With aerospace, ICT and electronics leading the way, CzechInvest, the Business and Investment Development Agency of the Czech Republic, is watching investments in its country grow continuously. Jo Murray (JM) speaks to Karel Kučera (KK), CEO of The Business and Investment Development Agency CzechInvest.
JM If you were to choose three or four target sectors upon which you would build your FDI strategy going forward, which would you choose and what makes the Czech Republic attractive to international companies from those sectors?
KK In recent years, we have manged to increase the number of investments with value added and we definitely want to continue this trend. The Czech Republic is gradually building a name for itself in, for example, aerospace, ICT and electronics, and we are striving to bring more major foreign investors into these sectors. Of course, we are also following key trends in our traditional sectors like the automotive industry and mechanical engineering, which involve industry 4.0, the internet of things, electric and smart cars and nanotechnology.
JM From where do you expect most of your FDI to originate? With which countries are you engaging the most? How is this changing?
KK Statistics from recent years show that American and Asian investors have renewed interest in the Czech Republic. We are seeing interest in investments from USA, China, Japan and Korea. Last year, Germany and Austria also confirmed their position as the strongest investors, which is usually connected with the automotive industry and mechanical engineering. Investment moves in cycles or waves and each country and sector has a bit different wavelength. And to feel this “pulse”, we have foreign offices – two in the USA and one each in Great Britain, Germany, South Korea, Japan and China – so that we can be as close as possible to potential investors.
JM To what extent do your traditional/historical trading partners and your close neighbours play a role in your FDI efforts?
KK Of course, we value our traditional trading partners. As previously mentioned, one of our key investment and trading partners is Germany. But in general, companies that have been investing and expanding here already know how advantageous the conditions for doing business are in the Czech Republic. So we are keeping close contact with them. However, we are of course targeting new partners to develop new competencies in our country. Furthermore, the Czech Republic has changed significantly in recent years. It is about having ideal conditions for value added investment and higher functions together with high-quality assembly.
JM For which sectors are you building a pipeline of young talent in your universities and research institutes?
KK There is strong demand for technically skilled workers in general and Czech schools and universities are responding to that demand, so the number of students is growing. There are several factors behind that. One is that CzechInvest brings employers in individual regions together with local educational institutions, organises excursions to companies and, within HR Points, connects career and guidance counsellors with HR specialists at individual companies. It is important for children to know even at an early age what their career opportunities are.
JM What types of R&D and innovation do you attract? How do you support that?
KK There are several significant science and research institutes together with major infrastructure in the Czech Republic. So naturally we are looking for projects that can benefit from this infrastructure and can cooperate more with universities and research institutes. Last year we managed to arrange such an investment by the American company GE Aviation, which decided to build its centre for development and production of turboprop engines here in the Czech Republic. This high-tech investment is a clear signal that we are ready to provide skilled researchers, workers, a high-quality supplier base and the right environment for successful development of key projects.
JM To what extent is Prague a regional HQ and what drives Prague’s success in this role?
KK You’ll be surprised, but Prague is not the centre of everything. Yes, in our capital you will find a strong base of start-ups, but there are also major foreign investors in other parts of the Czech Republic. Companies very often settle in prepared industrial zones, which are scattered across the country, or in other locations depending on the sector; for example, they choose cities like Brno, which is a major ICT hub.
JM To which supply chains (ie for which sectors) does the Czech Republic contribute most significantly?
KK The previously mentioned automotive industry and mechanical engineering, as well as nanotechnology and aerospace, for example. Basically high-tech engineering.
JM What are the Czech Republic’s international credentials, ie EU, UN, NATO membership?
KK The Czech Republic is an economically and politically advanced country that is accepted by other European countries and global powers as a full-fledged nation. We are a member of the UN, NATO, the OECD, the World Trade Organisation, the IMF, the World Bank, the Council of Europe, the Organisation for Security and Cooperation in Europe and the European Customs Union, and we are part of the Schengen area, the European Economic Area, the Visegrad group and other international structures. But more importantly, a survey of expats concluded that the Czech Republic is one of the best countries in which to live and have a family.
JM Do you have an export support role as well as FDI activities? Is there a correlation between export locations and the origination of FDI?
KK To some extent, yes. But mainly investors want to serve the EU region and/or the whole world. But we have specialised sister agencies that take care of export support in the form of marketing and/or financing, guaranties and other instruments.
JM Are there any world events or macro-economic issues that you are building into your FDI strategy?
KK Definitely, as risk is one of the key factors in today’s world. The Czech Republic is considered to be one of the safest countries in the world. It is economically and politically stable. Therefore, we often receive investments from companies for which support and willingness on the part of the state are important. For example, we are currently responding to the Brexit issue and we are preparing for the inflow of companies that will seek a replacement for the British environment here in the Czech Republic.