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Czech Republic 2018

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Czech Republic 2018 CCG Czech Republic 2018 Table of Contents Doing Business in the Czech Republic ____________________________________ 5 Market Overview _____________________________________________________________ 5 Market Challenges ___________________________________________________________ 7 Market Opportunities _________________________________________________________ 8 Market Entry Strategy _________________________________________________________ 9 Political Environment _________________________________________________ 10 Selling US Products & Services _________________________________________ 11 Using an Agent to Sell US Products and Services ________________________________ 11 Establishing an Office _______________________________________________________ 11 Franchising ________________________________________________________________ 12 Direct Marketing ____________________________________________________________ 12 Joint Ventures/Licensing _____________________________________________________ 13 Selling to the Government ____________________________________________________ 13 Distribution & Sales Channels _________________________________________________ 15 Express Delivery ____________________________________________________________ 15 Selling Factors & Techniques _________________________________________________ 15 eCommerce ________________________________________________________________ 16 Trade Promotion & Advertising ________________________________________________ 18 Pricing ____________________________________________________________________ 18 Sales Service/Customer Support ______________________________________________ 19 Protecting Intellectual Property ________________________________________________ 19 Due Diligence ______________________________________________________________ 19 Local Professional Services __________________________________________________ 20 Principal Business Associations ______________________________________________ 20 Limitations on Selling US Products and Services _________________________________ 20 Web Resources _____________________________________________________________ 20 Leading Sectors for US Exports & Investments ____________________________ 22 Agricultural Sector __________________________________________________________ 22 Aircraft and Aircraft Parts ____________________________________________________ 24 Automotive Parts and Equipment ______________________________________________ 25 Cosmetics/Toiletries _________________________________________________________ 27 Electronics ________________________________________________________________ 29 Energy ____________________________________________________________________ 31 2 Information Technology ______________________________________________________ 33 Medical Equipment __________________________________________________________ 35 Pet and Veterinary __________________________________________________________ 36 Customs, Regulations & Standards ______________________________________ 39 Trade Barriers ______________________________________________________________ 39 Import Tariff ________________________________________________________________ 39 Import Requirements & Documentation _________________________________________ 39 Labeling/Marking Requirements _______________________________________________ 40 U.S. Export Controls _________________________________________________________ 40 Temporary Entry ____________________________________________________________ 41 Prohibited & Restricted Imports _______________________________________________ 42 Customs Regulations ________________________________________________________ 42 Standards for Trade _________________________________________________________ 42 Licensing Requirements for Professional Services _______________________________ 44 Web Resources _____________________________________________________________ 44 Investment Climate Statement __________________________________________ 46 Executive Summary _________________________________________________________ 46 Openness to and Restrictions upon Foreign Investment ___________________________ 47 Bilateral Investment Agreements and Taxation Treaties ___________________________ 49 Legal Regime ______________________________________________________________ 50 Industrial Policies ___________________________________________________________ 52 Protection of Property Rights _________________________________________________ 52 Financial Sector ____________________________________________________________ 53 State-Owned Enterprises _____________________________________________________ 54 Responsible Business Conduct _______________________________________________ 55 Corruption _________________________________________________________________ 56 Political and Security Environment _____________________________________________ 58 Labor Policies and Practices __________________________________________________ 59 OPIC and Other Investment Insurance Programs _________________________________ 59 Foreign Direct Investment and Foreign Portfolio Investment Statistics _______________ 59 Contact for More Information on the Investment Climate Statement _________________ 62 Trade & Project Financing _____________________________________________ 63 Methods of Payment _________________________________________________________ 63 Banking Systems ___________________________________________________________ 63 Foreign Exchange Controls ___________________________________________________ 63 3 US Banks & Local Correspondent Banks ________________________________________ 64 Project Financing ___________________________________________________________ 64 Financing Web Resources ____________________________________________________ 65 Business Travel ______________________________________________________ 66 Business Customs __________________________________________________________ 66 Travel Advisory _____________________________________________________________ 66 Visa Requirements __________________________________________________________ 67 Currency __________________________________________________________________ 67 Telecommunications/Electronics ______________________________________________ 68 Transportation______________________________________________________________ 68 Language __________________________________________________________________ 68 Health _____________________________________________________________________ 68 Local Time, Business Hours and Holidays_______________________________________ 69 Temporary Entry of Materials or Personal Belongings _____________________________ 69 Travel Related Web Resources ________________________________________________ 69 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2018. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 4 Doing Business in the Czech Republic Market Overview Introduction The United States and the former Czechoslovakia forged a close relationship during the beginning of the 20th century, when America pledged its support for Czech independence. This friendship, which stalled during the period of Soviet influence, re-emerged as the Czech Republic gained political independence and joined the European Union. Today, this nation that sits at the heart of Europe has emerged as one of the region’s most prosperous and industrialized economies, and serves as an entry point for U.S. companies expanding beyond the more traditional markets in Western Europe to the developing markets in the east. The year 2018 marks the centennial of the founding of Czechoslovakia and the 100th anniversary of U.S.-Czech diplomatic relations. Economy In 2017, the Czech economy was one of the fastest growing economies in Europe and grew by a robust 4.6 percent. Nominal GDP rose to $216.4 billion. The economy is expected to continue to expand in 2018 (est. growth of 3.6 percent) and into 2019. Although growth will be slower than in 2017, it will still be higher than in more advanced European economies. The high growth rate will continue to be driven by domestic demand, investment, and trade. In 2017, unemployment declined (to under three percent) and is among the lowest in the OECD. The tight labor market has led to shortages of skilled employees in many industry sectors and is becoming the main constraint to growth. In April 2017, the CNB removed the currency cap which had kept the crown pegged at 27 CZK to the euro. Since that time, the crown has gained around five percent against the euro and more than 13 percent against the U.S. dollar. The annual targeted inflation rate is around two percent, however, inflation was 2.5 percent in 2017. Services account for around 60 percent of the economy, with manufacturing at around 38 percent, and agriculture at over two percent. Trade As a medium-sized, open, export-driven economy, the Czech Republic is heavily dependent on foreign demand, especially from the Eurozone. Around 88 percent of Czech exports go to fellow EU states. Of that amount, around 40 percent is exported to the Czech Republic’s largest trading partner, Germany. In 2017, the country’s top import source countries were Germany, Poland and Slovakia. The United States ranked 11th among source countries. The trade balance has been positive every year since 2005 and rose substantially in 2017. Czech imports increased by almost 14 percent to $161.9 billion and exports were up by 11 percent to $180.2 billion. Import commodities include machinery and transport equipment, manufactures, electronic
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