Background To Business in the Czech Republic

As with all the former Soviet bloc countries, the Czech Republic needs to be viewed as a transitional economy which is in the process of moving from a state-controlled, centrally planned economy to one which is embracing a more Anglo-style capitalist model.

Although it could be strongly argued that the Czech Republic has moved faster and more successfully in this direction than some of its neighbours, this does not mean that the transition is complete.

One of the strongest legacies of the former Soviet-style system is in the area of trust in the business environment. All commentators on Czech business culture focus on the difficulty of developing deep levels of trust within any business relationship. Czechs, it is argued, start from a level of deep distrust when they engage with a new contact. This mistrust can only be broken down through time, perseverance and proving to be a trustworthy associate. Therefore, one of the key messages when attempting to work with Czechs is the need for patience. Trying to do too much, too quickly could prove very counterproductive.

Another key issue within the Czech business environment is the different attitudes to business issues which you can expect to find in people from different generations. Older employees (40 – 45+) are influenced by the Soviet-style systems they were brought up to see as the norm. The younger generations, however, who have been educated and come into the workplace after the changes, are much more likely to be heavily influenced by western business models and thinking. When doing business in the Czech Republic, you need to know who you are going business with before you can make any conclusions on how they might address various business issues. (We will return to this generational issue later in this country profile.)

A brief overview of some key concepts to consider when doing business in Czech Republic

Written and Produced by Keith Warburton

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Overview

The Czech Republic’s economy has, on the whole, performed very well since the structural and political changes of the 1990’s. Although growth stalled after the banking crises, it seems to have returned through a combination of public expenditure and direct foreign investment. Key indicators such as inflation and unemployment levels show reasons for optimism going forward.

The Czech Republic also scores very highly on many key indictors around ‘well-being’ with personal security, work-life balance, education and skills scoring particularly strongly. In all, the country seems to have come through the transition from Soviet satellite state to modern social economy much better than some of its Central and East European neighbours.

These factors lead us to conclude that the future of the country is bright and that doing business in the Czech Republic probably makes sound commercial sense. The economy is relatively strong, the country is geographically well-positioned, there is an educated workforce and a buoyant consumer culture – all the ingredients would seem to be in place for you to make a success of the Czech market.

However, as with all new markets you really need to do some research before you start to make any plans and it is important to take Czech business culture into account. For example, generational issues will come into play when starting to work with people in the Czech Republic. Are you dealing with people who were educated and worked during the former Soviet era or are your contacts younger professionals raised in a completely different period? Approaches to business can differ significantly between these two groups – and that’s just one of several cultural issues you should understand in advance of starting any business dealings in the country.

This country profile provides an overview of some of the key aspects of Czech business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips