French investors savour not only Czech snails, but also the Czech cocktail of high economic growth, moderate inflation and low taxes
2008/04/03,
The share of French direct investment in the Czech Republic’s total volume of foreign investment ranked France in seventh place in 2000. The turning point came in 2001, when Société Generále decided to purchase 60% of Komeční banka, a leading Czech bank, and the companies Vivendy and Anglian Water acquired Pražské vodovody a kanalizace.
Thanks to these investments, France became the fourth largest investor in the Czech Republic, a position it still holds today. The joint investment of PSA of France and the Japanese carmaker Toyota (TPCA) valued at EUR 1.3 billion undoubtedly contributed to the country’s higher ranking among foreign investors.
Since 2005, when the TPCA plant reached full production capacity, it has produced 300,000 cars per year, whereas more than 90% of production is intended for export. TPCA’s activities contribute to the favourable trade balance with France, and thus 2005 was the breakthrough year in trade relations. Since then, the Czech Republic has managed to maintain a positive trade balance, which indicates that foreign investors are choosing the Czech Republic to meet the needs of not only the local market, but entire European market.
One of the first incoming investors to take advantage of the opportunities presented by privatization in 1993 was Schneider Electric Písek, which is focused on manufacturing electromechanical instruments intended primarily for the global market. Since it entered the Czech Republic, the company has invested roughly CZK 630 million in a modern plant, which employs 800 workers and is among the Schneider Electric group’s European largest plants.
Then entrance of TPCA into the Czech Republic meant not only an investment worth millions of euros, but also a large volume of order for automotive-components suppliers. One of the most significant manufactures of auto parts is the French company Faurecia, which at the end of last year opened its seventh factory in the Czech Republic in the South Bohemian town of Písek. The plant, in which the company invested EUR 50 million, produces door panels, seat frame and exhaust systems. In total, Faurecia has invested nearly CZK 4 billion in the Czech Republic.
The companies Lisi Automotive, Electropoli Groupe and Lachant Spring have more in common than just the fact that they operate in the automotive sector. They also entered the Czech market by acquiring a Czech partner. Electropoli Groupe a two-thirds share of the Czech firm Galvia, Lachant Spring this year purchase a share in the Martis Martis Pérovna and Lisi Automotive took over a 97% share in Form, which specializes in the production of instruments and cold forming of components. Lisi Automotive is also currently undertaking investments in the South Moravia region.
Valeo, a manufacturer of automotive accessories, has three factories n the Czech Republic as well as a technology center engaged in the development of 3D computer modeling of automotive air-conditioning systems and control panels. Another French automotive firm that has expanded its production programme with new technologies is Hutchinson, which employs approximately 800 people in Rokycany. The portfolio of French manufactures present in the Czech Republic is also growing with the addition of Saint-Gobain, which Hořovice produces automotive glass for mid-sized and luxury cars. Besides the automotive industry, Saint-Gobain is also active in construction. In 2005, SG bought the company W.A.W. A- Keramika, which is number two on the Czech market in the area of sanitary and facing materials. The company’s very positive results in this area (construction materials) led Saint-Gobain last year to establish Platforma, a wholesaler of building materials for professionals.
Other French firms contributing to the growth in the construction industry are Vinci, which has a controlling interest in Stavby silnic, železnic and Průmstav, the cement-maker Lafarge, and Knauf Insulation, which supply building-insulation systems.
The the French share of the banking sector is dominated by Société Generale, the Czech Republic is home to a range of other, smaller investments. Volksbank of Austria is represented by French capping from Banque Populaire, and BNP Paribas is better know in the Czech Repubic through it offshoot Cetelem, a loan provider. Cofidis is engaged in the same business activity, as it is a credit providing loans by telephone. Another example of the French presence in the local financial market AXA Assistance, which – as its names implies – ensures assistance services related to automobile and travel insurance.
With regard to sophisticated investments from France, we can mention Altran, which offers innovation production-process solutions for industrial companies. The Franco-Czech joint venture ADDS/DSC is involved in bioinformatics, meaning that it tests and evaluates substances and molecules in pharmacy with the use of sophisticated statistics programmes. Headquartered in Brno, the company was began with ten employees two years ago and is currently planning to expand and at least double its staff.
In 2000 Letov letecká výroba became a part of Groupe Latecoere of France. Over the following seven years, the company tripled the number of its employees and expanded its production capacity in order to supply Airbus, Embraer and Dassaut Aviation.
If you lose your luggage when flying, contact Team Tracker, a customer call center operating in 17 languages and providing support to airlines in cases of lost or damaged luggage.
The Czech Republic offers countless opportunities for foreign investors and thus appeals particularly to French investors who are considering tasting the Czech cocktail comprising six-percent economic growth, moderate inflation, low taxes, an educated workforce and favourable location at the center of the European market.
Iva Ribaille, CzechInvest
Contact to CzechInvest’s French office:
E-mail: paris@czechinvest.org
Tel.: +33 1 56 24 87 72
Centre tcheque, 18, rue Bonaparte
F-75006 Paris, France
Thanks to these investments, France became the fourth largest investor in the Czech Republic, a position it still holds today. The joint investment of PSA of France and the Japanese carmaker Toyota (TPCA) valued at EUR 1.3 billion undoubtedly contributed to the country’s higher ranking among foreign investors.
Since 2005, when the TPCA plant reached full production capacity, it has produced 300,000 cars per year, whereas more than 90% of production is intended for export. TPCA’s activities contribute to the favourable trade balance with France, and thus 2005 was the breakthrough year in trade relations. Since then, the Czech Republic has managed to maintain a positive trade balance, which indicates that foreign investors are choosing the Czech Republic to meet the needs of not only the local market, but entire European market.
French investors prefer partnerships in the Czech Republic
If we take a closer look at the structure of French investments in the Czech Republic, we will see that the great majority of these investments represent capital entry into Czech companies or joint ventures. The French demand a rate of return on risk that is much higher than any other investors. They prefer to enter into partnerships with companies that they know and with which they have established (often long-term) cooperation. French investors have a strong presence in the Czech Republic, even though it is often hidden behind Czech names. This is confirmed by recent research conducted by the French embassy, which declares that in the Czech Republic there are more than 400 companies with French capital employing roughly 70,000 people.Investment across all sectors
We can find French investments in practically every sector of the Czech economy, though primarily in the automotive industry and related sectors, in construction and in financial services.One of the first incoming investors to take advantage of the opportunities presented by privatization in 1993 was Schneider Electric Písek, which is focused on manufacturing electromechanical instruments intended primarily for the global market. Since it entered the Czech Republic, the company has invested roughly CZK 630 million in a modern plant, which employs 800 workers and is among the Schneider Electric group’s European largest plants.
Then entrance of TPCA into the Czech Republic meant not only an investment worth millions of euros, but also a large volume of order for automotive-components suppliers. One of the most significant manufactures of auto parts is the French company Faurecia, which at the end of last year opened its seventh factory in the Czech Republic in the South Bohemian town of Písek. The plant, in which the company invested EUR 50 million, produces door panels, seat frame and exhaust systems. In total, Faurecia has invested nearly CZK 4 billion in the Czech Republic.
The companies Lisi Automotive, Electropoli Groupe and Lachant Spring have more in common than just the fact that they operate in the automotive sector. They also entered the Czech market by acquiring a Czech partner. Electropoli Groupe a two-thirds share of the Czech firm Galvia, Lachant Spring this year purchase a share in the Martis Martis Pérovna and Lisi Automotive took over a 97% share in Form, which specializes in the production of instruments and cold forming of components. Lisi Automotive is also currently undertaking investments in the South Moravia region.
Valeo, a manufacturer of automotive accessories, has three factories n the Czech Republic as well as a technology center engaged in the development of 3D computer modeling of automotive air-conditioning systems and control panels. Another French automotive firm that has expanded its production programme with new technologies is Hutchinson, which employs approximately 800 people in Rokycany. The portfolio of French manufactures present in the Czech Republic is also growing with the addition of Saint-Gobain, which Hořovice produces automotive glass for mid-sized and luxury cars. Besides the automotive industry, Saint-Gobain is also active in construction. In 2005, SG bought the company W.A.W. A- Keramika, which is number two on the Czech market in the area of sanitary and facing materials. The company’s very positive results in this area (construction materials) led Saint-Gobain last year to establish Platforma, a wholesaler of building materials for professionals.
Other French firms contributing to the growth in the construction industry are Vinci, which has a controlling interest in Stavby silnic, železnic and Průmstav, the cement-maker Lafarge, and Knauf Insulation, which supply building-insulation systems.
The the French share of the banking sector is dominated by Société Generale, the Czech Republic is home to a range of other, smaller investments. Volksbank of Austria is represented by French capping from Banque Populaire, and BNP Paribas is better know in the Czech Repubic through it offshoot Cetelem, a loan provider. Cofidis is engaged in the same business activity, as it is a credit providing loans by telephone. Another example of the French presence in the local financial market AXA Assistance, which – as its names implies – ensures assistance services related to automobile and travel insurance.
Czech media in French hands
The leader in the Czech private radio broadcasting market is the French group Lagardere Aktive Radio International, which decided to capture the SVE market in the 1990s. The group operates the biggest radio stations in the Czech Republic, Frekvence 1 and Evropa 2, and publishes Elle and Maxim magazines.With regard to sophisticated investments from France, we can mention Altran, which offers innovation production-process solutions for industrial companies. The Franco-Czech joint venture ADDS/DSC is involved in bioinformatics, meaning that it tests and evaluates substances and molecules in pharmacy with the use of sophisticated statistics programmes. Headquartered in Brno, the company was began with ten employees two years ago and is currently planning to expand and at least double its staff.
In 2000 Letov letecká výroba became a part of Groupe Latecoere of France. Over the following seven years, the company tripled the number of its employees and expanded its production capacity in order to supply Airbus, Embraer and Dassaut Aviation.
If you lose your luggage when flying, contact Team Tracker, a customer call center operating in 17 languages and providing support to airlines in cases of lost or damaged luggage.
Edith Piaf filmed in Prague
Investments in the film industry can undoubtedly be included among investment with added value. The Czech Republic can be recognized in numerous foreign-produced films. There are several reasons why the Czech Republic is known as the Hollywood of Central Europe. Production costs here are on average two time lowers than in foreign filmmakers’ home countries, while local film studios offer top-quality equipment and personnel. Last year, two films by leading French producers were filmed in Prague, the first of which, Faubourg 36, is set in Paris at the time of the People’s Front. Director Christophe Barratier recognized that, in addition to costs (building a Parisian quarter was paradoxically cheaper in Prague than in Paris), the high standard of living there also played a significant role. The second French film shot in Prague in 2007 was director Olivier Dahan’s Oscar-winning Edith Piaf – Le Môme.The Czech Republic offers countless opportunities for foreign investors and thus appeals particularly to French investors who are considering tasting the Czech cocktail comprising six-percent economic growth, moderate inflation, low taxes, an educated workforce and favourable location at the center of the European market.
What do look out for when dealing with a French partner, or a few cultural tips:
- Be careful with language – your first contact with a French partner should be in French. The French are very proud of their language and at the beginning prefer not to use anything but their mother tongue.
- Patience above all else – the French are indecisive and it takes a relatively long time to convince them of the advantages of cooperation. It is necessary to capture their interest in order to gain their trust.
- Three vacations a year – if you are planning to invite a French partner to your country or to visit his, it is necessary to take the French calendar into account. During the summer holiday season, the whole of France travels south to the sea, while in winter they descend on ski resorts. In addition, the French like to use holidays falling on a day in the middle of the week as a “bridge”, meaning they the given holiday to the weekend by taking vacation or sick days. There are three national holidays in May, so for most of the month you will not be able to reach your partner.
- Time perception – in France, punctuality is not a high priority. Whereas the typical grace period in Czech Republic is fifteen minutes, in France it rather a half-hour or longer.
- Proper selection of meeting times – for the French, food is a very important part of live, so do not expect them to give up their two-hour lunch breaks. It is inappropriate to schedule a meeting between 11.00 a.m. and 2:00 p.m. It can happen that you will not manage to cover the given matter before lunch and your counterpart will feel guilty for not inviting you to lunch.
- How to negotiate – during negotiations, it is not considered civil to go straight to the matter at hand. Personal contact is important to the French, who feel the need to get to know your, which is also related to building trust. Therefore, you should be prepared to discuss your hobbies, studies or, for example, football.
- How to make contact – initial contact via e-mail is not suitable. It is much better to use the telephone, in which case you will explain (ideally in French) your purpose to your counterpart. If it is necessary to present materials, a printed brochure is preferable to a presentation on a CD.
- Strikes are a national sport in which the French engage several times a years for various lengths of time. For the French, strikes represent their right to express disagreement and as such should be respected. Beware of exaggerated criticism of strikers who cause your flight to be delayed, for example, because the French will not understand your aggravation.
Iva Ribaille, CzechInvest
Contact to CzechInvest’s French office:
E-mail: paris@czechinvest.org
Tel.: +33 1 56 24 87 72
Centre tcheque, 18, rue Bonaparte
F-75006 Paris, France