. customer requests by creating an effective way to link together
multiple boring machines (ranging from simple manual
Amest is a Czech-owned company that devises new machines to full CNC equipment).
measuring techniques for serial production machinery. Up to
• Foreign Investments
Aerospace resistant nuts & bearings made in the Czech Republic. GCE
Airplanes: Boeing exports 80% of its Czech production. A recently introduced
Propellers: Hamilton Standard burner, designed in the Czech plant, gained much faster
Special Alloy Machining: Triplex Lloyd acceptance to the EU markets than the parent company had
Hamilton Standard, a part of United Technologies Corp., anticipated. AMF Reece, based in Moravia, operates central
manufactures aircraft propellers in a joint-venture with the Avia Europe's only manufacturer of top-quality industrial sewing
company. Triplex Lloyd operates a Prague joint-venture called machines.
Walter Deritend, which supplies precision castings made from
cobalt, nickel & steel alloys for critical components, such as Components
turbine blades for the aerospace sector and medical products. Tubes: Sandvik, Mannesmann
Relays: Siemens, Euro-Matsushita
Instrumentation Machined Parts: Frencken
Optical: Tyrolit, MW, Opticon Sandvik makes precision stainless steel tubes and pipes in a
Precision: Mahr plant in North Bohemia. Many of such tubes end up on the bed
Tyrolit owns stakes in three joint-ventures with Meopta, the of the North Sea in critical oil exploration and pipeline
country's largest optical equipment firm. Meopta specializes in applications, or in such far-flung markets as Canada and India.
optical finishing and employs over 500 people. Mahr runs its Siemens operates multiple Czech manufacturing plants and is
high quality production center in North Bohemia and is quite expanding its relay & low-tension switch factory in east
satisfied with the high levels of quality that it has achieved. Bohemia. The Dutch firm Frencken makes precision-machined
parts for Airbus autopilot systems and for Ariane space rockets
Machinery supplied by DaimlerChrysler Aerospace.
Automotive: Erwin Junker
Turbines: Sanborn Tool-Making
Engines: Leroy Somer, Jungheinrich Tools: Festo, Merona, Brawe
Control Equipment: GCE Tools & presses: Groupe FSD
Sewing Machines: AMF Reece Festo Tool Technik is expanding its export of electrical tools
Erwin Junker's German parent won a special Formel-Q98 from its Narex subsidiary in North Bohemia under the new
award from VW, the only machine-manufacturer to be awarded ProTool trademark. Swiss-based Merona operates multiple tool-
for exceptional quality. Many of its machinery components were making plants in the Czech Republic.
made in the Czech Republic. Sanborn's hydro-powered turbines
use special pressure-resistant screws and high temperature-
→ Travel Tips
• Visa Requirements be obtained subsequently after arrival. Since the processing
Although U.S. citizens do not need a short-term visa, the time may be very long in some cases, business travelers
Czech authorities do require a visa for working purposes, study, seeking temporary residence in the Czech Republic should
and general stays over 90 calendar days. All visas must be contact their respective Czech consular offices as soon as
issued by Czech Embassies or Consulates abroad, and cannot possible.
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