World Travel Guide

City Guide  - Prague  - Business
Business

Business Profile: The Czech Republic's principal industries are power engineering and fuels, metallurgy, engineering, glass, wood and armaments. The rapidly growing service industry is a major source of income with the related tourist industry the providing enough invisible income to help redress the trade deficit.

Global recession in 1996 revealed just how fragile the Czech 'economic miracle' actually was. Increased domestic demand and poor export performance have generated a growing deficit. Despite austerity packages in the two previous years, 1999 was a year of falling output, and rapidly rising unemployment. Unemployment figures show wide regional variations, not surprisingly, Prague, the country's commercial capital, shows a rate of just 0.5% while parts of North Bohemia and Moravia approach 10%. Approved budget deficit for 1999 was set at K?31 billion, rising to K?39.8 in 2000, however, the actual deficit forecast for 1999 now stands at K?65 billion.

Current difficulties stem largely from problems with the large banks. Enormous bad debt portfolios and unsalable collateral have led to a fall in bank share prices of nearly 80%. Megalithic conglomerates, largely 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 through exposure to bad debts in the former USSR. With the current difficulties, banks will not make loans without sound collateral and sources of venture capital have virtually dried up. This has led to a squeeze on the small and medium enterprises (SMEs) which should be at the heart of a dynamic economy.

Preparations for admission to the EU have also contributed to the fragility of the economy and the target date of 2003 has been called into question. The EU have identified four main problem areas - the need to reform financial markets, weak disclosure rules 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 cut down on smuggling; the need to deal with the rights of the Roma (gypsy) minority.

All is not gloom, however, since much of the Czech workforce is well trained (and willing to retrain), intelligent and hard working. Opportunities for venture capital investment, especially in the SMEs, could reap rich rewards, and low share prices offer attractive bargains. Large conglomerates are being broken 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 a warm people who greatly value hospitality. In some instances, when dining it will emerge that the bill has quietly been settled. If this happens, accept gracefully (considering the disparity in Czech and Western wages, this may also be a matter of personal pride) and try to find some later means of showing one's appreciation. Punctuality is essential and colleagues should be informed of any unavoidable delays.

A firm handshake and maintaining eye contact are seen as signs of honesty and sincerity, while overloud talking and interrupting as an attempt to obscure issues. The use of forenames is a mark of friendship; using them without permission is seen as insulting or demeaning. Degrees are considered important and should always be used in addressing correspondence (only the doctorate is used in direct address).

Czech society is still 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 dine at a colleague's home, a small gift is appropriate; a bottle of wine and flowers are the best presents. When offering or accepting a lift with a business colleague, the favoured location is the back seat.



Copyright © 2001 Columbus Publishing
    
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