Minister Havlíček: Czech exports into China remain a challenge

1. 11. 2019 | Source: Ministry of Industry and Trade of The Czech Republic

The Czech Republic’s high-profile presence at the China International Import Expo (CIIE) will bring a number of benefits to participating businesses, who hope to establish new ties with their Chinese counterparts. And it is this factor of opening up doors to the Chinese market that the Ministry of Trade and Industry took into consideration, in its role heading the Czech delegation, when deciding to gain partner country status for the Czech Republic, thus enabling Czech firms to make presentations in China, says Minister of Industry and Trade Karel Havlíček.

This year, the Czech Republic will be participating in the China International Import Expo in Shanghai for the second time – albeit for the first time as a partner country. What lies behind such a change?
Last year’s China International Import Expo (CIIE) kicked-off with twenty heads of state in attendance, including Chinese president Xi Jinping and Czech president Miloš Zeman. Such high visibility at this event also brings additional benefits, which can play a significant role at key moments during the establishment of business relations with Chinese partners.

And it was this factor of opening up doors to the Chinese market that we took into consideration at the Ministry of Trade and Industry (MPO) in our role heading the Czech participation effort, when we decided to gain partner country status for the Czech Republic, thus enabling Czech companies to make presentations at the event. Our “Guest Country of Honour” status is also notable because it has only been awarded to 15 countries – in terms of Europe, asides from he Czech Republic, this includes France, Italy and Greece.

You will be attending the CIIE – who else is coming, and what will you be brining?
We are planning two expositions – one in the national section, and one in the commercial section of the trade fair. The national exposition will span 256 m2 and will present the new concept of: “The Czech Republic: A Country for the Future” which emphasises innovative solutions and unique technologies. It will present 13 countries spanning the Czech automotive and aeronautics industries, and the fields of biotechnology, nanotechnology, optics, lasers, and mechanical engineering.

The national exposition will also present the Czech Republic in terms of its tourism, agriculture, food production, and education. The commercial exposition will span 120 m2 and will be situated in the “Quality Life” hall. This exposition will feature 14 companies from the fields of glassmaking and design. The Czech delegation is headed by the Czech Speaker of the Chamber of Deputies Radek Vondráček. Alongside representatives from other state institutions, the delegation also features an accompanying delegation of figures from business, organised by the Confederation of Industry of the Czech Republic (Svaz průmyslu a dopravy ČR).

Although trade between the Czech Republic and China is on the rise, there is still a large trade imbalance in favour of China. Which fields of industry could be tapped to increase Czech exports?
The vast majority of European Union countries also have a negative trade imbalance with China – albeit ours is ten-times smaller. After factoring-in re-exports, our position looks better, but it still is far from ideal. And so exports to China remain a challenge. Over the past five years Czech exports to China have increased, and last year attained a year-on-year increase of seven percent. Our aim is to change the negative trade imbalance by supporting Czech businesses, including small and medium-sized businesses, including their expansion into other areas and provinces of China that are undergoing industrialisation.

A number of businesses will present themselves at the national exposition at the China International Import Expo in Shanghai. These include Meopta, Nafigate Corporation, Škoda Auto, Tescan, Preciosa, Ton and Petrof. Additionally, visitors will be able to taste the output of traditional Czech firms such as Budějovický Budvar, Becherovka, Bohemia sekt, Marlenka and Hořické trubičky. Meanwhile, the MPO, CzechTrade, CzechTourism, Ústí nad Labem Region, The Centre for International Cooperation in Education (DZS), and CzechInvest will offer a range of services “under one roof”. 

„Opportunities in terms of the Czech economy can primarily be found in the combination of industrial traditions, a strong research groundwork, and considerable business proficiency. Such reasons helped guide the formulation of an “Innovation Strategy”, whose goal is to promote an integration of these elements.“

Which export areas are already strong, and which possess opportunities for growth?
The areas where Czech exports have found long-term success are machinery and transportation-related products, which account for more than 17 percent of direct exports. Additionally, we export industrial and consumer goods, and primarily automobile components, pumps, switchboards, telephones, electrical circuits, toys, prams and tyres. China is one of the fastest-growing markets for aviation products. This means that opportunities exist for Czech companies from a variety of industries, including the construction and reconstruction of airports, as well as radar systems, supplying aircraft and training flight crews.

And despite the gradual decline in the use of coal, potential still exists in terms of the mining and extraction industries, in which the Chinese government is supporting expansion, primarily in underground mining. And one should also not forget the energy industry – China is the largest consumer of solar energy in the world, and is currently also planning to expand its nuclear energy industry.

In what ways can the Ministry of Trade and Industry assist this “China-oriented” direction?
Significant support for businesses and entrepreneurs is gained via official and specialised participation by Czech companies at exhibitions and trade fairs organised by the MPO and CzechTrade. The CIIE trade fair is just one such example. We are also expanding our international support network via a new CzechTrade office in v Guangzhou, thus further supporting Czech business activities in China, as well as organising new trade missions. 

And, conversely, what is the position on Czech investments in the Czech Republic?
Following the establishment of the strategic partnership, investments have increased. And despite the fact that the Czech economy is going through a period of unprecedented low unemployment, in recent years Chinese interest in investing in the Czech Republic continues to grow. According to CzechInvest, in 2018, China was a significant investor in terms of direct foreign investments with respect to investment volume and the number of new jobs created. While during 1993 – 2017 such investments reached CZK 6.67bn, in 2018 alone we saw an increase of CZK 3.7bn.

Where do you see the opportunities for the Czech economy in terms of China in the ensuing years?
Opportunities in terms of the Czech economy can primarily be found in the combination of indus-trial traditions, a strong research groundwork, and considerable business proficiency. Such reasons helped guide the formulation of our “Innovation Strategy”, whose goal is to promote an integration of these elements. We want the Czech Republic to become a country which becomes a symbol of advanced skills and technologies that is able to achieve success even in the most challenging global markets. 

Is there any point in setting quantitative goals, for example in terms of lowering the trade imbalance, or are you emphasising other priorities?
Businesses and the private sphere represent the main force driving Czech international trade. This is true both in terms of China and in a universal sense. The priority of the MPO is thus to create the best possible conditions for Czech businesses and entrepreneurs both at home and abroad.   For this reason, too, we adopted our Innovation Strategy, and are also working on a new Business Strategy for the Czech Republic. In terms of our relationship with China, we are seeking – in a bilateral sense, and also multilateral sense, via the EU and WTO – to create the fairest possible playing field with equal conditions for businesses and entrepreneurs. 

Karel Havlíček

Studied at the Faculty of Civil Engineering at the Czech Technical University in Prague (ČVUT), followed by studies at the Prague International Business School (PIBS) in partnership with the Manchester Metropolitan University. Gained a doctorate at the Faculty of Business Administration at the University of Economics, Prague (VŠE), where he was also awarded an associate professorship   at the Faculty of Finance and Accounting.

Since the turn of the millennium, Havlíček has served to advocate for the interests of entrepreneurs, primarily in his role as a Chairman of the Board of Directors of the Czech Association of the Association of Small and Medium-Sized Enterprises and Crafts of the Czech Republic (AMSP ČR).

Since 2014, has been a member of the Governmental Research, Development, and Innovation Council (RVVI), and since 2018 he serves as its deputy chair.

In April 2019, Havlíček was appointed by the Czech prime minister to serve as the government’s Deputy Prime Minister for Economics, as well Minister of Trade and Industry. He was appointed to both functions by the Czech president on 30 April 2019. On that same date, Havlíček resigned from all existing statutory and business posts in the private sphere and departed the leadership of the AMSP ČR.

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