The Czech Republic is an economy which is still on a journey from a Soviet-style command economy towards a free market approach. It has made great progress on this journey but still has some way to go before reaching its goals.
The business environment still suffers from the legacy of the old systems. This legacy ranges from the massive levels of bureaucracy found in some of the former monopoly companies to a weakness in the countrys basic infrastructure.
One of the most noticeable legacies of the old system is an inherent mistrust of people on first meeting. This mistrust can only be overcome through perseverance and demonstrating a professional approach. Always deliver what you promise.
Although nowhere near as affected by corruption as the Russian economy, there is still a large amount of bribery within the Czech system – especially in the public sector.
Research the origins of any company you are doing business with – is it a foreign-owned company or a local entity? This ownership issue can have a big impact on how the company is structured and managed.
Be aware of the potential generational divide which exists within Czech society. The older generation are likely to be far more heavily influenced by the approach to business found under the old Soviet-style regime whereas the younger generation might have a more open, entrepreneurial approach.
When dealing with older managers in former monopoly companies, you can expect to encounter a hierarchical approach where decisions are made at the top of the organisation.
Make sure you do some research on the structure of the organisation you are dealing with. Dont waste too much time with middle managers if all the decisions are made by top management.
As with their German and Polish neighbours, Czechs would tend to do significant amounts of preparation prior to meetings and would expect their counterparties to do the same. Arriving unprepared could add to their latent sense of suspicion.
Meetings should be scheduled well in advance – meetings at short notice are often difficult to organise.
Try to avoid scheduling meetings for Friday afternoon.
If you want to be taken seriously, arrive on time. Punctuality is the sign of a serious professional. (Plan your trip from the hotel to the office in advance – don’t leave things to the last minute.)
Cards are usually exchanged at the start of a meeting and, as a great deal of importance is placed on educational background, titles and qualifications should be visible on your business card.
There might be some small talk at the start of a meeting but this does not usually last too long.
Due to the inherent suspicion of strangers found in the Czech Republic (especially amongst the older generation), it is advisable to try to keep teams together over long periods of time. It can take new teams a considerable time to start to work effectively together.
On the whole, English language levels are very good in the Czech Republic and it is unlikely that a translator would be necessary. (On the other hand, some older managers might struggle a little with English and these people might be the ultimate decision makers.)
Czechs are fairly non-confrontational and their communication style reflects this. They would rather avoid certain issues so that they avoid hurting people’s feelings.
When in disagreement with you, Czechs will often go silent and look downwards – watch out for this in meeting situations.
Body language is minimal in meetings which can lead to mistaken impressions of disinterest.
Visiting business women should encounter little, or no, gender bias. However, most senior positions still tend to be held by older men.
Written and Produced by Keith Warburton
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: