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In light of ever-shorter production cycles and the growing importance of innovation, it should be emphasized that the Czech Republic has a unique position for expanding its design and investment functions. Its population has a deeply rooted spirit of innovation and an exceptionally high number of graduates.

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Production cycle requirements can be accommodated here better than anywhere else in Europe. As a result, we have seen a dramatic increase in the number of foreign corporations that have relocated or built up their research and innovation activities in the Czech Republic, thus supporting their global operations.

Strategic services

The position of the Czech Republic is suitable for locating strategic services in the true center of Europe. The country offers easy solutions available at very competitive costs due to its high intellectual capital, good language skills, geographic advantages, cultural proximity to Western Europe and the United States, a modern telecommunications infrastructure, first-class office premises and growth-stimulating investment climate.

Projects classified as strategic services:

ICT special solution centers;
Software development centers;
Customer call centers;
Shared service centers;
High-tech repair centers;
ICT and software development

In the new millennium, companies of all sizes are striving to reduce costs and improve services. When deciding whether to use outsourcing, managers must seriously consider questions such as whether the given work is better performed on corporate premises at the same time and in the same geographic zone. Having taken fourth position in the “Offshore Location Attractiveness Index” published by A.T.Kearney for 2004 (closely following India, China and Malaysia), the Czech Republic beat its rivals in the region: Poland ranked 10th and Hungary 11th.

According to the above-mentioned A.T. Kearney index for 2004, the Czech Republic is the fourth most attractive overseas location in the world and the first in Europe: “The Czech Republic offers European clients low costs, good language skills and cultural proximity, competitive infrastructure and a stable political and economic environment.” Many well-known transnational corporations have already discovered these benefits, among them DHL, SAP, EDS, Sun Microsystems and Monster Technologies.

The Czech Republic still remains the most advanced IT market in Central Europe and the increasing technological literacy of Czech end users creates market opportunities for small players as well as for traditional major IT suppliers, including HP and IBM. The growing economy, which is becoming ever more dependent on technologies, foreign direct investment and the full membership in the EU since May 2004 represent key growth stimuli that drive the expansion of the IT services segment.

Medical science

The chemical and pharmaceutical sectors, including biology, employs around 120,000 employees and is set to gain the importance of the automotive sector, which is at present the key industry driving the growth of the Czech economy.

The exceptionally high intellectual capital is the key to success in the Czech biological sector. Among other things, the government has been in favor of increasing the public funds spent on research and development.

The main focus of biotechnological research in the Czech Republic has been on botany and molecular genetics, which has positive effects on both medicine and agriculture. The Czech Republic has been home to modern genetics, with a long and impressive track record.

At present, the Czech Republic stands in the front line in the battle against chronic Type B hepatitis and AIDS.

Electronics

The Czech Republic offers a number of opportunities in the microelectronic and electronic industries due to its enormous comparative advantages. The country is suitable for opening a production facility or design center, for establishing a joint venture with a Czech firm, or even to procure sources of final products from existing Czech facilities.

The history of Czech microelectronics and electronics dates to the 1880s. The country has been home to a number of original Czech and foreign companies that offer a broad range of capacities and resources. The former Czechoslovakia used to be a place where the Tesla conglomerate operated, which had more than 60 subsidiaries all over the country. Most of them still offer foreign investors extensive experience with the Czech market of microelectronics and electronics.

At present, the Czech electronic and microelectronic industries focus on a number of production activities: manufacture of electronic components, consumer goods, high-voltage technologies, assembling computers and more. The only board manufacturer in Central and Eastern Europe is ON Semiconductor, which is based in the northeastern part of the Czech Republic, in Rožnov pod Radhoštěm. With its 180,000 employees, electronics and microelectronics, the company ranks as the second-biggest industry in the Czech Republic.

High-tech engineering

The Czech high-tech engineering industry is mostly represented by precision engineering, in particular the manufacture of tools (cutting tools and metal forming machines) and the production of machine equipment. It accounts for 90% of the total machine equipment production. The manufacturing of metal-working machines has a tradition of more than 100 years. It is typical for the excellent technical quality of machines, traditionally good workmanship, and the reputation of brands used by many Czech and foreign companies. A characteristic attribute of the Czech tool production sector is the excess of production capacities over domestic consumption. This sector has traditionally been dependent on the sales of machines and tools abroad. Czech metal-working machines worth USD 275 million (2002) were exported to more than 85 countries. Metal cutting and forming tools represent a successful industry which has proven competitive in the most demanding foreign markets.

Automotive industry

The Czech Republic is presently referred to as the “new Detroit” due to its success in attracting investments of automotive suppliers in Europe. Due to its geographic position in the center of the New Europe, the country is an excellent place for launching a greenfield production facility or developing a control center for a supplier chain that would be able to serve the existing OEMs (o riginal e quipment m anufacturers) as well as those being established in Central and Eastern Europe.

The current reputation of the Czech Republic as a place with automotive production stems from the fact that one of the three oldest car manufacturers in the world is based in this country. More than 70% of car module and component suppliers in Central and Eastern Europe that are based in regions around the Czech Republic presently profit from more than 100 years of development and production experience.

The main benefit for automotive engineering and production is the high competence and innovative solutions of Czech engineers in combination with competitive service costs and an effective road transportation system. Since the automotive industry is one of the most powerful drivers of the Czech economy, investment incentive programs have been modified to fulfill the needs of automotive companies that constantly invest in material, design, and production technology innovations.

Plastics

The production of plastic products in the Czech Republic has been one of just a few areas of manufacturing that have not been affected in recent years by changes in the economy, both on a national and global scale. Its importance has been growing, due in particular to the broad range of possible applications for plastic products, and its share in manufacturing indicators has been increasing. This industry supplies semi-finished products to all segments of the industry, primarily for the production of motor vehicles, electrical machine equipment, construction, agriculture, food processing, and the leisure industry.