Czech delegation to Vietnam seeks to rebalance trade relations

Vietnam is one of the main Czech targets for boosting exports outside of Europe. And while current trade flows are overwhelming in favour of the South-East Asian country, Czech companies are hoping for a lot more by filling in some of the many gaps in industrial know-how and equipment and the country’s basic infrastructure.

Hanoi, Vietnam, photo: Iostream01, CC BY-SA 3.0

This year the Czech Republic will halt its development aid to Vietnam, testimony to the fact that the country has evolved fast over the last two or three decades from a largely agricultural country into a fast developing business and industrial hub. Industry and services each now represent around 40 percent of the economy with agriculture in third place with around 20 percent. It’s estimated that the Vietnamese economy has expanded 36-fold over the last 20 years. Annual economic growth rates are around 5-6 percent.

It’s not surprising then that the Czech Republic has targeted Vietnam as one of its 12 priority countries for increasing trade, and in particular Czech exports. Vietnam is the only of the fast expanding South-East Asian ‘tiger’ economies that has been singled out in this way.

Czech Minister of Industry and Trade Jan Mládek has just returned from leading an around 20-strong trade delegation to the country, whose population has swelled to over 90 million.

On the face of it, the Czech Republic has one major advantage in building trade ties with Vietnam, the presence of an estimated 60,000-80,000 Vietnamese living in the Czech Republic. In many cases, the children of immigrants who were encouraged to come to Czechoslovakia by the former Communist regime in the 1970’s and 1980’s are perfectly at ease in both cultures and languages, often high achievers at school, and have ambitions to do a lot more than run the corner shop stores or restaurants, which is the Czech stereotype for the Vietnamese community.

But bilateral trade ties are still overwhelmingly in favour of Vietnam at the moment. Czech exports stand at around US $ 128 million a year compared with Vietnamese imports running at around US $ 416 million a year. Exports of machinery and transport equipment make up around 68 percent of Czech sales to Vietnam with food and chemicals representing around 12 percent and 5 percent respectively.

The possibilities for a fast growing economy that still needs to construct a lot of basic infrastructure and fully exploit its own resources are enormous. During the latest Czech mission, ministers of industry from both countries signed a memorandum aimed at deepening cooperation in mining and the exploration and development of Vietnam’s natural resources.

Brno-based engineering group Alta has long been a supplier of mining equipment to one of the biggest Vietnamese companies, state coal and raw materials company, Vinacomin with gravel extractor Šteřkovana Dolní Benešov has a long standing partnership to supply its know-how and technology to the same firm.

Export boosting Czech potential is seen in developing transport infrastructure, construction and equipment of hospitals, urban planning projects, building new power stations, chemical plants and refining projects, and treatment of water and waste. Czech construction giant Metrostav established an office in the southern city of Ho Chi Minh (formerly Saigon) with an eye on potential contracts to build metro systems and other transport projects in 2013.