The Czech Republic has one of the highest GDP growth rates and lowest unemployment rates in the EU, with an array of innovative local manufacturers offering great potential for businesses looking to invest. Combined with its reliability in doing business, the Czech Republic is worth considering for a stable foothold in Central Europe.
After reading this guide you will understand the opportunities presented by the Czech Republic and how to take make the most of them, as well as have a general understanding of the Czech Republic’s place in the global balance of powers and why this affects businesses.
2 Expanding business to Czech Republic
With a population just over 10.5 million, the Czech Republic has one of the highest GDP growth rates and lowest unemployment rates in the EU. The Czech Republic is listed by Forbes as the 28th best country to do business with. Its main industries include: High-Tech Engineering, Electronics, Motor Vehicles, Machinery and Pharmaceuticals.
3 Quick facts and advantages of doing business in Czech Republic
Nominal GDP is about $18,300, with a purchasing power parity of just over $33,0001
The Czech Republic’s exports account for nearly 80% of the country’s GDP. Key exports include machinery, transport equipment and electronics
Main export partners include Germany, Slovakia and Poland
Unemployment is just over 5.2%, the lowest in the EU
Over 40% of the population is between 25-54 years. Long-term challenges include a rapidly ageing population, a shortage of skilled workers, a lagging educational system and a need to diversify away from manufacturing towards a more high-tech, service-based economy
4 Customer trends
It’s crucial to think about customer behavior when expanding in new markets. How does your target customer usually buy products? What’s their preferred method of delivery? The following factors will help you consider how customer trends will affect the way you go about doing business in the Czech Republic.
8.4% of purchases in the Czech Republic are completed online and about 70% of the population shops at least a couple of times per year
75% of customers request same-day delivery
Customers prefer to select a delivery window and date
Czech ecommerce sites most often sell textiles and accessories (17%), home and garden products (11%), electronics (7%) and groceries (6%)
Major buying holidays include pre-Christmas, January, pre-Easter and midsummer sales
The most popular form of social media includes YouTube and Facebook. It is estimated that almost 95% of the Internet-connected population in the country uses YouTube (most users are watching rather than uploading videos)
5 Fulfillment models
Cross-border into the Czech Republic
Many companies use a major logistics hub in mainland Europe (often in the Netherlands or Germany) to manage fulfillment into Europe, so the Czech Republic is used to making purchases cross- border. Cross-border ecommerce is increasingly popular among Czech consumers because of the variety of products available in the rest of Europe — particularly electronics, clothing, accessories and cosmetics space. For Czech consumers, providing customer support and trusted websites and payment options are important in determining their decision to buy.
The V4 or “Visegrad Four” is a cultural and political alliance between the Czech Republic, Hungary, Poland and Slovakia. Within the V4 region, the Czech Republic is considered the regional innovator because of its many local manufacturers and its low unemployment rate. Logistics companies remain heavily concentrated around Prague, but can also be found in northwestern cities like Hradec Králové.
Small parcel carriers
- Local post offices
Larger-than-truckload (LTL)/ truckload (TL) carriers
7 How to start doing business in Czech Republic
When thinking about your move into the Czech Republic, weigh up the pros and cons of different company structures. Also think about the type of fulfillment model that best suits your business. What’s the most effective way of reaching customers and fulfilling orders? You should evaluate the regulatory requirements of ecommerce and how they apply to your business. You also need to determine whether you’ll need to be registered with the Trade License Office. Finally, find a fulfillment center and carriers that provide coverage in the Czech Republic in the regions that you’re targeting.
Market Finder contains a breakdown of the World Bank’s Doing Business Index, where you can get a heads-up about the ease of doing business in the Czech Republic. It ranks on a scale of 1 - 190 how easy it is for a business to set up and run a local firm in each of the world economies. Ten topics are assessed to gain the score. These include the ease of getting electricity, the ease of getting credit, and the potential for cross-border trade.
When trading in a new market, it’s good to know the administrative, regulatory, and logistical challenges that may lie ahead. Navigating legal requirements and working out logistics is made a lot easier with Market Finder - find further support and tools including in-depth guides and insights.
Ingram Micro Commerce & Lifecycle Services provides logistics solutions to help businesses connect supply and demand.
The materials provided on the site are for informational purposes only. For financial, tax, or legal advice, consult a specialist.