Cashing Czechs

Roger Williams explores the potential of dealing with a former Soviet nation: the Czech Republic.

The Czech Republic emerged from the tank-shod heel of Soviet-backed Communist rule in 1993 and completed its emergence by joining the EU in 2004 as a democratic, developed economy. Bounded by Germany, Poland and Austria, the Czech Republic also shares a border with Slovakia with whom it formed the historical state of Czechoslovakia.

Czech Republic is a country of some 10.6 million inhabitants and its capital city, Prague, is home to 1.3 million people with over two million in its metropolitan area.

Although officially, Brno is the next largest city with a central city population of 370,000 and some 730,000 in its metropolitan area, the sprawling city Ostrava has a smaller city population of 314,000 but boasts a metropolitan population of 1.1 million.1 The country covers an area of some 30,450 square miles and population density is approximately 350 per square mile.

To give you a gauge, the UK is double that at around 700 per square mile.2 The median age of people in the Czech Republic is 41 years, close to that in the UK (40 years). Population growth is almost non-existent and the population is balanced with half of the population male. Czech is the main language with Slovak also common.

Today, the country’s President, Milos Zeman, is an economist and its Prime Minister, Andrej Babis, a Eurosceptic billionaire businessman. Despite this, the Czech Republic has agreed to adopt the euro and to join the eurozone when it satisfies euro convergence criteria.

Czechoslovakia was ranked 10th in industrial in the world before the Second World War but was hit hard, losing, among others, effectively all of its Jewish citizens. Perhaps this is why Czechs are supposedly the least religious people in the world. 

Economically, the country’s ranking has slipped considerably post WWII. Ranked by growth in industrial production, Czech Republic was 43rd, only just ahead of Burkina Faso and Zambia. The US News and World Report lists of best countries ranked the Czech Republic 41st overall in 2018. The UK ranked fifth in the same study. 

The low ranking of the Czech Republic is reflected in how the Czechs see themselves and their relationship with the EU. As one Czech citizen told me: “We didn’t join the EU for economic advantages; we’re not like Britain. We joined because of people like my parents. They have lived in three different countries yet they have lived in the same home all their lives. For us it is about avoiding war and conflict.  For you it is economics.”

The Czech currency is the Koruna, sometimes referred to by English-speaking Czechs as the Crown.  You might imagine that the Euro would be widely accepted in Czech Republic, however you will find that dollars are preferred; if Euros are accepted, the imputed exchange rate tends to be very poor.

The Koruna’s movement against the Euro has been relatively stable in recent years – between 0.036 and 0.039 euros – and today’s quote is 0.03887. Against the pound Sterling, the Koruna is worth just over 3p.  A pint costs about £1.50 in Prague perhaps explaining why so many stag do’s are held there.

As a place to do business, Czech Republic flatters to deceive. Good adoption of advanced software, acceptance of English and German as dominant business languages; adoption of high engineering standards and a desire to do well, are all to the country’s benefit.  Yet as a place ‘open’ to do business, the country ranks 47th, ahead of Turkey (75th) and Mexico (53rd) but well behind say Estonia at 29th.

My own personal experience bears this out.  We took Turkish guns to a Czech proof house to determine if it made sense to attempt to use the Czech Republic as a distribution centre in the EU.  It had experience in this area with both CZ and, to a much lesser extent Brno, both being well known Czech brands of firearms worldwide.

We knew that the guns would pass proof having carried out full proof-testing before sending the guns to Czech Republic.

Using a Czech intermediary proved to be a mistake as, for whatever reason, the shotguns were destroyed while being proofed.  It was not easy to determine exactly what went wrong, but the gist of it was that “they were Turkish guns so they were never going to pass proof”.

Shooting advocate Milos Zeman won his second term as President last year

Perhaps we hadn’t paid the intermediary enough or chose the wrong man.  However, it seems to me, that the remnants of the Soviet-backed communist era with all that it entailed, remain in some parts of the regulatory systems of Czech Republic, despite its change in government.

To sell into this country, an agent is useful but it is a small market, constrained by population size and income.  Hunting is generally on private land by a syndicate, called a ‘game keeping association’ and a hunting licence and hunting permit is required. The Czech Republic is known for driven pheasant offering quality birds in large numbers. 

Duck hunting is good and there are good populations of roe, red and sika, exceptionally large mouflon and driven wild boar are also available.

There is an internal demand for shotguns and rifles but it is difficult to attack this market without a local partner.  Low household income and the fact that many hunters come from other countries with their arms and equipment to Czech Republic, constrains the amount of local demand in size and in quality.  Smaller calibre rifles are the domain of the local behemoth, CZ. Czech Republic is correctly ranked lowly as a place to do business.

 

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