I created CzechInvest in 1992 to promote the Czech Republic as the ideal European location for foreign companies seeking to establish operations in a country with a stable political and economic environment combined with highly skilled and productive workers.
Over the past three years the impressive list of foreign investors who have chosen the Czech Republic has contributed to the growth and expansion of our economy. These investors have brought much needed capital, technology and modern management skills to hundreds of Czech companies and thousands of Czech workers. They have also been major contributors to our improving export performance.
But, there is no doubt that the Czech Republic has also been good for foreign investors. Comparative studies conducted by CzechInvest of the Automotive, Electronics and Precision Engineering sectors clearly demonstrate our competitive strengths and hence the potential for profit available.
Key strengths include declining levels of inflation, a stable and convertible currency, a decreasing tax burden and an increasingly productive work force. The Government intends to maintain and improve these attributes in the coming years. And they are the most attractive incentives a country can offer any company, national or international, seeking to grow and expand.
I believe that they make the Czech Republic a serious contender for any mobile manufacturing investment looking for a location in the new Europe.
I am pleased to see that CzechInvest has developed in accordance with investor's needs. Through their foreign offices, extensive network of regional representatives, and recently created matchmaking service, CzechInvest is able to provide foreign companies with all the relevant information and assistance they need to assess and develop a commitment to the Czech Republic.
I wish both CzechInvest and our growing number of foreign investors continued success in the coming year.
CzechInvest Results
Since its foundation up to February 29th, 1996 CzechInvest successfully completed 19 projects with a total value over $250 mil. More than 5700 jobs have been created or safeguarded.
Vaclav Petricek, Deputy Minister of Trade and Industry
In the course of its three years of existence CzechInvest has accomplished concrete investment results, firmly establishing a valuable role for itself in the Czech economy. A notable contribution to this result has been provided by the Steering Committee, made up from representatives of a number of Ministries and from the private sector. This structure ensures the support of all important players in the Czech Republic for an organisation charged with the critical task of making it as easy and attractive as possible for foreign companies to establish operations in our country. It means that CzechInvest staff have access to decision makers at the highest level throughout industry and government.
My thanks to those members who have helped guide CzechInvest in its successful development to date. I know they will continue to provide valuable support and assistance in the coming year.
Members of the Steering Committee are listed below:
Ing. Ales Barabas, Zivnostenska banka Ing. Pavel Dzida, Confederation of Industry Ing. Jan Fisher, Czech Statistical Office Ing. Petr Gandalovic, Ministry of Foreign Affairs Ing. arch. J. Amos Havelka, CSc., CzechInvest Ing. Pavel Klima, Ministry of Finance Ing. Oldrich Macak, Ministry of Trade and Industry Ing. Vaclav Petricek, CSc., Ministry of Trade and Industry Ing. Libor Prochazka, Investicni a postovni banka Ing. Petr Prochazka, Czech National Bank Ing. Milan Ptacek, Komercni banka Ing. Vaclav Smolak, Association of Entrepreneurs Ing. Alexander Safarik, Economics chamber of the CR Ing. Vit Stepanek, Ministry of Economy of the CR Ing. Josef Tauber, CSOB
Jan A. Havelka - CEO CzechInvest
CzechInvest is a market driven organisation. It is committed to providing its customers with quality care through the provision of information, advice and contacts to assist foreign investor in the Czech Republic. CzechInvest's structure reflects its commitment to providing customer focused services. The Marketing Department provides general information on economic and trading conditions as well as in-depth surveys on key industrial sectors. Information on specific local conditions including site and labour availability is provided by the Regions Department. For investors wishing to operate their own production facility, the Greenfields Department aims to help them manage the investment process from initiation to completion. While for those investors wishing to identify a local partner, the Joint Venture Department provides a matching service.
Significant operational achievements
1995 was a year of growth and expansion of our marketing activities. Additional staff were hired and trained and offices were opened in Paris, London and Dusseldorf. It is planned to open a fourth office in the United States during 1996. A Japanese office is planned for 1997. The purpose of these foreign offices is to enhance CzechInvest's marketing abilities and accessibility to company decision makers located in these countries. During the year, highly targeted direct marketing campaigns were conducted in Germany, France, the United Kingdom, Japan and the United States. The results have been concrete investments in the automotive, electronics and other sectors. The most significant of these has been the commitment by Panasonic to invest $66 million, announced in January 1996. A number of other projects have good potential to become investment commitments in the near future.
Other Highlights
- During the year, CzechInvest helped the following companies invest in the Czech Republic: ITT Automotive, Johnson Controls, Denon, Philips, Schade, Arrow International, Lefevere, PLM, and Hualon.
- In-depth studies have been completed on the Electronics and Precision Engineering sectors. The next major study will cover the Chemical industry, including Pharmaceuticals.
- The Joint Ventures department began to develop a database of Czech companies to identify and assess potential domestic partners for the department's match-making services.
- The creation of a contact management system and database was initiated to improve customer care from the first contact to production start-up and subsequent expansion.
- To provide further readily available services for the greenfield investor, the Association for the Support of Foreign Investors was founded in co-operation with CzechInvest in early 1996. Members of the Association provide valuable services ranging from engineering feasibility studies and recruitment services to real estate, taxation and management consultancy.
Staffing
CzechInvest invests heavily in its most valuable asset, its people. Through recruitment of qualified, young professionals and continued professional training and personal development, CzechInvest's staff are equipped to anticipate and respond to the needs of the inward foreign investor. In 1995, six additional executives and an additional data support operator were hired. Executive training included a project management skills course at the Czech Management Centre.
Finally, I wish to acknowledge the contribution PHARE has made to the agency and especially the professional advice of two experienced FDI experts from Scotland, Howard Moody and David Brown.
Organisational Structure of CzechInvest
This information was correct on November 11 1996
The following personnel changes have now occurred:
Tomas Mifek has now left the company Martin Jahn is now head of the Greenfield Project in Chicago, USA The London office contact is now Vladimira Rysankova Lucie Bizova and David Hriciste work on the Greenfield Project Libuse Hartmanova is now working on the Greenfield Project as are Vitka Eliaskova and Petr Sevcik The Legal Advisor is now Leona Gree
Regional Development
The Regions Department has developed a network of representatives throughout the Czech Republic in order to identify suitable sites and buildings for inward investors and to provide regional based information. The Department is heavily involved in training the regional staff and assisting them in setting up local economic development units which will help them deal with CzechInvest‹s customers and form the basis for broader-based economic development initiatives in the regions.
During the past year the Department actively participated in a City Certification Program. The pilot stage of this program was realised jointly between CzechInvest, the Ministry of the Economy and George Mason University (GMU) Washington.
The City Certification Programme aims to provide cities in the Czech Republic with the skills and resources required to service the needs of foreign investors. The programme includes training, consultancy and a number of study tours for city staff in Europe and the US, funding for which has been provided by the Mellon Foundation, US Aid and the PHARE programme
CzechInvest now has a network of 15 regional representatives who have contributed to the development of a unique sites and buildings database which, by the end of 1996 will contain 100 major sites and buildings suitable for large foreign investment projects.
Significant projects assisted by CzechInvest
The Joint Venture Department assisted in the successful acquisition of the Czech Company Cottex Hronov by Textonia, the Malaysian subsidiary of the Hualon Group of Taiwan. Cottex Hronov had been undergoing bankruptcy proceedings for two years at the time of the acquisition. The new company, Textonia Czech Ltd., intends to completely restructure and modernise to produce textile fabrics of the highest quality. Total investment should reach $ 23 million and create 1000 jobs.
In the case of Arrow International, a manufacturer of medical equipment, CzechInvest provided extensive support in dealing with local legal procedures involved in establishing a new greenfield production facility of advanced technology equipment. Arrow selected the historical city of Hradec Kralove in which to invest $15 million. The city was selected due to the need to locate the manufacturing operation close to the most capable and highly developed cardiology surgical facility in Central-Eastern Europe, found in the city's Faculty of Medicine of Charles University.
In January 1996 Matsushita Electric Industrial Co., makers of brand names Panasonic, Technics and Quasar announced its decision to invest $66 million to create a new Czech subsidiary, Matsushita Television Central Europe s.r.o. The company will build a new manufacturing facility in Pilsen in Western Bohemia to produce Panasonic TVs . The project is the first major Japanese greenfield investment in the Czech Republic and the company's first in the emerging market countries. This project is the largest investment mediated by CzechInvest to date.
The new plant will be built on the Bory Field site in Pilsen. Construction including fitting with plant from Japan, is to be completed in 1996 and production is to begin in April 1997 at 300 000 units annually and employing 350. Full capacity will reach one million units a year, employing 1500. Further investments to increase capacity and broaden the product range are possible. Tooling will account for $54 million of the total investment. Production will mostly be for export to other European countries. Based on previous experience, Matsushita expects Czech and local foreign parts suppliers to supplement imported components which will strengthen the electronics component supply base.
Schade KG, a German manufacturer of automotive components, had been trying to establish a manufacturing presence in the Czech Republic for two years in collaboration with the Ministry of Privatisation without success. Following contact with CzechInvest in 1994, the agency provided alternative site options and expedited the negotiation process. Schade invested DM 50 million to purchase CZ Blatna's existing facilities and refit with completely new technology. Currently 450 are employed in an area with 7% unemployment. Schade had been considering re-locating to France and the UK to reduce its labour costs before deciding on the Czech Republic. Further investment is possible as German labour costs continue to pressure manufactures.
A part of the world-wide Nike Corporation, Canstar of Canada established a manufacturing presence in the form of a greenfield project at Zdar nad Sazavou in South Moravia, a town approximately 130 kilometres East of Prague. Currently, Canstar employs more than 400 persons and has, to date, invested $10 million. At Zdar nad Sazavou, the company manufactures Bauer Ice and In Line skates, exporting 95% of production to over 20 countries in Europe. Both Nike and Canstar are suppliers to the Czech National Ice Hockey Team.
When ITT was planning to build a new plant to manufacture passenger car brake boosters in the region, the Czech Republic was considered along with Poland, Hungary and Slovakia. CzechInvest provided ITT with information ranging from macro-economic conditions to the labour situation that influenced ITT to select the Czech Republic. The decisive factors affecting ITT's decision were the country's economic and political stability. The high skill level of the labour force and low manufacturing costs also weighed heavily in the Czech Republic's favour. Through its regional network and local company contacts, CzechInvest was able to put ITT in contact with local construction companies, personnel management consultancies, and provide inspection tours of 45 potential sites to build a new plant. The city of Jicin was finally decided upon as the location. The total investment ITT has pledged is $15 million.
Selected projects assisted by CzechInvest
For further information contact:
HEAD OFFICE CzechInvest, Politickych Veznu 20, CZ-112 49 Praha 1, Czech Republic. Tel: + 420 2 24221540 Fax: + 420 2 24221804 USA CzechInvest, Suite 918A, The Merchandise Mart, 200 World Trade Center, Chicago ILL 60654, USA. Tel: + 1 312 245 0180 Fax: + 1 312 245 0183 Email: czechin@ais.net United Kingdom CzechInvest, 95 Great Portland St, London W1N 5RA, U.K. Tel: + 44 171 2919922 Fax: + 44 171 4368300 Germany CzechInvest, Wilhelm-Marx-Haus, Heinrich Heine Allee 53, D-40213, Dusseldorf, BRD. Tel: + 49 211 8307240 Fax: + 49 211 8307366 France CzechInvest, 6, rue des Renaudes, F-750 17, Paris, France. Tel: + 33 1 42 12 02 52 Fax: + 33 1 42 12 02 54
