Czech Republic Market Access

Import regulations and customs duties

Regulations
In accordance with its European Union membership since May, 1st of 2004, Czech Republic applies the European Union trade policy such as antidumping or anti-subsidy measures, for instance. The European Union import rules, especially concerning the textile products sector, is widespread in Czech Republic. If the Czech Republic has adopted the main part of the community regulations on its accession to the EU, some transitional measures have been granted to the country regarding some EU rules like for example freedom of movement for workers or cabotage inside some countries. For further information about each candidate country’s compliance with the Community acquis, please consult the Enlargement of the EU - Guide to the Negotiations published by the European Commission.

While the European Union has a rather liberal foreign trade policy, some products need import licenses. There are some restrictions, especially on farm products, following the implementation of the CAP (Common Agricultural Policy): the application of compensations on import and export of farm products, aimed at favouring the development of agriculture within the EU, implies a certain number of control and regulation systems for the goods entering the EU territory.

When being introduced in Czech Republic, some products must be "CE" marked in respect to the European Directives adopted on the basis of the New Approach and the Global Approach. For further information, please consult the Guide to the Implementation of Directives based on New Approach and Global Approach.

Distribution

The principal economic zones of the country are concentrated around the capital Prague and in metropolitan cities like Usti nad Labem and Plzen in the west and Brno and Ostrava in the east.
The distribution market is currently booming due to modernisation of the sector, all the more so as this boom is accompanied by an increase in purchasing power on the part of the Czech consumer, which increased from 16,920 CZK ( 520 euros per month) in 2003 to 18,125 CZK ( 580 euros per month) in 2004. In 2004, Czech retail business had a value of 22.8 billion euros, which is a growth of 3.4% over 2003..

The Business to Consumer (B to C) market

The distribution structure in the Czech Republic increasingly resembles that of western countries, i.e.the dominance of big groups at the cost of the traditional trade. In fact, until 1989, commercial distribution was under State control, but today it is almost entirely privatised. In 1997, the hypermarkets represented only 1% of retail business while traditional businesses represented 49%. Today, the trend has completely changed and hypermarkets largely dominate with 44% of retail trade, while the market-share of traditional traders fell to 18% in 2003.

Today, the distribution market in the country is dominated by Austrian, Belgian and German companies which were the first ones to enter the Czech market. A majority of Czech companies have gone bankrupt or have been taken over as they lost their competitive edge. We thus find here:
- Delhaize which is represented by Delvita,
- Julius Meinl.
- Royal Ahold.
- Makro.

Shopping centers and malls have also had great success: 80% of the population living in big cities frequent them. At these centres supermarkets rub shoulders with luxury stores.
It should be noted however, that Czech people have a very distinct preference for their national products and for the label "Czech made". Also the relatively low purchasing power of the average Czech consumer makes these products more affordable.

The Business to Business (B to B) market

Since joining the European Union, FDI (Foreign Direct Investment) has gone up by 109%, from 2.1 billion dollars in 2003 to 4.4 billion dollars in 2004. The phenomenon of foreign companies setting up in the Czech Republic dates back to 1993, but the liberalisation that followed its joining the European Union reinforced it further. This is especially true because economic development in the past few years has increased the demand in sectors like transportation, railways, automobiles and industrial goods. The demand is high in the housing sector as well, mainly due to the renovation of residential complexes constructed in the 1960's.Opportunities have also finally touched sectors like service providers, local groups (concessions), tourism (infrastructure requirements), as well as the environment sector.

The franchise distribution system has proven to be the most desirable by foreign companies to enter the Czech market. According to the Czech franchise association, there are 50 franchise systems operating in the country, a majority of which are foreign brands such as Mac Donalds, Etam, Yves Rochers.

Numerous salons et foires (fairs and exhibitions) take place in Prague, especially in the building sector.

Transportation of goods

By road
There are 56,000 km of roads and highways. In 1998, the public transport of goods by road network represented 62,900 tons. The authority concerning transport is the Ministry of Transport and Telecommunications.

By rail
The railroad network extends over 9,400 km. The government foresees the end of the electrification of the Ceska Trebova-Brno line. A plan for 2000-2005 is forecasted for the electrification of Ceske Budejovice-Horni Dvoriste, Letohrad-Lichkov and Kadan-karlovy Vary lines.
The national company is Czech State Railway ( CDRAIL).
The developers of rail traffic are: Viamont.a.s who manages infrastructures and OKD DOPRAVA A.S.
The Czech railroad network should get bigger during these next 10 years grace in the opening of two main lines: Berlin-Praha-Wien and Warszawa-Bohumin-Wroclaw-Wien.

By air
The national airline company is CZECH AIRLINES CSA. In the country, there are 10 public international airports (Liberec, Pardubice, Karlovy Vary, Klatovy, Hosin, Prague-Ruzine, Brno-Turany, Kunovice, Ostarava-Mosnov, Holesov), 2 private international airports (Otrokovice, Vodochody), 58 national public airports, 5 private national airports. Prague-Ruzine airport handles over 94% of total passengers traffic and 84% of air cargo service. The basic air transport network of the Czech Republic is dominated by activity generated at the international airports in Prague, Brno, Ostrava and Karlovy Vary.

Standards

The body in charge of the standardisation and certification of the Czech Republic is the Cesky Normalizacnì institute, it depends on the Ministry of economics. However certain products have to obtain the approval of other specialised bodies as Urad Pro Technickou Normalizaci Metrologii has Statni Zkusebnictvi (the Institute of Mechanical Technical Standardisation and state Analysis).
National standard (SN) is inspired by ISO standards.

Patents and brands

The body responsible for the protection of intellectual property in Czech Republic is Ùrad Prùmyslového Vlastnictvi ( Industrial Property Office).

The Czech Republic signed the agreement of Paris for the protection of industrial property, it is a part of the agreement of Madrid on the international register of brands and also of the agreement of Lisbon on the designation of origin.