Opportunities to Expand to New Markets: the Czech Republic
Due to the strong interest of Sofia businesses in opportunities to expand to new markets, we publish an overview of the opportunities for entering the market of the Czech Republic and the special features of the local business environment. The article was prepared by Georgi Stoilov, trade representative for Bulgaria in the Czech Republic at the Trade and Economic Office in the Czech Republic with the Ministry of Economy.
The Czech Republic is an open and export-oriented economy. As one of the fastest growing countries in Central and Eastern Europe, it is often referred to as one of the outstanding former socialist countries. The factors that make it very attractive for business include its geographic location, support from the Czech state through its export and economic development institutions, as well as its numerous business contacts with countries around the world. On the other hand, imports benefit from the upward trend of the price of CZK to EUR and USD.
Traditionally, Bulgaria and the Czech Republic have good commercial and economic relations. Globally, the Czech Republic is among Bulgaria’s top 15 trading partners. From 2007 to 2017, exports to the Czech Republic rose more than five times, from EUR 95.1 million in 2007 to EUR 546.119 million. Imports grew at a slower pace, but more than doubled as well. The trade balance between the two countries over the period 2007 – 2017 went up from EUR 336.6 million in 2007 to EUR 1 228,861 million (over one billion two hundred million). The trade balance, though negative, was continuously decreasing to reach its lowest levels of EUR -136.622 million in 2017.
The Czech Republic is an attractive country for business partnerships, but there are several special features that Bulgarian exporters should bear in mind in order to implement successful projects.
In the first place, due to their conservatism, the Czech partners mostly buy and import from companies they know, mainly working with their representatives in the Czech Republic. Direct sales on the Czech market without a partner are almost impossible.
The Czechs do not speak many foreign languages which further impedes communication between partners. The Bulgarian minority in the Czech Republic, which is one of the officially recognized in the country, can be of help here.
The Czechs do not know much about Bulgaria. Our country is mainly popular with the Black Sea and some Bulgarian wine brands. Although the Czechs use the phrase “Maká jako bulhar” (Works hard as Bulgarian), with regard to business partnerships, Bulgaria remains a less popular partner.
In spite of the fact that at present Bulgaria is not very popular as a possible partner, the entry of Bulgarian companies on the Czech market would be a very profitable move, as companies that make breakthrough with sales in the Czech Republic will also receive access to sales in Slovakia. Although the states are separated, their markets are still closely connected. In addition, the good contacts of the Czechs and the good performance of Bulgarian goods on the Czech market enable easier access to international markets such as Latin America and Africa, which are more difficult to access directly from Bulgaria.
A good trading experience and a proper approach and partner enable the trade of a variety of goods and services in the Czech Republic.
1. Groceries – although they have well-developed agriculture, the Czechs import large part of their food products because domestic production is insufficient. Here there are import opportunities in bio foods, gluten-free foods and foods for diabetics. The latter have almost no domestic production and are mostly imported from the EU countries. Of utmost importance is to stick to the very strict sanitary and hygienic food requirements but Bulgarian manufacturers with the respective health certificates as well as certified quality systems and food production will be able to meet the regulations in the segment.
2. Bulgarian wine – a segment which Bulgaria is known for and for which it has a positive import image. The brand that is mostly popular in the Czech Republic is Mecha Krav (Bear Blood), but the trend is starting to change and thanks to the efforts of importers of quality Bulgarian wines, more and more Czechs learn and begin to understand the qualities of the good Bulgarian wine, which has a good price for its quality. There are several larger importers of Bulgarian wine in the country such as Prowine, Trakia Wine, VinoBg, which import only quality Bulgarian wines, know the market and the regulations and are open to cooperate. The production of wine in the Czech Republic is very small and does not cover the demand, which is going up year by year.
3. Textile and leather goods / manufacture and sale of clothing, footwear and fashion accessories. Since 2004, the Czech Republic has not been able to cope with the competition with the Chinese producers and has small domestic production. Bulgaria is seen as a market that also relies mainly on imports from Turkey and China. Bulgarian manufacturers can gain recognition in the search of higher quality textile with good communication of the traditions in textile production in our country and with a proper approach on the spot – personal contact and communication in the local language and with a local representative.
4. Electronics and electrical engineering – here there are selling opportunities mainly in nodes and details. These are also some of the most exported goods for the Czech Republic. With a proper strategy, a new partner in the great demand for these goods in the Czech Republic would have the potential for success.
Due to the above mentioned market specific features and the current poor knowledge of Bulgaria as a partner, the following steps would contribute to successful business relations:
1. Participation in exhibitions held in the Czech Republic. This is a prerequisite given the market requirement that the negotiations are conducted on the spot and not by distant communication and correspondence, as well as in the local language.
There are many trade fairs in the Czech Republic with different focus and their organizers are very open towards Bulgarian participation, which is lacking. The largest exhibitions are those in Brno and Prague. For more information on what kinds of exhibitions are being held, as well as on the conditions for participation or visit, you can contact the Trade and Economic Office in the Czech Republic. The participation should be well prepared and with the help of branch organizations a funding for group participation with a common stand is also possible. It is very important to choose the right exhibition and to have an interpreter. The purpose of participation should not be the direct contact with clients, but rather finding a local partner / representative.
2. Holding meetings with potential Czech partners in the Czech Republic or Bulgaria. This is a good opportunity that will make Bulgaria a more visible and recognizable business partner.
3. Creating a community of companies interested in business between Bulgaria and the Czech Republic. At present, the Trade and Economic Office in the Czech Republic is working on this idea, as such communities in the form of chambers, clubs, etc. are of great help in the development of bilateral relations.
4. Development of cooperation between branch organizations (the Czechs are open to this), between representatives of different business communities in both countries. Cooperation between the Bulgarian and the Czech start-up ecosystem will be of great benefit both to the development of the two ecosystems and to the companies themselves, being part of this ecosystem.
For more information and assistance on the special features of the business environment in the Czech Republic and the opportunities for market cooperation, you can contact
The Trade and Economic Office in the Czech Republic, Prague
Georgi Stoilov
6, Krakovska Str.Praha-1, 110 00, Czech Republic
Phone: +420 601 025 755
e-mail: obchodniradabg@gmail.com
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