DOING BUSINESS IN THE CZECH REPUBLIC
Like other former Soviet bloc nations, the Czech Republic economy is a transitional one which is moving from a state-controlled economy in the wake of the “Velvet Revolution” which brought an end to Czechoslovakia’s Communist dictatorship and paved the way for The Czech Republic to gain full independence from Slovakia in 1993. This process brought in the dawn of a more Anglo-style capitalist approach. This transition has both presented advantages and posed challenges for those intent on doing business in the Czech Republic.
Arguably the Czech Republic economy has performed well since the transition began, with the country excelling in automobile exports, enjoying one of the EU’s lowest unemployment levels, highest GDP growth rates and scoring highly in terms of economic freedom, ‘work-life balance’ and the ease of doing business. Geographically well-positioned, trade is vital to the Czech economy and generally governments ensure policies do not significantly restrict foreign investment. What’s more, setting up a business in the Czech Republic was made quicker, cheaper and easier in 2016 with entrepreneurs able to register their companies online.
Although bribery can still be commonplace, particularly in the public sector, the main issues people doing business in the Czech Republic often face is the innate mistrust harboured by many Czech professionals towards new contacts. This is one of the most distinct legacies of the old Soviet-style system. Patience and subtle persistence are needed to overcome the suspicion and doubt of Czech colleagues.
For professionals seeking to be successful when doing business in the Czech Republic carrying out research is essential. Find out what the background is of the Czech company you wish to work with and what their structure is. Discover who you are doing business with in order to anticipate how they will react when certain business issues arise. As the Czech business environment is relatively new and constantly developing, business structures vary from ex-state monopoly enterprises beset with the remnant bureaucracy of the former Soviet system to local start-up enterprises hampered by their short-termist approach. Meanwhile, depending on the age of your Czech colleagues, some may be advocates of the old Soviet-style systems, whilst younger co-workers are likely to favour, open approaches and western business models.
The World Business Culture website is a supportive source of advice, such as the fact that Czech professionals value punctuality and prefer time to plan ahead of meetings, to aid professionals aspiring to do business in the Czech Republic. Put the insights this site has to offer into practice and be on your way to business success in the Czech Republic!
The Czech Republic’s economy has, on the whole, performed very well since the structural and political changes of the 1990’s. Although growth stalled after the banking crises, it seems to have returned through a combination of public expenditure and direct foreign investment. Key indicators such as inflation and unemployment levels show reasons for optimism going forward.
The Czech Republic also scores very highly on many key indictors around ‘well-being’ with personal security, work-life balance, education and skills scoring particularly strongly. In all, the country seems to have come through the transition from Soviet satellite state to modern social economy much better than some of its Central and East European neighbours.
These factors lead us to conclude that the future of the country is bright and that doing business in the Czech Republic probably makes sound commercial sense. The economy is relatively strong, the country is geographically well-positioned, there is an educated workforce and a buoyant consumer culture – all the ingredients would seem to be in place for you to make a success of the Czech market.
However, as with all new markets you really need to do some research before you start to make any plans and it is important to take Czech business culture into account. For example, generational issues will come into play when starting to work with people in the Czech Republic. Are you dealing with people who were educated and worked during the former Soviet era or are your contacts younger professionals raised in a completely different period? Approaches to business can differ significantly between these two groups – and that’s just one of several cultural issues you should understand in advance of starting any business dealings in the country.
This country profile provides an overview of some of the key aspects of Czech business culture in a concise, easy to follow-format. The document includes information on:
- Background to business
- Business Structures
- Management style
- Women in business
- Top tips