'Czech wants to take partnership with Korea to new level'
By Nam Hyun-woo
.jpg?w=728)
CzechInvest Seoul Office Chief Martin Jirovec
CzechInvest Seoul Office Chief Martin Jirovec said Korea and the Czech Republic have a lot of similarities in their industries, which will help Koreans understand that Czech is a great business partner, more than a country remembered by its beautiful view of Prague.
“A lot of tourists from Korea visit Prague and other Czech cities. But the Czech Republic is not only a beautiful country,” Jirovec said in an interview with The Korea Times.
“It has been traditionally strong in the automotive, aerospace and high-tech manufacturing industries and is making progress in ascending industries such as nanotechnology, info-tech and security, and life sciences. Czech wants to become a new partner in such fields.”
CzechInvest is a state-run agency mandated to draw foreign investors to support Czech enterprises’ expansion efforts. It is subordinated to the Ministry of Industry and Trade of the Czech Republic and acts as an umbrella business promotion organization for manufacturing firms in the country.
Though many remember the country by scenic view of its cities, Czech stands as one of the manufacturing powerhouses in Europe, with 38 percent of its gross domestic product coming from the sector. Not many know that the contact lens was invented by a Czech chemist and about one third of electron microscopes used worldwide are manufactured in the country.
Czech has been traditionally strong in manufacturing, Jirovec said. Before gaining independence from the Austria-Hungary Empire in 1918, what is now Czech accounted for 70 percent of industrial production in the empire, which covered the whole of Central and Eastern Europe.
During the communist regime of Czechoslovakia, it mainly focused on heavy industry and defense manufacturing. After the regime fell, Czech started to mark itself as manufacturing powerhouse in the 1990s, with cheap labor, low costs and a strategic location in the middle of Europe.
Similar to Korea, the Czech industry is largely relying on exports, especially those to Germany. Also, its core industry is the automotive business, which Jirovec cited as one of the most noteworthy similarities between Korea and Czech.
“The automotive industry has the strongest inflow of foreign direct investment from Korea,” he said. “When Hyundai Motor decided to establish its European operations in the Czech Republic in 2006, it brought its supply chain, making vehicle manufacturing very significant with respect to Korean investment.”
In 2006, Hyundai Motor announced a plan to build a factory in Nosovice at a cost of 34.4 billion Czech koruna ($1.66 billion). It was the biggest investment arranged by CzechInvest, according to Jirovec, and the factory is now producing 300,000 vehicles a year including Tucson, i30 and ix20.
Along with the Hyundai Motor factory, Nexen Tire is building a $1.1 billion factory in the country, marking the third largest investment drawn by CzechInvest.
So far, Korea has invested $3.25 billion in the Czech Republic, becoming the No. 3 investor after Germany and Japan. More than 50 Korean firms are now based in Czech, hiring 12,000 locals.
Jirovec said along with the Czech Republic’s strategic location of being a gateway the European market, its government is offering investors the ideal conditions for a stable investment.
According to him, both the Czech Republic and foreign legal entities can apply for investment incentives as long as they are based in the country. Incentives are provided in the form of corporate income tax relief, cash grants for job creation and training and retraining of employees, cash grants for the purchase of assets and exemption of the property tax.
“A new amendment of the Investment Incentives Act is currently being drafted. The amendment should focus this type of support more on projects involving research, development and innovation.”
As Czech’s industrial focus is shifting to new industries such as info-tech, robotics, artificial intelligence and other advanced technologies, Jirovec said the partnership between Korea and the Czech Republic can advance to a new level.
“Czech companies are increasingly adding research and development activities to their production operations and focusing on highly technical and higher value added projects,” he said.
“Korea ranks among the key players in a variety of industries and the Korean government has adopted policies to encourage growth in the new areas. They are corresponding with the strategy of our country and we believe opportunities and strong interests of collaboration in the fields of augmented/virtual reality, gaming, artificial intelligence, pharmaceuticals, cosmetics and healthcare.”