Czech mate
As another major foreign investment deal eludes us again, this time when French car consortium Peugeot-Citroen chose a location in Slovakia over Radomsko, perhaps it is high time to look southwards and examine whether there is something we can learn from our neighbours.
"Poland should be able to present itself as more than just a source of cheap labour," said Petr Maryska, deputy commercial counsellor at the Czech Republic's embassy in Warsaw. "One major foreign investment will then attract others."
When the economic bond that existed between Council of Common Economic Assistance member countries was broken after 1990, the economic exchange between the former members of this communist version of the European Community fell to alarmingly low levels. Since then, according to Maryska, the relations have been reestablished on a very strong basis, particularly since the creation of the Central European Free Trade Agreement (CEFTA) in 1993. The trade turnover between Poland and the Czech Republic is now four times higher than in 1993, despite a recent slowdown in its growth.
Maryska said that bilateral economic relations have been growing at a steady and impressive pace of about 10% annually. The figures back him up: in 1993 the trade exchange between the two countries was €700 million, while this year it is estimated to be €3.1 billion-€3.2 billion.
Although traditionally the trade relations between the Czech Republic and Slovakia have been good, Czech manufacturers have come to realise that the market of their smaller neighbour does not offer as many opportunities as the 40 million-strong market just north of the border.
"All the manufacturers in the region are very well aware of the opportunities that such a large market holds," Maryska said.
Considering the obvious market-size differences between the two nations, Maryska believes that Czech manufacturers have penetrated our market with some success. In fact, during the Business Journal's interview, next door a Czech company was presenting its offer to potential Polish partners.
Although the majority of the Czech companies on our market specialise in heavy machinery or raw materials production, the largest of all the exporters, Skoda, a widely recognised car brand, has just increased its market share to approximately 10%. As far as consumer goods are concerned, their production and distribution are largely controlled by multinational companies, such as Procter and Gamble, which when faced with a surplus of coffee or washing powder in one country in the region, sends it to another.
"We can say that now the economic relations have stabilised, and Czech producers know the market really well," Maryska said. "Polish exporters, on the other hand, have noticed that even though our market is small, with a relatively small absorption rate, it is still a market of 10 million consumers.
"There is great potential in Czech SMEs coming into Poland, but there is the problem of overcoming the certificate barrier. Many firms only now realise that it would be profitable to invest in international certificates. Therefore, EU accession will present a great opportunity to such firms because their expenses will decrease."
The vital component of the economic relations between Poland and the Czech Republic is the economic state of the given countries. During the Czech economic crisis of the late 1990s, it was difficult for foreign exporters to enter the market successfully. Maryska pointed out that since the Czech economy depends largely on Germany, any fluctuations on the German market find immediate repercussions on the Prague bourse and the local market.
Andrzej Miedziński, commercial attaché at Poland's embassy in Prague, agrees and points out that nearly 36% of Czech foreign trade exchange is with Germany. By November, last year's turnover for the Czech Republic was at €70 billion, and 30%-36% of that was with Germany.
The trend is reversed on the Czech market, with our small- and medium-sized firms trying their luck selling anything from piping to frozen fruits and vegetables. According to recent unofficial estimates, there are approximately 600 firms with Polish capital operating in the Czech Republic.
Miedziński says that official estimates are highly unreliable, as many of the companies do not seek the assistance of the Polish authorities abroad, preferring to pursue local contacts instead. Yet, sometimes, even knowledge of the local market cannot suffice to succeed in business.
"From what I have observed, it is not easy to enter the local market here," he said. "A real success is only possible if one carves out a niche for oneself."
This, according to Miedziński, could be the export of fruits, vegetables and fish. The Czech diet, designed to complement the many hectolitres of beer consumed annually, does not really include a wide variety of the proverbial peas and carrots.
"When there is no demand, the production does not exist, either," Miedziński said.
This is where our processed fruit and vegetables manufacturers step in and truly make it big on the local market. Miedziński said that the Kubu juice from Wadowice-based Maspex is particularly well-known and can be easily purchased at large supermarkets and hypermarkets, just like canned fish from various smaller producers.
Politically, one factor behind the very great weight of our relations with the Czech Republic has been the common priority in the pursuit of EU accession. This has been achieved through relations within the Visegrad Four group, which also includes Hungary and Slovakia, and involves the co-operation of respective defence ministries as well as meetings between chief EU negotiators and other ministers.
But over the past few weeks, talk of EU accession has been overshadowed by the presidential elections, after which the current Czech president, legendary dissident and writer Vaclav Havel, will step down, having spent 13 years in power and reached the constitutional limit for a presidential term. The outcome of the elections, held on January 24, had not yet been announced as the Business Journal was going to press.
The discussion about the potential candidates and their political competencies has been paralleled by a public debate on the election format, which in the Czech Republic stipulates a vote by the members of the parliament and the senators.
According to Czech radio correspondent Pavel Novak, most Czechs disapprove of the current presidential election process as they lose the chance to directly affect its results. Petr Maryska believes that a debate on a possible change of the election method could begin soon after the election of the new president, and if direct elections have enough supporters in the government, an appropriate amendment to the constitution could follow.
"Poland should be able to present itself as more than just a source of cheap labour," said Petr Maryska, deputy commercial counsellor at the Czech Republic's embassy in Warsaw. "One major foreign investment will then attract others."
When the economic bond that existed between Council of Common Economic Assistance member countries was broken after 1990, the economic exchange between the former members of this communist version of the European Community fell to alarmingly low levels. Since then, according to Maryska, the relations have been reestablished on a very strong basis, particularly since the creation of the Central European Free Trade Agreement (CEFTA) in 1993. The trade turnover between Poland and the Czech Republic is now four times higher than in 1993, despite a recent slowdown in its growth.
Maryska said that bilateral economic relations have been growing at a steady and impressive pace of about 10% annually. The figures back him up: in 1993 the trade exchange between the two countries was €700 million, while this year it is estimated to be €3.1 billion-€3.2 billion.
Although traditionally the trade relations between the Czech Republic and Slovakia have been good, Czech manufacturers have come to realise that the market of their smaller neighbour does not offer as many opportunities as the 40 million-strong market just north of the border.
"All the manufacturers in the region are very well aware of the opportunities that such a large market holds," Maryska said.
Considering the obvious market-size differences between the two nations, Maryska believes that Czech manufacturers have penetrated our market with some success. In fact, during the Business Journal's interview, next door a Czech company was presenting its offer to potential Polish partners.
Although the majority of the Czech companies on our market specialise in heavy machinery or raw materials production, the largest of all the exporters, Skoda, a widely recognised car brand, has just increased its market share to approximately 10%. As far as consumer goods are concerned, their production and distribution are largely controlled by multinational companies, such as Procter and Gamble, which when faced with a surplus of coffee or washing powder in one country in the region, sends it to another.
"We can say that now the economic relations have stabilised, and Czech producers know the market really well," Maryska said. "Polish exporters, on the other hand, have noticed that even though our market is small, with a relatively small absorption rate, it is still a market of 10 million consumers.
"There is great potential in Czech SMEs coming into Poland, but there is the problem of overcoming the certificate barrier. Many firms only now realise that it would be profitable to invest in international certificates. Therefore, EU accession will present a great opportunity to such firms because their expenses will decrease."
The vital component of the economic relations between Poland and the Czech Republic is the economic state of the given countries. During the Czech economic crisis of the late 1990s, it was difficult for foreign exporters to enter the market successfully. Maryska pointed out that since the Czech economy depends largely on Germany, any fluctuations on the German market find immediate repercussions on the Prague bourse and the local market.
Andrzej Miedziński, commercial attaché at Poland's embassy in Prague, agrees and points out that nearly 36% of Czech foreign trade exchange is with Germany. By November, last year's turnover for the Czech Republic was at €70 billion, and 30%-36% of that was with Germany.
The trend is reversed on the Czech market, with our small- and medium-sized firms trying their luck selling anything from piping to frozen fruits and vegetables. According to recent unofficial estimates, there are approximately 600 firms with Polish capital operating in the Czech Republic.
Miedziński says that official estimates are highly unreliable, as many of the companies do not seek the assistance of the Polish authorities abroad, preferring to pursue local contacts instead. Yet, sometimes, even knowledge of the local market cannot suffice to succeed in business.
"From what I have observed, it is not easy to enter the local market here," he said. "A real success is only possible if one carves out a niche for oneself."
This, according to Miedziński, could be the export of fruits, vegetables and fish. The Czech diet, designed to complement the many hectolitres of beer consumed annually, does not really include a wide variety of the proverbial peas and carrots.
"When there is no demand, the production does not exist, either," Miedziński said.
This is where our processed fruit and vegetables manufacturers step in and truly make it big on the local market. Miedziński said that the Kubu juice from Wadowice-based Maspex is particularly well-known and can be easily purchased at large supermarkets and hypermarkets, just like canned fish from various smaller producers.
Politically, one factor behind the very great weight of our relations with the Czech Republic has been the common priority in the pursuit of EU accession. This has been achieved through relations within the Visegrad Four group, which also includes Hungary and Slovakia, and involves the co-operation of respective defence ministries as well as meetings between chief EU negotiators and other ministers.
But over the past few weeks, talk of EU accession has been overshadowed by the presidential elections, after which the current Czech president, legendary dissident and writer Vaclav Havel, will step down, having spent 13 years in power and reached the constitutional limit for a presidential term. The outcome of the elections, held on January 24, had not yet been announced as the Business Journal was going to press.
The discussion about the potential candidates and their political competencies has been paralleled by a public debate on the election format, which in the Czech Republic stipulates a vote by the members of the parliament and the senators.
According to Czech radio correspondent Pavel Novak, most Czechs disapprove of the current presidential election process as they lose the chance to directly affect its results. Petr Maryska believes that a debate on a possible change of the election method could begin soon after the election of the new president, and if direct elections have enough supporters in the government, an appropriate amendment to the constitution could follow.
