EU accession: is time running out for small and medium-size enterprises?

r_2100x1400_radio_praha.png

Act now or die, that is the imperative of today for small and medium-size enterprises as the time for preparation for the vast, highly competitive, borderless EU market is running out. A recent survey in ten Central and East European candidate countries showed that although companies are widely optimistic about their future on the single market, the state of their overall preparedness suggests that the level of optimism may be unsubstantiated.

Photo: CTK
In the Czech Republic, more than 90 percent of companies are in favour of joining the EU and two-thirds of them are generally optimistic about their prospects in the single market. However, the level of information on the Acquis communautaire is still insufficient, with 6 per cent of companies claiming to be fully informed and 14 percent claiming not being informed at all. The situation in the Czech Republic, though, is better than in most of the other candidates countries, where one-third of companies on average claim to have no information about the Acquis a year before planned accession. Besides that, about every second company has not yet started organised preparations for the single market (43 per cent in the Czech Republic as compared to an average 49 per cent for the whole bloc).

The annual survey called CAPE 2003 was third in a row. The project examines corporate readiness for enlargement in Central and East Europe. It is an initiative of the Association of European Chambers of Commerce and Industry, Eurochambres, and is financially supported by the European Union's Phare programme.

I spoke to Ivan Voles, senior director of the foreign division of the Economic Chamber of Commerce, about the preparedness of Czech companies for EU accession:

Photo: CTK
"I think in comparison with companies in other candidate countries, Czech companies are relatively well prepared. But in general, Czech companies are still missing a lot of activities in their preparation for the accession."

What is missing? Is it knowledge of the Acquis or its implementation? What are the main issues?

"It is a very wide range of issues, including a deep knowledge of Acquis communautaire. But I think the main point is a lack of investment in adapting technology, especially that related to environmental issues."

The accession date has been known for quite a long time. Have Czech companies been making proportionate progress or have they had to speed up their preparations now?

"The CAPE research has been running for three years and we can see a certain progress in the preparations but the progress is not sufficient with regard to the very near date of accession."

Which areas of the Acquis do Czech firms have most problems adapting to?

"According to the CAPE report, it seems that Czech companies feel confident about technical standards. The biggest problem is that many companies did not start real preparations for Acquis communautaire and they will face tremendous problems when all the EU legislation is applied in the Czech Republic."

Is it a matter of money, of the costs connected with the implementation?

"Definitely. Maybe that is the main reason. But there is also a lack of other capacities, human resources... Small- and medium-size companies do not have enough people to be trained in European issues, and they absolutely lack money for necessary investments in improving their technical equipment, especially regarding environmental issues."

Do Czech firms see the EU accession as an opportunity or as a threat? Or what are the main opportunities and the main threats?

"Maybe I should not say it so frankly, but it seems to me that many Czech companies are a little over-optimistic regarding the accession, and they don't see the threats very clearly. According to the poll, Czech companies are mostly optimistic. But it would be better for their preparations if they also consider the real threats that will be there."

So, what are the main threats?

"The main threat is, of course, the opening of the market to other companies from the EU. We can argue that the market is already open, but the abolishment of the economic borders between member countries will lead to tremendous changes in patterns of business, especially in the border regions. We always view the accession only with regard to the old member states, our neighbours Austria and Germany. But we forget that after accession to the EU, we shall have Poland, Slovakia, Hungary as practically the closest neighbours, and there will be tremendous competition from companies from these countries. We know that they can be highly competitive regarding labour costs and so on.

There is also another threat. Our companies will not be able to operate on the Czech market only. They will have to expand, they have to use the opportunity of the European Union. I ask myself: are they really prepared for that? Do they have the necessary human resources? I mean trained people who know foreign languages, who know the Acquis and how to profit from it. These are the threats that Czech companies should be aware of."

Are there any differences between small and big firms, or between different sectors of the industry?

"Yes. There are substantial differences because small- and medium-size enterprises are much less prepared for the Acquis communautaire, for accession, than large firms, because large firms have already examined the future implications of the Acquis for their business. However, small and medium enterprises do not have enough resources to do that. That is why we need to focus our activities on this segment in the run-up to the accession."