Greater support for family businesses and small rural businesses to be launched next year

6. 9. 2019 | Source: Ministry of Industry and Trade of The Czech Republic

In domestic family companies there is a generation change. However, no one in the Czech Republic knows exactly how many they are at present. At the same time, it is the family businesses that is very much trusted by people for combining the tradition, interest and efforts to have quality products and services.

They often work in agriculture and rural areas. That is why they were talked about at the 46th International Agro Show Earth Breadwinner, which takes place in České Budějovice. Rural service as such, including the lack of small shops, was discussed in addition to new forms of support being prepared by the Ministry of Industry and Trade (MIT).

Rural service must be addressed by the state. Young people often go to towns from municipalities because they do not have the necessary services in the village, which, of course bothers older generations who rarely ever get out of the countryside. Among other things, the support of family businesses that traditionally work very well in agriculture can help. 

“We know that, for example, in Germany, about 80% of small and medium-sized companies are family businesses. We see them as the basis of a healthy and resilient economy, and we know that it is necessary to maintain them and motivate their establishments. Therefore, based on the initiative of the Association of Small and Medium-Sized Enterprises and Crafts of the Czech Republic (AMSP CR) and activities of the MIT, the government recently anchored their official definition by its Resolution” says Deputy Prime Minister and Minister of Industry and Trade Karel Havlíček adding that the Czech Republic ranks among eight EU countries creating a specific support for a key business segment whose importance is not only economic. Family businesses are the bearers of traditions, original products and the main employer in the country.

“The domestic family companies are now undergoing a generational change but they often do not know how to deal with. In this regard, we want to help entrepreneurs and tradesmen, among other things, through education by launching teaching of specialized fields and programs at universities or special courses that can be supported by the State. That is why we needed their definition in order to be able to identify them” says Eva Svobodová, Member of the Board of Directors and CEO of the Association of Small and Medium-Sized Enterprises and Crafts of the Czech Republic.

Deputy Prime Minister and Minister of Industry and Trade Karel Havlíček agrees and adds that the next step will be the voluntary certification of family businesses, i.e. an independent verification that the entrepreneur really falls into this segment. Family companies themselves decide whether to apply for it or not. It can be used in specific support as well as in marketing, because according to AMSP CR surveys, it is confirmed that customers see the family companies as stable suppliers and traders with higher quality expectations.

Small shops in the countryside are also related to agriculture, and thus to the Agrosalon Earth Breadwinner that is currently held. Despite the fact that they often offer quality regional food, sales are not always successful due to rural depopulation. According to a fresh survey carried out by the Association of Czech Traditional Trade (AČTO), in total 16% of independent small shops were loss-making in 2014 and 2019 even 5.4% closed. Therefore, the Ministry of Industry and Trade is considering supporting shops in municipalities with inferior infrastructure. “We will involve the Czech-Moravian Guarantee and Development Bank to prepare financial instruments and we are also considering creating a fund from the resources of government, regions and municipalities that could directly support small groceries” says Deputy Prime Minister and Minister of Industry and Trade Karel Havlíček and adds: 

“Traders in approximately 2,000 small municipalities with a so-called lower degree of development could receive annual support of approximately tens of thousands of crowns. Those groceries that will simultaneously offer postal services, i.e. the so-called mail partner service, will receive a higher support”. Havlíček pointed out that the mail partner is currently operated by private entities, from half by municipalities. Municipalities must logically have and are interested in ensuring that people do not leave them and that the service of the countryside is maintained. The inspiration of the combination of post and groceries in the village is mainly in Austria. In parallel, the government is preparing measures to a flat reduction in administration, which will also be an important form of support for small businesses in rural areas. Expert discussion also envisage amendments to the Act on Significant Market Strength.

The measures are dealt with by a seven-member working group at the MIT. What they have actually agreed should be heard by the end of this year. “It is already clear that the background papers we are likely to submit this November should include three basic things: reducing administration, mitigating the impact of legislation and targeted subsidies” says the Chairman of the Association of Czech Traditional Trade, Zdeněk Juračka, adding: “300 million crowns would be enough to invest in the sustainability of small businesses in the country. The state would not have to pay the whole amount, because the local governments, i.e. regions and cities could partake in it.”

“Providing motivation is the way to maintain services in the countryside. I agree with the proposals of the President of AČTO. However, we have to realize that the main problem is that people shop in chain stores in towns, often at discount deals, which is difficult for a small village trader to compete with. A similar problem is dealt with in all countries. We want to proceed in a balanced way, support small shops, but at the same time, not restrict consumers in their choice” adds Deputy Prime Minister and Minister of Industry and Trade Karel Havlíček. At the same time, he recalls that in some regions, such as the Vysočina Region or the Pardubice Region, grants, from which the regions help financially to maintain trade in small municipalities, already exist.

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