Sep - British Chamber of Commerce in the Czech Republic

Do not neglect the Czech Republic / 4Will the New Government be brave enoughto make the necessary reforms? / 12How to finance a small and middle-sized business / 20

EditorialBoard of Directorsof the British Chamberof CommerceHonorary ChairpersonH. E. Mrs Anne PringleHonorary Vice-ChairmanKaren StantonCo-ChairmenDesmond MullanJo WeaverTreasurerChris GarlickBoard DirectorsMiles GrahamJan GrozdanovičDoug PritchardSanjiv SuriTereza UrbánkováJan ValdingerACTIVITY AREAS AND BOARD RESPONSIBILITIES• Lobbying/Euro-Czech ForumChris Garlick, Miles Graham, Jan Grozdanovič,Desmond Mullan, Sanjiv Suri• Membership/PatronageDesmond Mullan, Doug Pritchard, Jan Valdinger• TreasuryChris Garlick• Navigating Business Environmentand Networking (NBEN):Tereza Urbánková, Doug Pritchard• Publications/CommunicationsTereza Urbánková, Doug Pritchard• Code of ConductJan Grozdanovič, Sanjiv Suri, Jo WeaverPATRONS• Allen & Overy • BAE Systems• Bovis Lend Lease • Clifford Chance• Cushman & Wakefield Healey & Baker • DHL• Egon Zehnder International • Flow East • HSBC• International Power • Linklaters • LogicaCMG• PricewaterhouseCoopers • Provident Financial• Tesco • Travelex • Zátiší Catering GroupCHAMBER OFFICERenata Scharfová, Executive DirectorTomáš Klvaňa, Strategy & External RelationsLucia Mišovicová, Publications/FOCUS EditorLenka Péčová, Assistant/Events Co-ordinatorBritish Chamber of Commerce in the Czech RepublicIBC, Pobřežní 3, 186 00 Praha 8Tel.: (+420) 224 835 161, Fax: (+420) 224 835 162E: info@britcham.czwww.britishchamber.czThe newsletter is published bythe British Chamber of Commerce in the Czech Republic.Should you wish to place an article, advertise or contribute in any wayto the newsletter, please contact Lucia Mišovicová at 224 835 165.© British Chamber of Commerce in the Czech RepublicThis has been a historic and exciting year for the Czech Republic and it ishard to believe that, after the years of preparation and planning, we havenow been part of the European Union for more than four months!When I defected from Czechoslovakia in 1980, it was impossible to imaginethat this country could ever shake itself free of communism. The idea thatit could one day become part of a united Europe was completely unthinkable.But here we are in 2004, part of Europe and, for many of us who leftin the old days, this is again our home.I was on the board of the Chamber of Commerce during the years 1999to 2002, but the Chamber as it was then was quite different. This board,and this Czech Republic, are a whole new scenario. As is usual in May,a new board was voted in, but we also have two new Joint Chairmen,a new Executive Director and a new Strategy & External Relations Adviser,and I am sure that you will soon see that we mean business!In the next few weeks you will hear about quite a few new incentives forthe Chamber. A ‘Code of Conduct’ that is being brought in for members;Legal ‘Info Sheets’ – first-hand legal info; as well as a bi-weekly ‘informationsheet’ BCC Digest that will replace the sometimes excessive number ofe-mails that members were receivingThere are also some exciting new events in store, including dinners andlunches with some of the Czech Republic’s business leaders and politicians.As a practicing lawyer I have been able to assist the Board in implementingnew concepts brought about by the changes in the Articles. This makessure the Board does not get carried away with the feasibility of its newideas! With dual legal Czech and English qualifications, I will be able tocontribute to the further development of the ECF/BCCC relationship andECF new policies. Like my fellow Board members I want to ensure thatmembers get value for money from their membership.I hope you will find the new changes equally exciting. Read FOCUS andget further details regularly.Jan GrozdanovičBoard DirectorFOCUS SEPTEMBER 2004 3

InterviewRené Samek is the Director of UK and IrelandOperations at CzechInvest, the Czech governmentagency for business developmentand investment promotion. He graduatedfrom Charles University in Prague and alsostudied at the Central European Universityin Prague and Budapest, where he obtaineddevelopment programmes. We also act as an intermediary between the EU andsmall and medium-sized enterprises in implementing EU structural funds in theCzech Republic.We have changed our name from CzechInvest: Czech Agency for ForeignInvestment, to CzechInvest: The Investment and Business Development Agency,but potential foreign investors should not be afraid that we will put less emphasison attracting foreign investment. On the contrary, the merger prompted us to lookDo not neglect the Czech Republicat our services and information materials and after a bit of restructuring and consolidation,our services to the potential investor and our information materials willbe better than ever!The role of our foreign offices remains unchanged: to promote the CzechRepublic to potential investors abroad and work with colleagues in Prague and theCzech regions on helping the investors choose the Czech Republic over our rivalcountries. Competition is tough – almost every country of the world has an investmentpromotion office in London.Could you describe the structure of incoming investments? Has it changed overthe past few years (in the sense of traditional manufacturing projects versusbusiness development services, know-how etc.)?Most inquiries and projects come from the following six sectors: automotive components,electronics, plastic components, precision engineering, software developmentand business support services, (shared services, call centres and high-tech repaircentres). These are also our target sectors – most of my marketing activities in theUK are directed towards them.The last two years saw a big shift towards higher value added manufacturingprojects and non-manufacturing projects. In 2001-2 the London office had just ahandful of inquiries in business support services and software development. Today,these sectors account for nearly one-third of all my inquiries and I am confidentthat in a year or two more than half of inquiries/projects from the UK will be nonmanufacturingknowledge based projects.The London office was the first point of contact for successful projects such asDHL Systems (pan-European IT support centre), Symbol Technologies (high-techrepair centre) and Ricardo (design of automotive components).his Master’s degree in the field of InternationalRelations and European Studies, and at theLondon School of Economics, where he obtainedanother Master’s in Political Economy. Hehas been with CzechInvest since 1997 – he wasthe Deputy Director of Marketing and theMarketing Director for four years before comingto London at the end of 2001 to headthe agency’s UK & Ireland office.We asked him a few questions about therole of CzechInvest in the UK and the structureof incoming investments, as well the CzechRepublic as an investment target.What is the mission of the ‘new’ CzechInvestafter the merger of the Ministry of Trade andIndustry’s agencies – Agency for BusinessDevelopment (ARP) and Agency for Developmentof Industry in the Czech Republic(CzechIndustry) with CzechInvest? What isthe specific role of the London/UK branchof CzechInvest?CzechInvest contributes to attracting foreigninvestment and developing domestic companiesthrough its free-of-charge services and severalHow would you define the CR as an investment target? Does it have somespecific characteristics in comparison with other neighbouring states?The Czech Republic offers a unique combination of a strategic location in the centreof Europe, well developed infrastructure, highly educated and technically skilled labourforce and low costs. There are many countries in southeastern Europe and theformer Soviet Union where labour is cheaper than in the Czech Republic, but theyusually lack one or more of the other advantages of the Czech Republic. You maybe able to produce your products cheaper further East, but getting the products toyour clients in Germany may be significantly more expensive and time consumingthan from the Czech Republic.The availability of technically skilled labour, especially university-educated engineers,has become the most important factor in our success in attracting foreign investment.The Czech Republic still has a large percentage of students graduating inscience and technology subjects. This theoretical background is combined with aninnovative approach of Czech people that helps to find solutions to almost everytechnical problem. Let us hope that young Czechs will not turn their backs on thesedisciplines and the Czech Republic will be able to maintain this advantage.One of the significant advantages the Czech Republic offers to British companiesand entrepreneurs is the excellent accessibility of Prague and the rest of the CzechRepublic. I know that you in Prague are fed up with all these stag parties, but dueto Prague’s popularity you can fly to Prague directly from twelve UK airports – noother city in Central and Eastern Europe can offer you that. I have been contacted bya company from Carlisle – they want to be able to fly to their future Czech subsidiaryin the morning and be back in Carlisle in the evening. They were very pleased tohear that from the end of October they will be able to choose between Newcastleand Glasgow airports. (ČSA Czech airlines are introducing their Prague–Glasgowroute on 30th October).4 FOCUS SEPTEMBER 2004

InterviewDo you think there has been a significant shift in investors’ interest followingthe CR’s accession to the EU?There has been a significant increase in the number of inquiries this year and thatis no surprise, as the EU expansion has received a good share of publicity here in theUK. I am confident that the inflow of foreign investment to the Czech Republic willcontinue to be strong. There has been one significant shift, however. While in thepast most of the inquiries / projects came from larger companies, today there aremany inquiries / projects from small and medium-sized enterprises. They probablytake our membership in the EU as a guarantee that the Czech Republic is a safecountry to invest in.From your experience, what are the key factors in the potential investor’sdecision making?Market access, availability of labour, quality of local infrastructure and cost of doingbusiness. Support from local government bodies is also important – many investorshave told me that the quality of our services and the perceived support from localauthorities had played prominent role in their decision making.Examples of realised investmentprojects in the Czech RepublicLaminar MedicaThe leading European producer of insulatedshipping systems for the pharmaceutical andbiotech industries, Laminar Medica Limited,recently opened a new production facility in theCzech Republic. The new plant in Vodňany,South Bohemia, will bring to the region up to35 new jobs.Heads & All ThreadsOne of the leading British independent suppliersof industrial fasteners, wire harnesses &Is the British investor ‘different’ from others? Are there any specifics of the ‘Britishinvestor’?Some British companies have quite low expectations when they go to visit the CzechRepublic for the first time. They are not fully aware of the enormous changes whichhave taken place there since 1989.Also, many UK companies have experience with trading with, and investing incontinental Europe, Commonwealth countries or Southeast Asia, but less experiencewith Central and Eastern Europe. This is probably different with German and Austriancompanies which have more and longer contacts with the region.Into what sectors do British companies invest most? Is there a type of industryin which they show the greatest interest?In the past there were several large privatisation projects in utilities, but the typicalBritish investment in the Czech Republic is in high-tech manufacturing industriessuch as automotive components, electronics, plastic parts and precision engineering.Software development seems to be a growing sector now. Quite a lot of Britishinvestment has also gone to real estate and to retail services. The Czech TechnologyPark in Brno and Tesco supermarkets are the most visible examples, but there aremany more.Is there a way in which a company that is already established here in the CRcould benefit from CzechInvest?Our services are provided to both new and already established investors. We canprovide information on the business and investment climate in the Czech Republic,information on available industrial real estate, location of potential Czech suppliersand assistance in application for investment incentives.The scheme of investment incentives has recently been amended to extend thetax incentive for already existing investors who plan to expand their Czech activities.There is also a new programme to support the creation of new jobs in regions withhigh unemployment. Our regional offices collect applications for grants from programmesaimed at increasing the competitiveness of small and medium-sized enterprises,such as the Inovace (Innovation) or Školící střediska (Training Centres). Furthermore,new and existing companies will be able to benefit from programmes aimed at developingbusiness incubators, science and technology parks, and industrial clusters.How many British and Irish companies already exist in the Czech market?As far as I am aware, there are more than 300 British and more than 50 Irish companiesin the Czech Republic – from large multinational companies such as Shell,Unilever, Tesco, LogicaCMG, Kingspan and Barlo, to small manufacturing and servicefirms and consultants and sales branches.What would be your key message to potential investors?Do not leave the door open for your competitors by neglecting the Czech Republic.Many British companies have had their eyes set on India or China, but Central andEastern Europe offers similar opportunities and a much friendlier business and investmentclimate. And the Czech Republic has attracted more foreign investment percapita than any other country in Central and Eastern Europe.cable assemblies and machine parts, Heads &All Threads, has chosen the Czech Republicas a location to serve the needs of continentalEuropean clients.Hillside PlasticsThe Supplier of plastic parts to Black & Deckerhas followed their customer to the Czech Republic.R.B.FarquharThe Scottish manufacturer of bathroom podsfor hotel chains such as Holiday Inn, Travel-Lodge and Travel Inn, opened their first plantoutside the UK in Chomutov on 26 August 2004.CzechInvest – The CzechInvest central officeis based in Prague with 13 regional offices inthe Czech Republic and nine foreign representationoffices.Central office:Štěpánská 15, 120 00 Praha 2, Czech Republictel.: 296 342 500, fax: 296 342 502E: agentura@czechinvest.orgU.K. & Ireland office: 1 Harley Street,London W1G 9QD, United KingdomRené Samek, E: london@czechinvest.orgtel.: +44-20-7291 4610, fax: +44-20-7291 4612FOCUS SEPTEMBER 2004 5

Introducing New MembersCont’d from page 6ambition to remain your Opportunity Providerin the Czech Republic: acquisitions/mergers, joint ventures, companies openingtheir capital, green or brown field projects…Moreover our exclusive partnershipswith an account & tax adviser and a lawoffice, allow us to co-ordinate for you anyChristophe BeaujardManaging Directoracquisition, from the investment/businessplan review, through the strategic due diligence,onto the contract signature.We also represent Czech companieson exclusivity basis: in charge of the saleprocess we seek foreign investors.CzechEuroRadlická 61, 150 00 Praha 5T: +420 251 119 229F: +420 251 119 229E: info@czecheuro.comwww.czecheuro.comAlps Group is an international propertyconsultancy operating across a variety ofindustry sectors. Providing a wide rangeof corporate property services on an internationallevel, Alps Group draws on itsPeter AlcockCEODavid LordManaging ConsultantLeon HartOperations Directorwealth of experience of handling propertyissues for companies on a global basis,both in mature and emerging economies.Alps has a highly skilled team whichassist companies to maximise the returnsfrom the property that they own or occupy,as well as resolve any specific propertyissues. Services include carrying out anaudit of the entire property portfolio toidentify how it can make an improved financialcontribution to the business andopportunities for making potential savings.Alps also carry out risk assessments, lookingat what property related risks exists suchas environmental issues, fire and security,and devise a strategy for managing themto minimise their effects on the business.Other areas of expertise include operationalproperty management, acquisition& disposal of property, environmental managementand property & environmentaldue diligence for the M&A market.Alps Group Limited4 Vernon Street, DE1 1FR, Derby, UKT: +44 1332 346424F: +44 1332 291466E: info@alpsgroup.comwww.alpsgroupRENOMIA, a. s., the leading Czech insurancebroker was founded in 1993 andnow ranks as the number one Czech insurancebroker.As a member of the Worldwide BrokerNetwork (WBN), the company has extensiveexperience in the international insurancebusiness. A specialised international departmenthas been established to meet the needsof international clients such as re-insuranceand insurance program localisation.RENOMIA offers a full array of corporateinsurance services in all major linesincluding: Risk Management, Claims Settlement,Property and Business Interruption,Liability, Casualty, Marine and Cargo,Jiřina NepalováCEOCar Insurance, Personal Insurance, GroupInsurance and Employee Benefits. Theclient base ranges from medium size companiesto the market leaders of all theindustrial sectors.RENOMIA operates six branches inthe main regions of the Czech Republicand a subsidiary in Slovakia. As an independentbroker it co-operates with all theleading domestic and international insurers.RENOMIA CEO, Jiřina Nepalová adds:“We are always on the customers’ side,ready to defend their interests and offerthem the most convenient solution regardingprice and conditions.”Should you be interested in any furtherdetails, RENOMIA representativeswill be very glad to assist you personally.Renomia, a. s.Vlkova 46, 130 00 Praha 3T: +420 222 722 972F: +420 222 720 855E: info@renomia.czwww.renomia.comBusiness Brokerage Partners was establishedto operate a project Trh firem(BusinessMarket).Our goal is to create a new marketplacein the Czech Republic, where supplyand demand for selling businesses can meet.We want to facilitate a more efficient searchfor partners to negotiate sales or jointventures, particularly in the segment ofsmall and medium enterprises. Our conceptis based on proven methods adaptedto the Czech environment.Basic features of the BusinessMarket:• To be offered for sale, criteria such asturnover have to be met.• Businesses for sale and basic data are postedon the website www.businessmarket.cz.• When parties agree, further data includingcontact details are exchanged whilerespecting confidentiality.• No exclusivity is required when searchingfor buyers or sellers.To deliver a sufficient quantity of buyersand sellers we are involved in a promotionalcampaign and communicate with institutionssuch as M&A advisors, commercialchambers, auditors and venture capital funds.Within a short history of the project,we have attracted the attention of numerousbuyers and sellers and mediated a varietyof businesses opportunities.Key Personnel:Ing. Martin Dvořák, PartnerBusiness Brokerage Partners, s. r. o.Na Výsluní 201/13, 100 00 Praha 10T: +420 226 004 135F: +420 226 004 136E: info@trhfirem.czwww. businessmarket.czFOCUS SEPTEMBER 2004 9

Chamber People NewsPricewaterhouseCoopersPavel Kulhavý (36) has been appointedDirector in the PricewaterhouseCoopers’Assurance and Advisory Services department.He will focus on advising companies thatare converting their financial statementsto International Financial Reporting Standards(IFRS).In 1998, Kulhavý spent six months inthe firm’s London office providing specialistadvice to multinational clients on IFRSaccounting issues.Kulhavý, who has been with PricewaterhouseCooperssince 1991, graduated fromthe Management Faculty of the EconomicsPetr KulhavýPricewaterhouseCoopersUniversity in Prague. He is a fellow member(FCCA) of the international Association ofChartered Certified Accountants and a registeredstatutory auditor of the CzechChamber of Auditors. Kulhavý, who enjoyssport and travelling, speaks English fluently.Jiří Klumpar (48) has been appointed tothe position of Director in the Advisorydepartment of PricewaterhouseCoopers.He is responsible for banking and capitalmarkets in the Czech Republic and Slovakiaand his first task is to build and managea specialised team of financial services expertsacross the entire Central Europeanregion.Between 1998 and 2004, Klumpar workedfor GE Capital Bank. He was Vice-Chairman of the Board of Directors and,in 2002, Business Development Director.Prior to joining GE Capital Bank, he workedfor Agrobanka and the Czech NationalBank, (his last position at the Czech NationalJiří KlumparPricewaterhouseCoopersBank was Executive Director for Risk Managementand Settlements). Since 1998,he has been a member of the SupervisoryBoard of the Prague Stock Exchange, andbetween 2001 and June 2004 he was theChairman of the Czech Banking Association’sCommittee for Banking Regulation.A graduate of the Czech TechnicalUniversity in Prague, Klumpar, who ismarried with a son and daughter, speaksfluent English and enjoys reading, gardening,and good cuisine.Jiří KovalPricewaterhouseCoopersJiří Koval (39) has been promoted to theposition of Director in the Assurance &Advisory Services department of PricewaterhouseCoopers.He will be responsiblefor the activities of a team of experts specialisingin providing services to companiesfrom German speaking countries. Koval whohas been with PricewaterhouseCooperssince 1992, spent two years at the firm’soffice in Frankfurt am Main.Another of his goals will be to continueto develop the German market group ofPricewaterhouseCoopers further. This groupwas established a couple of years ago andincludes specialists from both the assuranceand tax advisory departments.Koval, who is married with one son,graduated from the Czech TechnicalUniversity and the Czech University of Economicsin Prague. He is fluent in Englishand German and speaks good Russian. Heis interested in travelling and skiing.Tomáš Kuča (34) has been promoted toDirector in PricewaterhouseCoopers’ Advisorydepartment. He will be responsible forproduct development, team co-ordination,Tomáš KučaPricewaterhouseCoopersand project management for the telecommunicationsindustry in the Czech Republicand Central and Eastern Europe.Kuča has been with Pricewaterhouse-Coopers since 1994, and between 1999 and2001, he worked on telecommunicationsprojects in Canada and in the Caribbean.He graduated from the Business Facultyof the Technical University in Brnoand is a Certified Accountant (ACCA) anda Certified Information Systems Auditor(CISA). He spends his leisure time with hisfamily, but also enjoys golf and travelling.Jiří Halouzka (37) has been promoted tothe position of Director in Picewaterhouse-Coopers’ Advisory department. He is to focusmainly on the consumer packaged goods sectorand industrial products sector, but will alsobe responsible for relationship managementto clients of the state authorities, especiallyin relation to gaining financial support fromthe EU Structural and Cohesion Funds.Halouzka has been with PricewaterhouseCooperssince 1992. Prior to this hewas a research assistant in the Institute forPhysical Chemistry and Electrochemistryat the Czechoslovak Academy of Sciencesand a lecturer at the Faculty of NaturalJiří HalouzkaPricewaterhouseCoopersSciences of Charles University in Prague. Hegraduated from the Nuclear and PhysicsFaculty of the Czech Technical Universityin Prague.Halouzka, who speaks English, is marriedand spends most of his leisure timewith his three children. If there is any timeleft, he enjoys taking photographs.AccentureJan Kubát, the successful former ManagingDirector of LogicaCMG Czech Republic hasbeen welcomed into Accenture as partner.Kubát will be primarily responsible forthe Products Industry Group, includingTransport and Health, for three countries– the Czech Republic, Slovakia and Hungary.He will also be responsible for setting upJan KubátAccenturethe new Government Industry Group in theCzech and Slovak Republics, where he willbe concerned with market demand and programsaimed at state administration andself-government.In 1998, Kubát joined Logica (LogicaCMG, as of 2003) as Managing Director,and under his leadership the company notonly succeeded in acquiring FCC Folprecht(270 employees in eight organisations), butalso became one of the highest performingbusiness units of the global parent. Beforethat he worked as Commercial Directorfor SAP ČR, and briefly in APP Systems(today known as Ness). He is a graduate ofthe Economic University, Prague.DHLTereza Urbánková has joined DHL ISServices Centre as a Communications andPR Senior Specialist. In her role she willbe responsible for all external and internalcommunications channels.Previously Urbánková worked as aDirector of Marketing for the Palác Florashopping mall. Prior to that she was partof the Hilton Prague team as a PR/Marketing Manager and at the Ministry of10 FOCUS SEPTEMBER 2004

Chamber People NewsForeign Affairs in the Diplomatic Protocol.A graduate in modern philology (Englishand Spanish), from the Masaryk Universityin Brno, she is fluent in English and SpanishTereza UrbánkováDHLand in her leisure time enjoys being withher son, reading and translating.Ernst & YoungErnst & Young has recently admitted twonew partners to the CESSA partnership.Josef Pivoňka graduated from the Facultyof Electrical Engineering of the CzechTechnical University, where he specialisedin economy and energy management. Theenergy sector is also his domain at Ernst &Young. Josef has over 11 years’ experienceJosef PivoňkaErnst & Youngin providing audit and business advisoryservices. He specialises in the energy, chemicalsand utilities industry sectors.Pivoňka has led a number of significantprojects. His experience includes audit projectsfor ČEZ, a. s., Transgas, s. p., Severočeskédoly, a. s., gas and electricity distributioncompanies, NEC – National Bulgarianelectric company, SE – Slovak electriccompany, and for a number of clients fromother industries.He is a member of the Chamber ofAuditors of the Czech Republic, a memberof the Association of Chartered CertifiedAccountants (ACCA), and a member ofthe Association of Energy Managers. He isfluent in English.René KulínskýErnst & YoungRené Kulínský has been involved in taxadvisory services at Ernst & Young for nearlynine years. He has assisted clients from awide range of industrial, trade and servicesectors. His main focus relates to tax supportof real estate transactions, tax issuesof financial institutions and financial instrumentsand to international taxation ofcorporate entities. He has participated in anumber of key assignments, including majorprivatisation projects.Kulínský has comprehensive experiencein international as well as domestic transactionstructuring. He has worked withclients in a wide range of industries.CB Richard Ellis PragueBert Hesselink has been appointed asAgent in the CB Richard Ellis Prague office.Prior to joining the Prague officeHesselink worked for almost four years forCB Richard Ellis in Amsterdam. In January2002, after a variety of experience in variousBert HesselinkCB Richard Ellis Praguedepartments including investment, valuationand property management, he joined theagency team, where he specialised in industrialagency and corporate services.He completed his studies at the Universityof Groningen Economic GeographyStudy, in which he majored in Real Estate,but he wrote his final thesis partly in theUSA at the University of North Carolina.Hesselink speaks Dutch, English andGerman.Clifford Chance LLPThe law firm of Clifford Chance LLP hasannounced that advocate Emil Holub hasbeen named to the position of “Counsel”, atitle reserved for senior lawyers who are ofoutstanding ability and have made an exceptionalcontribution to the law firm.Holub is the first lawyer of CliffordChance to be named to this position inCentral and Eastern Europe. He beganworking for Clifford Chance LLP in 1995and specialises in corporate and commerciallaw as well as real estate law. Before comingto Clifford Chance he worked for three yearsin a law firm in Zlín where he was engaged inEmil HolubClifford Chance LLPthe fields of corporate and commercial law.In 1994 he completed his studies at theLaw Faculty of Masaryk University in Brnoafter taking part in exchange programs withthe Leiden University in The Netherlands,Suffolk University in Boston and RegensburgUniversity in Germany. In 1995 he completeda postgraduate course in internationalcommercial law at TMC Asser Institute inDen Haag and since 1997 he has been enteredin the list of advocates of the CzechBar Association.Clifford Chance is a global law firmwith 29 offices in 19 countries around theworld. The Prague office was establishedin April 1995.InterContinental Hotels GroupThe General Manager at the InterContinentalPrague, Pavel Hlinka, has been promoted tothe position Chief Liaison Officer – CzechRepublic/Slovakia/Romania/Bulgaria.Hlinka was with the company for manyyears as Hotel General Manager and establishedexcellent relationships with hotelowners as well as governmental and localauthorities. In his new position, Hlinkawill build on this experience, developingLeon LarkinInterContinental Hotels Grouprelationships with business communities,statutory authorities and industry leadersacross the region.The announcement was made by theChief Operating Officer Northern, Central& Eastern Europe, Arie A.J. van der Spekwho also introduced Leon Larkin as Hlinka’ssuccessor. Larkin joins the InterContinentalHotels Group with a wealth of more than25 years experience in the hotel industry.Before joining InterContinental HotelsGroup, he was Hotel Area General Managerin Singapore and Malaysia and also workedin Beijing, St Petersburg and Helsinki.Holiday Inn Prague Congress CentreJan SovadinaHoliday Inn Prague CongressCentreThe Hotel Holiday Inn Prague CongressCentre has a new Director of Sales & Marketing.Jan Sovadina has taken up the postafter three years in different positions withinthe Sales department Holiday Inn PragueCongress Centre.Sovadina completed his studies in 1996and worked in the Corinthia Panoramahotel and the former Holiday Inn Praguein Podbaba.Are you “News for the Chamber”? Let us knowabout your arrivals, promotions or departures.Call Lucia at tel.: 224 835 165, or e-mail:publications@britcham.czFOCUS SEPTEMBER 2004 11

ECF NewsEUIC NewsWill the New Governmentbe brave enough to make thenecessary reforms?European entrepreneurs united in the Euro-Czech Forum (ECF) hope that the new CzechGovernment remains committed to finalisingthe necessary reforms. A further delay of thereform processes will inevitably lead to a slowdown of investments, an increase in unemploymentand a decrease in economic growth.The reform of public finance, the legalbusinessenvironment including the modernisationof the taxation system and the redefinitionof the social-security payments systemshould remain the priorities of the incomingGovernment. The Government must also continuein a more effective way communicationwith business and improve the efficiencies ofthe framework of the Council for the Developmentof the Business Environment.The Coalition Government of Prime MinisterStanislav Gross needs to act immediatelyif it wants to improve the attractiveness ofinvestment into the Czech Republic. This actionis required in the areas of the reforms of bankruptcyprocedures, the commercial registry,the commercial judiciary, and overall improvementsin the field of law enforcement, aswell as education and vocational training. Atthe same time, the ECF recommends concentratingwithout undue delay on the preparationof the second phase of the reform of public finances,especially with regard to the reformsof the pension system and the financing ofhealth care, with an emphasis on the mandatorycomponents of the expenditures of thestate budget.A bold new Government now has thechance to make a difference. It can create thebasis for a new Czech Republic that will beaccepted as a successful member of theEuropean Union, a member that is respectedfor taking charge of public finances, as wellas of the legal-business environment.The Euro-Czech Forum (ECF) and its membersoffer their full support in helping thenew Government make the required changes.The official ECF declaration on the new Czechgovernment appointed by Stanislav GrossEuro-Czech ForumA Joint Institution of the Chambersof Industry and Commerce of Britain, France,Germany, the Netherlands and SwedenSenovážné náměstí 23, 110 00 Praha 1Tel.: 222 242 232, Fax: 222 240 550www.ecf.czAddressing apathy with a new line-upIn mid August, the President-designate of the European Commission, José ManuelBarroso, announced the policy portfolios he has allocated to each member of his team.The new Commission brings together people from across the political spectrum andall Commissioners will have strictly equal powers as Members of the College.The new Commission consists of people with in-depth experience in various policyareas and members have acquired a profound knowledge of EU policies and institutions.They are former Prime Ministers and Ministers and current Commissioners,and many were in charge of negotiating their country’s accession to the EuropeanUnion. Some were members of the constitutional Convention.The role of each Commissioner is not limited to managing portfolio business. EachCommissioner will be strictly equal in the process of collective decision-making.There will be no delegation of powers to Commissioners’ groups. To further enhancecollegiality, the Commission will hold more informal brainstorming sessions andwill improve co-operation between departments and Commissioners’ private offices.The new Commission has been designed to achieve clear results for the EuropeanUnion’s people and to give Europe a stronger voice in the world. Preisdent Barrosofelt no need for a revolutionary shake-up of the Commission’s departments, howeverhe attaches particular importance to communicating within Europe to address theapathy shown in the last European elections.The main changes to the current situation introduced are:• The President personally chairing the group of Commissioners on external relationsand on the Lisbon Strategy• A new job of Vice-President for institutional relations and communication strategy• A Vice-President ensuring a coherent Commission approach in the CompetitivenessCouncil• The highest proportion of women Commissioners ever• A split of current portfolios: transport and energy; agriculture and fisheries; internalmarket and taxation• A greater use of task forces to anticipate policy issues• Grouping Commissioners in the same building (Berlaymont)• Separating financial control from budgetary affairs and appointing a Vice-Presidentto oversee sound management.The new Commission will take office on 1 November, subject to a vote of approvalby the European Parliament. The European Parliament can only vote on the wholebody and not on individual Commissioners. According to the Treaty establishing aEuropean Constitution, the EU Minister for Foreign Affairs will enter into theCommission as Vice-President upon ratification of the Constitution.More information about commissioners and attributed portfolios at:http://www.evropska-unie.cz/eng/article.asp?id=3019http://europa.eu.int/comm/commissioners/newcomm_en.htmDaniela Červová, EUIC DirectorEuropean Union Information Centre, Rytířská 31, 110 00 Praha 1T: 221 610 142-3, F: 221 610 144, E: info@iceu.cz, www.evropska-unie.cz12 FOCUS SEPTEMBER 2004

Embassy LatestTrading places at the EmbassyEva Kopecká has joined the team at the Trade & Investment Sectionof the British Embassy in Prague. She takes over from LucieVotavová, who has gone on maternity leave.Eva is responsible for the supervision of the Overseas MarketIntroduction Services for British companies wishing to export oridentify potential partners in the Czech Republic. She is also responsiblefor identifying business opportunities for British companiesby visiting local companies and trade fairs, as well as dealing withcommercial publicity, public enquiries and other administrativematters. Her sector responsibilities include tourism and culturalheritage, training, education, advertising and media. In partnershipwith UK Trade & Investment and other UK business partners,she will be organising seminars, trade missions and other eventswithin her sector responsibilities.After her graduation from the University of Economics in Prague,Eva started working for foreign trade corporation Pragoexport,where she was responsible for the worldwideexport of stationery products; followed byemployment at ICL as Logistics manager. Shethen moved on to Rank Xerox and as MarketingManager was responsible for activities withinthe Czech and Slovak Republics. She gainedfurther experience at the Rank Xerox InternationalHeadquarters in London where she stayedfor four months. Her last job was with US basedEva KopeckáTrade and Investment Advisermanagement consultation company IMPAC,where she worked as consultant responsiblefor public relations and marketing projects inthe Czech Republic, Poland, Romania, Germany, Holland, Denmark,the UK and Ireland.Besides her native Czech, Eva is fluent in English and has agood knowledge of German. Her hobbies include winter sports,aerobics, travelling, reading and art and she enjoys spending timewith her two children.“I am looking forward to being part of the team providing serviceswhich enhance and develop trade between the UK and theCzech Republic”, said Eva.If any British Chamber of Commerce member would like todiscuss any business-related issues with Eva, please feel free tocontact her:Eva Kopecká, Trade & Investment Adviser, British Embassy PragueEva.Kopecka@fco.gov.uk, T: 222 240 021, F: 222 243 625It is perhaps becoming a tradition that the staff in the BritishEmbassy’s Press and Public Affairs Section share a commonbackground – journalism. Former journalist Peter Wickenden joinedthe team in October 2003 as Section Head. Until early August,another ex-scribe Karolína Rezková worked in the section as Pressand Public Affairs Officer. And on her departure for maternity leaveshe was replaced by a person coming from, where else, but anewspaper. Ingrid Ludvíková, the new Press and Public AffairsOfficer, has joined the Embassy after nearly two years at the weeklyEnglish language publication The Prague Post. “I worked there asa researcher and later on also wrote my own stories. A reporter’sjob is a great challenge, mostly when you need to worm out informationfrom places where it is next to impossible to obtain.” Ingridexplains. Ingrid’s experience of all the pitfalls and banana skins ofcommunication with state officials and spokespeople equips herwell for tackling the tricky tasks ahead.“Now I have joined the opposing side, so to speak. It will be interestingto see how things I never understood before (why can’t thesepeople answer straight away, can they everlearn to be clear about things, why does it takeso long?), become part of my everyday life.”she says. “I already see it is not that easy incomparison with the journalist’s job, they justbomb you with requests but you bear responsibilityfor what goes out and that is not anegligible point.”As Press and Public Affairs Officer Ingrid’sdaily duties will be monitoring the Czech press,Ingrid LudvíkováPress and Public AffairsOfficercommunication with Czech and also internationalmedia, maintaining contact with journalistsand facilitating meetings between theEmbassy and useful local political contacts.Ingrid Ludvíková, Press and Public Affairs Officer, British EmbassyPrague, Ingrid.Ludvikova@fco.gov.uk, T: 257 402 295, F: 257 402 296After spending nearly a year living in London, Monika Tomíčkovábecame an Anglophile, and is now happy to be working at theBritish Embassy as the new Projects Officer in the Political andEconomic Section. Monika was educated at the Law Faculty of theCharles University in Prague, and has a law and tax advisory professionalbackground. Before joining the Embassy Monika workedfor Deloitte & Touche Prague as a member of the tax department teamfor three years, and for Czech NGO Bílý kruh bezpečí (White Circle ofSafety) where she worked on a series of projects related to domesticviolence. Having found that she prefers organising and dealing withpeople rather than studying the precise word of the law, Monikaapplied for the post of project officer. She has also become a studentof psychology, and has among her other interests dance, yoga, moviesand travelling. She is married with one son and one daughter.In her new role at the Embassy Monika is responsible for themanagement and co-ordination of UK-Czech bilateral co-operationprojects. Funded by the Foreign Commonwealth Office’s (FCO) mainprogramme budgets, these projects cover arange of issues often, though not exclusively,under the Justice and Home Affairs banner (therehave, for instance, been a number of LisbonAgenda themed projects). Examples of pastprojects include Tackling Corruption at Regionaland Central Level with Transparency InternationalPrague, Commercial Judges visits to UK, orAdvice to Czech Ministries on AdministeringMonika TomíčkováProject OfficerStructural and Cohesion Funds. Monika workswith Czech institutions and non-governmentalorganisations in order to define and developproject ideas, while ensuring that they fit the Embassy’s and the FCO’sobjectives, and monitoring the projects’ progress and evaluatingtheir impact. There is also a large element of project creation involvedin the role, as well as reporting all of the above to FCO London.Monika Tomíčková, Project Officer, British Embassy PragueMonika.Tomickova@fco.gov.uk, T: 257 402 241, F: 257 402 296British Embassy, Thunovská 14, 118 00 Prague 1T: 257 402 111, www.britain.czBritish Embassy Trade & Investment SectionPalác Myslbek, Na Příkopě 21, 117 19 Prague 1T: 222 240 021-3, F: 222 243 625E: tradeinvest.pragc@fco.gov.uk14 FOCUS SEPTEMBER 2004

Events Round-upAround 130 of the chamber members, friendsand families gathered on the first Saturdayof September in the grounds of the GolfClub Erpet Praha, to enjoy and take part inthe Sports Day, which we organised jointlywith the Italian-Czech Chamber of Commerce.Due to the big interest in tennis, playerselected to compete in doubles in order to getmore matches in during the day – somethingEngland vs. ItalyFootball & Sports Daymany rather later regretted as the temperaturehit nearly 30°C! There were fewer squashplayers, who enjoyed the atmosphere of afully air-conditioned indoor squash hall,but who also sweated buckets! Those fewwho decided not to play any ‘real games’,teamed up and shared some mental andphysical challenges in activities organisedby New Day Activity Marketing.But the highlight of the day was undoubtedlythe long anticipated footballmatch, England vs. Italy. The game wascontrolled by Jiří Krejča, the ManagingDirector of Travelex, who agreed to becomea referee for the day. Although our teamwas in much better shape, and the Italiansoften got distracted by our long-leggedcheer-leaders, at the end of the second halfthe Italians equalised and after a penaltyshoot out, finally triumphed 5:3. Despitethe final score, we would like to thank thewhole football team for their enthusiasmand fair play.Results:FootballEngland : Italy 3:5Squash1. Austin Kimm – Aviva životní pojištovna a. s.2. Douglas Wong – ADC Blackfire Entertainment s. r. o.3. Václav Hrach – RENOMIA, a. s.Tennis doubles1. Pavel Nepala / Václav Hrach – RENOMIA, a. s.2. Martin Levey – Moores Rowland Levey & Jung/ Martin Bolcek – Český Web3. Věra Pavlíková / Jiří Pavlík – BT LimitedPrizes were given at the end of the day tothe team of 15 Italian football players, andthe winners named above.Team photo (from upper left): J. Šimůnek – Mmd, M. Palička – Et netera,P. Roiková – Prague Marriott Hotel, P. Kubíček – Český web, P. Johnson– British Embassy, S. Bradley, L. Krejča, B. Šabjan, J. Štok – MAIInsurance Brokers.Our thanksgo to the sponsors:16 FOCUS SEPTEMBER 2004

After HoursDo you have a thirst for adventure? Do youwant to experience fresh air, beautifulcountryside and tree-mendous fun?Then why not head for Adrenalin Park –Malevil? The newest aerial assault courseto appear in Czech Republic, and the thirdadventure facility to be launched by Chambermember New Day Activity Marketing, openedearlier this year on the edge of RanchMalevil, a superb hotel, country club andconference centre near Liberec in NorthernBohemia.Adrenalin Park offers a unique opportunityto test your limits, in a moderately demandingyet safe environment. The course consistsof a network of white knuckle challenges,such as the High Traverse, Jacob’sHigh Timefor an Adventure?Ladder, Cat Walks and Tarzan Jump, allsuspended at 16 metres above the ground,and is designed so that adventurers canprogress around the majority of the circuitindependently, with instructor assistance,while wearing full body safety harness andhelmet.The final stage and the climax of thewhole experience is the unforgettableGiant Swing: this is truly a leap of faith, butonce you take that heart stopping step it isa 100% thrill and fantastic fun!New Day have teamed up with RanchMalevil to be able to provide a much fullerservice compared to many other outdoorevent companies. At this rural location, clientscan also benefit from an 18-hole golf course,swimming pool, bowling alley, horse ridingand mini- zoo, as well as squash and tennisfacilities. Those who desire an Outdoor Adventureexperience, but who also wish tobe in close proximity to conference facilities,accommodation and restaurants, have foundthat instead of losing valuable time travellingto remote locations, all their needs canbe met on one site.Meanwhile for a different kind of ‘adventure’you might consider heading furtherwest, into České Švýcarsko National Park,where Adrenalin Park Janská offers the highestropes course and giant swing in Europe(20 metres high), in a unique, natural environmentof narrow gorges, rocks and undergroundtunnel systems. For companiesand organised groups, it is also possible toparticipate in one of New Day’s speciallydesigned adventure programmes in whichparticipants get the chance to venture intothe tunnels, abseil down a 40 metre cliff faceand ford rivers. This is a fascinating areafor its historical significance adding furtherthrill potential to the whole adventure.New Day’s Adrenalin Parks are becomingincreasingly popular with individuals, familiesand groups seeking a memorable andfun day out, as well as with the growingnumber of companies who choose to takeadvantage of adventure experiences as ameans to develop leadership and team workingskills, or simply require action-packedevents to reward and incentivise staff.For more details visit www.newday.cz, orcall Vladimír Pešek on +420 608 817 220.

Events Round-upAs the Chamber’s membership includes many small sized successfulcompanies, we brought the theme of financing small and middlesizedbusiness to the attention of the Chamber members at thefirst September breakfast meeting organised after the summerbreak. The speakers for the event were Ladislav Dvořák, ČeskáSpořitelna, (Head of the Special Program Dept.) and Daniel Lynch,3TS Venture Partners (Senior Investment Director).Ladislav Dvořák gave an overview on how to access bank financingin the CR, and what the financial institutions in general requireHow to finance a smalland middle-sized businessfrom a small and a middle-sized company to grant them a loan.Daniel Lynch unveiled other ways of financing a small or a middlesizedbusiness, including: qualifying for financial investment, assessingthe differences between investment funds, pluses and minusesof taking on a financial partner and working towards a commonexit (detailed presentation below).Seed stage – angel capitalWhen a company is founded, it has a core team of founder-managersand a set of products or product plans. “Seed Capital” investors,such as friends and family are usually available to provideintroductory financial support to get the business started. This ofteninvolves funding dedicated to the early tasks of researching andassessing the initial product concept. Business people with capitalto invest personally (i.e., “business angels”) may provide the seedcapital and some financial or business know-how. Amounts investedat this stage range up to about €200,000. Apart from a few experiencedindividual “angel investors,” most seed investors are privateindividuals. As such, they are less likely to get involved in the dailyoperations of the company but can offer advice on strategy, businessdevelopment, staffing and other issues.Early stage – venture capitalVenture capital investors targetcompanies that are in the processof developing a business conceptLadislav Dvořák, Česká Spořitelna,Daniel Lynch, 3TS Venture PartnersHead of the Special Program Dept.Senior Investment DirectorE: ladislav.dvorak@csas.cz E: dlynch@3tsvp.comBuilding successful companies with venture capitalIf you are managing a small or medium-sized company you alreadyknow that in order to realise the full growth potential of your business,your company may need external financing at some stage.There are specific phases that have been defined and are well understoodin terms of the types of management/capital sizes thatare required. The principal phases may be characterised as follows:• Seed Stage (prior to product launch, business plan in development)• Early Stage (start of revenues, typically not yet profitable)• Expansion Stage (profitable and expanding based on strategicobjectives)• Late Stage (stable consistent cash profits).Most Seed Stage companies need funding to cover their operationallosses during the product development phase. Others will turnprofitable within a short period of time but will eventually needEarly Stage and Expansion capital in order to enter new markets. Itis important to realise that the sources of funding available dependvery much on the stage of development the company has achievedwhen it is seeking external funding.and need further funding to finalise development and take theirproduct to market but, most importantly, the product already exists.At this stage, most companies can demonstrate some interest frompotential or actual customers and show revenue growth, whichhelps the company obtain further private funding from venture capitalinvestors. They do this via a seat on the board of directors aspart of their acquisition of anequity stake in the SME, as well as theiron-going dialogue with management. Their involvement usuallymeans a higher degree of control over the business, which servesthe goal of preparing the company for potential further rounds offunding, creates more transparency and performance monitoring.A seat on the board usually means that the company may also beable to access the investor’s additional resources in terms of businessdevelopment, legal or financial advice.Expansion stage – venture capital and private equityWhile the business is growing in revenues, it may need all its cashflowto be invested in product development and without additionalfinancing the company will have difficulty hiring new sales andmarketing staff, making an acquisition or entering a new marketby setting up a sales office. If a company’s annual revenues areCont’d on page 2420 FOCUS SEPTEMBER 2004

Health and Safety Training? Try E-learningOne of the fundamental company obligations in the field of humanresources is to provide health and safety at work (HSW) trainingfor employees.The system of HSW training is regulated by legal regulations.For simplification it can be divided into the following:In terms of time:1. Induction training – conducted on the new employee entry.2. Periodic training – employees must be trained regularly in regulationsand informed about HSW issues.In terms of activity:1. Basic training – attended by all employees irrespective of thesector of the working activity.2. Special qualification training – attended by employees operatingequipment or carrying out operations with increased exposureto risks to health and safety (e.g. work on electrical installations,elevated work, operation of material handling trucks etc.)The modern wayE-learning is a modern, efficient and elegant solution, which cansignificantly help organisations in HSW training. Due to the specificrequirements for HSW training, e-learning can be recommendedabove all to organisations whose employees are exposed to lowerhealth and safety risks, such as the banking or insurance sectors,informatics, business, services, public administration and others.The highly positive contribution provided by e-learning is mostvisible in companies of a fully administrative character, but also inthe case of administrative personnel of other companies. Electroniccourses are not necessarily ‘dull sessions on regulations preventingemployees from fulfilling more important working duties, withthe only lasting memory piquant occupational accident stories’.A significant role in the training organisation proper belongs tothe Learning Management System (LMS), which the electronic coursesare organised in. Proper setting of this system allows specificrequirements for HSW training given by legal regulations, whichotherwise in terms of organisation processes are difficult to cope with,(examination of knowledge, periodic training, information for employeesbetween periodic training sessions, issuance of certificates, etc.),to be solved in a very simple manner. Certainly, e-learning is also thecheapest solution for adequate organisation of compulsory courses.Most Frequent QuestionsIs e-learning acceptable for the Health and Safety Executive?Application of e-learning to the HSW training system is not preventedby any legal regulation. The training system depends fullyon the organisation. Government bodies have also participated in thedevelopment of electronic courses, above all those designed forthe professional public – MPSV (the Ministry of Labour), ČÚBP (theCzech Occupational Health and Safety Administration), VÚBP (the OccupationalHealth and Safety Research Institute) and IVBP (the OccupationalHealth and Safety Education Institute).Is training conducted using e-learning sufficiently provable?The LMS records the training history of each employee. Employeespass courses in sections protected by access data. The course contentscan be back checked anytime, including associated legal regulations.Is the examination of knowledge adequate?Examination of knowledge in the e-learning system is ensured bytesting, for which it is simple to set parameters. The test is evaluatedautomatically by the LMS. No employee passes the test withoutmeeting the set criteria.Don’t employees miss contact with the lecturer?The LMS allows employee-lecturer communication in a form of enquiriesand answers. Feedback is for the entire time of e-learning period,thus also beyond obligatory deadlines for periodic training sessions.How about certificates?Requirements as to the certificate are important for HSW training.Essential are namely the identification of the trainee, the coursecontents description, specification of the method of examinationof knowledge and identification of the training guarantor (a personqualified to conduct the particular training). Despite all the electronicrecords on the course history contained in the LM, it is advisableto establish a system where employees print their certificates fromthe LMS, sign them and send them to a unified register.Is the course content also adequate?As in the case of traditional courses, it is advisable to select a providerqualified to conduct the respective courses, who can guaranteethat the content of electronic courses are adequate. The advantageof electronic courses is that, in addition to the explanation proper,they can also contain relevant complementary study materials.How are employees to be informed about specifics in a particularorganisation when the courses are general?Employees can be informed about specific conditions and hazardsin the organisation by the following methods:• Through their chiefs or authorised employees.• Through written supplementary information.• Also through e-learning, using a supplementary electronic coursecustomised for the given organisation.Ing. Jan Hes, PREVENT s. r. o.www.instructor.cz, www.prevent.czTHE ENGLISH COLLEGE IN PRAGUEHeadmaster: Peter de Voil MA FRSAPatrons: Ex-president Václav Havel, The Prince of WalesNon-profit- making Secondary School for students aged 13 – 19The College will celebrate its 10th Anniversary in September 2004• IGCSE and IB programmes taught in English• Wide range of extra-curricular activities• Among the most successful IB schools in the world• Assessed as ’outstanding’ by Czech School Inspectorate• Member of COBISEC, ECIS, HMCOPEN DAYS: 24 November 2004 and 9 February 2005.Entrance Examinations: April 2005For details, please contact: Mrs Jana Kloudová, The English CollegeSokolovská 320, 190 00 Praha 9 – VysočanyTel: +420 283 893 113, e-mail: office@englishcollege.czwww.englishcollege.cz22 FOCUS SEPTEMBER 2004

Events Round-upCont’d from page 20significant and continuing to grow, it can expect to raise some capitalfrom a wider range of private equity sources.Later stage and exit development – private equity/buy outWhen a company has reached revenues above, say, €8 million, itmay need all its cash to be conserved to reach or maintain profitabilityin order to become an attractive acquisition target – or perhapsmake an acquisition itself to reach a strategic position on its targetmarkets. If the company is considered financially mature and strategicallyattractive enough to raise additional funding from publicstock markets (“go public”), or attract a strategic investor, a venturecapital investor may seek to sell all or most of their shares inthe company. In Central and Eastern Europe, where stock marketsdo not currently offer a viable funding opportunity for late stagecompanies, companies can again seek funding from later stageventure capital or discuss a full sale of the company to privateequity buyout firms. Venture capital or buyout investors at this stagerestrict themselves to a financial role.Qualifying for VC financingInvestors like to say that they invest in people. In fact, if an investorwas to choose between investing in a high-quality product witha mediocre team and a high-quality team with an undevelopedproduct, they will almost always choose the latter. Think aboutwho can help build your business, what areas you need to covernow and what areas you will need to reinforce in the future. Thinkcritically about your own abilities, current or future role at thecompany. Does your role as top manager of your company provideyou with the best possible value as a shareholder of your company?Is there another role in the company that you would be better atwhile maintaining your ownership control over management? Whenwould be the time to move on to another role? What other areasneed reinforcements? The key is to proactively address these issuesin your conversation with the venture capital investor – preferablybefore he or she is asking.But remember as a general rule it always takes more investmentthan originally envisioned, and the prospect of subsequentinvestment rounds may make the investment at hand less attractivefor the investor. Moreover, the existence of competitors on yourcompany’s target markets does not discourage investors frombacking your company. On the contrary: competitors validate thebusiness opportunity and provide motivation for your company tomake better products or provide a better service, which is goodnews for investors.What does a venture capital firm offer?You should be looking for a lot more than just funding from yourpartners. Most venture capital firms will tell you about their abilityto add value in all aspects of business from management and strategy,to human resources, sales, marketing, accounting, valuationand forecasting. As a stakeholder in your company, the venture capitalists’interests should be aligned with those of managementand the other shareholders and thus support the company’s managementin several operational aspects, if needed.A venture capital firm’s name may also lend more credibility toan SME, which can cite the venture capitalist’s brand name in allits corporate information. As the venture capital firm’s cash mostlycomes from international sources, at the time of the investmentthe SME also receives an EU or U.S. “stamp of approval” on itsbusiness model from an experienced independent third party.By 3TS Venture Partners24 FOCUS SEPTEMBER 2004

Member ProfileAlice Punch has a MS.c. degree in industrial management from the TechnicalUniversity in Ostrava and MBA degree from the University of Pittsburgh. Shehas been in the executive search industry in central & Eastern Europe for morethan six years. She has completed senior management recruitments across allsectors with focus on industrial, manufacturing, and finance sector. Before enteringthe executive search profession in 1998, Alice worked in the finance and realestate investment advisory in Prague and Toronto. Alice speaks fluent Czech andEnglish and can communicate in Russian and Polish.Name: Alice PunchPosition: PrincipalCompany: Egon Zehnder InternationalMarital Status: MarriedHobbies: Fitness, modern art, reading, travellingWhat brought you to the Czech Republic?My origins; I was born in Ostrava. I was brought up and also studied there. Atthe end of 1980s, I moved to Canada, where I started my professional career. Thedynamism and enthusiasm of the political and economic changes in the CzechRepublic attracted me to move to Prague in 1996, where I have been living andworking since. Travelling and working in new markets is in my blood. Today, Ispend most of my time in the Czech Republic, but travel a lot within Europe.Has it proved to be a successful move for your business?Personally, it has been the best move ever. I have enjoyed an interesting and rewardingprofessional career in the Czech Republic. Professionally, our firm is anactive contributor to the changing local business environment and we have beena very active member of the Czech business community since 1992.What do you perceive to be the good things about doing business in the CR?It is still a dynamic and changing market with new opportunities to grow business.Most rewarding is the opportunity to contribute to the changes, to assistour clients to minimise risks for their businesses by hiring highly qualified executives.And the bad…Lately, the tax changes and the political environment have slowed down newinvestors coming to the country. Also, the lack of transparency in decision making,including corruption, is fairly high.Where do you see the big opportunities for British exports and investmenthere?The real estate and development sector and service industry. The real estate sectoris already witnessing expansion, while the service industry is growing, however,its potential is largely untapped.If you had your time in the Czech Republic over again, what would youdo differently?Professionally, I would not change anything. Personally, I would have invested inreal estate.What do you think of the current political and economic scene hereat the present time?The economic scene would be more dynamic if the political, tax and legal environmentwould encourage it. The political scene is not supportive to the reputationof the country internationally. The lack of ability to speak foreign languages andhaving international work experience is worrisomefor an export-/import-based economysuch as the Czech one is.What makes business succeed in the CzechRepublic?Perseverance, hard work, flexibility, andoptimism.What do you believe is the main impacton your business now the Czech Republichas joined the EU?The number of multinational organisationsentering the Czech Republic will slightlyincrease in the next few years, which willdrive demand for local and internationalexecutives. The cross-border moves of managerswill be easier.If you were to spend a weekend anywherein the CR, where would it be and why?Prague wins… The city relaxes during weekendswith many people leaving for their“chatas”… There is so much to do and visit…What is your favourite restaurant in Prague?These days, the choices are great. Dependingon the mood; for relaxing, low-key atmosphere,my husband and I enjoy PotrefenáHusa, for an elegant lunch or dinner, we liketo go to Bellevue or the Intercontinentaltop-roof restaurant.What is your idea of ideally spentweekend?In general, I am a homebody, but I like fitness,getting together with friends, and travellingabroad. I find a weekend or few daysspent away from the Czech Republic somewhereabroad very inspiring and energising.What is your favourite Czech phrase orCzech word?“To není problém”… hope we hear more ofthese words.What is the funniest thing that has happenedto you since you first arrived in the CR?Upon return from Toronto, I needed to registermy two-year-old car and an emissioncontrol was a part of the procedure. It wasdifficult for me to understand that a nearlynew car needs to undergo this. A funny, yetsad thing, was that when I arrived there,there was an about 20 years old, fuming,orange Škoda that just successfully completedthe emission control… I could hardlybreathe.What three objects would you take withyou to a desert island?Not a good idea. I would get seasick beforeI get there.FOCUS SEPTEMBER 2004 25

Legal NewsOn 2 June 2004, Act no 340/2004 Coll., amendingthe Czech Competition Act 1 (the “Amendment”)took effect. The Amendment followsa recent change in competition rules at EUlevel as well as the accession of the CzechRepublic into the EU. The purpose of thisChanges to CompetitionLaw in the Czech Republicarticle is to briefly outline the main changesintroduced by the Amendment.Horizontal and vertical restraintson competitionThe Amendment abolishes the previous systemof notifying agreements restrainingcompetition to the Czech Office for the Protectionof Economic Competition (the “Office”)and the granting of individual exemptionsby the Office. Therefore, from now on, theonly exceptions to the prohibition of horizontaland vertical restraints on competition arecontained (i) in the Competition Act itself;or (ii) in the block exemption regulationsissued by the Office in the form of generallybinding regulations.The restraints on competition (whetherin the form of an agreement, resolution ofan association of undertakings or act in concert)will be exempt from the prohibition ifthey meet the following conditions:(i) They aim to improve production or distributionor promote technical and economicdevelopment and, at the same time, assignto consumers an adequate portion of theadvantages arising as a result thereof;(ii) They do not impose restrictions on undertakingswhich would be unnecessary to achieve the aims described at point (i)above; and(iii)They will not result in the elimination of competition in a substantial part ofa market in goods or services, the purchase or supply of which is the subjectmatter of the agreement (or the subject matter of the resolution of an associationof undertakings or act in concert).Furthermore, the Amendment increased the thresholds under which agreementsare considered de minimis and thus exempt from the prohibition. Horizontal agreementsare thus exempt if the combined market share of the parties thereto doesnot exceed 10%. Vertical agreements are exempt if the combined market share ofthe parties thereto does not exceed 15%. 2In addition, the Amendment introduced the following changes:(iv) It is no longer possible to request that the Office issue a negative clearance, i.e.a decision confirming that a particular agreement does not distort competition;(v) The Office may accept commitments offered by the parties to a restrictive agreement,provided that such commitments will be sufficient for the protection ofcompetition and provided any distortion of competition can be removed. However,the Office may not accept the commitments of parties who have already actedupon the restrictive agreements and such actions resulted or could have resultedin the distortion of competition.Abuse of dominant positionThe Amendment extends the application of the essential facilities doctrine to intellectualproperty or other natural monopolies (whether based on ownership or public law).Furthermore, the Amendment makes it possible for the Office to accept commitmentsfrom a dominant undertaking which abused its position, provided thatthe Office considers the commitments sufficient for the protection of competitionand provided any distortion of competition can be removed. However, the Officewill not be allowed to accept the commitments if the abuse of dominant positionhad already resulted in a significant distortion of competition.Merger controlThe Amendment substantially increased the turnover thresholds under whichconcentrations of undertakings will be subject to approval by the Office. 3Under the new thresholds, notification of a proposed merger is mandatory if:(i) The combined net turnover of all merging parties was at least CZK 1.5 billionin the Czech Republic in the previous financial year, and at least two of themerging parties each had a net turnover exceeding CZK 250 million in theCzech Republic in the previous financial year; orCont’d on next pageNew strength of the BCC officeStarry nightFor the past few months the Board of theChamber of Commerce has been carryingout interviews to find a new ExecutiveDirector to replace Simona Kalvoda. WithRenata ScharfováExecutive Directorsome excellent candidates putting themselvesforward, choosing the most suitable wasan incredibly difficult process, but it givesus great pleasure to announce that from1st September, the new Executive Directorhas been Renata Scharfová. Renata has, ofcourse, been acting ED since Simona departedand needs no introduction.In order, however, to strengthen the Executiveoffice and to enable the BCC to becomeeven more powerful than it already is,we have also taken the decision to appointTomáš Klvaňa as the Strategy & ExternalRelations Advisor.Tomáš is a political lobbyist who workedfor two years as adviser to Václav Klaus,Tomáš KlvaňaStrategy & External Relationshaving previously worked as Deputy Editorof Hospodářské noviny. He will work on apart time basis for the Chamber, with particularemphasis on raising the BCC’s profilein the media, chairing public events and cooperationwith the Euro-Czech Forum.We would like to thank The Prague Post,Target CR s. r. o. and Hudson Global Resources,s. r. o. for their support in our searchfor a new Executive Director.The British Chamber of Commercein the Czech Republictakes great pleasure in announcing itsChristmas Gala DinnerStarry nightat Slovansk˘ dÛmSaturday, 4th December 2004, 7:30 P.M.,at Slovanský důmProgramme:Gala dinner, Charity Auction, Music &Dance, and many ‘starring’ surprises!Invitations and programme will be distributed by post.You can book your Corporate Table and Tickets onwww.britishchamber.cz, or call +420 224 835 161.Corporate Table for ten: 40,000 CZKTicket: 2,500 CZKDress Code: Evening Dress for ladies,Tux for gentlemen26 FOCUS SEPTEMBER 2004

Q & A(ii)Depending on the type of merger: (i) at least one party to a legal merger;or (ii) the target (if the merger takes the form of a share or asset acquisition);or (iii) at least one of the undertakings establishing a joint venture (if themerger is through the establishment of a full-function joint venture) hada net turnover in the Czech Republic in the previous financial year exceedingCZK 1.5 billion, and the worldwide net turnover of the other party exceededCZK 1.5 billion in the previous financial year.In this context, it must be noted that in certain circumstances, an undertakingwhich has an obligation to file a request for approval from the Office may bereleased from such obligation. Thus, according to the new EC Merger Regulation139/2004/EC which entered into force on 1 May 2004, undertakingsmay request the European Commission to review transactions which do notmeet the EC turnover thresholds, but which are capable of being reviewedJUDr. Eva VranáClifford Chance LLPMgr. Tomáš PiętakClifford Chance LLPunder the national merger control regimes of at least three Member States.Where none of the competent Member States object to the referral within15 working days of receiving the submission, the merger benefits from theone-stop shop principle, and will be examined only by the European Commission.The possibility to opt for one-stop-shopping will thus apply to multi-jurisdictionaltransactions and will significantly lower the burden for companies involvedin this type of transaction.All the above turnovers are determined on the basis of group turnover. Incomparison with the previous regulation, the Amendment makes it clear thatthe seller’s turnover should not be taken into account when calculating thecombined turnover of the undertakings concerned.The Amendment abolished the mandatory seven-day filing deadline.Therefore, from now on merger notifications should be made only when thenotification documentation is complete. The prohibition on closing prior toclearance still applies.The Amendment has also substantially increased the filing fees – from thecurrent amount of CZK 10,000 to CZK 100,000.Procedural changes, dawn raids in private homes of company officialsThe Office has been designated as the authority responsible for applyingArticles 81 and 82 of the Treaty. When enforcing rules contained in Articles81 and 82 and in Regulation 1/2003/EC the Office will apply the same proceduralrules as applicable to domestic competition law matters.With the prior approval of the national court, the Office will be entitledto conduct on-the-spot investigations in private homes of company officials,provided that it is reasonably expected that there are documents evidencinga substantial breach of competition law.ConclusionThe Amendment brings about two principle categories of change. Firstly, itprovides for further harmonisation of Czech competition law with reformedEC law (namely in the area of restrictive agreements and practices, includingnew powers of the Czech competition authority to enforce EC law andits strengthened powers of investigation). Secondly, the Amendment substantiallyincreases the merger filing thresholds which should dramaticallyreduce the administrative burden on undertakings.JUDr. Eva Vraná, Mgr. Tomáš Piętak, Clifford Chance LLP1. Act no 143/2001 Coll., on the Protection of Economic Competition (the “Competition Act”)2. Please note that as with the previous regime, the de minimis exemption does not apply to “hard core” restrictions,namely price-fixing or market partitioning.3. If the EC turnover thresholds are met, the concentration will only be subject to clearance by the EuropeanCommission (the one-stop-shop principle applies).Is there anything you have notdone in the past, but which younow regret not doing?Berardino ParisiMarketing Manager for Central& Eastern Europe, BTSo far, no. Life is short and precious.Thirty years from now I don’twant to look back on my life andsay “I wish I would of done this… I wish I wouldhave done that”. I try to enjoy everyday with vigor,not necessarily as if it was my last, but withthe knowledge that it is a precious gift.Petra VeškrnováSales & Marketing Manager,Hotel SavoyI cannot remember anything I regretnot doing. I think everythingI wished to do and was feasiblecame sooner or later true. Nevertheless one thingoccurs to me concerning one of my stays abroadin the past. Having two possibilities of spendingtime in two different countries, I decided for theone which eventually did not meet my expectations.Despite this, it was a valuable experience.Vilém MařákMarketing Manager,Bovis Lend Lease a. s.I think I’m still young enough not toregret what I haven’t done, becauseI can still do it. A better questionfor me would be is there something I regret notdoing before having a wife and kids. That is amilestone for me. One dream I have is to do amotorcycle run from Prague to Rome, (the Alpsare the main attraction) and secondly havinga motorcycle capable of going such a distancewithout completely falling apart. Now I’d haveto have a sidecar to pile the family in. Seriouslythough, I could regret not taking my studies inuniversity more seriously. It’s hard to say, really.I’ve never actually thought about any regrets.Dagmar PikhartováMarketing & HR Manager,The Prague PostThis is a good a question. I don’tthink there is anything that I regretnot doing. Either I am reallylucky or my memory is failing!FOCUS SEPTEMBER 2004 27

Dining out with … Petr SvobodaRestaurant Palác Kinských, Týnská ulička 606/3, Praha 1, T: +420 224 810 750The first time I visited Palác Kinských, after a recommendationfrom friends, I spent a long time wanderingabout and couldn’t find it. Who would think thereis not only Týnská Street, but also Týnská Small Streetin this part of Prague? However, the final end of mywanderings fully offset the troubles to find the right address. A cosyrestaurant at the back part of the historical building of KinskýPalace, suitably located in the centre of the city. An intimate diningarea where the staff always have enough time for you and makeyou feel that your are their personal guest. The restaurant is idealfor undisturbed business meetings with exclusive guests.The owner of the restaurant, which opened in 1999, Mr. Procházka,has close relations with top wine distributor Mr. Pastyřík, thePresident of Association of Sommeliers of the Czech Republic.However, don’t hesitate to ask the local sommelier Mr. Horák forhis advice, as he is familiar with all the wines. The restaurant staffare hardly novices, having served the likes of President Bush andMichael Jackson during their visits to Prague. The chef won the 1staward in the international competition of chefs in Iceland and heholds the title ‘Knight of French Gastronomy’.The restaurant entrance leads down to a cellar where a pleasantunderground space is dominated by a big wine barrel on oneside and an elegant bar on the other. A few ship models with theirpatina and technical mystery link the historical environment withunknown distances, unspoken dreams and desires. Here is a perfectcombination of ambience, unobtrusive and virtuous care fromthe staff, all accompanied by nice music.But the most interesting moment comes when you open themenu. Meals in rich combinations run at you with their names.And when you finish your order and the meals – works of art – arein front of you on the table - it is an experience for all your senses.The menu changes every three or four months but it is impossibleto learn all the tastes offered by the restaurant. Czech cuisine iscombined with non-standard additions, recipes of world cuisineare full of fantasy and creativity.I would recommend the King of Czech Cheeses Melted withCaramel-Pepper Dressing, Lettuce and Toast (CZK 190), or the classicalBeef Carpaccio with Roast Young Beetroot, Cress and MustardCream (CZK 280) as a starter. Gourmets may go for Caviar Variationof Sea and Freshwater Fish with Herb Cream and Toast (CZK 320),or Slices of Duck Liver on a bed of Herb Lentils and BalsamicoReduction (CZK 540).Fish lovers will also have a lot to taste. Try Salmon Steak onVegetable Duet with Grilled Pancetta and Saffron Reduction (CZK480), or Steamed Fillet of Sea Bass with Fennel and Topinambour(for the same price).The most popular main course is the Czech classic Roast Duckon Rosemary and Garlic with Red and White Cabbage and TwoTypes of Dumplings (CZK 510), or Filleted Duck Breast with CaramelChicory, Algerian Coffee Sauce and Rice with Calcined Pine Seeds(CZK 550).If you have enough space for the desert, don’t miss out on thefruit and herb sorbets, the homemade pralines or the lavender icecream.The restaurant offers a wide range of high quality wines, especiallyMoravian and French, complemented with brands from otherpart of the world. Don’t hesitate to experiment and to get advicefrom Mr. Horák. And if you are not sure, leave the choice to him– you’ll not make a mistake. Wine is pampered here with the sametenderness and respect that the customers enjoy.The restaurant also prepares special events, such as the Titanicdinner in 2000, when the chef created a menu based on the availablematerials that were on table on the same day when the majesticliner went under.Frequent guests include famous Czechs such as Kateřina Neumannováand Dominik Hašek, and loyal customers are offered theVIP card with exclusive discounts. It is interesting, that the holderof the No. 1 card is Ing. Chvalovský, the ex-Chairman of the CzechFootball Union.If I was asked to find a freckle on the face of Palác KinskýchRestaurant, it would be the fact that there is no mobile phone signalthere. On the other hand nobody can disturb you from yoursensual experience and you have greater feeling of freedom andrelaxation. Therefore it is an advantage rather than a defect.Petr Svoboda is the President of Czech branch of the leading pharmaceutical company AstraZeneca. After graduatingfrom the Pharmaceutical Faculty of Charles University in Prague, he worked at the headquarters of Spofa. In 1989he established ICI Pharmaceuticals on the Czechoslovak market and in 1992 he worked in the UK with responsibilityfor marketing ICI and Zeneca. He also participated in establishing branches in Far East (Korea, Taiwan, HongKong, China). Between 1998 and 1999 he was the CEO of Zeneca in Finland. In 2003 he was appointed Chairmanof International Association of Pharmaceutical Companies (MAFS).28 FOCUS SEPTEMBER 2004

In BriefCelebrating in friendlySwiss styleEgon Zehnder International, the world’sleading executive search and managementconsulting firm, has been celebrating theThe Egon Zehnder Consultants team unveiling their addition tothe Prague Cow Parade.10th anniversary of its official opening inPrague in 1994. The company establisheda residence presence in Prague in 1992and opened a full office two years later.The EZI local consultants, Erik Slingerland,Alice Punch, and Daniel Hron,together with the office team, celebratedthis anniversary with their clients and businesspartners in the courtyard of Kaunickýpalác in Panská street, where the firm’soffices are located.Being part of what started out as a Swissfirm, the celebration was held in a friendly,easy going “Swiss style”. Celebrationsbegan with the unveiling of a monument,a cow sponsored by Egon Zehnder International,as part of the Prague Cow Parade,designed and painted by Jiří Votruba.Afterwards guests enjoyed a buffetaround the fountain in the courtyard to thesound of original Swiss Alp horn music.A new pavilion for the CentralMilitary HospitalThe Metrostav joint-stock company hasformally handed over the reconstructedpavilion B III of the Central MilitaryHospital in Prague, which offers some ofthe most modern healthcare facilities in theCzech Republic.The four-storey building underwentalmost total reconstruction, with only theperipheral and some of the load-bearingwalls retained. It is serviced by a total ofseven lifts and seven staircases which alsogive access to the newly built floor, –2,which functions as an underground supplycorridor.The Hospital’s original inner courtyardhas been remodelled into a central entrancehall, which acts as the main communicationand information centre.In the reconstructed pavilion there arenow eight hospital departments: haematology,biochemical and blood transfusion;occupational diseases; central medical andpsychological; clinical oncology; nuclearmedicine; neurology, ophthalmologic clinicand ORL. There is also an orthopaedicThe Central Military Hospital Entrance Hall.ambulance with an X-ray department andsonograph examining room and a centralpharmacy. There are a total of 98 beds, 12intensive care unit beds and seven operatingtheatres.DHL’s New Global IT ServiceCentre nears completionDHL’s new service centre in Prague is nearingcompletion, with management nowactively seeking the most important partof the operation – people.The company, the world’s largest logisticsprovider, has a state-of-the-art facilitywhich completes the company’s vision forthree global IT Services Centres aroundthe world (the others being in Cyberjaya,Malaysia and Scottsdale, USA). Operatingaround the clock, on a follow the sun policy,the IT Services Centres deliver vitalanywhere, anytime information to the businessand DHL customers.The global IT Services Centre is offeringa rare career opportunity for a largenumber of employees, across a full spectrumof IT roles including specialists, administrators,operators and managers.“Now we have the infrastructure in place,we continue to look for our most importantasset – people – who will support and developthe technology and run the Centre,”said Alex Pilař, Programme Director,Global IS Services Centre, Prague.The new IT Services Centre in Praguewill initially house more than 600 serversprocessing over 60 million transactionsper day and it will handle 65 terabytes ofinformation, connected through a networkwith international bandwidth that exceedstwo-gigabytes.Teamconsult opens secondbranch in SlovakiaTeamconsult, a Germany-based executivesearch company, has continued its expansion,opening a second branch in the SlovakRepublic.The new branch in Prešov (East Slovakia),complements the services already onoffer from the successful office in Bratislava.Teamconsult is currently active in fourcountries: Slovakia, Germany, Hungary,and the Czech Republic. To date all projectsin Slovakia were co-ordinated fromthe office in the capital, but increasingdemand in East Slovakia prompted thecompany to establish a separate branch.The company believes the region has significantbusiness potential for the future.Teamconsult’s branch is focusing on specialistsand managers with very good languageskills.The firm operates a success-based feestructure and has, over the last 11 years,become firmly established among the Topfive executive search companies in theCzech Republic.LeasePlan host Euro Gameswith a differenceEach year, staff from all the European branchesof the Dutch-based LeasePlan Corporation,the world’s leading provider ofoperational leasing and fleet managementservices, get together at one location wherethey compete in the LeasePlan EuroGames.This year, the Czech LeasePlan teamwere honoured and pleased to host the20th annual EuroGames in Prague in midSeptember.Cont’d on page 32FOCUS SEPTEMBER 2004 31

In BriefCont’d from page 31Around 400 participants from 18 countriesdescended on the capital to compete insome tough disciplines, including beerdrinking and barrow pushing, as well asquizzes about Prague landmark buildingsand, naturally enough, their expert subjectof car servicing.Each team was multinational, so therewas no national rivalry, and the companyinsists that the winning team was not important.Instead all employees got to knowtheir foreign colleagues a little better, andalong the way, enjoy the glorious experienceof Prague.Cushman & Wakefield Healey& Baker move to new officesCushman & Wakefield Healey & Baker s. r. o.(C&W/H&B) has moved to swish new officesat Na Příkopě 1, in the functionalistbuilding at the foot of Wenceslas Square,the axis of the “golden cross”. The Czechdivision of the world’s leading real estateconsultancy, has rented the entire fourthfloor, including a terrace.“The whole floor has been completelyrefurbished and redesigned to providemodern and attractive open-plan offices,following the concept used in our EuropeanHeadquarters in London,” said MarkPowell, Partner of C&W/H&B who hasbeen responsible for the project. “Particularattention has been paid to providing morewelcome facilities for our visiting clientswith Internet access and laptop connectionpoints, as well as more comfortable meetingareas, of course all with stunning viewsover Prague.”The property, designed by architects AlenaSramkova and Jan Sramek, was built in1977 is today is listed in the architecturalheritage registry. Renovation of the building,originally owned by ČKD, began inApril 2003.Kinnarps acquire internationallyrenowned design groupMATERIAScandinavia’s largest interior design group,Kinnarps, has added to its talent poolwith the acquisition of one of the region’smost illustrious and well known architectureand design groups, Materia.Kinnarps, which was founded in 1942,says that integrating Materia’s values intotheir organisation creates a platform forpublic space furniture and means they canoffer business clients and customers allinclusive concepts.The Design Group has also welcomedthe arrival of a number of renowned architects,including Kersti Sandin and LarsBurlow.In addition Kinnarps has announcedthe completion of it’s 100th ‘Interior DesignHouse’ in Europe.10th Anniversary of theEnglish College in PragueThe English College in Prague celebratedits 10th Anniversary in September with aReception at the British Embassy hostedby the British Ambassador.In addition to other events later thisyear and early in 2005, the college has alsolaunched a book detailing the College’sillustrious past. “Old Roots, New Shoots:The Story of the English College in Prague”,which is edited by one of the foundergovernorsof the College, Ann Lewis, hascontributions from its patrons includingPresident Havel and the Prince of Wales.The book, which is illustrated with photographsand drawings by students, is describedas ‘Poignant, lively and often funny’.Thanks to a generous offer from theMayor of Prague 9, a disused school buildingin Vysočany was made available tothe College which opened its doors to thefirst Czech students in September 1994.Designed as an educational charity, theCollege offered bursaries for gifted CzechThe English College in Prague Reception at the British Embassychildren alongside expatriate students payingfull fees.The English College now has 320 studentsaged 13 to 19, the final class sitting theInternational Baccalaureate examination.Annonce to use PayCentredeveloped by Et neteraEt netera, a leading Czech supplier ofe-business solutions, has developed a Pay-Centre payment system for Annonce k. s.,which streamlines the company’s paidservices.Now customers wanting bold type, advertiserlogos, fully centred business advertisements,buying contacts in advertisementsand so forth, can create, order and thenbuy them without getting up from theircomputer.“From the point of view of the user,both the on-line and micro-payments aswell as the off-line methods of payment areinteresting,” said Martin Havel, ProjectManager for Et netera. “Annonce customersform their advertisements, addingformatting, or a logo, then order the adand pay for it over the Internet. Once theservice is paid for through a money orderor a cash payment, the service is activatedwithout having to visit the website again.”“We expect the interest in on-line servicesto continue to grow, especially afterwe recently launched centred business (fullygraphically formatted) advertisements andFAPIA (international) advertisements,” saidMichael Matyáš, Annonce’s MultimediaService Manager.VOLVO helps promote JazzThe world’s leading jazz performers includingVan Morrison, Richard Müller withhis jazz repertoire, Spyro Gyra and DanBárta have been entertaining audiences atthe Sazka Arena in Prague.32 FOCUS SEPTEMBER 2004

Bubble? What Bubble?However the aim of the Phillips InternationalJazz Festival, held on September18th, was also to bring jazz to a wider audienceand so the line-up also includedmore contemporary acts whose work hasbeen influenced by jazz“We want Philips International JazzFestival to become a place where jazz reachesout to many more listeners,” said RuudJona, CEO, Philips Česká republika, whoVan Morrisonadded that he hoped that the Festival willbecome an extraordinary annual event.In addition to the international jazzgreats, the European jazz stage featuredAcker Bilk and his Paramount Jazz Band,marking the 40th anniversary of his firstperformance in Prague. He was joined byBéla Szakcsi Lakatos of Hungary, JiříStivín, Adriena Bartošová of Slovakia andAdam Pieronczyk of Poland.The Philips International Jazz Festivalwas organisationally supported by Agentura10:15. The Festival Partners were: Citibank,Eurotel, Hotel Mövenpick and Volvo CarsČeská republika.Mrázovka Tunnel Openingat andel's hotel PragueOn 26th August the Mrázovka Tunnel celebrationswere held at andel’s hotel Pragueto officially start the tunnel operations forpublic.The event was attended by the CzechMinister of Local Development, Jiří Paroubek,deputy Prague mayor Jan Bürgermeister,the Prague region Parliament representativePetr Bendl and and Subterra generalmanager Petr Kuchař, who representedarchitects and constructors of the tunnel.There is plenty of global talk, and perhaps more speculation these days, about housingbubbles and now that discussion has reached the Czech Republic.People from all walks of life are predicting gloom and doom in various housing marketsthroughout the world as a result of some perceived pricing bubble. A “bubble” ina market generally means the price of an asset has grown so much that it has outstrippedthe asset’s fundamental value, usually on speculation that prices will continue to increase,driving prices higher until they reach an unsustainable level and eventually collapse.But note that bubbles typically do not pop like a balloon; they don’t even crash likestock markets. Rather, the air in housing bubbles tends to just leak out slowly – sometimespainfully slowly – while in commercial real estate markets there is a more noticeablehiss. And traditionally the market adjustment to a collapse in real estate has come fromthe quantity side, not the price side – fewer houses are sold – while price reductionstend to come gradually. This doesn’t mean that housing bubbles can’t exist or that thebust is any less painful, only that it doesn’t make as much noise.Now, with respect to the housing market in Prague, let’s be clear; there is no bubbleand here’s why:• Home prices remain relatively affordable. Even though home prices have grown, theaffordability of housing – the link between incomes and home costs – remains in check,thanks in part to historically low mortgage rates and the fact that for several years,mid-manager/manager incomes grew slightly faster than home prices and people saved.Home prices remain within the reach of many with a little saved and the ambition tobe a home owner.• Housing inventories remain reasonably low. One key sign of a housing “bubble” wouldbe a growing stock of unsold homes on the market as speculative production outpaceddemand and affordability. This has not yet occurred in this market, nor do we anticipateit in the near to mid term. Demand for homes continues in a large part becauseof strong demand fuelled in some ways by growth in new household formations, thesteady growth in disposable income and the strongest engine, the new mortgage productsbeing offered by area lenders. Meanwhile, the supply of homes is held in checkby land use, available developable land, and homebuilder inventory controls, (thephasing of building construction and the sales of new units). These supply-demandfactors – not price speculation – have helped to push home prices up.• Housing bubbles are hard to create. The housing market here has not experienced the“boom-bust” cycle in prices which have been seen in mature housing markets suchas the United States. Indeed, home prices have not really declined as some mightsuggest. While home prices in a few areas of the city have been a little more buoyanton occasion, that is due mostly to some other volatility in that particular locale but notnecessarily because of a price “bubble”. As the US Federal Reserve Chairman AlanGreenspan recently noted, it is difficult to generate bubble conditions in housing.“Certainly the analogy to stock market bubbles is inappropriate,” he said, noting thattransaction costs and the process alone generally prevents the type of speculativehousing demand that leads to bubbles.There continues to be unprecedented interest in the residential real estate markets ofcentral and eastern Europe, but particularly in Prague. But not only among local buyers.Prague is seen as far more western than its Polish or Hungarian counterparts andthe level of English spoken throughout the city helps British and Irish investors feel morecomfortable about where their investments are located. It also helps that there are somany relatively inexpensive flights to and from the City, to say nothing of the stunningarchitecture and the fascination people have always had with Prague.Since May 1st investor interest has steadily increased while prices have remainedrelatively stable. This flies in the face of the many predictions a year ago that EU entrywould bring about a price spike. Note: this author never agreed with that theory but rathersaid that prices would continue unphased along their current growth curve. Today, thevalue of quality properties continue to appreciate at about 6-8% per year and it is anticipatedthat this growth will follow that trend for some time to come.Rental yields have slowly levelled off due in large part to increased investor activities.There is a larger stock of quality rental housing, leaving new expats moving to Praguewith more to choose from and more to say about where they will live. Yields, in today’srental market average 5 to 7%; still averaging a few points above western equivalentinvestment returns.Is now a good time to buy? Categorically yes. Property values will continue to appreciate,mortgage rates will eventually go up, expats and diplomats will always be hereand Prague will continue to develop as a premier capital city.John Breaux, CIPS, LEXXUS a. s.FOCUS SEPTEMBER 2004 33