Czech Focus 2/2005 - AFI

COUNTRYFOCUS10Furthermore, the Czech Republic has become even more accessiblefor Korean businessmen and tourists since Korean Air –a member of Sky Team – opened its direct flight fromSeoul Incheon to Prague Ruzyne three times a weekstarting June 2004. Prague’s Ruzyneairport with its on-going expansionsis becoming the largest airport inCentral and Eastern Europe. Consequently,China Airlines announcedthe opening of a new cargo flight fromTaipei to Prague in early 2005.Investments from India and SingaporeBusiness Processing Outsourcing (BPO)has been practised by primarily US-basedlarge corporations. India has traditionallybeen the most attractive destination for theseoffshore operations. However, recently there hasbeen certain interest even from Indian companiesto offshore business processes to the CzechRepublic following their US clients.PROGEON is headquartered in the state-of-art INFOSYScampus in Bangalore, India. Their centre in the Czech Republichas been located in Brno since 2004 and currently offers servicesin as many as eleven languages. Progeon is one of the leading BPOcompanies in India. It is focused on high-end process outsourcing formajor global customers across industries.There are three announced investors from Singapore – FLEXTRONICS,SYSTEM ACCESS and AMTEK. FLEXTRONICS maintains itsoperation on Design Services in Brno employing some 30 engineers.SYSTEM ACCESS is a leading financial software provider ofcustomer centric universal banking solutions for financial servicesinstitutions worldwide. They established their service operation in2002 in Prague. AMTEK is a leading global supplier of componentsand products. It established its Czech base in 2000 in Pisek and Brno.Amtek Precision Engineering CZ provides design and manufacturingof knitting machines and engineering of electronics components andautomation devices.Why?Asian investors usually choose the Czech Republic for an opportunityto minimize costs, the availability and quality of Czech humancapital, location advantages and favourable business environment. Forinstance, some investors look at the establishment of an operation inthe country as a way to avoid payment antidumping customs dutieson imports from Asia to the EU. It is also usual for the next stageof a manufacturing project to be an additional service project, such asrepair or technology centre, and/or after expansion to concentrateall activities into one hub. Many investors choose the country for theCzech supplier base. Another reason is capacity management, especiallyin nearshoring. Asian companies having their hubs still locatedin Western EU countries can easily cover excess customer demandsthrough their manufacturing and service capacities in the CzechRepublic, achieving significant cost savings by such outsourcing.Mainland China Taiwan South Korea MalaysiaSingaporeIndiaThe core processes are still kept in the home country. Later there isoften a shift from only outsourcing and non-core processes, and lowmarginproduct lines to more sophisticated processes and technologyshifts. For instance, it has taken four years for ASUSTeK from theirstart- up in Prague in a rental building until they established their hub inOstrava. Investors also use the local supply chain and logistics closerto their new customers’ locations. And, the Czech Republicis a full-fledged EU member, which brings legal, economic andpolitical stability for long-term projects.New directionsDuring recent years, South East Asian companies invested a lot in theCzech Republic, mostly into assembly lines to meet the demand fromtheir European customers on order as OEM or ODM suppliers. It hascreated a lot of capacities. Some operations have developed well so theyeven expanded and also added a service centre, usually a repair or innovationcentre. The Czech Republic has alight engineering culture. This means thatthe country is less suitable for labour-intensiveassemblies but more for projectsusing skills and brains.Jaromir CernikDirector of CzechInvest´s officein Hong KongUseful contactsEmbassy of the Republic of Korea inPrague, Czech RepublicSlavickova 5, Praha 6 – Bubenec, 160 00Phone: +420 234 090 411KOTRA Trade Center PragueVaclavske namesti 47, Praha 1, 110 00Phone: +420 221 625 600www.kotra.or.krEmbassy of the Republic of India in PragueValdstejnska 6, Praha 1 – Mala StranaPhone: +420 257 533 490www.india.czEmbassy of the People’s Republicof China in PraguePelleova 18, Praha 6 – Bubenec, 160 00Phone: +420 224 311 323 (Protocol),233 028 800www.chinaembassy.czTaiwan Economicand Cultural Office in PragueEvropska 2590/ 33c, Praha 6, 160 00Phone: +420 233 320 606www.roc-taiwan-cz.comConsulate- General of the Republicof Singapore in PragueNa Prikope 23, Praha 1, 110 00Phone: +420 221 967 208Sources:• Czech Statistical Office, 2004• Statistics of Ministry of Industry and Trade, 2005