Foreign markets

Czech Republic: The Location scores with Quality

| Author / Editor: Robert Benacka / Stéphane Itasse

Moreover, the reality check of the analysis is particularly revealing. It compares the original motives for location selection with the actual impression, which the surveyed persons could collect from the land and the people in the course of years: In the selection of Czech Republic, primarily the low labour costs and qualification of employees were decisive, whereas less procurement costs or corporate tax played a minor role.

Labour cost benefits in Czech Republic no longer that important

The stimulating atmosphere in day-to-day business, with respect to the employees or the experiences with authorities, is complimented with other experience values. Thus, the labour costs benefits have become less important, since a noticeable cost increase, in particular in the wages and salaries, belongs to the daily routine. At the same time, many middle-sized companies are influenced very positively from the cooperativeness, work ethic and commitment of their employees. With respect to the infrastructure and collaboration with authorities, Czech Republic even acquired a leading position ahead of other investigated countries such as Poland or Slovakia – reliable information, fast turnaround time and less bureaucratic hurdles for proposals and approvals seem to be rather the rule than exception.

If anyone decides to establish a separate production in Czech Republic, then he must invest enough time in search of a suitable location. Multiple, personal on-site visits are helpful, since the impression of the local conditions creates an important counterweight to known facts, which e.g. the business development corporations provide. In general, it is recommended to proceed according to a catalogue of criteria and to clearly visualize the infrastructure, property costs, employee availability and accessibility. In addition, it is very much helpful to involve an employee of Czech business development in this project phase. Since their knowledge of place can be used to check alternatives for urban centres, which score in decentralized location with advantages such as better availability of manpower and lower labour and property costs.

Companies should invest in trainings for Czech employees

In addition, it should be considered that further trainings of employees in practical field may be required. Since there is no dual training, connecting practice and theory in Czech Republic as against Germany. Furthermore investments in the qualifications of executives may be necessary: the decision makers questioned in the survey evaluate the qualification of the managers in East Europe overall negative; only a third party evaluates this as "good". Nevertheless, one in two middle-sized companies awards this rating for the skills of technicians and employees in administration and management. With respect to the situation in Czech Republic, it is apparent that the satisfaction with the offer for commercial or legal experts is just average.

Training programs with strong practical orientation are recommended for further qualification of skilled workers in the production. Besides exchange programs with German locations, training factories are primarily helpful here: The employees are given training in specific tasks from practice and this simulates new working practices for integration of applications from Internet of Things.

* Robert Benacka is the Managing Director of ROI Management Consulting a.s. in 25242 Jesenice u Prahy (Czech Republic). For further information (Germany): Tel. (0 89) 12 15 90-0, kontakt@roi.de

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