Government streamlines export support but companies call for more practical approach

Photo: Hafiz343, CC BY-SA 3.0

Czech authorities have streamlined the system of support for exporters, creating a joint network of services for companies trying to enter foreign markets. The new system, which includes a central Prague-based client centre, comes after the ministries of foreign affairs and industry and trade agreed to coordinate their activities in support of Czech exporters. But the country’s main association of exporters remains sceptical about the move and is calling for a more hands-on approach.

Radomil Doležal,  photo: archive of CzechTrade
The new system has been created in response to demands from both the government and the business community for simpler and more efficient ways of supporting Czech exports.

In the past, the Ministry of Foreign Affairs and the Ministry of Industry and Trade acted independently, leaving exporters unsure which door to knock on when seeking information about foreign markets, government regulations, or their potential business partners abroad.

This should now change, says Radomil Doležal, the head of CzechTrade, a pro-export agency affiliated with the Ministry of Industry and Trade which runs the new system.

“There has been a strong impulse to simplify the process and make it more usable for exporters. That’s the reason why the two ministries came together to work on it.

“There have also been requests from our partners in the export community for such a simplification because the past procedures were often a waste of time and money.”

Exporters seeking information about potential markets are now encouraged to start at the client centre, set up at the CzechTrade headquarters in Prague.

There, a new catalogue of services is available for them, ranging from initial consultations and assessment of the client’s level of “export readiness” to market research and analysis and providing specific information on potential business partners.

Photo: Hafiz343,  CC BY-SA 3.0
The basic assistance is provided free of charge but exporters will have to pay for some of the more advanced services. However, Mr Doležal says no price list for services has yet been set.

“Each country is specific, and the same service in one country can be very different in terms of time consumption than in another, so it’s difficult to put a price tag on it. Also, it is a general principle in business that your clients first need to gain confidence in your services before you can charge for them.

“So I believe our colleagues in the foreign service know their turf very well and they will price their offers to ensure future success.”

In searching for information, the client centre will draw on CzechTrade trade offices in some 40 countries around the world as well as on staff at Czech embassies and envoys of the Industry and Trade Ministry posted abroad.

Bringing all the information together is another change in the official policy of supporting Czech exporters, says deputy industry and trade minister Vladimír Bärtl.

“This is the first time that all these services are included in one catalogue which should help exporters to organize and orientate themselves, whether they need assistance with business-to-business, business-to-government or even government-to-government projects, and wherever they need it.”

Vladimír Bärtl,  photo: archive of Industry and Trade Ministry
Last year, Czech foreign trade rose to a record level when it increased by 2.8 percent compared to 2012. The country’s net exports surged to over 350 billion crowns, which was some 45 billion more than in the previous year. However, a vast majority of Czech exports – over 80 percent, are still destined to other EU countries, mainly Germany.

The dominance of one export destination has been seen as risky, and several Czech governments have tried to push for a higher diversification of exports, mainly to emerging economies in Asia and Latin America.

In 2012, the cabinet of former prime minister Petr Nečas identified 12 countries as priority destinations. These included Brazil, China, India, Iraq and Ukraine. But the current centre-left government is now re-thinking this strategy, according to Mr Bärtl.

“The concept of priority countries is something we are now discussing very much. I personally don’t think this is the best concept we could have; it in fact goes against the approach we want to adopt when we revise our export strategy.

“We want to look at sectoral priorities, to see what strengths we have and how we want to develop them and that should tell us which countries we should focus on. But that means that some countries are priority for some sectors while different countries are a priority for other sectors.”

The new system has only been in place for several days although officials at CzechTrade say they have already received some requests for assistance. But the head of the Czech Exporters’ Association Jiří Grund doubts it will have a significant impact.

Jiří Grund,  photo: Czech Television
“In principle it’s good and I believe that any effort to support exports is worth it. But I’m not sure that this will work everywhere. We travel around the world and know some of the CzechTrade representatives, and there are big differences between them.

“We don’t know if this will lead to CzechTrade representatives being replaced with commercial attaches or whether both will remain in place. This is not quite clear and we will wait and see how it works out. But it’s an administrative measure which I’m not sure will improve services for exporters.”

The issue of competence of some CzechTrade experts and economic diplomats should be addressed by a new system of training. The two ministries are now set to cooperate in training their staffers sent to work at embassies and CzechTrade offices abroad.

However, Jiří Grund believes the entire system of state support for exporters should also shift its focus to small- and mid-sized companies.

“They should get much closer to the exporters. Get in touch with them, get in touch with their associations and unions and offer them services, mainly to the mid- and small-sized ones. The big ones are doing fine; they have their own offices set up abroad. But the authorities should focus on smaller exporters.

“This segment, which could fuel the growth of Czech exports, needs assistance – participation in fairs and exhibits, in trade missions, and so on, so that small and mid-sized firms could afford such trips and to offer their products. These are the things they need.”

Support for exporters has long been a staple of Czech governments’ economic policies, with the streamlining of the support system being the latest in a series of initiatives. But in practice, little has been done to boost Czech foreign trade, according to Mr Grund.

“This is not the reality. It’s talked about more and concepts and intents are being presented. But even though it takes time before such measures take effect, we don’t see that much has happened over the last year and a half.

“I can say that we as the Exporters Association has felt no major impact or increased support for exporters.”