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Made in Czech

Investor’s Guide for Manufacturing and Logistics Companies – 2015

1� Made�in�Czech�•�Investor’s�Guide�for�Manufacturing�and�Logistics�Companies�•�2015

The�Czech�Republic�has�a�long�and�rich�history�as�one�of�the�world’s�most�successful�manufacturing�and�logistics�markets.�We�also�believe�that�it�has�a�very�bright�future.�

The�Czech�Republic�is�truly�situated�at�the�geographical�heart�of�Europe�and�has�the�infrastructure�in�place�to�operate�as�the�gateway�between�the�East�and�the�West.�With�its�population�at�just�a�little�over�10�million�people,�it�is�a�relatively�small�market�but,�is�a�heavyweight�in�the�manufacturing�arena.�It�is�a�strategic�location�for�numerous�manufacturing�and�logistics�companies�planning�activity�throughout�Europe,�Central�&�Eastern�Europe,�Russia�and�other�CIS�countries.

The�well-established�Czech�highway�and�road�network�is�continuously�seeing�further�additions�and�improvements,�particularly�since�the�country’s�economic�outlook�has�improved�over�the�past�few�years.�These�advantages,�linked�with�the�highly�skilled�workforce,�low�labour�costs,�the�availability�of�investment�grants�and�incentives�and�EU�Membership,�since�2004,�make�the�Czech�Republic�a�very�attractive,�business-friendly�location.�

Local�knowledge�is�key�to�making�the�most�of�the�opportunities�that�the�Czech�market�has�to�offer.�For�this�very�reason,�JLL�has�prepared�this�report�in�co-operation�with�the�following�partners:�PwC�and�Hays.

This�report�aims�to�offer�guidance�to�international�manufacturing�and�related�service�companies�that�wish�to�establish�or�grow�their�presence�

in�the�Czech�Republic�and�provides�an�inside�view�of�the�country’s�manufacturing�landscape.�It�also�offers�key�expertise�on�the�Czech�labour�market�with�regard�to�the�manufacturing�sector�and�advice�on�important�legal�topics�such�as�the�structure�of�grants�and�incentives,�setting-up�a�business�and�taxes.�Insights�into�the�manufacturing�industry�are�demonstrated�with�sector�analysis.�Commentary�on�the�real�estate�market�provides�a�guide�to�the�different�acquisition�and�rental�methods,�timeframes�and�market�practices�and�trends.�

We�would�like�to�thank�all�partners�involved�for�their�valuable�input�in�preparing�this�report.�We�firmly�believe�that�“Made in Czech”�is�a�useful�source�of�information�for�investing�in�this�country.

Tewfik Sabongui Managing�Director�Czech�Republic�JLL

Harry Bannatyne Head�of�Industrial�Agency�Czech�Republic�JLL

Foreword

Content�Table

1. Executive Summary 3

2. Labour Market 5

3. Grants & Incentives 8

4. The Infrastructure Map of the Czech Republic 10

5. Key Manufacturing Sectors in the Czech Republic 12

Automotive�sector� 14

FMCG�sector� 18

Home�Appliances,�ICT�and�Electronics� 22

Medical�and�Pharmaceutical�Industry�� 24

General�Machinery� 26

6. The Czech Industrial Real Estate Market 28

7. Real Estate: Rent or Buy? 30

Rent�a�facility?�� 30

Buy�a�facility?�� 31

Overview�of�the�permitting�process� 32

How�quickly�can�you�be�operational?� 32

Market�practice�for�leasing�space� 33

Market�practice�for�purchasing�space�� 34

8. Real Estate Acquisition 35

9. Setting-up a Business 37

10. Czech Tax Structure 39


The�Czech�Republic,�with�a�population�of�just�over�10�million�people,�is�one�of�Europe’s�and�the�World’s�biggest�success�stories�in�terms�of�manufacturing.�

The�Czech�Republic’s�close�connection�to�Western�markets,�particularly�the�German�market,�and�good�cooperation�with�central�European�countries,�provides�it�with�a�balanced�position�and�excellent�economic�stability�in�both�booming�times,�as�well�as�crises.

The�Czech�Republic�mainly�benefits�from�its�unique�location�in�the�heart�of�Europe,�representing�a�junction�of�trans�European�transport�corridors,�in�addition�to�a�highly�educated�population�and�a�well--developed�infrastructure.

Numerous�international�companies�have�already�identified�the�country’s�potential�and�have�taken�advantage�of�the�favourable�conditions�that�we�highlight�in�this�paper.�The�following�are�our�key�rationale�for�investing�in�the�Czech�Republic:

Czech investment rationale

� Central�European�hub�and�favourable�geographic�location

� Political�and�economic�stability,�with�one�of�the�highest�GDP�growth�rates�forecasted�in�the�EU�in�2014/2015

� Availability�of�a�highly�skilled�workforce

� Low�labour�costs�vs.�high�labour�productivity

� Quality�logistics�/�industrial�real�estate�stock

� Favourable�government�investment�incentives,�mainly�focused�on�hi-tech�projects

� One�of�the�densest�highway�networks�in�Europe

� One�of�the�densest�rail�networks�in�the�world

� Excellent�business�opportunities�in�the�areas�of�R&D,�Design�and�Innovation

Fast growing market

In�May�2014,�the�Czech�Republic�had�its�10th�anniversary�of�becoming�a�member�of�the�European�Union.�Being�a�part�of�the�single�European�market�has�certainly�brought�trading�benefits�along�with�reforms�that�have�provided�a�relatively�stable�market�environment,�for�today’s�standards,�and�a�reliable,�safe�business�climate.�

According�to�Oxford�Economics,�The�Czech�Republic�is�forecast�to�experience�one�of�the�highest�GDP�growth�rates�in�Europe�with�an�average�of�3.0%�between�2014�and�2016.�

The�country�continues�to�attract�a�large�share�of�Foreign�Direct�Investment�(FDI),�most�recently�with�new�investments�from��Nexen�(tyres),�Hyundai�Mobis�(automotive�components)�and�Bell�Helicopters.

Investment rating

The�Czech�Republic�has�the�strongest�country�ranking�in�CEE�from�all�three�major�rating�agencies.�Moody’s�have�ranked�the�Czech�Republic�A1,�Fitch�giving�the�rank�of�A+,�both�of�them�confirming�a�stable�outlook.�S&P�ranked�the�Czech�Republic�at�AA–.�

Country Fitch Moody’s S&P

Czech�Republic

A+(stable)

A1�(stable)

AA–(stable)

HungaryBB�

(stable)Ba1�

(stable)BB+�

(stable)

PolandA–�

(stable)A2�

(stable)A–�

(positive)

RomaniaBBB–�

(stable)Baa3�

(stable)BBB–�

(stable)

SlovakiaA+�

(stable)A2�

(stable)A�

(positive)

SloveniaBBB+�

(stable)Baa3�

(stable)A–�

(stable)

Source: Fitch, Moody’s, S&P, 2015

Attractive labour market

The�population�of�the�Czech�Republic�reaches�over�10.5�million�inhabitants.�The�largest�city�is�the�capital�city�of�Prague�with�more�than�1.2�million�inhabitants.�Other�large�cities�include�Brno,�Ostrava�and�Pilsen,�all�with�populations�of�above�150,000�inhabitants.

The�labour�force�of�the�Czech�Republic,�aged�between�15�–�64�years,�exceeds�7.3�million�people,�which�is�ca.�70%�of�the�population.�With�133.3�inhabitants�per�sq�km,�it�has�the�highest�density�of�inhabitants�in�the�CEE�region�and�the�13th�highest�density�of�inhabitants�among�European�countries.�

According�to�Eurostat,�the�Czech�Republic�offers�some�of�the�most�competitive�labour�costs�in�Europe�at�EUR�10.3�per�hour.�This�rate�is�more�than�half�of�the�EU�28�average�and�3�times�lower�than�in�neighbouring�Germany.

Educated workforce

The�Czech�Republic�offers�a�highly�qualified�workforce�with�wide�ranging�experience�in�the�manufacturing�sector.�The�well�renowned�and�long�industrial�history�of�the�country�is�supported�by�a�network�of�universities,�secondary�technical�schools�and�training�centres,�providing�a�significant�number�of�graduates.

The�Czech�Republic�has�77�public�and�private�universities,�with�a�total�of�375,000�students.�The�highest�portion�of�students�is,�unsurprisingly,�in�the�largest�cities�of�Prague,�Brno�and�Ostrava.�On�the�other�hand,�in�every�single�regional�capital�there�is�at�least�one�university.�The�highly�skilled�workforce�is�therefore�distributed�across�the�regions�and�it�is�not�concentrated�purely�in�the�largest�cities.�

1. Executive Summary

Made�in�Czech�•�Investor’s�Guide�for�Manufacturing�and�Logistics�Companies�•�2015� 4

Favourable grants & incentives

In�addition�to�its�attractive�labour�market�and�availability�of�workforce,�another�important�draw�factor�for�manufacturers�assessing�where�to�locate�a�new�development,�is�the�availability�of�investment�incentives�offered�by�the�government.�These�are�handled�by�CzechInvest,�the�Investment�and�Business�Development�Agency,�a�state�agency�created�by�the�Ministry�of�Industry�and�Trade.�

Attractive�investment�incentives�are�granted�through�many�forms�of�state�aid,�including:�corporate�income�tax�relief,�transfer�of�land�for�favourable�prices,�job�creation�grants,�training�and�retraining�grants,�and�cash�grants�for�the�acquisition�of�long-term�tangible�and�/�or��intangible�assets.

The manufacturing sector is evolving

The�Czech�Republic�is�an�export�oriented,�open�economy,�with�a�strong�emphasize�on�manufacturing.�The�country�has�shifted�from�an�assembly�production�market�to�an�added�value�manufacturing�and�high�technology�production�zone,�serving�also�as�a�transit�station�and�distribution�hub�for�goods�from�the�east�and�south�east�to�northern�and�western�Europe.

The�Czech�Republic�has�the�most�developed�industrialized�economy�in�Central�and�Eastern�Europe.�Its�strong�industrial�tradition�dates�back�to�the�19th�century�when�Czech�countries�represented�the�industrial�engine�of�the�Austro-Hungarian�Empire.

The�manufacturing�industry�is�one�of�the�most�important�parts�of�the�national�economy,�representing�a�substantial�share�of�gross�domestic�product.�The�traditional�industries�are�heavy�and�general�machine-building,�iron�and�steel�production,�metalworking,�chemical�production,�electronics,�transportation�equipment,�plastics,�textiles,�and�pharmaceuticals.�The�long�term�leading�sector�is�automotive�production,�which�strengthen�its�position�every�year.�On�the�other�hand,�we�are�recording�a�gradual�decline�of�the�mining�sector.�In�the�European,�as�well�as�global�rankings�of�most�industrialised�countries,�the�Czech�Republic�always�belongs�among�the�top�positions.

Thanks�to�its�strategic�location,�next�to�Germany,�in�the�centre�of�continental�Europe,�the�Czech�Republic�is�an�attractive�place�for�manufacturers�to�near�shore�operations�and�also�to�progressively�compete�for�cost-effective,�value-added�manufacturing,�supported�by�a�highly�skilled�workforce.�

Maturing real estate market

The�real�estate�market�is�maturing,�offering�high�quality�manufacturing�and�warehouse�space.�Many�large�international�developers�are�present�in�the�market.�The�various�options�of�buying�or�renting�an�existing�facility�or�commissioning�a�built-to-suit�production�facility�are�outlined�in�this�report.

According�to�the�JLL�Global�Real�Estate�Transparency�Index,�based�on�a�combination�of�quantitative�market�data�and�information�gathered�through�a�survey�of�the�global�business�network�of�JLL�and�LaSalle�Investment�Management,�the�Czech�Republic�has�a�transparent�real�estate�market�which�is�closing�the�gap�with�Western�Europe.�

The�index�is�based�on�a�review�of�the�following�categories:�

� Performance�Measurement

� Market�Fundamentals

� Governance�of�Listed�Vehicles

� Regulatory�and�Legal

� Transaction�Process�

Europe Real Estate Transparency, 2014

Source: JLL 2014

The Czech Republic is out of this world!

The European Global Navigation Satellite Agency (GSA) has selected Prague as its headquarters for the Galileo navigation system project which is anticipated to attract a great deal of talent, knowledge and put a spotlight on the Czech Republic.

This project will provide an opportunity, to both Czech companies and their partners, to push the boundaries in terms research and innovation into space related technologies and systems.

RU

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BY

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NO

HU

PL

ATSL

IT

DE

BEDK

FR

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PT

NL

GB

IE CZ SI

CH

HR

UA

G R BG IL

TR

KZ

RS

RU

RO

FI

BY

SE

NO

HU

PL

ATSL

IT

DE

BEDK

FR

ES

PT

NL

GB

IE CZ SI

CH

HR

UA

G R BG IL

TR

KZ

RS

Opaque

Low Transparency

Highly Transparent

Semi-Transparent

Transparent

Not Covered

Low Transparency

Highly Transparent

Semi-Transparent

Transparent


Human�capital�is�a�key�element�in�the�investment�process.�The�three�main�areas�to�assess�with�regard�to�investment�potential�include�employment�costs,�availability�of�workforce�and�quality�of�labour.�A�focus�on�Czech�labour�dynamics�will�be�outlined�in�this�chapter.

From�a�human�resources�perspective,�the�Czech�Republic�offers�a�highly�qualified�workforce�with�wide�ranging�experience�in�the�manufacturing�sector.�The�well�renowned�and�long�industrial�history�of�the�country�is�supported�by�a�network�of�secondary�technical�schools�and�training�centres,�providing�a�significant�number�of�graduates.�In�addition,�the�presence�of�technical�universities�across�the�country�including:�Prague,�Brno,�Liberec,�Ostrava,�Pilsen,�Ústi�nad�Labem�and�Zlín,�allow�for�a�sustainable�flow�of�electrical,�mechanical�and�manufacturing�engineers.

Although�the�Czech�Republic�has�slightly�higher�employment�costs,�when�compared�to�other�markets�in�the�region,�this�is�offset�by�the�high�levels�of�technical�education�and�the�general�above�average�language�knowledge�(English�and�German)�within�the�CEE�region.

Combined�with�the�countries�geographical�location�and�developed�transport�network,�it�makes�the�country�a�very�attractive�location�for�manufacturing�companies�and�also�those�with�added�value�production�or�R&D�Centres.

Labour law

A�trial�period�of�up�to�6�months�can�be�agreed�with�so-called�managerial/leading�employees�entitled�to�determine�and�assign�tasks�and�give�instructions�to�their�subordinates�and�to�organise�and�control�their�work.

The�trial�period�of�a�maximum�3�months,�is�applicable�to�other�employees,�regular�staff.�

Employment�for�an�indefinite�period�is�the�most�common�in�the�Czech�Republic,�preferred�by�both�parties�(employer�and�employee).�

Employment�for�a�definite�period�concluded�between�the�same�contracting�parties�may�not�exceed�3�years.��From�the�day�when�the�first�employment�for�a�definite�period�is�concluded,�this�employment�term�may�be�repeated�twice�only.�Extended�employment�will�be�considered�repeatedly�concluded�employment.

Previous�employment�for�a�definite�period�will�no�longer�be�taken�into�account�three�years�after�the�end�of�the�last�employment�for�a�definite�period.

�

Severance

Employment�lasted�<�1�year�employee�is�entitled�to�1x�average��monthly�earnings

Employment�lasted�>�1�and�<�2�years�employee�is�entitled�to��2x�average�monthly�earnings

Employment�lasted�>�2�years�employee�is�entitled�to�3x�average�monthly�earnings

Source: Hays Czech Republic

Other information

Notice�period:�� 2�months�by�law,�or�by�agreement

Holidays/year:�� 20�days�by�law

Bank�holidays:� 13�(Fixed�to�specific�dates)

Working�hours/week:�� 40�(Typical)

Sick�Leave:�� 1st�–�3rd�day�no�reimbursement,�4th�–�14th�day��reimbursed�by�employer,�15th�+�day�reimbursed�by�the�state


Employment costs

The�two�most�significant�components�of�employer�costs�are�salaries�and�Social�Security�Contributions�(SSC).�According�to�Eurostat,�the�Czech�Republic�offers�one�of�the�lowest�labour�costs�in�Europe�at�EUR�10.3�per�hour.�This�rate�is�more�than�half�of�the�EU�28�average�and�3�times�lower�than�in�neighbouring�Germany.

Comparison of hourly total labour costs among selected European countries in the Industrial and Construction sectors (in EUR)

Source: Eurostat, 2013

2. Labour MarketSection contributed to by Hays Czech Republic

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

Swed

en

Fran

ce

Aust

ria

Ger

man

y

EU (2

8 co

untri

es)

Spai

n

Uni

ted

King

dom

Slov

enia

Cze

ch R

epub

lic

Slov

akia

Pola

nd

Hun

gary

Rom

ania


Statutory employer costs

Social security

�Sickness�insurance� 2.3�%

�Retirement�/�pension�insurance�� 21.5�%

�Employment�insurance� 1.2�%

Health security 9.0�%

Total paid by employer on top of salary 34.0 %


Additional costs

Optional Benefi ts Costs – average annually CZK / per head

1�extra�week�of�holidays�(over�80%�companies)

��Based�on�employees’�monthly�gross�salary

Lunch�Vouchers�(over�76%�companies)

��6,000–12,000�(215–430�EUR)�per�employee�annually�(1�day�average�contribution�is�40–60�(1.4–2.2�EUR)

Cafeteria�/�fl�exible�benefi�ts�for�culture�etc.�(around�30%�companies)

��6,000–15,000�(215–540�EUR)�per�employee�annually

Health�Care�Benefi�ts�(common�in�organizations�where�expats�are�working)

��0–24,000�(0–862�EUR)

Training�and�Development�programs

��5,000–40,000�(180–1,437�EUR)�up�to�seniority�level

Source: Hays Czech Republic / CNB FX Rate (13/3/15) 1 EUR = 27.30 CZK

Monthly�salaries�for�manufacturing�roles�in�the�Czech�Republic�range�from�less�than�EUR�510�up�to�EUR�900�for�blue-collar�workers,�from�EUR�900�up�to�EUR�3,200�for�white-collar�staff�(specialists)�and�from�EUR�1,600�up�to�above�7,000�for�management.�It�is�worth�noting�that�salary�levels�can�be�higher�when�seeking�specialists�with�niche�skills�and/or�when�relocation�is�required.

Average gross monthly salaries in the Czech Regions(in EUR)

Source: Czech National Statistical Offi ce, Q3 2014, (1 EUR = 27.30 CZK)

When�assessing�employment�costs�among�the�Czech�regions,�the�variation�between�average�salaries�in�each�region�should�be�considered.�Salary�levels�mostly�depend�on�the�development�of�each�region,�as�well�as�the�type�of�industry�situated�in�that�particular�area.�

Typical average gross monthly salaries for selected regions and general manufacturing positions (EUR)

Prague Brno Pilsen Ostrava

Skilled�workers 860�–�900 720�–�790 790�–�850 575�–�610

Unskilled�workers 650�–�720 650�–�680 650�–�690 540�–�580

Engineers 1,450 1,290 1,350 1,200

Source: Hays Czech Republic / CNB FX Rate (13/3/15) 1 EUR = 27.30 CZK

Availability of labour

The�labour�force�of�the�Czech�Republic,�calculated�by�the�number�of�people�aged�between�15�and�64�years�old,�exceeds�7.3�million�inhabitants�which�is�ca.�70%�of�the�population.�At�the�end�of�February�2015,�the�Czech�Republic’s�unemployment�rate�was�reported�at�7.5�%,�according�to�the�Czech�National�Statistical�offi�ce.�

When�assessing�unemployment�across�the�country,�the�spread�between�regions�can�be�signifi�cant,�as�shown�on�the�map�below.�The�more�developed�regions,�such�as�Prague,�Central�Bohemia�and�the�Pilsen�region,�have�unemployment�rates�below�6.5%,�whereas�some�of�the�less�developed�regions,�such�as�the�Usti�nad�Labem�region,�have�unemployment�rates�above�10%.

The�unemployment�map�can�indicate�parts�of�the�country�where�there�is�an�accessible�labour�force,�although�it�is�worth�considering�that�there�are�certain�sub-regions�in�some�of�the�most�developed�regions�that�also�have�a�ready�workforce.�These�regions�can�facilitate�investment�in�proximity�to�a�major�hub,�such�as�Prague,�whilst�also�providing�easy�access�and�cheaper�employment�of�the�labour�force,�particularly�when�hiring�blue-collar�workers.

Average unemployment rate (%) in the Czech Regions

Source: Czech National Statistical Offi ce, February 2015

PRAGUE REGION

CENTRAL BOHEMIAREGION

KARLOVY VARY REGION

PILSEN REGION

SOUTH BOHEMIA REGION

VYSOČINA REGION

PARDUBICE REGION

HRADEC KRÁLOVÉ REGION

SOUTH MORAVIAN REGION

MORAVIA-SILESIA REGION

OLOMOUC REGION

ZLÍN REGION

LIBEREC REGION

ÚSTÍ NAD LABEMREGION

> 1000

900 - 1000

700 - 800

> 10%

7.6 - 10%

5 - 7.5%

PRAGUE REGION


KARLOVY VARY REGION

PILSEN REGION


VYSOČINA REGION

PARDUBICE REGION




OLOMOUC REGION

ZLÍN REGION

LIBEREC REGION

ÚSTÍ NAD LABEMREGION


Skilled & educated workforce

In�the�Czech�Republic,�there�are�77�public�and�private�universities�with�a�total�of�347,300�students�(81,300�in�technical�fi�elds)�and�88,146�graduates�(16,529�in�technical�fi�elds).�The�highest�proportion�of�students�are,�unsurprisingly,�in�the�largest�cities�of�Prague,�Brno�and�Ostrava.�On�the�other�hand,�in�every�single�regional�capital�there�is�at�least�one�university.�Highly�skilled�labour�is�therefore�distributed�across�regions�and�is�not�purely�concentrated�into�the�largest�cities.�

Number of Students / Number of Faculties in the Czech Regions

Source: MŠMT 2014

The�economic�maturity�of�countries�focused�on�hi-tech�industries�is�determined�by�the�quality�of�the�tertiary�education�system�and�its�share�of�students�in�technical�fi�elds.�The�Czech�Republic�has�one�of�the�largest�proportions�of�students�studying�science,�mathematics,�computing,�engineering,�manufacturing�and�construction.�Approximately�25.3%�of�all�students�are�enrolled�in�the�above�mentioned�fi�elds�of�study.

Students at ISCED levels 5–6, – as % of all students

Finland 33.9Germany 32.9Greece 32.7Portugal 29.2Romania 28.6Ireland 28.3Slovenia 26.7Spain 26.4Estonia 26.3Sweden 25.9Austria 25.6Czech�Republic 25.3Bulgaria 25.1France 25.1Italy 24.7Croatia 24.3Switzerland 24.3Slovakia 23.2United�Kingdom 23.2Macedonia 23.0Poland 22.7Hungary 22.5Liechtenstein 22.4Lithuania 22.1Latvia 21.1Malta 20.9Cyprus 20.8Japan 19.8Denmark 19.1Luxembourg 18.2Iceland 18.0United�States 17.8Norway 17.0Belgium 16.8Netherlands 14.7

Source: Eurostat, 2014

PRAGUE REGION


KARLOVY VARY REGION

PILSEN REGION


VYSOČINA REGION

PARDUBICE REGION




OLOMOUC REGION

ZLÍN REGION

LIBEREC REGION

ÚSTÍ NAD LABEMREGION 144,486 / 74

1,435 / 2

15,522 / 10

38,856 / 18

78,382 / 35

22,887 / 10

10,328 / 7

12,263 / 6

7,951 / 6

9,774 / 9

467 / 1

17,987 / 12

3,242 / 211,730 / 9

Pavel RufertTPG�Powertrain�ManagementŠKODA AUTO a.s.

“ŠKODA AUTO a. s. highly value the personal growth of our employees and provide regular training, as it is vital for our continuous progress. ŠKODA AUTO a. s. has also established effective cooperations with the technical universities in Prague, Brno, Pilsen and Liberec, supporting students on various research and development projects, conducting student trainee programmes, providing consultancy on student theses and sharing expertise. In addition, ŠKODA has founded its own Škoda Auto University as another opportunity for theory to meet practical experience.

As ŠKODA contributes signifi cantly to improving regional employment rates, supports sporting and cultural activities, operates employee health programmes and helps enhance the environment and infrastructure in ŠKODA’s locations, the Czech local authorities have always been keen to support ŠKODA’s production and its growth.”


Introduction

Choosing�the�appropriate�investment�location�relies�on�a�thorough�analysis�of�potential�costs�and�benefits�of�the�sites.�One�of�the�key�factors�influencing�the�decision�on�location�is�often�the�availability�of�state�aid.

Investors�considering�investment�in�the�Czech�Republic�are�able�to�benefit�from�various�types�of�incentives.�The�amount�of�incentives�provided�depends�on�the�location�of�the�investment.��The�incentives�are�provided�in�the�form�of:�(i)�cash�grants,�(ii)�tax�relief�and�(iii)�discounts�on�the�purchase�price�of�land.��Incentive�procedures�are�handled�by�CzechInvest,�the�Investment�and�Business�Development�Agency,�a�state�agency�created�by�the�Ministry�of�Industry�and�Trade.�CzechInvest�acts�as�an�intermediate�in�the�incentive�application�process�and�for�communications�between�an�applicant�and�the�relevant�ministries.�

Eligible Investments

Investment�incentives�can�be�provided�for�the�following�investments:

� introduction�or�expansion�of�production�in�certain�sectors�of�the�manufacturing�industry;

� construction�or�expansion�of�research�and�development�centres;

� launch�or�expansion�of�technology�centres;�and

� launch�or�expansion�of�business�support�services�centres.�

Forms of the incentives being provided:

� corporate�income�and�real�estate�tax�relief;� transfer�of�land�for�a�favourable�price;� job�creation�grants;� training�and�retraining�grants;�and� cash�grant�for�the�acquisition�of�long-term�tangible�and�/�or��

intangible�assets.

Corporate income tax relief

An�entity�can�apply�for�corporate�income�tax�relief�for�ten�years�or�for�ten�consecutive�tax�periods.�The�first�relief�period�can�be�drawn�when�the�statutory�conditions�for�the�state�aid�are�met�but�can�be�no�later�than�within�three�years�from�the�moment�when�the�investment�incentive�has�been�granted.�An�entity�can�also�apply�for�tax�relief�concerning�land�or�real�estates�situated�in�the�favourable�industrial�areas.�Tax�relief�is�subject�to�approval�of�the�municipality�and�may�be�applied�for�5�years�at�maximum.

Transfer of land for a favourable price

The�nature�of�this�grant�represents�the�possibility�for�the�applicant�to�acquire�land�plots�owned�by�the�state�or�municipalities�for�favourable�prices.�The�incentive�is�then�represented�by�the�difference�between�the�purchase�price�and�the�market�price�of�the�particular�land�plots.

Job creation and training/re-training grants

These�grants�can�only�be�provided�for�investments�made�in�certain�regions�(regions�where�the�unemployment�rate�is�at�least�50�%�higher�than�the�average�rate�in�the�Czech�Republic).�For�every�newly�created�job�a�cash�grant�in�the�amount�of�CZK�200,000�(approximately�EUR�7,200)�can�be�granted.�In�addition�to�that,�grants�of�up�to�45�%�of�the�amount�of�expenses�spent�for�training�and�retraining,�depending�on�the�size�of�the�enterprise,�can�be�provided�to�the�applicant.

These�grants�may�be�changed�in�the�future�as�the�Act�on�Incentives,�amended�in�2015,�predicts�also�related�regulations�to�be�amended:�the�grants�may�be�provided�also�for�investments�in�regions�where�the�unemployment�rate�is�at�least�25%�and�grants�for�job�creations�may�be�raised�up�to�CZK�300,000�(approximately�EUR�10,800).

Cash grant on capital investment

The�capital�investment�grant�is�provided�for�a�strategic�investment�(as�described�further�in�the�text)�to�launch�or�expand�new�manufacturing�or�technology�centres.�A�cash�grant�is�provided�to�the�amount�of�10��%�of�the�eligible�costs.�This�grant�could�be�increased�up�to�12.5�%�of�the�eligible�costs�if�both�manufacturing�and�technology�centres�are�launched�at�the�same�time.

Amount of Incentive

The�amount�of�incentive�is�limited�by�a�“ceiling”�–�the�amount�stipulated�in�the�implementing�regulation�depends�on�the�region.�Currently,�a�ceiling�varies�from�30�%�to�40�%�of�the�eligible�costs.��In�February�2014,�the�European�Commission�adopted�a�new�map�of�amounts�of�state�aid�applicable�for�the�Czech�Republic,�decreasing�the�amount�of�the�incentive�to�25�%�of�eligible�costs.��Investments�in�the�territory�of�Prague�are�not�eligible�to�receive�any�incentives.

Conditions

Any�entity�that�makes�its�investment�in�the�Czech�Republic�is�entitled�to�apply�for�an�incentive.�The�applicant�can�be�both�Czech�or�foreign�entities;�whereas�the�recipient�of�the�incentive�can�only�be�an�entity�with�its�registered�seat�in�the�Czech�Republic.�

The�Investment�Incentives�Act�stipulates�basic�conditions�for�granting�the�incentive,�among�others:��

� the�investment�must�be�implemented�in�the�territory�of�the�Czech�Republic;

� the�activity�subject�matter�of�the�investment,�construction�or�facility�must�be�environmentally�friendly;

� work�connected�to�implementing�the�investment�shall�be�started�only�after�CzechInvest�has�approved�the�investment�and�incentives.�

3. Grants & IncentivesSection provided by PwC Legal


Conditions for eligibility for incentives in the case of investment in manufacturing industry:

General�Conditions:

� the�investment�in�long-term�tangible�and�non-tangible�assets�shall�exceed�CZK�100�million�of�which�the�minimum�of�CZK�50�million�is�intended�for�investment�into�new��machinery;

� creation�of�at�least�20�new�jobs.

Strategic�Investment:

� the�investment�in�long-term�tangible�and�non-tangible�assets�shall�exceed�CZK�500�million�of�which�a�minimum�of�CZK�250�million�is�intended�for�investment�into�new��machinery�and�the�creation�of�at�least�500�new�jobs;

Conditions for eligibility for incentives in the case of investment in technological centres:

General�conditions:

� the�investment�in�long-term�tangible�and�non-tangible�assets�shall�exceed�CZK�10�million�of�which�a�minimum�of�CZK�5�million�is�intended�for�investment�into�new�machinery;��

� creation�of�at�least�20�new�jobs.

Strategic�Investment:

� investment�in�long-term�tangible�and�non-tangible�assets�exceeding�CZK�200�million�of�which�a�minimum�of�CZK�100�million�is�intended�for�investment�into�new�machinery�and�the�creation�of�at�least�100�new�jobs;

In�the�case�of�an�investment�into�a�strategic�development�centre,�an�additional�20�jobs�in�the�case�of�software�development�and�170�jobs�in�the�case�of�other�strategic�development�centres�or,�500�jobs�in�the�case�of�customers�support�centres,�must�be�created�by�the�investment�as�a�condition�for�granting�the�incentive.�

The�above�criteria�are�reduced�to�half�in�case�the�investment�is�being�made�either�in�a�district�in�which�the�unemployment�rate�is�at�least�50�%�higher�than�the�average�unemployment�rate�in�the�Czech�Republic�or�in�the�favourable�industrial�area.�

The�above�conditions�must�be�fulfilled�by�the�recipient�of�the�incentive�within�3�years�from�the�moment�when�the�incentive�has�been�granted.�

Application process

The�application�is�filed�by�the�applicant�with�CzechInvest�who�then�elaborates�an�opinion�on�the�investment�and�forwards�the�application�to�the�Ministry�of�Industry�and�Trade.�The�Ministry�will�assess�the�intent�of�the�investment�in�cooperation�with�other�relevant�ministries.�The�process�usually�takes�from�five�to�six�months.�In�case�the�applicant�and�recipient�are�the�same�entity/person,�the�process�is�usually�faster�and�should�take�from�three�to�four�months.�

Liberec

PRAHA

Ústí nadLabem

Plzeň

HradecKrálové

Pardubice

ČeskéBudějovice

Olomouc

OSTRAVA

BRNO

Jičín

Jablonecnad Nisou

Mladá Boleslav

Teplice

Děčín

Most

Kladno

KarlovyVary

Tábor Jihlava

Třebíč

PřerovProstějov

Opava

Třinec

Karviná

5

5

66

7

7 8

8

10

10

11

1135

1

1

34

4

3

1

35

35

43

52 2

49

46 1

56481

55

1

3

Havířov

Písek

Příbram

Znojmo

Cheb

GERMANY

AUSTRIA

POLAND

SLOVA

KIA

GERMANY

Linz

NürnbergMünchen

Bayreuth

DresdenBerlin

Wroclaw

Katowice

BratislavaWien

Warszawa

Žilina

Šumperk

Žďár nad Sázavou

ValašskéMeziříčí

Vsetín

Hodonín

Havlíčkův Brod

Strakonice

Jirkov

Česká Lípa

Kolín

Kutná Hora

LitvínovTrutnov

Náchod

UherskéHradiště

Kopřivnice

Český Těšín

Břeclav

Kroměříž

Krnov

Klatovy

Jidřichův Hradec

Orlová

Blansko

Bohumín

Litoměřice

NovýJičín

Vyškov

Svitavy

Zlín

Chrudim

Sokolov

Chomutov

Frýdek--Místek

55

Transport Infrastructure

Existing network 1,234 kmUnder Construction 31 km

10 International Airports

Motorways and Express Roads

Major roads planned till 2018

Airport Network

Czech Republic - At a Glance

The Infrastructure Map of the Czech Republic

Czech Republic - Facts and Figures

Source: (a) Czech Statistical Office, (b) Oxford Economics, 2015

Economy

Largest cities in the Czech RepublicLargest cities in the Czech RepublicCity PopulationPrague 1,246,780

Ostrava 297,421Pilsen 167,472Liberec 102,113Olomouc 99,471Ústí nad Labem 93,747České Budějovice 93,467Hradec Králové 93,035Pardubice 89,467

Brno 378,327

Source: Czech Statistical Office, 2014

Source: JLL based on ŘSD, 2015

Key

Planned construction

Under construction/Preparatory works

In operation

Main roads

Motorways and express roads Regional cities

Cities over 50,000 inhabitants

Cities 20,000 - 50,000 inhabitants

Main International Airports

Regional International Airports

1D1 Motorway (Prague - Brno - Ostrava) - Completion of the section Přerov - LipníkD3 Motorway (Prague - Linz) - Completion of the section Veselí nad Lužnicí - ÚsilnéD8 Motoway (Prague - Dresden) - Completion of the final section Lovosice - ŘehloviceD11 Motorway (Prague - Wroclaw) - Completion of the section Osičky - Hradec KrálovéR4 Express Road (Prague - Písek) - Completion of the section Skalka - křižovatka II/118 (Háje)R6 Express Road (Prague - Bamberg) - Completion of the section Lubenec - BošovR7 Express Road (Prague - Chomutov) - Completion of the section Postoloprty - BítozevesR35 Express Road (Hradec Králové - Olomouc) - Completion of the section Opatovice nad LabemR49 Express Road (Hulín - Slovak border) - Completion of the section Hulín - Fryšták

Population (a) 10,538,275Territory km2 (a) 78,866GDP Volume in milllion USD (b) 212,688GDP per Capita in USD (b) 19,552Consumer Price Index (b) 0.4%Unemployment Rate as of February 2015 (a) 7.5%Government Gross Debt (as % of GDP) (b) 41.3%10 Year Government Bonds (b) 1.6%Exchange Rate EUR/CZK, period average (b) 27.5Exchange Rate USD/CZK, period average (b) 20.8

4.TheInfrastructureMapoftheCzechRepublic


Successful then, successful now

The�Czech�Republic�is�one�of�the�most�prosperous�economies�of�the�Central�and�Eastern�European�region.�It�benefits�mainly�from�its�unique�location�in�the�heart�of�Europe�representing�a�junction�of�trans�European�transport�corridors,�as�well�as�from�a�well-educated�population�and�a�well-developed�infrastructure.

The�country�also�has�the�most�developed�industrialized�economy�in�Central�and�Eastern�Europe.�Its�strong�industrial�tradition�dates�back�to�the�19th�century�when�Czech�countries�represented�the�industrial�engine�of�the�Austro-Hungarian�Empire.�During�the�interwar�times,�the�Czechoslovakian�Republic�steadily�ranked�among�the�top�ten�most�developed�countries�in�the�world.�

The�manufacturing�industry�is�one�of�the�most�important�parts�of�the�national�economy,�representing�a�substantial�share�of�gross�domestic�product.�The�traditional�industries�are�heavy�and�general�machine-building,�iron�and�steel�production,�metalworks,�chemical�production,�electronics,�transportation�equipment,�plastics,�textiles�and�pharmaceuticals.�The�long�term�strongest�sector�is�automotive�production,�which�strengthens�its�position�every�year.�On�the�other�hand,�we�are�recording�a�gradual�decline�of�the�mining�sector.�In�the�European,�as�well�as�the�global�rankings�of�the�most�industrialised�countries,�the�Czech�Republic�always�features�among�the�top��positions.

Manufacturing, value added 2012 (worldwide ranking; % of GDP; trend 2012/2009)

1 Thailand 34%

2 Korea,�Rep. 31%

3 Belarus 25%

4 Czech�Republic 25%

5 Malaysia 24%

9 Ireland 23%

10 Germany 22%

12 Slovakia 21%

17 Switzerland 19%

19 Austria 18%

25 Poland 18%

30 Croatia 16%

77 United�Kingdom 10%

78 France 10%

Source: The World Bank, 2014

Strong FDI influence

In�the�last�fifteen�years,�the�Czech�economy�has�been�significantly�influenced�by�a�strong�inflow�of�foreign�direct�investment.�The�period�between�2003�and�2007�saw�the�strongest�inflow�of�FDI,�as�the�incoming�corporations�and�investors�were�significantly�increasing�the�production�capacity�of�country.�Over�the�past�few�years,�we�have�recorded�more�reinvestment�of�capital�and�expansions�of�existing�investments�rather�than�the�inflow�of�new�investors.�A�substantial�number�of�corporations�that�set-up�their�production�facilities�in�the�Czech�Republic�several�years�ago,�are�now�expanding�their�operations,�mainly�into�Research�and�Development�centres,�IT�centres,�Central�European�or�European�distribution�hubs,�or�even�European�headquarters.�The�Czech�economy�is�thus�gradually�moving�from�the�production�and�assembly�part�of�the�industry,�to�higher�added�value�sectors.�

Despite�the�relatively�small�size�of�the�country,�thanks�to�existing�know�how�and�technical�excellence,�sustaining�cost�effectiveness,�excellent�transport�infrastructure�and�strategic�location,�it�is�still�one�of�the�major�destinations�of�foreign�investment�in�Europe.�

Foreign direct investment, net inflows 2012 (BoP, current bil. US$, trend 2012/2011)

1 China 253.5

2 United�States 203.8

3 Brazil 76.1

7 United�Kingdom 56.1

8 Russian�Federation 50.7

13 France 28.1

15 Germany 27.2

28 Czech�Republic 10.6

32 Hungary 9.4

36 Poland 6.7

72 Romania 2.0

82 Slovak�Republic 1.5

Source: The World Bank, 2014

Growing sectors in the Czech Republic

The�largest�share�in�the�Czech�national�production�accounts�is�obviously�covered�by�the�services�and�trade�&�wholesale�sectors,�with�a�share�of�61%�of�Gross�Value�Added�in�2012.�As�depicted�on�the�following�graph,�services�and�trade�are�followed�by�manufacturing�(27%�share),�construction,�utilities,�agriculture�and�extraction.�

5. Key Manufacturing Sectors in the Czech Republic


Czech GVA Structure on National Accounts in 2012

Source: JLL, CZSO, 2014

The�manufacturing�sectors�have�grown�in�the�past�two�decades�by�260%.�The�fastest�growing�industrial�subsector�was�the�manufacturing�of�plastics�and�rubbers�with�a�1,261%�growth�of�gross�value�added�between�1993�and�2012.�The�plastics�and�rubber�manufacturers’�key�customers�recruit�mainly�from�the�automotive,�electronics�and�packaging�industries.�The�next�biggest�industry�jumpers�were�mainly�the�automotive�and�other�transportation�manufacturing�industries�with�an�851%�increase�and�the�electronics�&�electrical�equipment�industries�with�a�737%�increase.

Czech GVA Structure in Manufacturing Industries

Source: JLL, CZSO, 2014

The�production�of�automotive�and�other�transportation�vehicles�with�its�4.9%�share�on�total�GVA,�is�not�only�the�largest�manufacturing�subsector,�but�also�the�sector�with�largest�share�growth�on�total�GVA�with�an�approximate�growth�of�3.2�percentage�points�in�the�past�20�years.�

Other�dominating�sectors,�based�on�value�added,�are�metal�processing�(3.8%�of�GVA),�electronics�and�electrical�equipment�(2.5%),�FMCG�(2.4%)�and�general�machinery�(3.4%).

Based�on�economic�forecasts,�the�value�added�on�manufacturing�in�the�Czech�Republic�is�forecast�to�grow�by�more�than�46%�in�the�coming�decade,�leaving�the�estimated�growth�of�the�services�sector�(28%�by�2023)�far�behind.�

Czech Gross Value Added, real, LCU (billions CZK: 2010 prices)

Source: Oxford Economics, 2014

From�the�various�different�manufacturing�sectors,�five�(FMCG,�domestic�appliances�&�electronics,�automotive,�medical�&�pharma�and�general�machinery)�are�outlined�in�more�detail�in�the�following�sections.�Although�we�have�selected�these�sectors�as�an�example,�great�potential�also�exists�in�many�other�sectors.

Services51%

Extraction1%

Trade & Wholesale

11%

Construction6%

Utilities5%

Agriculture2%

Manufacturing24%

0

20000

40000

60000

80000

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120000

140000

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2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

Agriculture and forestryIndustry incl. Manufacturing

ManufacturingServices

Mark KelleherVice-President,�European�OperationsSmiths Medical

Smiths Medical, part of Smiths Group, is a leading global provider of medical devices and equipment for the healthcare industry. Worldwide the company employs over 7,500 people, with manufacturing concentrated in the US, UK, Italy, Mexico – and from 2013, the Czech Republic.‘’Smiths Medical chose the Czech Republic to expand its operational base in Europe to serve our European customers and EU markets. The key benefits included the country’s stable economic base, its strategic location within Central Europe, the availability of highly skilled labour and the over cost effectiveness. After considering other locations in CEE and the Czech Republic, Smiths Medical chose to locate its CEE production base in Hranice, in northern Moravia, near the University cities of Olomouc, Ostrava and Brno. The location benefits from a combination of lower total operating costs, direct access to the European motorway networks and close proximity to skilled labour and a regional supply base.’’


Automotive sector

The�Czech�Republic�is�currently�the�5th�biggest�car�producer�in�Europe�and�the�13th�largest�worldwide.�In�2013,�the�number�of�passenger�cars�produced�in�the�country�reached�almost�1.13�million�units,�which�places�the�country�as�the�second�largest�global�car�manufacturer�(after�Slovakia)�in�production�per�capita.�In�2012,�production�per�1,000�inhabitants�reached�111�car�units.�During�2013,�the�number�of�cars�produced�per�1,000�inhabitants�decreased�to�107�units;�however,�the�latest�data�for�H1�2014�(+10.3%)�indicates�another�strong�year�for�the�Czech�automotive�sector.�With�such�statistics,�it�is�no�wonder�that�automotive�and�automotive�parts�productions�currently�represent�the�most�dominant�Czech�manufacturing�industry.

The�automotive�sector�in�the�Czech�Republic�includes�the�production�of�a�wide�variety�of�vehicles�ranging�from�passenger�cars�(Škoda�Auto�–�Mladá�Boleslav,�TPCA�–�Kolín,�Hyundai�–�Nošovice.),�to�trucks�(Tatra�–�Kopřivnice),�buses�(Iveco�(ex�Karosa)�–�Vysoké�Mýto,�SOR�–�Libchavy),�motorcycles�(Jawa�–�Týnec�nad�Sázavou),�trailers�(Schwarzmuller�–�Žebrák,�PANAV�–�Senice�na�Hané,�Agados�–�Velké�Meziříčí)�and�sport�roadsters�(Kaipan�–�Smržovka).�

As�one�of�the�most�important�industries�in�the�Czech�Republic,�the�sector�boasts�the�highest�inflow�of�FDI�and�currently�employs�approximately�120,000�people�across�the�country�in�car�plants�or�related�services.�In�H1�2014,�the�Czech�Republic�accounted�for�over�7%�of�the�total�European�car�production�market.�In�the�past�few�years,�the�initial�inflow�of�mainly�large�car�producers�has�been�accompanied�by�a�significant�inflow�of�automotive�suppliers�and�research�and�development�centres�tied�to�these�manufacturers.�The�strong�automotive�background�is�also�attracting�more�and�more�distribution�centres,�usually�for�the�central�European�or,�the�entire�European�market�area.

The�main�drivers�behind�other�leading�automotive�manufacturers�moving�their�production�to�the�country�include:�the�tradition�of�car�production�and�access�to�a�skilled�labour-force,�further�supported�by�a�large�number�of�technical�university�graduates,�the�availability�of�relatively�cheaper�materials�and�the�central�location�of�the�country�which�gives�proximity�to�both�growth�and�core�markets.

Major Car Producers

The�tradition�of�car�production�in�the�Czech�Republic�is�tied�to�Škoda�Auto,�one�of�the�most�famous�and�most�valued�Czech�brands�worldwide.�Škoda�Auto,�a�car�manufacturer�with�over�115�years�of�tradition�in�motor�vehicle�production�is�the�largest�Czech�exporter�with�nearly�600,000�cars�produced�per�annum.�Moreover,�it�is�the�only�car�manufacturer�in�the�country�who�is�involved�not�only�in�production,�but�also�in�actual�car�development.�The�company�is�based�in�Mladá�Boleslav,�north-east�of�Prague,�with�production�situated�in�three�locations�(Mladá�Boleslav,�Kvasiny�and�Vrchlabí)�where�nine�different�models,�including�one�of�the�most�popular�brands�globally,�within�its�category,�the�Škoda�Octavia,�are�being�produced.�In�1991,�Škoda�Auto�became�part�of�leading�car�producer�–�Volkswagen�Group.�Its�R&D�centre�in�Mladá�Boleslav,�which�was�further�extended�by�a�new�Engine�centre�this�September,�is�the�fourth�largest�of�the�entire�group�in�the�world.�

TPCA�(Toyota�Peugeot�Citroen�Automobile)�started�production�in�their�brand�new�manufacturing�plant�in�Kolín,�east�of�Prague,�in�2005.�The�total�construction�cost,�which�amounted�to�20�billion�CZK,�represented�the�largest�greenfield�investment�in�CEE�at�the�time.�The�factory,�which�is�focused�on�the�manufacturing�of�small�city�cars�(Toyota�Aygo,�Peugeot�107�and�the�Citroen�C1)�currently�employs�3,200�people�and�its�annual�production�reaches�300,000�vehicles.�

To�date,�the�largest�foreign�direct�investment�in�the�history�of�the�country�is�represented�by�the�new�production�plant�of�leading�Korean�car�producer�Hyundai,�who�set�up�in�Nošovice�in�the�Moravia-Silesia�region,�close�to�the�Slovak�borders�(another�Korean�car�producer,�KIA,�is�situated�in�Žilina�approximately�80�km�from�Nošovice).�It�is�the�first�manufacturing�plant�of�Hyundai�in�Europe�and�the�serial�production�started�there�in�November�2008,�after�only�19�months�of�construction.�The�annual�production�of�five�car�models,�especially�designed�for�the�European�market,�totals�300,000.�This�major�investment�of�the�Korean�producer�initiated�a�huge�inflow�of�OEM�suppliers,�first�closely�tied�to�Hyundai�and�KIA,�but�later�reaching�other�producers�within�and�also�beyond�the�Czech�Republic.

Pavel RufertTPG�Powertrain�ManagementŠKODA AUTO a. s.

“ŠKODA AUTO a. s. follows the tradition, success and expertise of more than 100 years of uninterrupted car manufacturing, technical development and customer after-sales care.

In the Czech Republic alone, ŠKODA AUTO a. s. has been operational in three production plants: Mladá Boleslav, Vrchlabí and Kvasiny, employing a total of 24,500 employees (in 2013).

It was mainly the company’s great potential, successful car models, skilled labour and other advantages of automotive production in the Czech Republic that sparked VW’s interest to connect the ŠKODA brand with the VW Group in 1991.

The high quality and reliability of ŠKODA products has been the result of the introduction of new technologies, building on the expertise of skilled professionals and cooperating on common projects and platforms. VW Group’s confidence in ŠKODA’s technical know-how was proved by assigning ŠKODA with the full development of a new series of 3-cylinder 1.2l MPI engines for three VW Group brands, starting in 1998. Between 1991 and 2014, a total of 280 billion Czech crowns have been invested by ŠKODA AUTO a.s. in the Czech Republic.

For example, the latest R&D activities have been endorsed by the investment into a new Engine Centre in Mladá Boleslav, where new development projects are integrated into the Group’s strategic programmes.

The stable economic environment in the Czech Republic, cost-efficient production and human resources have not only been beneficial for ŠKODA but also for our suppliers who have been opening new plants, creating local automotive clusters close to our factories.”


OEM parts suppliers

It�might�sound�like�a�bold�statement�but�the�spectrum�of�OEM�parts�production�in�the�country�indicates�that�almost�every�single�part�of�a�car�is�being�produced�in�the�Czech�Republic.�Out�of�50�leading�European�OEM�parts�suppliers�36�are�producing�in�the�country.�For�example,�TPCA�uses�80%�of�spare�parts�for�its�car�production�in�their�plant�in�Kolin�from�Czech�based�producers.�The�manufacturers�include�both�major�multinationals�who�entered�the�country�in�the�past�two�decades�as�well�as�traditional�Czech�companies.�

Out of the Top 100 global OEM parts suppliers, there are 69 companies based and producing

in the Czech Republic.

The�first�and�major�inflow�of�automotive�suppliers�was�originally�connected�to�Škoda�production�in�Mladá�Boleslav,�in�the�Central�Bohemian�region.�The�area�around�Mladá�Boleslav�and�nearby�Liberec�region�have�attracted�a�number�of�leading�companies�from�the�sector,�TRW�in�Řepov�and�Stará�Boleslav,�Mahle�Behr�in�Mnichovo�Hradiště,�Continental�in�Brandýs�nad�Labem,�Faurecia,�Magna,�Johnson�Controls�in�Mladá�Boleslav�and�FIAMM,�an�Italian�producer�who�took�over�local�company,�Akuma.�The�establishment�of�the�TPCA�plant�in�Kolín,�reinforced�the�interest�of�international�OEM�parts�producers�to�enter�the�Czech�market.�The�third�major�impulse�represented�the�opening�of�the�Hyundai�production�site�in�Nošovice.

The�strongest�and�most�developed�OEM�parts�manufacturing�sector�in�the�Czech�Republic�includes�tyres,�rubber�and�plastics�production,�which�draws�upon�the�long�history�of�the�Czech�and�Czechoslovakian�companies�active�in�this�field,�such�as:�Mitas,�Gumárny�Zubří�and�Barum,�now�part�of�the�Continental�group.�The�newest�addition�to�this�subsector�is�Korean�tyre�producer�Nexen�who�will�be�investing�1�billion�USD�into�a�new�plant�in�Žatec.�Interior�and�seating�producers,�including:�Faurecia,�Hyundai�Mobis�and�Johnson�Controls,�represent�another�strong�group�of�manufacturers�supplying�parts�not�only�to�Czech�automotive�producers�but,�also�to�other�manufacturers�outside�of�the�country.�One�recent,�large�investment,�included�Johnson�Controls�who�decided�to�move�its�production�of�car�seating�from�Germany�to�CTPark�Bor�in�the�Pilsen�region.�The�plant�will�supply�car�seating�to�BMW�factories�in�Germany�and�to�domestic�producers�as�well.�

Automotive�electronics�and�brake�systems�production�is�another�thriving�part�of�OEM�production�in�the�country.�Brembo,�an�Italian�supplier�of�brakes�systems�to�Porsche,�BMW,�Mercedes�and�Land�Rover�opened�its�25,000�m2�plant�in�Ostrava,�Northern�Bohemia�in�2011.�This�year,�they�extended�their�premises�by�another�30%.�Lighting�systems�and�HVAC�are�also�represented�by�a�large�number�of�producers�including�strong�players�like�Visteon�Autopal�and�Mahle�Behr.�One�of�the�largest,�recent�investments�into�the�automotive�sector�included�Hyundai�Mobis�who,�in�mid-2014,�announced�its�decision�to�invest�120�million�USD�into�a�new�factory�for�the�production�of�lighting�systems�in�Mošnov,�in�the�vicinity�of�the�Hyundai�car�production�site�in�Northern�Moravia.

The�booming�automotive�sector�also�represented�an�opportunity�for�once�renowned�but,�recently�subdued�sectors;�such�as�textiles�and�

glass�production.�AGC�Automotive�Czech,�a�successor�of�a�traditional�glass�producer�from�Northern�Bohemia,�Sklo�Union�in�Teplice,�is�nowadays�the�largest�producer�of�flat�glass�in�CEE�for�the�construction�and�automotive�sectors.�Fezko�Strakonice,�once�a�world�recognised�producer�of�hats,�is�now�a�part�of�Johnson�Controls�and�a�supplier�of�textiles�for�car�interiors�to�leading�car�producers�including�Škoda�Auto,�Opel,�VW�and�Ford.�

Top 50 European OEM parts suppliers, based on 2012 European OEM parts sales (Manufacturing in the Czech Republic marked in red)

Source: JLL based on Supplement to Automotive News, June 2013

0 5 000 10 000 15 000 20 000 25 000

Georg Fischer AutomotiveBayer MaterialScienceTrelleborgVibracoustic

TI AutomotiveNTN Corp.

Alpine ElectronicsLeopold Kostal

CumminsJTEKTTakata

WABCOWebasto

KSPGGoodyear Tire & Rubber

Dana HoldingTenneco

HoneywellIAC Group

Grupo AntolinFederal-Mogul

VisteonLeoni

Hyundai MobisGKN PLC

Eberspaecher HoldingDraeximaier Group

Plastic OmniumAutoliv

BehrMahle

Aisin SeikiSchaeffler

Brose FahrzeugteileBorgWarner

DensoHELLA KGaA Hueck & Co.Benteler Automobiltechnik

Magneti MarelliGestamp Automocion

LearTRW Automotive

Delphi AutomotiveValeoBASF

Johnson ControlsZF Friedrichshafen

Magna InternationalFaurecia

ContinentalRobert Bosch

Liberec

PRAHA

Ústí nad Labem

Plzeň

Pardubice

Olomouc

Brno

Kladno

TáborJihlava

Příbram

Brandýsnad Labem

Kralupy nad Vltavou

NymburkSlaný

Mnichovo Hradiště

Mělník

Bělá podBezdězem

Hořovice

Lysá nad Labem

RakovníkUnhošť

České MeziříčíJaroměř

Rychnovnad Kněžnou

Hranice u Aše

Nejdek

Hrádek nad Nisou

KarvináKrnov

Frýdek-Místek

Litovel

Uničov

Zábřeh

Hlinsko

Jevíčko

DomažliceKlatovy Blatná

Byňov

ČeskéBudějovice

Mírovice

Strakonice

Vimperk

Blansko

Břeclav

Bzenec

Hodonín

Mikulov

Uherské Hradiště

Kroměříž

Valašské Meziříčí

Zlín

Chabařovice

Lovosice

Rumburk

Teplice VelkéBřezno

Žatec

Humpolec Žďár nad Sázavou

Žebrák

Úvaly

Komárov

Řepov

Zdice

TrutnovVrchlabí

Červený KostelecDolní Kalná

Adršpach

Kvasiny

Libáň

Jičín

Kostelec nad Orlicí

Frýdlant

Chrastava

Jablonec nad Nisou

Jilemnice

SmržovkaStráž nad Nisou

Stráž pod Ralskem

Klášterec nad Ohří Louny

Litvínov

Most

Krupka

Kadaň

Jirkov

Roudnicenad Labem

ChotěšovBor u Tachova

Dýšina

Holýšov

Janovice nad Úhlavou

Ostrovu Stříbra

Přeštice

Nýřany

Tachov

Podbořany

Písek

DačicePrachaticeJemnice

Soběslav

Ivanovicena Hané

Vyškov

Oslavany

Havlíčkův Brod

Batelov

Okříšky

JiřiceRožnov pod Radhoštěm

Vsetín

Otrokovice

Uherský Brod

Bojkovice

Hluk

Zubří

Kopřivnice TřinecNový Jičín Nošovice

Hradec nad MoravicíRychvald

Přerov

Hranice

Lipník nadBečvou

Mohelnice

Senicena Hané

Štíty

Lanškroun

Moravská Třebová

ČeskáTřebová

Choceň

Třemošnice Svitavy

Libchavy

Moravany

Přelouč

Vysoké Mýto

Hanušovice

České Velenice

Kolín

Benátky nad JizerouMladá Boleslav

Zruč nad Sázavou

Týnec nad Sázavou

Bakovnad Jizerou

Kněžmost

Rudná

Česká Lípa

Nový Bor

TurnovZákupy

Velké Meziříčí

Český Těšín

Hradec Králové Region

Olomouc Region

Moravia Silesia Region

Ústí nad Labem Region

Karlovy Vary Region

Pilsen Region

South Bohemian Region

South Moravian Region

Zlín Region

Pardubice Region

Prague Region

Vysočina Region

Central Bohemian Region

Liberec RegionSelection of Manufacturers – Automotive Sector

Hranice u AšeGrupo Antolin-CML

NejdekMetalis NejdekWitte Nejdek

Mnichovo HradištěHella - Mahle Behr - Plastic Omnium (HBPO Czech)Mahle Behr Mnichovo Hradiště

NymburkMagna Exteriors & Interiors (Bohemia)

PříbramAIR ČenkovDUVE ČRKARSIT HOLDING

RakovníkBRANO GROUPEberspacher RakovníkValeo Autoklimatizace

RudnáL&L Products

ŘepovTRW Carr

SlanýMitsubishi Electric Automotive Czech

Stará BoleslavTRW Carr

Týnec nad SázavouJAWA

UnhošťFurukawa Electric Autoparts Central EuropeT.RAD Czech

Úvaly u PrahyEssa Czech

ZdiceKOSTAL CR

Zruč nad SázavouAsmo CzechTRW Autoelektronika

ŽebrákMubeaMuramoto Manufacturing EuropeValeo Climate Contro

Bakov nad JizerouFaurecia Exhaust Systems

Bělá pod BezdězemTiberina Automotive Bělá

Benátky nad JizerouLINDE + WEIMANN CZUACJ Extrusion Czech

Brandýs nad LabemContinental Automotive Czech Republic

BřezniceZbrojovka Březnice

ČenkovKOSTAL Kontakt Systeme

HořoviceKOSTAL CRSaint-Gobain Sekurit ČR

KladnoKeihin Thermal Technology Czech (Showa Aluminium Czech)

KněžmostKautex Textron Bohemia

KolínLear Corporation Czech RepublicMC Syncro KolínTPCA (Toyota Peugeot Citroen Automobile)

KomárovBUZULUK

Lysá nad LabemLINDE + WEIMANN CZ

MělníkMTX

Mladá BoleslavAutoliv B.V. & Co.Faurecia Interior SystemsGrupo Antolin BohemiaHP-PelzerMagna Seating

Recticel Interiors CZSAS AutosystemtechnikŠkoda Auto (Volkswagen Group)TI Group Automotive SystemsYapp Czech Automotive SystemsSAI Automotive BohemiaTower Automotive CzechTrelleborg Automotive Czech RepublicYapp Czech Automotive Systems

ChabařoviceMagna Seating

ChomutovEaton IndustriesMagna Seating Chomutov

JirkovHillside Plastics

KadaňDonaldson Industrial CROiles Czech ManufacturingThermal Products Czech Republic

Klášterec nad OhříDonaldson Czech RepublicToyoda Gosei CzechBOS Automotive Products CZ

KrupkaAuto-Kabel Krupka

LitvínovINNO-COMP Bohemia

LounyAisan Bitron CzechCIE Automotive CZFujikoki CzechNACHI Czech

LovosiceAoyama Automotive Fasteners CzechFukoku CzechKOS WIRE EUROPETokai Rika (TRCZ)MostAFSI EuropeGrammer CZNemak Czech RepublicRecticel Automotive (RAI Most)

Roudnice nad LabemJohnson Controls

Automobilové součástky

RumburkBenteler Automotive Rumburk

TepliceAGC Automotive CzechSnoeks Automotive CZ

Ústí nad LabemArcelorMittal - Stainless Automotive- -Tubes Czech RepublicKS Kolbenschmidt Czech Republic

ŽatecGrammer CZGestamp LounyHITACHI Automotive Systems CzechHP-PelzerJC Interiors CzechiaKoito CzechNeturen Nexen Tire

Česká LípaEKOBUSFehrer BohemiaGrammer CZJohnson Controls AutobaterieJohnson Controls Automobilové součástky

Dolní ChrastavaGrupo Antolin Bohemia

FrýdlantThermolastTRW Automotive Czech

Hodkovice nad MohelkouTenneco Monroe Czechia

Hrádek nad NisouKSM Castings (CITIC Dicastal)

ChrastavaBenteler ČR

Jablonec nad NisouA.Raymond JablonecBenteler ČRMegatech Industries JablonecTI Group Automotive SystemsTRW Automotive Czech

JilemniceBRANO GROUP

LiberecCleverGlassDENSO Air Systems CzechFehrer BohemiaGrupo Antolin BohemiaInteva Products Czech RepublicKnorr Bremse Systémy pro užitková vozidla ČRLIPLASTECMagna Exteriors & Interiors (Bohemia)Matador Automotive ČRSarnamotive BohemiaTI Group Automotive Systems

Nový BorBrano Group

SmržovkaKaipan

Stráž nad NisouBenteler ČRPEKM Kabeltechnik

Stráž pod RalskemJohnson Controls Automobilové součástky

TurnovGrupo Antolin TurnovKAMAXNeumatic CZ

ZákupyInternational Automotive Components Group (IAC)

AdršpachContinental Automotive Czech Republic

Červený KostelecSaar Gummi Czech

Dolní KalnáTakata - Petri Parts

JaroměřKARSIT HOLDINGJičínContinental Automotive Czech RepublicRONAL CRTucker

Kostelec nad OrlicíFederal-Mogul Friction Products

KvasinyŠkoda Auto

LibáňMagna Exteriors & Interiors (Bohemia)

Nový JičínVarroc Lighting Systems

Rychnov nad KněžnouAssa Abloy Czech & SlovakiaJohnson Controls Automobilové součástkyMagna Seating

TrutnovContinental Automotive Czech Republic

VrchlabíŠkoda Auto (Volkswagen Group)

Brandýs nad LabemC.I.E.B. Kahovec

Česká TřebováBohm Plast-Technik

HlinskoMegatech Industries Hlinsko

ChoceňAutoneum CZComposite ComponentsRieter Automotive CZ

JevíčkoGST Automotive Safety CzechRehau

LanškrounSchott CR

LibchavySOR Libchavy

MoravanyAcerbis Czech

Moravská TřebováATEKTreboplast (Industrias Tajo)Rehau

PardubiceFaurecia Interiors PardubiceJTEKT Automotive Czech PardubiceKYB Manufacturing CzechPanasonic Automotive Systems CzechRONAL CR

PřeloučKiekert CS

SvitavyFibertex

TřemošniceElectropoli-Galvia

Vysoké MýtoIveco Czech Republic

BojkoviceZeveta Bojkovice

HlukHalla Visteon-Autopal Czech Republic

KroměřížMagnetonPlastika

OtrokoviceContinental BarumMITASTomatex Otrokovice

Rožnov pod RadhoštěmBrose CZRobert BoschZPV

Uherské HradištěSchlote-Automotive Czech

Uherský BrodMann Hummel Innenraumfilter CZTeknia Uherský Brod

Valašské MeziříčíAntolín-CIE Czech RepublicCIE Automotive CZPWO Unitools CZ

VsetínIndet Safety SystemsNippon Kayaku CZ

ZlínD PLAST - EFTEC

Zubří

Gumárny ZubříBRANO GROUP

Český TěšínDonghee CzechPyeong Hwa Automotive Czech

Frenštát pod RadhoštemContinental Automotive Czech RepublicSiemens Automobilové Systémy

Frýdek-MístekHanwha L&C Czech

Frýdlant nad OstravicíBATZ Czech

Hradec nad MoravicíBRANO GROUP

KarvináSejong CzechStant Manufacturing

KopřivniceBrose CZDURA Automotive Systems CZErich JaegerRieger Automotive InternationalRochling Automotive KopřivniceTawesco

KrnovErdrich Umformtechnik

NošoviceHyundai Motor Manufacturing CzechHuyndai DymosHyundai Mobis Czech

Nový JičínHalla Visteon-Autopal Czech Republic

OstravaCromodora WheelsBRANO GROUP (Deltacol CZ)Brembo CzechCirex CZCTS Czech RepublicDaechang SeatGoodyear Engineered ProductsGrupo Antolin OstravaHayes Lemmerz AutokolaHP-PelzerITT CorporationKES - kabelové a elektrické systémyMahle Behr OstravaPLAKOR CzechRossignol Galvanik CZSchroeder CZSungwoo HitechUFI Filters

RychvaldHalla Visteon-Autopal Czech RepublicVarroc Lighting Systems

TřinecDaechang SeatMatador - Dongwon CZ

HanušoviceZKL

HraniceAVL ČechyHenniges Automotive

Lipník nad BečvouMetalPlast Lipník nad Bečvou

LitovelBRANO GROUP (Deltacol CZ)

MohelniceHella Autotechnik Nova

OlomoucKoyo Bearings Česká republikaOTSUKA-BRANO

ProstějovMaier CZMubea HZPMubea IT Spring Wire

PřerovPSP Speciální strojírna

Senice na HanéPANAV

ŠtítyKlein & Blažek

UničovBRANO GROUPHexopol Compounding

ZábřehHDO

BlatnáDURA Automotive CZTesla Blatná

České BudějoviceMOTOR JIKOVRobert Bosch

České VeleniceMagna Cartech

DačiceTRW - DAS

Kamenice nad LipouEdscha Automotive Kamenice

PísekAisin Europe Manufacturing CzechFaurecia Automotive Czech RepublicFaurecia Componentss.n.o.p. czHeyco Werk ČR

PrachaticeInTiCa SystemsSoběslavBANESMOTOR JIKOV

StrakoniceČZDURA Automotive CZIdeal AutomotiveJohnson Controls Fabrics StrakoniceMahle Filter SystemsMetal Progress Strakonice

TáborBRISK TáborGreiner Perfoam

VimperkSAK

BlanskoBLATA

BrnoDaido Metal CzechIFE-CRIGE-CZMergon Czech

BřeclavGumotexLINDE + WEIMANN CZ

BzenecAVX Czech Republic

HodonínInternational Automotive Components Group (IAC)

Ivanovice na HanéFischer Automotive Systems

MikulovGebauer A Griller KabeltechnikNichias Czech

OslavanyMetaldyne

VyškovSMC Industrial AutomationLear Corporation Czech Republic

PrahaPMP PALSatremaTRW Volant Horní Počernice

Bor u TachovaAutoneum CZEissmann Automotive Česká RepublikaIdeal AutomotiveRieter Automotive CZTechnické pružiny Scherdel

DomažliceBEHR Thermot-tronik Czech

HolýšovEvobus Bohemia

DýšinaGerresheimer Wilden Czech

ChotěšovMD Elektronik

Janovice nad ÚhlavouOLHO-Technik Czech

NýřanyFaurecia Automotive Czech Republic

Ostrov u StříbraIdeal AutomotiveLear Corporation Czech RepublicNeumatic CZ

PlzeňAlfmieier CZBoshoku Automotive CzechDAIHOFuji Koyo CzechHP-PelzerJTEKT Automotive Czech PlzenMTXSpecialty Coating SystemsViza Auto CZYazaki Wiring Technologies Czech

PřešticeInternational Automotive Components Group (IAC)

TachovGrammer CZJohnson Controls

BatelovMotorpal

Havlíčkův BrodFutaba Czech

HumpolecValeo Compressor Europe

JemniceMotorpal

JihlavaAutomotive Lighting JihlavaBosch DieselMotorpalKosykaTesla Jihlava

JiřiceConnaught Electronics CZ

OkříškyFraenkische CZMann Hummel CZ

Velké MeziříčíAgadosConstruct Czech Motorpal

Žďár nad SázavouCooper-Standard Automotive Česká republikaTOKOZ

Johnson Controls

Ostrava

Chomutov

Frenštát pod Radhoštěm


FMCG sector

Since�the�early�1990’s,�when�the�country�was�undergoing�an�economic�transformation,�the�long�manufacturing�tradition�combined�with�a�skilled�workforce�and�local�consumer�base,�attracted�a�large�number�of�international�investors�to�the�then�state�owned�companies.�Some�of�the�first�pioneers�included�Procter�&�Gamble�who�acquired�Rakona�Rakovník,�a�traditional�soap�producer,�in�1991�and�Coca-Cola�and�Nestlé�that�entered�Pražské�Sodovkárny�and�Pražské�Čokoládovny�respectively�in�1992.�It�was�the�same�year�when�Phillip�Morris�bought�the�state-owned�Tabák�company�in�Kutná�Hora�through�privatisation.�

The�strategic�location�in�the�heart�of�Europe,�favourable�labour�costs�and�the�skilled�and�motivated�labour�pool,�represented�key�drivers�for�brand�new�investment�in�the�Czech�Republic.�Over�the�next�twenty�years,�the�number�of�foreign�investors�greatly�increased�and�their�initial�investments�were�multiplied�by�upgrading�facilities,�building�new�plants,�distribution�and�R&D�centres.�

One�of�the�best�examples�of�a�successful�investment�which�grew�over�the�years�was�the�establishment�of�a�production�plant�by�Danish�toy--producer�LEGO,�who�opened�in�Kladno,�near�to�Prague�in�2000.�Over�the�following�years,�the�company�further�invested�into�three�production�plants,�moving�part�of�its�production�from�Denmark�to�the�Czech�Republic.�During�this�time,�the�company�also�set�up�a�100,000�m2�global�distribution�warehouse�near�Prague�and�have�established�an�R&D�centre.�In�2015,�they�are�planning�to�open�a�fourth�factory�and�increase�the�number�of�employees�from�the�current�2,000�up�to�3,000.

The�attractiveness�of�the�Czech�FMCG�market�is�proven�by�the�presence�of�eight�out�of�the�top�10�global�producers�on�the�local�market.�Besides�those�already�mentioned,�these�include�the�large�soft�beverages�producer�Pepsico�with�two�manufacturing�sites,�in�Prague�and�Teplice�nad�Metují�in�Eastern�Bohemia�and�Mondelez�(ex-Kraft�Foods�CR),�who�is�operating�four�plants�in�the�country,�two�in�Moravia�–�Opava�and�Valašské�Meziříčí�and�two�in�Bohemia�–�Mariánské�Lázně�and�Lovosice.�

The�majority�of�the�largest�international�producers�have�entered�the�market�via�the�purchase�of�one�of�the�traditional�and�well�established�local�brands,�including�production�plants�and�qualified�staff.�Gradually�they�have�incorporated�these�production�facilities�into�their�own�portfolio�and�have�very�often�extended�the�line�of�products�with�their�established�brands.�After�the�Czech�Republic’s�entry�into�the�EU,�the�number�of�investments�grew�with�green-field�projects�such�as�MARS�Czech�opening�a�new�plant�in�Central�Bohemia�in�2006,�Tivall�(Nestlé)�establishing�a�manufacturing�site�in�Northern�Bohemia�in�2007�and�Hill’s�Pet�Nutrition�(Colgate�Palmolive)�investing�into�brand�new�production�premises�in�Southern�Bohemia�in�2010.

Other�strong�international�FMCG�brands�producing�in�the�Czech�Republic�include�among�others:�cheese�producers�Fromageries�Bel�and�Bongrain,�Danone,�Bidvest,�La�Lorraine,�Kimberly-Clark,�Euroserum,�Tereos�TDD,�Lyckeby�Amylex�and�pets�food�brands�/�producers�Brit�(Vafo)�and�Propesko�(Provimi).

Leading 25 FMCG companies worldwide in 2012, based on net sales (in billion U.S. dollars) (Manufacturing in the Czech Republic marked in red)

*Asahi Super Dry is produced in licence in Pivovary Staropramen of Molson Coors Brewing Company

Source: JLL based on Statista, 2014

0 20 000 40 000 60 000 80 000 100 000

Kimberly Clark

General Mills

SAB Miller

Diageo

Colgate Palmolive

Altria Group

Kraft Foods

Kirin Breweries

Asahi Breweries*

Japan Tobacco

Heineken Holding

British American Tobacco

Danone

L'Oreal

Philip Morris International

Tyson Foods

Archer Daniels Midland

Mondelez

JBS

AB Inbev

Coca & Cola Company

Pepsico

Unilever

Procter & Gamble

Nestlé

Net sales in billion U.S. dollars


Location

FMCG�manufacturing�facilities�are�mainly�concentrated�close�to�the�large�cities�of�Prague,�Brno,�Pilsen,�Olomouc�and�České�Budějovice,�due�to�proximity�to�large�consumer�bases�and�access�to�workforce.�In�addition,�the�excellent�infrastructure�of�the�country�enables�manufacturing�sites�to�be�close�to�natural�sources.�Parts�of�the�country�which�are�strong�in�agriculture,�such�as�Southern�Bohemia,�Southern�Moravia,�Vysočina,�Central�Bohemia�and�the�Olomouc�Regions�are�well�known�for�production�of�dairy�and�meat�products.�Southern�Moravia�is�also�famous�for�wine�production�and�fruit�and�vegetable�processing.�The�western�part�of�the�country,�Karlovy�Vary�and�the�Pilsen�regions,�are�well�known�for�mineral�waters�(Mattoni,�Korunní),�destilates�(Jan�Becher�–�Karlovarská�Becherovka�Pernod�Ricard,�Plzeň�Stock�Božkov)�and�sparkling�wine�production�(Bohemia�Sekt�Starý�Plzenec).�

Strong local producers

In�addition�to�the�strong�multinationals,�domestic�producers�also�play�a�very�important�role�in�the�food�and�beverages�industry.�One�of�the�strongest�and�largest�producers�is�Agrofert�holding�which�operates�a�wide�spectrum�of�companies�from�meat�processing�and�dairy�and�to�bakeries�and�frozen�food�production.�Among�these�are�renowned�Kostelecké�Uzeniny,�Vodňanská�drůbež,�Olma,�Penam,�Profrost�and�Mlekárna�Hlinsko.�Another�important�domestic�player�is�dairy�producer�–�Madeta,�with�plants�situated�in�six�different�locations�in�Southern�Bohemia.�Hamé,�a�traditional�Czech�producer�of�tinned�vegetables,�ketchups,�children’s�food�and�paté�has�seven�production�plants�in�the�south-eastern�part�of�the�country.�EMCO�is�the�largest�Czech�muesli�producer�with�a�more�than�50%�share�of�the�local�muesli�market.�Another�strong�local�producer�is�Kofola,�a�manufacturer�of�a�popular�soft�drink�which�was�almost�forgotten�but,�thanks�to�local�investors,�managed�to�successfully�return�to�the�Czech�market.�

Breweries

A�special�category�within�the�food�and�beverages�sector�in�the�Czech�Republic�is�held�by�breweries.�In�2013,�the�total�beer�production�in�the�country�rose�by�0.6�%�to�19.3�mil�hectolitres.�Czechs,�according�to�some�rankings,�are�the�largest�consumer�of�beer�per�capita�in�the�world.�Each�inhabitant�who�drinks�on�average�144�litres�per�annum,�has�a�large�variety�of�different��tastes�and�brands�to�choose�from.�

The�interest�in�Czech�beer�is�also�increasing�abroad�with�export�rising�by�9%�in�2013�and�includes�new�markets�such�as�South�Korea.�

The�long�tradition�and�global�reputation�of�Czech�beer�production�was�proven�once�again�in�early�summer�2014�with�two�new�entries�of�major�investors�from�the�brewery�sector:�Carlsberg�announced�its�investment�in�Žatecký�pivovar�and�Anheuser-Busch�(AB�inBev)�acquired�Pivovar�Samson�in�České�Budějovice,�the�town�where�the�famous�Budějovický�Budvar�(Budweiser),�is�produced�in�a�state�owned�brewery�and�is�a�direct�competitor�to�AB�inBev.�At�the�same�time,�the�owner�of�Pivovary�Lobkowicz�brewery�launched�its�IPO�on�the�Prague�Stock�Exchange.�

There are approximately 50 large and 215 micro‑breweries in the Czech Republic.

Other�large�multinational�investors�active�in�the�country�include�SABMiller,�the�owner�of�five�breweries�including�the�famous�Pilsner�lager�(Plzeňský�Prazdroj),�Heineken�(Královský�pivovar�Krušovice,�Pivovar�Starobrno�and�Pivovar�Velké�Březno)�and�Molson�Coors�Brewing�Company�(Staropramen�Praha�and�Pivovar�Ostravar).�

Small�to�mid-size�local�breweries�continue�to�play�a�strong�role�such�as�Rodinný�Pivovar�Bernard�in�Humpolec�which�started�out�on�a�small�scale�and�managed�to�develop�in�to�one�of�the�most�important�players�on�the�market.�

Retail distribution

Hypermarket�operators,�mostly�Dutch�and�German�chains,�were�pioneers�in�the�Czech�retail�market.�The�development�of�the�first�hypermarkets�started�in�the�mid-1990s,�when�international�retailers�were�taking�advantage�of�opportunities�arising�in�the�transitional�booming�Czech�economy.�The�first�hypermarket�in�the�country�was�opened�by�German�chain�Globus.�The�first�retail�schemes�were�hypermarket�anchored�shopping�centres�consisting�of�a�hypermarket�and�a�service�line.�Dutch�retailer�Ahold,�owner�of�the�Albert�chain,�is�currently�the�most�active�retail�operator�with�regard�to�expanding�its�foodstore�chain�on�the�market.�In�2014,�Ahold�acquired�its�competitor�Interspar�in�the�Czech�Republic�and�currently�operates�more�than�330�hypermarkets�and�supermarkets�across�the�country,�including�the�former�Interspar�units.

Major food operators in the Czech Republic

Type Chains

Hypermarkets Albert�(Netherlands),�Globus�(Germany),�Kaufland�(Germany),�Tesco�(UK)

Supermarkets Albert�(Netherlands),�Billa�(Austria),�Tesco�(UK)

Discounters Lidl�(Germany),�Norma�(Germany),�Penny�Market�(Germany)

Liberec

PRAHA

Ústí nadLabem

Plzeň

Pardubice

Olomouc

Ostrava

Brno

Chomutov

Kladno

Tábor Jihlava

Benešov

Brandýs nadLabem

Dobrovice

Klášter Hradištěnad Jizerou

Kralupy nad Vltavou

Kutná Hora

Krušovice

Mnichovo Hradiště

Nelahozeves

Poděbrady

Poříčí nad Sázavou

Radonice

Rakovník

Velké Popovice

Vysoký Chlumec

České MeziříčíJaroměř

Teplice nad Metují

Cheb

Karlovy Vary

Kyselka

Hrádek nad Nisou

Svijany

Karviná

Krnov

KunínPříbor

Opava

Litovel

OtinovesProstějov

Šumperk

Uničov

Vrbátky

Zábřehna Moravě

Helvíkovice

Hlinsko

Chrudim

Jevíčko

Letohrad

Klatovy

Mariánské Lázně

Starý Plzenec

Sušice

Blatná

ByňovČeský Krumlov

ČeskéBudějovice

Jindřichův Hradec

Mírovice

Planá nad Lužnicí

ProtivínVodňany

Řípec

Třeboň

Strakonice

Veselí nad Lužnicí

Vimperk

Blansko

Břeclav

Bzenec

HodonínHustopeče

Mikulov

Modřice

Valtice

Velké BíloviceVelké PavloviceZnojmo

Uherské Hradiště

Kroměříž


Zlín

Holešov u Kroměříže

Hrobčice ChabařoviceLovosice

Rumburk

Teplice Velké Březno

Žatec

Humpolec

Kostelec

Polná

PřibyslavŽďár nad Sázavou

Police nad Metují

Nošovice

Sedlčany

Městec Králové

Kyšice

BudčevesNové Město nad Metují

Broumov

Třebechovice pod Orebem

Vysoké Mýto

HorníMoštěnice

Bohumín

RosiceŽeletava Třebíč

VelkýRatmínov

Lednice

Stříbro

Korunní

Klimentov

Hrdly

Lobodice u Tovačova

Dolany

VřesceHoražďovice

Tišnov

KunoviceUherský Brod

Byšice

Varnsdorf

Roudnice nad Labem

Boršov nad Vltavou

Jemnice


Pilsen Region


South Moravian Region Zlín Region

Prague Region

Vysočina Region

Selection of Manufacturers – FMCG Sector

Hradec Králové Region Olomouc RegionÚstí nad Labem Region

Karlovy Vary Region

Pardubice Region


Liberec Region

BenešovSchreiber Foods (Danone)Brandýs nad LabemUnited Bakeries

Orkla ASA (Vitana)DobroviceTereos TTD (Lihovar Dobrovice)Tereos TTD (Cukrovar Dobrovice) KladnoLa Lorraine Bakery GroupLEGO Production

Klášter Hradiště nad JizerouPivovary Lobkowicz (Pivovar Klášter)Kralupy nad VltavouBidvest KralupyKrušoviceHeineken ČR (Královský Pivovar Krušovice)Kutná HoraPhilip Morris ČR

Kyšice u UnhoštěRYORMěstec KrálovéKOH-I-NOOR HARDMUTH

Kofola

BroumovKOH-I-NOOR HARDMUTH

BudčevesAveflor

České MeziříčíTereos TTD (Cukrovar České Meziříčí)

JaroměřKimberly-Clark

Nové Město nad MetujíDetecha

Teplice nad MetujíPEPSICO CZ

Police nad MetujíMerkur

Třebechovice pod OrebemUnion Cosmetics

DolanyLN Group

Horní MoštěniceMolinari (Hanácká Kyselka)

LitovelKimberly-ClarkEuropasta (Zátkovy těstoviny)

Lobodice u TovačovaLN Group

OlomoucArcher Daniels Midland

Hamé (Apetit Hněvotín)Hanácký MasokombinátNestlé (Zora Olomouc)OLMAPENAM

BohumínUnilever (Bochemie)Emco

KarvináUnited Bakeries

KrnovKofola

KunínMlekárna Kunín

NošoviceSAB Miller (Pivovar Radegast)SAB Miller (Pivovar Nošovice)

OpavaBidvest OpavaMondelez (Opavia)

OstravaMolson Coors Brewing Company (Pivovar Ostravar)PENAM

PříborAmoené

HrdlyEmco

HrobčiceShanghai MaLing Czech

LovosiceMondelez (Deli)

RumburkUnited Bakeries

TepliceTivall CZ (Nestlé)

Velké BřeznoHeineken ČR (Pivovar Velké Březno)

ŽatecCarlsberg (Pivovar Žatec)United Bakeries

ChebPlaymobil CZ

Karlovy VaryPernod Ricard (Jan Becher - Karlovarská Becherovka)

KlimentovPENAM

KorunníKarlovarská Korunní

KyselkaKarlovarské Minerální Vody (Mattoni)

HoražďoviceLyckeby Amylex

KlatovyMlekárna Klatovy

Mariánské LázněMondelez (Kolonáda)

PlzeňSABMiller (Plzensky Prazdroj)SABMiller (Pivovar Gambrinus Plzeň)STOCK Plzeň-BožkovUnited Bakeries

Starý PlzenecBohemia Sekt Starý Plzenec

StříbroEUROSERUM

SušiceSPAK Foods

BlatnáFrutana

ByňovDobrá Voda

České BudějoviceAB InBev (Měšťanský pivovar České Budějovice)Budějovický BudvarKOH-I-NOOR HARDMUTHMadetaPENAMViscofan CZZáruba Food

Český KrumlovMadetaSchwan Cosmetics CRSchwan-STABILO ČR

Jindřichův HradecFruko-SchulzMadeta

MíroviceVodňanská drůbež

PelhřimovMadeta

Planá nad LužnicíKostelecké uzeninyMadeta

BlanskoMlekárna OlešnicePivovary Lobkowicz (Pivovar Černá Hora)

BrnoDermacolEmcoHeineken ČR (Pivovar Starobrno)PENAMUnited Bakeries

BřeclavHamé (FRUTA Podivín)PENAMSaloos

BzenecHamé (PIKA Bzenec)Zámecké vinařství Bzenec

HodonínBongrain (TPK Hodonín)

HustopečeHill's Pet Nutrition

LedniceChateau Lednice

HumpolecRodinný pivovar Bernard

JemniceTata Global Beverages CR (Jemča)

JihlavaPivovary Lobkowicz (Pivovar Jihlava)

Kostelec Kostelecké uzeniny

PolnáMlekárna Polná

PřibyslavBongrain (Pribina)

TelčKrahulík - Masozávod Krahulčí

TřebíčPENAM

Žďár nad SázavouEfko

ŽeletavaFromageries BEL (Bel Sýry Česko)

NelahozevesWet Wipes International

PoděbradyPoděbradkaPolabské Mlékárny

Poříčí nad SázavouMARS Czech

RadoniceNěmcova Selská Mlekárna RakovníkProcter & Gamble

SedlčanyBongrain (Povltavské Mlekárny)

Velké PopoviceSABMiller (Pivovar Velké Popovice)

Vysoký ChlumecPivovary Lobkowicz (Pivovar Vysoký Chlumec)

Holešov u KroměřížeNestlé (SFINX Holešov)

KroměřížKmotr - Masna Kroměříž

KunoviceHamé

Uherské HradištěHamé (OTMA - Sloko)Hamé (Slovácká Fruta)Pivovary Lobkowicz (Pivovar Uherské Hradiště)

Uherský BrodUnited Bakeries

Valašské MeziříčíMlekárna Valašské MeziříčíMondelez (Dadák CZ)

ZlínRudolf Jelinek VizovicePENAM

HelvíkoviceDibaq

HlinskoMlekárna Hlinsko

ChrudimPivovary Lobkowicz (Pivovar Rychtář)Tereos TTD (Lihovar Chrudim)JevíčkoCzech BladesLetohradHamé (BAPA Letohrad)

PardubiceUnited Bakeries

Vysoké MýtoTomil

PrahaASTRID CosmeticsCoca-Cola Česká republikaHELLADAMlekárna PragolaktosMolson Coors Brewing Company (Pivovary Staropramen)PENAMPEPSICO CZShanghai MaLing FoodUnited BakeriesVafo (Brit)

ProtivínPivovary Lobkowicz (Pivovar Protivín)

StrakoniceUnited Bakeries

TáborFriallSwallowfield

TřeboňPivovar Ťřeboň

Veselí nad LužnicíEfko czProvimi (Propesko)

Veselí nad Lužnicí - ŘípecMadeta

Velký RatmínovVafo (Brit)

VimperkVimperská Masna

VodňanyVodňanská drůbež

VřesceEmco

MikulovVinařství Mikrosvín Mikulov

ModřiceVodňanská drůbež

TišnovVITAR

RosicePENAM

ValticeVinné sklepy Valtice

Velké BíloviceVinařství Velké Bílovice

Velké PavloviceČeské vinařské závody

ZnojmoUnited BakeriesZnovín Znojmo

Hrádek nad NisouDrylock Technologies

LiberecUnited Bakeries

SvijanyPivovar Svijany

OtinovesMlekárna Otinoves

ProstějovPENAMProfrost

ŠumperkPENAM

UničovUnited Bakeries

VrbátkyCukrovar Vrbátky

Zábřeh na MoravěOLMA

Roudnice nad LabemOrkla ASA (Vitana)

VarnsdorfOrkla ASA (Vitana)

Europasta (Zátkovy těstoviny)

Mnichovo Hradiště

Byšice


Home Appliances, ICT and Electronics

The�Czech�and�Czechoslovak�electrical�engineering�and�electronics�sector�was�one�the�most�highly�developed�within�the�former�Eastern�bloc�between�the�1960’s�and�1980’s.�Its�advances�in�technology�and�cutting�edge�were�gradually�weakened,�compared�to�Western�countries,�by�the�lack�of�investment�into�innovation.�However,�the�large�technology�base�that�was�created�by�the�thousands�of�engineers�and�state�institution�researchers�employed�in�the�industry,�provided�a�strong�base�for�future�development�potential�of�this�sector�in�the�country.

ICT and Home Appliances

In�the�past�20�years,�ICT�products�have�become�one�of�the�most�important�export�commodities�on�the�local�market,�covering�ca.�1/7�of�the�total�export�(in�2012).�This�makes�the�Czech�Republic�not�only�one�of�the�largest�exporter�of�ICT�in�Europe�but�also�worldwide.�Based�on�numbers�from�2012,�the�country�was�the�third�largest�exporter�of�ICT�products�in�Europe.

The�export�of�ICT�is�dominated�by�computers�and�peripherals�with�an�almost�50%�share,�followed�by�consumer�electronics,�communication�devices�and�electronic�components.�The�largest�local�computer�producers�include�AT�Compus�(member�of�AB)�and�eD’system�Czech�(producing�brand�LYNX)�both�located�in�Ostrava.�

Behind�the�growth�of�the�ICT�sector�in�the�Czech�Republic�there�is�a�long�tradition�of�production,�such�as�the�Tesla�group�dating�back�to�1921,�as�well�as�strong�foreign�investments�over�the�past�20�years�from�producers�such�as�Panasonic�in�Pilsen�and�Pardubice,�Changhong�in�Nymburk,�Bang�&�Olufsen�in�Kopřivnice,�Alps�Electrics�and�Foxconn.�These�are�only�a�few�examples�of�Czech�ICT�industry�development.�

FOXCONN CZ:

� established its operations in the Czech Republic in 2000, setting up a central regional production hub for Europe in the city of Pardubice;

� in 2008, opened the second manufacturing plant in Kutná Hora after moving production from Scotland;

� Foxconn Global Services Division opened in 2002; � one of the largest employers in the Czech Republic (nearly 8,000

employees);� one of the leading exporters in the country; in 2013 produced and

exported goods worth ca. 100 billion CZK, ranking the third largest exporter of the Czech Republic;

� manufacturing for HP, Cisco and many others.

The�long�history�of�Czech�home�appliances�production,�represented�by�brands�such�as�ETA,�Romo�and�MORA,�also�has�its�place�on�the�local�market.�Currently,�the�largest�producers�on�the�Czech�market�are�represented�mainly�by�Mora�Moravia�who�is�owned�by�Gorenje�and�produces�in�Mariánské�Údolí,�near�to�Olomouc,�Miele�a�German�manufacturer�of�washing�machines,�dishwashers�and�tumble�dryers�in�Uničov,�R-fin�–�successor�of�traditional�producer�Romo�in�Fulnek�and�ETA��–�who�moved�its�production�from�traditional�Hlinsko�to�Milotice�nad�Bečvou.

Electron Microscopes

The�Czech�Republic�was�one�of�the�first�countries�in�the�world�to�build�an�electron�microscope�back�in�the�1950’s�and�continues�to�be�one�of�the�world�leaders�of�this�high-tech�manufacturing,�supported�by�R&D�activities.�TESCAN,�a�Czech�company�that�was�established�in�1991�by�former�highly�qualified�engineers�of�TESLA�Brno,�is�today�one�of�the�global�suppliers�of�electron�microscopes.�Brno,�due�to�its�tradition�in�electron�microscope�production,�supported�by�the�presence�of�technical�universities,�was�selected�as�the�local�branch�for�FEI�Company,�a�global�leader�in�electron�microscopes�production,�back�in�1993.The�Brno�branch,�supported�by�the�local�R&D�Centre,�has�developed�into�one�of�the�fastest�growing�divisions�of�FEI�worldwide,�increasing�its�capacity�from�10%�to�60%�of�the�company’s�total�production.�

Approximately every fourth electron microscope in the world is manufactured in Brno.

Electrical Engineering (EE) and Electronics

The�history�of�production�of�EE/Electronics�products�in�the�Czech�Republic�is�tied�to�TESLA,�which�before�1990,�was�one�of�the�most�renowned�Czech�companies�in�general,�producing�a�wide�spectrum�of�products�varying�from�electric�motors�and�consumer�electronics�to�semi-conductors.�It�was�in�one�of�its�divisions,�Tesla�Pardubice,�where�the�renowned�Tamara�radar�was�developed�and�produced.�Nowadays,�the�extensive�technological�know-how�of�the�former�Tesla�group�was�transferred�to�both�successors�and�newly�established�EE/electronic�companies�over�the�last�twenty�years.�One�of�the�direct�successors�is�Metra�Blansko,�a�producer�of�measuring�instruments�and�ERA,�a�manufacturer�of�a�new�generation�of�the�Tamara�radar�system,��VERA.

The�Czech�Republic�has�attracted�all�major�players�in�the�EE/electronics�sectors�including:�Siemens,�Eaton,�Honeywell,�Schneider�Electric,�ON�Semiconductors�and�ABB.�In�addition�to�a�number�of�manufacturing�sites,�many�investors�have�increased�their�initial�investment�by�opening�R&D�Centres,�Repair�Centres�or�Service�Centres.�

For�example,�Schneider�Electric,�a�French�world�renowned�producer�of�electro-mechanical�instruments,�originally�entered�the�market�by�privatising�the�then�state-owned�firm�Elektropřístroj�Písek�in�Southern�Bohemia.�In�1998,�the�company�decided�to�invest�into�the�construction�of�a�new�production�facility.�Between�2002�and�2008,�the�company�further�expanded�its�manufacturing�premises�by�60%�and�moved�its�production�from�Ireland,�France,�Spain�and�Italy�to�the�Czech�Republic.�Nowadays,�their�Písek�production�facility�is�one�of�the�company’s�largest�production�sites�in�Europe,�manufacturing�mostly�for�export.

One�of�the�most�important�parts�of�the�Czech�electrical�engineering�industry�is�the�production�of�semiconductors.�Building�on�the�Czech�traditions�in�the�industry,�a�number�of�the�well-known�global�as�well�as�local�producers�have�settled�down�in�the�Czech�Republic�to�manufacture�or�design�semiconductors�here.�Honeywell,�ABB,�Certicon,�ON�Semiconductors,�HC�Electronics,�Unites�Systems�and�Arsil�Crystal�are�just�a�few�examples�of�the�local�players.

PRAHA

Plzeň

Pardubice

Olomouc

Ostrava

Brno

Chomutov

Kladno

Kutná Hora

Nymburk

Jičín Náchod

KarvináBruntál

Kopřivnice

Jeseník

Šumperk

Milotice nad Bečvou

Lanškroun

Králíky

Letohrad

Stříbro

Přeštice

Chotěšov

Třemošná

Písek

Suchdol nad Lužnicí

Sebranice u Boskovic

Ráječko

Mikulov

Uherské Hradiště

Valašské MeziříčíRožnov pod Radhoštěm

Louny

Žebrák UničovŠtemberk

Velké Meziříčí

Planá

Libušín

Drásov

Hradec Králové

TrutnovVrchlabí

Nová Paka

Česká Lípa

Mohelnice

PostřelmovNový Jičín

Rychvald

Blansko

Brankovice

Jevišovice

Jihlava

Prachatice

Blatná Kuřim

Blovice

AšPlesná Sokolov

Karlovy VarySvatava

Dolní Rychnov

Ostrov nad Ohří

Kynšperk nad OhříChyše

Malá Skála

Otrokovice

Znojmo

Humpolec

Telč

Nové Město na Moravě

Jemnice

TáborMilevsko

ČičeniceNišovice

Teplice

Klášterec nad Ohří

Krupka Děčín

Vimperk

Holešov-Všetuly

Hluk


Olomouc Region



Pilsen Region



Zlín Region

Pardubice RegionPrague Region

Vysočina Region


Liberec Region

Karlovy Vary Region

DrásovAveo Engineering Group

KladnoNkt Cables

Kutná HoraFoxconn CZ

LibušínHelukabel CZ

NymburkChanghong Europe Electric

ŽebrákMuramato Manufacturing Europe

Hradec KrálovéHC ElectronicsTL Elektronic

JičínAEG ComponentsLAMIREL PCB Europe

NáchodAMETEK elektromotory

Nová PakaQuittner & Šimek

TrutnovABBTyco Electronics EC Trutnov

VrchlabíNkt Cables

JeseníkFenix

Milotice nad BečvouETA


OlomoucGorenje (MORA Moravia)Honeywell AerospaceO&M Solar

PostřelmovMEP Postřelmov

ŠternberkInvesys Appliance Controls

ŠumperkEPCOS

UničovMiele technika

BruntálOSRAM Česká republika

KarvináDexon Czech

KopřivniceBang & Olufsen

Nový JičínVisteon-Autopal

OstravaABBSiemens

RychvaldVisteon-Autopal

DěčínKDP Assembly

ChomutovJJS ElectronicsPULS investiční

Klášterec nad OhříZF Electronics

KrupkaAuto - Kabel Krupka

LounyMaterion CzechRimaster AB

TepliceMelecs ETS

BloviceFaiveley Transport Lekov

ChotěšovRSF Elektronik

PlzeňAsteelflash PlzeňDaikin Industries CZGEMTEK.CZGES - ElectronicsPanasonic AVC Networks Czech

PlanáPanasonic Electric Works Czech

PřešticeRexxam CzechVishay Electronic

StříbroRSF Elektronik

TřemošnáEPIQ CZ

BlatnáTesla BlatnáVishay Electronic

České BudějoviceZETT (Hellux Elektra)

ČíčeniceDeutronic

MilevskoAURA

NišoviceEmerson (Knurr)

BlanskoMetra BlanskoRACOM

BrankoviceEMS-PATVAG

BrnoABBADC Czech RepublicAndrew CorporationAU OptronicsAŽD PrahaCombustion ControlsCommscopeDaikin Device CZESKO BrnoFEI Czech RepublicHoneywell Environmental and Combustion Controls Wistron InfoCommInventecMesingNitto Denko CzechTESCAN Brno

HumpolecHDEL Technology

JemniceEgston System Electronic

JihlavaAKI ElectronicELSAKosykaTesla Jihlava

Nové Město na MoravěRACOM

TelčHeiru CZ

Velké MeziříčíNkt CablesPrysmian Group (Draka Kabely)

BuchloviceBD Sensors

HlukVisteon-Autopal

Holešov-VšetulyELKO EP

OtrokoviceTronic Control

KrálíkyOEZ

LanškrounAVX Czech Republic (Kyocera)Wendell

LetohradOEZ

PardubiceCommscopeEldis ERAFlextronics InternationalFoxconn CZPanasonic Automotive Systems CzechT-CZ

PrahaABBBoschElcomEximet TrafoSaltekSiemens Audiologicka TechnikaSPEEL PrahaŠkoda (POLL)TeslaTTC MarconiVinci Energies (Cegelec Praha)

Česká LípaJohnson Controls Modus

Jablonec nad NisouABB

LiberecCiS SystemsHOKAMILaird Technologies

Malá SkálaSchurter

Stráž nad NisouPEKM Kabeltechnik

JevišoviceEximet Trafo

KuřimTyco Electronics Czech

Sebranice u BoskovicALPS Electric Czech

MikulovGebauer A Griller Kabeltechnik

RáječkoTYCO Safety Products

ZnojmoEgston System Electronic

AšMTG Montagetechnik

Dolní RychnovVishay Electronic

ChyšeLamela Electric

Karlovy VaryTronic Control

Kynšperk nad OhříNexans Power Accessories (GPH)

Ostrov nad OhříKonfektion E (KE Ostrov - Electrik)

PlesnáELROZ

SokolovWieland Electric

Svatavaept connector

PísekLOVATO ElectricSchneider ElectricSIBA PísekPewtronic

PrachaticeInTiCa Systems

Suchdol nad LužnicíEaton Elektrotechnika

TáborBrisk Tábor

VimperkRhode & Schwarz Czech Republic

VolaryVishay Electronic

Rožnov pod RadhoštěmON Semiconductor Czech Republic

Uherské HradištěAVX Czech Republic (Kyocera)

Valašské MeziříčíCodaco ElectronicSchott Solar CR

Buchlovice

Selection of Manufacturers – Consumer Electronics & Electrical Engineering Sector

PRAHA

Plzeň

Pardubice

Olomouc

Ostrava

Brno

Chomutov

Kladno

Kutná Hora

Nymburk

Jičín Náchod

KarvináBruntál

Kopřivnice

Jeseník

Šumperk

Milotice nad Bečvou

Lanškroun

Králíky

Letohrad

Stříbro

Přeštice

Chotěšov

Třemošná

Písek

Suchdol nad Lužnicí

Sebranice u Boskovic

Ráječko

Mikulov

Uherské Hradiště

Valašské MeziříčíRožnov pod Radhoštěm

Louny

Žebrák UničovŠtemberk

Velké Meziříčí

Planá

Libušín

Drásov

Hradec Králové

TrutnovVrchlabí

Nová Paka

Česká Lípa

Mohelnice

PostřelmovNový Jičín

Rychvald

Blansko

Brankovice

Jevišovice

Jihlava

Prachatice

Blatná Kuřim

Blovice

AšPlesná Sokolov

Karlovy VarySvatava

Dolní Rychnov

Ostrov nad Ohří

Kynšperk nad OhříChyše

Malá Skála

Otrokovice

Znojmo

Humpolec

Telč

Nové Město na Moravě

Jemnice

TáborMilevsko

ČičeniceNišovice

Teplice

Klášterec nad Ohří

Krupka Děčín

Vimperk

Holešov-Všetuly

Hluk


Olomouc Region



Pilsen Region



Zlín Region

Pardubice RegionPrague Region

Vysočina Region


Liberec Region

Karlovy Vary Region

DrásovAveo Engineering Group

KladnoNkt Cables

Kutná HoraFoxconn CZ

LibušínHelukabel CZ

NymburkChanghong Europe Electric

ŽebrákMuramato Manufacturing Europe

Hradec KrálovéHC ElectronicsTL Elektronic

JičínAEG ComponentsLAMIREL PCB Europe

NáchodAMETEK elektromotory

Nová PakaQuittner & Šimek

TrutnovABBTyco Electronics EC Trutnov

VrchlabíNkt Cables

JeseníkFenix

Milotice nad BečvouETA


OlomoucGorenje (MORA Moravia)Honeywell AerospaceO&M Solar

PostřelmovMEP Postřelmov

ŠternberkInvesys Appliance Controls

ŠumperkEPCOS

UničovMiele technika

BruntálOSRAM Česká republika

KarvináDexon Czech

KopřivniceBang & Olufsen

Nový JičínVisteon-Autopal

OstravaABBSiemens

RychvaldVisteon-Autopal

DěčínKDP Assembly

ChomutovJJS ElectronicsPULS investiční

Klášterec nad OhříZF Electronics

KrupkaAuto - Kabel Krupka

LounyMaterion CzechRimaster AB

TepliceMelecs ETS

BloviceFaiveley Transport Lekov

ChotěšovRSF Elektronik

PlzeňAsteelflash PlzeňDaikin Industries CZGEMTEK.CZGES - ElectronicsPanasonic AVC Networks Czech

PlanáPanasonic Electric Works Czech

PřešticeRexxam CzechVishay Electronic

StříbroRSF Elektronik

TřemošnáEPIQ CZ

BlatnáTesla BlatnáVishay Electronic

České BudějoviceZETT (Hellux Elektra)

ČíčeniceDeutronic

MilevskoAURA

NišoviceEmerson (Knurr)

BlanskoMetra BlanskoRACOM

BrankoviceEMS-PATVAG

BrnoABBADC Czech RepublicAndrew CorporationAU OptronicsAŽD PrahaCombustion ControlsCommscopeDaikin Device CZESKO BrnoFEI Czech RepublicHoneywell Environmental and Combustion Controls Wistron InfoCommInventecMesingNitto Denko CzechTESCAN Brno

HumpolecHDEL Technology

JemniceEgston System Electronic

JihlavaAKI ElectronicELSAKosykaTesla Jihlava

Nové Město na MoravěRACOM

TelčHeiru CZ

Velké MeziříčíNkt CablesPrysmian Group (Draka Kabely)

BuchloviceBD Sensors

HlukVisteon-Autopal

Holešov-VšetulyELKO EP

OtrokoviceTronic Control

KrálíkyOEZ

LanškrounAVX Czech Republic (Kyocera)Wendell

LetohradOEZ

PardubiceCommscopeEldis ERAFlextronics InternationalFoxconn CZPanasonic Automotive Systems CzechT-CZ

PrahaABBBoschElcomEximet TrafoSaltekSiemens Audiologicka TechnikaSPEEL PrahaŠkoda (POLL)TeslaTTC MarconiVinci Energies (Cegelec Praha)

Česká LípaJohnson Controls Modus

Jablonec nad NisouABB

LiberecCiS SystemsHOKAMILaird Technologies

Malá SkálaSchurter

Stráž nad NisouPEKM Kabeltechnik

JevišoviceEximet Trafo

KuřimTyco Electronics Czech

Sebranice u BoskovicALPS Electric Czech

MikulovGebauer A Griller Kabeltechnik

RáječkoTYCO Safety Products

ZnojmoEgston System Electronic

AšMTG Montagetechnik

Dolní RychnovVishay Electronic

ChyšeLamela Electric

Karlovy VaryTronic Control

Kynšperk nad OhříNexans Power Accessories (GPH)

Ostrov nad OhříKonfektion E (KE Ostrov - Electrik)

PlesnáELROZ

SokolovWieland Electric

Svatavaept connector

PísekLOVATO ElectricSchneider ElectricSIBA PísekPewtronic

PrachaticeInTiCa Systems

Suchdol nad LužnicíEaton Elektrotechnika

TáborBrisk Tábor

VimperkRhode & Schwarz Czech Republic

VolaryVishay Electronic

Rožnov pod RadhoštěmON Semiconductor Czech Republic

Uherské HradištěAVX Czech Republic (Kyocera)

Valašské MeziříčíCodaco ElectronicSchott Solar CR

Buchlovice

Selection of Manufacturers – Consumer Electronics & Electrical Engineering Sector


Medical and Pharmaceutical Industry

The�Czech�Republic�not�only�has�a�long�tradition�in�the�field�of�pharmaceutical�production�and�life�sciences,�but�also�in�medical�appliances�manufacturing.�

Medical technologies and devices

The�major�development�of�the�Czech�medical�devices�industry�started�in�the�20th�century�with�international�successes�of�the�introduction�of�the�first�external�cardio�defibrillator�and�the�invention�of�hydrogel�contact�lenses�by�Otto�Wichterle,�for�example.�

On�the�contrary�to�the�pharmaceutical�market,�where�only�a�few�companies�have�a�dominant�market�share,�the�medical�devices,�materials�and�technologies�sector�consists�of�a�large�number�of�small�producers.�In�the�past�few�years,�Czech�companies,�as�well�as�international�firms�producing�in�the�Czech�Republic,�have�proven�to�be�more�than�competitive�and�many�of�them�are�very�active�in�the�field�of�innovation.

The�competitive�edge�of�Czech�medical�devices�companies�is�based�on�its�high�quality�of�products,�innovation,�as�well�as�competitive�labour�costs�and�excellent�labour�quality.�In�the�past�20�years,�the�industry�has�grown�by�more�than�140%.�The�production�portfolio�varies�from�technical�gases,�hospital�beds�and�furniture,�surgical�instruments�and�x-ray�machines,�to�sterilizers�and�other�medical�materials,�appliances�and�devices.�

The�large�international�producers�have�been�entering�the�market�since�the�early�nineties.�Traditional�producers�already�operating�on�the�market�include:�Arrow�International�/�Teleflex�manufacturing�catheters�in�two�plants�in�Hradec�Králové�and�Žďár�nad�Sázavou,�Hartmann�Rico�with�three�production�plants�in�Veverská�Bytíška,�Havlíčkův�Brod�and�Chvalkovice,�Lohmann�&�Rauscher�producing�bandaging�materials�in�Nová�Paka�and�in�Slavkov�u�Brna,�Rodenstock,�Gerresheimer�and�many�others.

Medical�companies�can�also�be�very�often�located�within�industrial�parks�with�a�suitable�background.�In�the�logistics�and�production�park�CTP�Hranice,�there�are�currently�two�large�international�producers�of�medical�devices:�Medi�Globe,�manufacturing�products�for�gastroenterology�and�urology�and�Smiths�Medical,�who�produce�a�range�of�high-tech�products�at�the�plant,�primarily�single-use�medical�devices�to�support�breathing�and�for�drug�delivery.�

It�is�not�only�international�manufacturers�that�are�active�and�successful�on�the�local�market.�Many�of�the�Czech�producers�have�already�established�themselves�as�some�of�the�world’s�market�leaders.�Such�companies,�amongst�others,�include:�Borcad,�established�in�1990�and�focused�on�the�development,�construction�and�production�of�birthing�beds,�gynaecological,�transport�and�dialysis�chairs�or,�BMT�Medical�Technology�(member�of�MMM�Group),�successor�of�the�famous�traditional�Czech�sterilisers’�producer�–�Chirana.

The�best�recent�example�of�a�successful�Czech�company�who�expanded�on�a�global�level�is�one�of�the�largest�worldwide�

manufacturers�of�medical�beds�and�mattresses�–�Linet.�The�company�was�established�in�1990�in�Želevnice�near�Slaný�and�employs�600�people,�producing�around�40,000�beds�per�year.�The�majority�of�these�are�designated�for�export�into�100�countries�all�over�the�world.�

Pharmaceutical industry and life sciences

Thanks�to�the�Czech�Republic’s�superb�academic�background,�in�the�field�of�chemistry�and�biochemistry,�biotechnology,�genetics�and�immunology,�there�are�a�large�variety�of�research�institutes,�commonly�tied�to�universities,�as�well�as�centres�of�excellence.�Many�of�these�belong�under�the�Academy�of�Sciences�of�the�Czech�Republic.�Productivity�and�scientific�contributions�of�these�institutions�can�be�best�illustrated�by�the�global�achievements�and�success�of�Dr.�Antonín�Holý�and�his�team�in�the�field�of�anti-AIDS�and�hepatitis�B�medicaments�development.�

The�reputation�and�high�quality�of�this�academic�background,�supported�by�educated�and�skilled�local�personnel�has�also�attracted�several�international�companies�to�invest�into�manufacturing�or�R&D�centres�in�the�Czech�Republic.�Examples�of�the�largest�global�companies�operating�production�and/or�R&D�centres�include:�Sanofi,�who�bought�a�25%�share�in�the�largest�Czech�pharmaceutical�producer�Zentiva�in�2006,�Teva�Pharmaceuticals,�who�entered�the�local�market�in�1997�and�nine�years�later�acquired�production�company�Ivax�Pharmaceuticals,�successor�of�Galena�company�and�Lonza�Biotec,�entering�in�1992�via�taking�over�the�research�institution�SPOFA�in�Kouřim,�and�in�2006,�investing�into�a�new�research�and�development�centre�there.

Other�large�companies�operating�on�the�local�research�and�manufacturing�market�include:�Baxter�BioScience�in�Jevany,�Synthon�in�Blansko,�Sotio�in�Prague,�Interpharma,�member�of�Otsuka�group�and�many�others.�The�area�of�health�supplements�is�represented�by�one�of�the�most�dynamic�local�manufacturers,�Walmark.

Strength of Czech medical and pharma industries:

� excellent quality and availability of university students and educated workforce from an industry specific area;

� highly competitive salary and overall cost levels;

� close cooperation of universities and academia with pharmaceutical and medical business;

� regulation and patent environment harmonised with European Union standards;

� high quality of products;

� constantly developing R&D, educational and training activity;

� well-developed supplier network;

� long term commitment of the Czech government to invest into research & development and hi tech centres.

Pardubice

Hranice na Moravě

Ostrava

Brno

Chomutov

Kladno

Jihlava

ŽelevčiceChvalkovice

Turnov

Karviná

Krnov

Opava

Přerov

Klatovy

Horšovský Týn

Ejpovice

Vodňany

Trhové Sviny

Tišnov

Slavkov u BrnaVeverská Bítýška

Blansko


Litvínov

Velké Meziříčí

Nové Městona MoravěHavlíčkův Brod

Žďár nadSázavou

Kolín

KouřimJevany

Hradec Králové

Jičín

Bohumín

Třinec

Bolatice

FryčoviceOdry

Český BrodPchery

Vrané nad Vltavou

ŘežRoztoky u Prahy

Liberec Jablonec nad Nisou

Budčeves

Nová Paka

OlomoucKopřivnice

Zlín

Rožnov pod Radhoštěm

Slušovice

VeverskéKnínice

Strážnice

Ševětín

Rokycany

Terezín

Chuderov

Dolní Dobrouč

Vysoké MýtoChrudim

Rybitví


Olomouc Region



Pilsen Region



Zlín Region

Pardubice Region

Prague Region

Vysočina Region


Liberec Region

Český BrodDyntec

JevanyBaxter BioScience

Jílové u PrahyBIOPHARM Výzkumný ústav biofarmacie a veterinárních léčivMartin Bauer Group (Megafyt - Pharma)

KladnoBEZNOSKA

KolínLONZA BIOTEC

KouřimLONZA BIOTEC

BudčevesAVEFLOR

Hradec KrálovéARROW International CR (Teleflex)Dr. Kulich PharmaDr. Muller PHARMAITEST plusSVUS Pharma

ChvalkoviceHartmann - Rico

JičínBiomag CZDanaher (SpofaDental)

Nová PakaLohmann & Rauscher

Rudník u VrchlabíMZ Liberec

Hranice na MoravěMedi-GlobeSmith Medical Czech Republic

OlomoucFAGRONFARMAK

PřerovMeopta - optikaOlympus Medical Products Czech

BohumínBochemie

BolaticeMedis International

FryčoviceBORCAD CZ

KarvináMolnlycke Health Care Klinipro

KopřivniceFAVEA

OdryMedi-Globe

OpavaTeva Czech Industries

OstravaEkocentrum Ovalab

Galenická laboratoř OstravaGALMED

MB Pharma

Třinec Walmark Česká republika

ChomutovMikron Chomutov

ChuderovImunomedicA

LitvínovPrimed-Halberstadt CZ

TerezínDyntec

EjpoviceRondo obaly

Horšovský TýnGerresheimer Wilden

KlatovyRodenstock ČR

RokycanyWAKE

BlanskoSynthon

BrnoAudyBioVendorBMT Medical TechnologyIMUNAPrimeCell Theraupeutics (Národní Centrum Tkání a Buněk)

Slavkov u BrnaLohmann & Rauscher

StrážniceLEROS

TišnovVITAR

Veverská BítýškaBiosterHartmann - Rico

Veverské KníniceRosenPharma

Havlíčkův BrodHartmann - Rico

Nové Město na MoravěMEDIN

Velké MeziříčíALPA

Žďár nad SázavouARROW International CR

Rožnov pod RadhoštěmENERGOAQUAMEDITES PHARMA

SlušoviceMEDIAP

Valašské MeziříčíMedkotech

ZlínNoventis

Dolní DobroučContipro

ChrudimPENTA (Ing. Petr Švec)

PardubiceBionik Stapro GroupHerbacos Recordati

RybitvíVÚOS

Vysoké MýtoGlenmark Pharmaceuticals

PrahaAPIGENEXBeckman Coulter (Immunotech)BiomedicaCoopharmaHerbadentLEROSOtsuka (Interpharma Praha)PENTA (Ing. Petr Švec) PRO.MED.CS Praha

Zentiva (Sanofi Pasteur)

SEVAPHARMASotioSynthonUJP PrahaVAKOS XT a.s.

ŠevětínArdeapharma

Trhové SvinyMEDISIZE CZ

VodňanyLaminar Medica

Jablonec nad NisouPROFARMA-PRODUKT

LiberecTRUMPF Česká republika

TurnovOntex CZ

Pchery - TheodorGALMED

Roztoky u PrahyVUAB Pharma

ŘežRadioMedic

Vrané nad VltavouMartin Bauer (Megafyt - Pharma)

ŽelevčiceLINET

Rudník u Vrchlabí

PRAHA

Jílové u Prahy

Selection of Manufacturers – Medical & Pharmaceutical Sector

Pardubice

Hranice na Moravě

Ostrava

Brno

Chomutov

Kladno

Jihlava

ŽelevčiceChvalkovice

Turnov

Karviná

Krnov

Opava

Přerov

Klatovy

Horšovský Týn

Ejpovice

Vodňany

Trhové Sviny

Tišnov

Slavkov u BrnaVeverská Bítýška

Blansko


Litvínov

Velké Meziříčí

Nové Městona MoravěHavlíčkův Brod

Žďár nadSázavou

Kolín

KouřimJevany

Hradec Králové

Jičín

Bohumín

Třinec

Bolatice

FryčoviceOdry

Český BrodPchery

Vrané nad Vltavou

ŘežRoztoky u Prahy

Liberec Jablonec nad Nisou

Budčeves

Nová Paka

OlomoucKopřivnice

Zlín


Slušovice

VeverskéKnínice

Strážnice

Ševětín

Rokycany

Terezín

Chuderov

Dolní Dobrouč

Vysoké MýtoChrudim

Rybitví


Olomouc Region



Pilsen Region



Zlín Region

Pardubice Region

Prague Region

Vysočina Region


Liberec Region

Český BrodDyntec

JevanyBaxter BioScience

Jílové u PrahyBIOPHARM Výzkumný ústav biofarmacie a veterinárních léčivMartin Bauer Group (Megafyt - Pharma)

KladnoBEZNOSKA

KolínLONZA BIOTEC

KouřimLONZA BIOTEC

BudčevesAVEFLOR

Hradec KrálovéARROW International CR (Teleflex)Dr. Kulich PharmaDr. Muller PHARMAITEST plusSVUS Pharma

ChvalkoviceHartmann - Rico

JičínBiomag CZDanaher (SpofaDental)

Nová PakaLohmann & Rauscher

Rudník u VrchlabíMZ Liberec

Hranice na MoravěMedi-GlobeSmith Medical Czech Republic

OlomoucFAGRONFARMAK

PřerovMeopta - optikaOlympus Medical Products Czech

BohumínBochemie

BolaticeMedis International

FryčoviceBORCAD CZ

KarvináMolnlycke Health Care Klinipro

KopřivniceFAVEA

OdryMedi-Globe

OpavaTeva Czech Industries

OstravaEkocentrum Ovalab

Galenická laboratoř OstravaGALMED

MB Pharma

Třinec Walmark Česká republika

ChomutovMikron Chomutov

ChuderovImunomedicA

LitvínovPrimed-Halberstadt CZ

TerezínDyntec

EjpoviceRondo obaly

Horšovský TýnGerresheimer Wilden

KlatovyRodenstock ČR

RokycanyWAKE

BlanskoSynthon

BrnoAudyBioVendorBMT Medical TechnologyIMUNAPrimeCell Theraupeutics (Národní Centrum Tkání a Buněk)

Slavkov u BrnaLohmann & Rauscher

StrážniceLEROS

TišnovVITAR

Veverská BítýškaBiosterHartmann - Rico

Veverské KníniceRosenPharma

Havlíčkův BrodHartmann - Rico

Nové Město na MoravěMEDIN

Velké MeziříčíALPA

Žďár nad SázavouARROW International CR

Rožnov pod RadhoštěmENERGOAQUAMEDITES PHARMA

SlušoviceMEDIAP

Valašské MeziříčíMedkotech

ZlínNoventis

Dolní DobroučContipro

ChrudimPENTA (Ing. Petr Švec)

PardubiceBionik Stapro GroupHerbacos Recordati

RybitvíVÚOS

Vysoké MýtoGlenmark Pharmaceuticals

PrahaAPIGENEXBeckman Coulter (Immunotech)BiomedicaCoopharmaHerbadentLEROSOtsuka (Interpharma Praha)PENTA (Ing. Petr Švec) PRO.MED.CS Praha

Zentiva (Sanofi Pasteur)

SEVAPHARMASotioSynthonUJP PrahaVAKOS XT a.s.

ŠevětínArdeapharma

Trhové SvinyMEDISIZE CZ

VodňanyLaminar Medica

Jablonec nad NisouPROFARMA-PRODUKT

LiberecTRUMPF Česká republika

TurnovOntex CZ

Pchery - TheodorGALMED

Roztoky u PrahyVUAB Pharma

ŘežRadioMedic

Vrané nad VltavouMartin Bauer (Megafyt - Pharma)

ŽelevčiceLINET

Rudník u Vrchlabí

PRAHA

Jílové u Prahy

Selection of Manufacturers – Medical & Pharmaceutical Sector


General Machinery

When�we�put�automotive�aside,�which�is�nowadays�the�flagship�of�Czech�industry,�it�is�engineering�in�general�that�is�one�of�the�strongest,�most�traditional�and�globally�recognized�sectors�of�the�Czech�Republic.�The�spectrum�of�products�manufactured�in�the�country�is�overwhelming:�from�the�smallest�machine�parts�and�tools�like�drills;�to�precise�machinery�equipment,�military�hardware,�machinery�tools,�lifts,�cranes,�tractors,�trams,�aircraft,�jet�engines�and�turbines.

Engineering�production�is�evenly�spread�over�the�country�and�comprises�all�ranges�of�enterprises,�from�small�companies�to�large�holdings.�Their�location�is�usually�determined�by�historical�production.�The�synonym�of�the�industry�and�one�of�the�most�famous�Czech�companies�globally�is�Škoda�which�was�originally�established�in�Pilsen�approximately�150�years�ago.�This�world�renowned�producer�of�a�wide�range�of�transport�vehicles�including�trams,�trains,�locomotives,�metro�wagons,�trolleybuses�as�well�as�machine�tools�and�turbines�for�power�plants�was�recently�divided�into�several�companies.�The�division�of�Škoda�that�manufactures�rail�vehicles�including�locomotives�and�trolleybuses,�currently�employs�approximately�4,000�people�in�a�number�of�manufacturing�sites:�Pilsen�(Škoda�Transportation,�Škoda�Electric),�Ostrava�(Škoda�Vagonka),�and�Šumperk�(Pars�Nova).�The�company�is�investing�largely�into�innovation�and�operates�its�own�R&D�center.�

The�Czech�producer�of�turbines�for�power�plants,�Škoda�Power,�that�separated�from�the�original�Škoda�group,�was�acquired�by�Doosan�Heavy�Industries�and�Construction�in�2009.�The�company�has�an�8%�share�of�the�global�turbine�market�and�its�competitiveness�will�be�further�enhanced�by�a�global�R&D�centre�that�opened�last�year�in�Pilsen.�Another�large�producer,�formerly�part�of�the�Škoda�group,�Škoda�Machine�Tools,�now�part�of�ALTA�group,�is�one�of�the�world’s�leading�manufacturers�of�machinery�tools,�based�in�Pilsen.

The�Czech�Republic�has�also�gained�global�recognition�from�the�production�of�heavy�agricultural�and�construction�vehicles.�Among�the�largest�names�belong�Tatra,�LIAZ,�Avia�and�Zetor.�TATRA�Kopřivnice,�a�world�renowned�manufacturer�of�trucks,�draws�upon�its’�more�than�100�years�of�experience,�combined�with�the�implementation�of�the�latest�knowledge�from�its�own�R&D�centre.�In�2011,�the�company�introduced�a�strategic�partnership�with�Dutch�automotive�producer�DAF�Trucks.�Zetor,�a�traditional�tractor�manufacturer�with�a�68�year�history,�is�exporting�over�90%�of�products�abroad.

Other�successful�Czech�engineering�companies�include:�Brano�–�mainly�producing�door�systems�and�a�wide�range�of�components�for�the�automotive�industry,�traditional�weapon�producer�–�Česká�Zbrojovka,�in�Uherský�Brod,�one�of�the�largest�European�train�manufacturers�–�CZ�Loko,�ČZ�Strakonice�–�producer�of�Desta�forklifts�and�many�others.

One�example�of�a�recently�established�company�who�benefited�from�the�Czech�tradition�in�engineering�combined�with�new�high�tech�innovations�is�AROJA,�a�Czech�producer�of�the�largest�3D�printer�in�the�world.�

The�quality�of�local�engineering�talent,�supported�by�education,�expertise�and�the�traditional�background�was�recognised�by�international�investors�who�have�been�coming�to�the�Czech�Republic�since�the�early�1990’s.�Many�of�these�started�by�setting�up�local�branches�and�commencing�a�co-operation�with�domestic�manufacturers.�Gradually,�they�have�increased�their�initial�investments�by�taking�over�local�partners,�developing�new�plants�and�in�many�cases�setting�up�R&D�centres.�Such�companies�operating�on�the�Czech�market�include�for�example:�Bosch,�Ingersoll�Rand,�Daikin�Industries,�Doosan�Bobcat�and�Honeywell,�who�opened�its�first�R&D�laboratory�outside�of�the�USA�in�1993�in�Prague.�Honeywell�also�set�up�a�new�R&D�centre�in�2003�in�Brno,�which�was�later�upgraded�to�a�European�centre,�part�of�Honeywell�Technology�Solutions.�

Robert�Bosch�entered�the�market�in�1992�after�a�joint�venture�with�Czech�Motor�Jikov.�The�factory�focuses�on�production�parts�for�the�automotive�industry.�In�2005,�it�opened�a�new�R&D�and�testing�centre�for�almost�200�people�and�in�2013,�relocated�the�production�of�Denoxtronics�to�the�Czech�Republic�and�extended�the�research�centre�capacity.�Nowadays,�it�is�one�of�the�largest�employers�in�the�industry�with�manufacturing�plants�in�Jihlava,�České�Budějovice,�Brno,�Krnov�and�Albrechtice.�Another�significant�employer�is�Siemens�who�opened�in�1990�and�currently�employs�almost�10,000�people.�

Aviation

The�Aviation�sector�in�the�Czech�Republic,�which�has�a�long�tradition�dating�back�to�the�1920’s,�nowadays�includes�both�manufacturers�of�final�products�(small�planes,�ultralights�and�jet�trainers)�and�suppliers�of�OEM�parts�to�large�producers�such�as�Boeing,�Airbus�and�Embraer.�Moreover,�the�industry�that�employs�approximately�5,000�people�is�gradually�growing�with�overall�revenues�increasing�by�30%�last�year.�One�of�the�largest�domestic�manufacturers�is�Aero�Vodochody,�producing,�among�others,�L-159�jet�trainers�and�S-76�Sikorsky�Helicopters.�Aircraft�Industries�based�in�Kunovice,�which�was�acquired�in�2008�by�Russian�owner�UGMK,�is�a�producer�of�the�legendary�L-410�Turbolet.�Other�traditional�producers�for�the�aviation�industry�include:�Jihlavan,�Jihostroj,�PBS�Velká�Bíteš,�Technometra,�Zlín�Aircraft,�Mesit,�Mikrotechna,�Znojemské�Strojírny�and�a�number�of�others.�

In�the�last�twenty�years,�the�sector�has�attracted�a�number�of�major�international�companies�such�as�Honeywell,�Latecoere,�GE�Aviation,�SAAB,�Driessen�Aerospace,�Mt-Propeller�and�Bell�Helicopters�who�announced�this�summer,�their�new�investment�into�upgrading�its�Prague�facility�into�their�European�customization,�delivery�and�aftermarket�service�centre.�Another�large�investment�announced�this�summer�included�the�200�million�USD�to�be�invested�by�Malaysian�company�Aspirasi�Pertiwi�SDN�BHD�to�Evektor,�a�Czech�producer�of�EV-55�twin-engine�turboprop�outback�aircraft.�The�investment�will�be�used�for�finalising�the�development�and�commencing�the�serial�production�of�the�plane�which�can�carry�14�passengers�or�1,800�kg�of�cargo.�The�development�of�the�plane�represents�one�of�the�most�important�projects�of�the�Czech�Aviation�Industry�in�the�last�20�years.�

Frýdek-MístekNový Jičín

Žďár nad Sázavou

JihlavaVelké Meziříčí

Velká Bíteš

Český Krumlov

Vodňany

Strakonice

Vimperk

Kaplice

Velešín

Domažlice

Ústí nadLabem

Třebíč

Holice

Přerov

Krnov

Bohumín

ZlínHulín

Ledeč nad Sázavou

Chotěboř

Hrotovice

Pacov

OkříškySezimovo Ústí

Soběslav

Milevsko

Klatovy

Hořovice

Klášterecnad OhříRotava

LounyŽatec

Hořice

Liberec

PRAHA

PlzeňOlomouc

Ostrava

Brno

Chomutov

Kolín

Čelákovice

JičínNáchod

KarvináHradecnad Moravicí

Jeseník

Šumperk

Hranice

Ústí nad OrlicíHnátnice

Stříbro

Mikulov

Uherské Hradiště



Most

Trutnov

Uničov

Lutín

Slaný

Benátky nad Jizerou

Beroun

Mladá Boleslav

Nymburk

Dobříš

Český Brod

Komárov Žebrák

Hradec Králové

Dvůr Králové

Vrchlabí

Vamberk

SemilyČeská Lípa

Česká Ves

Lipník nadBečvou

Zábřeh

Mohelnice

PostřelmovAlbrechtice

Slavkovu Brna

Břeclav

Moravský Písek

Staré MěstoKunovice

VsetínSlušovice

Otrokovice

Uherský Brod

Mýto

Odolena Voda

Vlašim

Česká Třebová

Jablonné nad Orlicí

StudénkaVítkovice

Kopřivnice

BlanskoKuřim

Znojmo

Valtice

Strážnice

Říčanyu Brna

DrásovBystřice pod Perštejnem

Hradec Králové Region Olomouc RegionÚstí nad Labem Region

Pilsen Region


Zlín Region

Vysočina Region


Karlovy Vary RegionKlášterec nad OhříZKL

RotavaRotas Strojírny

Benátky nad JizerouDružstevní závody Dražice

BerounCarrier Refrigeration Operation Czech Republic

ČelákoviceTOS Čelákovice

Český BrodTechnometra Český Brod

DobříšDoosan Bobcat Manufacturing

KolínC&F ManufacturingDirac IndustriesEMERSON Electric (Alco Controls)Ingersoll-Rand CZ

Dvůr KrálovéKARSIT HOLDING

HořiceDAHER KARBOX

Hradec KrálovéZVU POTEZ

JičínSeco Group

NáchodATAS elektromotory Náchod

TrutnovSiemens (Nízkonapěťová spínací technika)

VamberkESAB Vamberk

VrchlabíSiemens (Nízkonapěťová spínací technika)

Česká VesŘetězárna

HraniceSSI Shafer

Lipník nad BečvouStojtos Lipník

LutínEdwards

MohelniceSiemens (Elektromotory Mohelnice)

OlomoucBRANO GROUPHoneywell AerospaceMoravské potravinářské strojírnySIGMET

PostřelmovKARSIT HOLDING

PřerovDSP Přerov

ŠumperkŠkoda (Pars nova)Pramet Tools

Uničov Ingersoll-Rand CZUnex

ZábřehSlovácké strojírny

AlbrechticeBosch Termotechnika

BohumínBONATRANS

Frýdek-MístekHuisman Konstrukce

Hradec nad MoravicíBRANO GROUP

KarvináGates Hydraulics

KopřivniceTATRA Kopřivnice


ChomutovParker Hannifin Czech RepublicSandvik Material Technology

LounyLegios

MostKSK Komořany - Slovácké strojírnyM.Ward Manufacturing

Ústí nad LabemADOZBlack & DeckerKONE Industrial

VarnsdorfTOS Varnsdorf

ŽatecCaterpillar (Solar Turbines )

DomažliceRosenberg

HořoviceTedom

KlatovyAerotech Czech

MýtoCarrier Refrigeration Operation- -Czech Republic

PlzeňAliatech MetalAmagasaki Pipe CzechDaikin Industries CZDoosan Škoda PowerGÜHRINGIscar ČRLOMA SystemsPrecision Castparts Corporate CZŠkoda ElectricŠkoda Machine Tools (Alta)Škoda TransportationTechnoCraneZodiac Aerospace (Driessen Aerospace CZ)

StříbroKermi

South Bohemian RegionČeský KrumlovFroniusLinde Pohony

KapliceBRAWEEngel StrojírenskáHauser

MilevskoZVVZ Machinery

Sezimovo ÚstíKovosvit MAS

BlanskoČKD Blansko

BrnoADOZAgunaAlstomBOMARBosch RexrothBrno Rifles - Zbrojovka BrnoDaikin Device CZDanaher MotionDESTILAEM BrnoGKN Stromag BrnoHoneywell Environmental and- -Combustion ControlsIMI International - Norgren CZKrálovopolskáMichel Precizní TechnikaNTSPoclain HydraulicsSiemens, Industrial

TurbomachineryŠmeral Brno

ZETORZKL

BřeclavOtis

Bystřice pod PerštejnemADOZ

HrotoviceMICo

ChotěbořCheops

JihlavaBosch DieselCZ LOKOJihlavan Jihlava

Ledeč nad SázavouDATEL Ledeč

OkříškyALFA IN

PacovPacovské strojírny

TřebíčTedom

Velká BítešPBS Velká Bíteš

Žďár nad SázavouK. HartwalŽďas

HulínToshulin

KunoviceAIRCRAFT Industries (LET Kunovice)Evektor AearotechnikMeister Moravia

OtrokoviceZLIN Aircraft

SlušoviceMould & Matic Solutions

Staré MěstoRay Service

Česká TřebováCZ LOKO

HnátniceAutoneum CZ

HoliceZbrojovka Holice

Jablonná nad OrlicíLUX

Ústí nad OrlicíRieter CZ

Pardubice RegionPrahaAmconBell Helicopter (Textron)GE Aviation Czech (BGA Turboprops)LA CompositeLatecoere Czech Republic (LETOV)LOM PrahaMikrotechna PrahaMt - Propeller (Avia Propeller)

Prague RegionČeská LípaBombardier Transportation CzechTTS Tooltechnic Systems (Narex)

LiberecElitronic

SemilyCharvát AXL

Liberec Region

KomárovBUZULUK

Mladá BoleslavSeco Group

NymburkJDKParker Hannifin Czech Republic

Odolena VodaAERO VodochodyTechnometra Radotín

SlanýDemag Cranes & ComponentsF.X. Meiller Slaný

VlašimMagtech (Sellier & Bellot)

DrásovSiemens Electric Machines

KuřimTOS Kuřim - OS (Alta)

MikulovEmerson Climate Technologies

Moravský PísekSchmolz + Bickenbach

Říčany u BrnaStartech

Slavkov u BrnaEPMSAAB Czech

StrážniceAroja

ValticeMauting

ZnojmoZnojemské Strojírny

SoběslavM beltMOTOR JIKOV

StrakoniceČZDENIOS Česko

VelešínJihostroj

VodňanyA. Pöttinger

Uherské HradištěMESIT

Uherský BrodČeská zbrojovkaSlovácké strojírny

VsetínMEZ Pohony VsetínTES Vsetín

ZlínTAJMAC - ZPS

KrnovKrnovské opravny a strojírny

Nový JičínMuller Weingarten ČR

OstravaDPO - INEKONSE-MI Technology (Alta)Siemens Kolejová vozidlaŠkoda Vagonka

StudénkaMSV Metal Studénka

VítkoviceVítkovice Holding

Selection of Manufacturers – General Machinery Sector


Given�the�size�of�the�country�and�number�of�its�inhabitants,�the�Czech�Republic�offers�one�of�the�most�developed�industrial�markets�in�Europe.�The�first�modern�logistics/industrial�park�was�developed�in�Prague�in�1997.�The�strong�retail�boom,�attractive�government�incentives�and�the�entry�of�the�Czech�Republic�to�the�European�Union�in�2004,�further�enhanced�both�construction�activity�and�demand�in�the�warehousing�sector,�spreading�out�to�the�regions.�

The�total�modern�industrial�stock�in�the�Czech�Republic�(which�is�offered�on�the�letting�market),�currently�stands�at�5.1�million�m2�and�consists�of�new,�high�quality�buildings�which�meet�the�highest�international�standards.�This�comprises�both�distribution�space�as�well�as�premises�for�light�manufacturing�purposes.�

In�the�last�fifteen�years,�the�pace�of�development�underwent�different�stages.�In�the�early�years�(2000–2004)�the�total�new�supply�in�the�country�reached�over�400,000�m2.�In�the�following�five�years�(2005�–�2009),�which�can�be�referred�to�as�the�first�boom�period,�the�total�level�of�completions�amounted�to�3�million�m2.�Between�2010�and�2014,�additional�new�supply�reached�over�1�million�m2.�This�represents�an�annual�supply�of�between�200,000�m2�to�350,000�m2�in�the�last�five�years,�out�of�which,�over�80%�was�developed�after�binding�lease�contracts�were�signed.

Stock and Vacancy in the Czech Republic

0500 000

1 000 0001 500 0002 000 0002 500 0003 000 0003 500 0004 000 0004 500 0005 000 0005 500 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%

5%

10%

15%

20%

25%

Stock Vacancy rate

Source: JLL, April 2015

The�most�interesting�areas�for�warehouse�facilities�are�those�within�close�proximity�of�highway�connections.�The�most�developed�area�in�the�Czech�Republic�is�within�the�Greater�Prague�Region�where�nearly�half�of�the�total�modern�warehouse�space�is�concentrated,�followed�by�Brno,�Pilsen�and�Ostrava.�Recently,�Mladá�Boleslav�in�the�Central�Bohemian�region,�the�seat�of�the�Škoda�Car�Company,�has�experienced�rapid�development�and�today�represents�the�fifth�largest�industrial�submarket�of�the�country.

Industrial Supply in the Czech Republic

40%

16%

14%

8%

7%

5%3%

2%2% 2% 1% Greater Prague

Brno region

Pilsen region

Ostrava regionCentral Bohemiaregion

Ústí nad Labem region

Liberec region

Pardubice region

Olomouc region

Jihlava region

Hradec Králové region

�Source: JLL, Industrial Research Forum, April 2015

The�largest�logistics�parks�of�the�country�are�P3�Prague�Horní�Počernice�with�nearly�320,000�m2,�in�Prague,�followed�by�CTPark�Bor�(270,000�m2)�in�the�Pilsen�region�and�Prologis�Park�Prague-Jirny�(220,000�m2).�CTPark�Ostrava�and�CTPark�Brno�conclude�the�top�five�major�industrial�parks.�These�five�parks�account�for�about�25%�of�the�entire�modern�industrial�stock�on�the�Czech�market.

The�major�developers�of�industrial�parks�in�the�country�include�CTP�Invest,�Prologis,�VGP,�Panattoni�and�P3.�Other�large�international�groups�active�on�the�market�are�Segro,�Goodman�and�Amesbury.��In�addition,�there�are�strong�domestic�players�such�as�D+D�Real,�Uno�and�Outulný�Group.�

Strong�competition�among�developers,�fuelled�by�growing�demand�in�the�booming�years�around�2006–2008,�led�to�speculative�construction�which�came�to�a�halt�at�the�beginning�of�the�financial�crisis.�The�oversupply�situation,�which�was�suddenly�a�new�experience�for�the�market,�was�gradually�overcome�by�steady�absorption�combined�with�a�restrictive,�conservative�approach�of�developers�and�financial�institutions.�A�focus�on�pre-let�and�built-to-suit�construction�has�prevailed�on�the�market�since�2009�and�has�had�a�positive�influence�on�the�vacancy�rate.�From�almost�19%�in�2009,�vacancy�dropped�over�the�following�years�to�the�current�(Q1�2015)�level�of�7.8%�for�the�Czech�Republic�and�8%�for�Prague.�The�other�large�submarkets�of�Brno,�Pilsen�and�Ostrava�are�all�between�7%�–�11%.

The�demand�for�distribution�and�light�industrial�space�in�the�Czech�Republic�in�the�last�five�years�was�ranging�between�0.8�million�m2�in�2011,�to�over�1.3�million�m2�in�2014,�which�was�the�best�annual�result�in�gross�take-up�in�the�markets�history.�The�total�volume�leased�to�industrial�tenants�in�the�last�5�years�amounted�to�over�5�million�m2.�The�most�demanded�regions�are�Prague,�Brno�and�Pilsen.�

The�major�drivers�of�demand�over�the�last�several�years�were�predominantly�manufacturing�companies�(mostly�from�the�automotive�and�electronics�sectors),�followed�by�logistics�companies�(3PLs).�For�the�past�two�years,�manufacturing�companies�recorded�more�than�a�35%�

6. The Czech Industrial Real Estate Market


share�of�net�take-up.�Recently,�a�number�of�companies�from�the�retail�sector,�especially�internet�retailers,�have�started�to�take�a�higher�share�on�the�take-up.�This�trend�is�expected�to�increase�further�in�the�near�future.

Czech Republic Logistics Market Overview

Source: JLL, IRF, April 2015

Prime�rents�in�the�Czech�Republic�refl�ect�the�maturity�of�the�market,�predominantly�with�the�evolution�of�supply�and�demand�which�has�evolved�considerably�since�1997,�when�fi�rst�industrial�buildings�were�developed�in�the�Greater�Prague�region.�Since�then,�the�market�has�registered�a�continuous�stabilisation�of�prime�rents�reaching�as�high�as�€ 6.5�per�m2�/�per�month�in�1997�and�dropping�to�€ 5.5�per�m2�/�per�month�towards�the�end�of�2003.�Increased�competition�from�newly�delivered�projects,�combined�with�the�global�economic�downturn�since�2008�led�to�a�further�stabilisation�of�prime�rents�to�the�current�level�of�€ 4.25�per�m2�/�per�month.

Prime Industrial Rents and Yields in the Czech Republic

0 €

10 €

20 €

30 €

40 €

50 €

60 €

70 €

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%

2%

4%

6%

8%

10%

Prime Annual Rent Mid Point Yield

Source: JLL, April 2015

Remon L. VosCEOCTP Invest

“Initially, multinationals came to the Czech Republic for low cost manufacturing projects. They soon discovered the strategic location of the Czech Republic in relation to Germany, Austria and the rest of central Europe, in addition to its well-developed road network and the availability of a highly qualifi ed and motivated workforce. Nowadays many of CTP’s clients have full size factories with in-house R&D facilities in the Czech Republic. In many cases they have consolidated a number of their European operations with the Czech facility now operating as their main sites with long-term commitments. CTP’s key clients include: TNT, DHL, UPS, Schenker, Brembo, Valeo, IMI, Honeywell, ABB.CTP has been investing in premium class properties throughout the Czech Republic since 1998. CTP´s current portfolio includes more than 200 buildings, totalling 2.2 million sqm of let-able area and 400 clients who together employ 35,000 people. On average CTP constructs 200,000 sqm per year, 70% for existing clients which says a lot. A large portion of the network is strategically located in the regional cities close to the country’s well renowned technical universities and long-term traditional manufacturing and engineering hubs.CTP owns and operates the CTPark Network, consisting of full service business parks, offering 5 unique property types from 350 sqm for suppliers and start-ups, to custom built projects of 70,000 sqm and more. CTP itself employs 150 people who are always available on site to provide project management, asset management and development services. CTP is privately owned and the investments are fi nanced through equity and bank loans. CTP clients wish to invest in things they know and where money is to be made, property is not their core business. CTP cooperates closely with the Czech authorities to ensure smooth procedures.”

Martin Polak Vice�President�&�Country�ManagerPrologis Czech Republic & Slovakia

“Located at the heart of Central Europe, the Czech Republic serves as a logistics hub with easy and effi cient connections to key European markets, such as Germany, Poland, Austria and Slovakia, and, from them, to the rest of continental Europe. For producers and manufacturers with global supply chains, this ease of access is an essential factor in location strategy. Furthermore, manufacturers need to maximize their effi ciency in every way, which means co-operating with all participants in the logistics chain. For that reason, the Czech Republic, which offers a skilled and experienced labour force in a central location, is a competitive solution.At Prologis we are mindful of the structural changes in consumer spending and technology, which lead to our customers needing to increase their requirements for logistics space. We receive demand from manufacturers to lease facilities in a variety of markets in the Czech Republic, especially Prague. With our global experience we are committed to meeting these requirements, by offering facilities that suit the needs of every customer in the Czech Republic and around the world. Our clients include: DHL, Globus, Raben, Gefco and Tesco.”

TOTAL INDUSTRIALSTOCK (sqm)

VACANCY RATE

UNDER CONSTRUCTION (sqm)

692

000

116

000

11.2

%

00 0%

233

000

6 00

0

6.4%

2 04

4 00

021

2 00

0

8.0%

170

000

8 00

0

0%

6 00

00 38

.1%

381

000

0 3.6%

100

000

0 3.0%

65 0

0027

000

15.9

%12

4 00

00 14

.3%

828

000

2 00

0

6.7%

100

000

13 0

00

14.2

%8

000

0 0%

393

000

16 0

00

7.3%

OLOMOUCOSTRAVA

LIBEREC

HRADEC KRÁLOVÉ

CENTRALBOHEMIA

PRAGUE

ZLÍN

JIHLAVA

ÚSTÍ NAD LABEM

BRNO

SOUTHBOHEMIA

PILSEN

PARDUBICE

KARLOVY VARY


The�decision�to�rent�or�buy�a�production�facility�is�one�of�the�first�which�should�be�taken�in�terms�of�real�estate.�This�decision�largely�depends�on�the�goals�of�the�manufacturing�company,�the�time�needed�to�be�operational,�expansion�plans,�and�the�desired�flexibility.�Consideration�is�also�given�to�tax�implications,�the�cash�flow�position�and�the�availability�of�real�estate�in�a�specific�location.�

Three�rental�and�three�purchase�methods�for�real�estate�will�be�described�in�this�chapter,�as�well�as�their�implications�and�timeframe.�

Rent a facility? Three main options

Option 1: A Built-to-Suit facility on a greenfield site

Built-to-Suit�(BTS)�is�a�dedicated�building�developed�specifically�to�suit�the�particular�needs�of�a�given�investor.

The�entire�investment�process�is�led�by�the�developer,�who:�

� presents�the�site�offers;

� proceeds�with�the�‘due�diligence’�of�the�selected�site;

� purchases�the�chosen�site�(subject�to�a�binding�agreement�with�the�investor);

� finances�and�supervises�the�entire�development�process;

� hands�over�the�building�to�the�investor�in�the�form�of�a�leasehold.

� extracts�the�land�from�the�agricultural�fund,�which�is�an�additional�cost�based�on�a�fee�per�m2�usually�in�Czech�crowns.��

The�investor�acquires�a�building:

� in�the�form�of�a�leasehold,�based�on�a�lease�agreement�(typically�a�minimum�lease�length�of�7–10�years�and�usually�a�rent-free�period�is�negotiated);

� designed�and�constructed�according�to�the�investor’s�requirements�(location,�technical�specification,�shape�of�the�building,�purpose�of�the�facility�–�e.g.�heavy�production,�light�production,�warehouse--sorting�plant).�

In�this�scenario�the�investor:

� does�not�have�to�commit�any�funds�for�the�purchase�and�there�are�no�initial�payments;

� can�benefit�from�additional�incentives�such�as�being�located�in�a�Special�Economic�Zone.

Option 2: A Built-to-Suit facility in a warehouse park

Built-to-Suit�(BTS)�in�a�Warehouse�Park�is�a�specific�form�of�BTS�project,�where�the�specially�designed�facility�is�developed�as�a�part�of�an�existing�or�planned�warehouse�park.

The�main�differences�between�a�‘classic�BTS’�and�a�BTS�in�a�Warehouse�Park�are:

� shorter�timeline�for�the�process;

� the�selection�of�the�site�is�determined�by�the�developer’s�portfolio;

� the�construction�of�the�premises�can�start�almost�immediately,�as�the�site�is�typically�equipped�with�the�necessary�infrastructure�and�connections.�Usually�the�developer�already�holds�all�environmental�and�building�permits�required.

The�location�of�the�BTS�project:

� is�determined�by�the�developer’s�site�portfolio;

� is�limited�to�the�logistics�hub/main�industrial�regions�in�Czech,�next�to�motorways,�national�road�junctions�and�by-passes,�which�does,�however,�improve�the�transport�connectivity.

Option 3: Leasehold of an existing building

In�this�scenario�the�investor�becomes�the�lessee�of�a�building�in�one�of�the�parks�located�in�the�main�logistics�regions�in�the�Czech�Republic.�

� The�investor�signs�a�lease�agreement,�with�the�typical�minimum�lease�length�being�3�years.

� The�use�of��the�space�is�determined�by�the�developer�(storage�space,�light�production,�etc).

� The�leased�premises�have�a�standard�technical�specification.

� The�space�can�be�adapted�to�the�lessee’s�needs,�although�the�scope�of�such�change�is�limited.

� Adaptations�can�be�financed�by�the�lessee�or�by�the�developer;�the�cost�may�be�paid�as�additional�rent�or�offset�against�incentives�and�in�most�cases,�can�benefit�from�tax�exemptions,�subject�to�meeting�formal�criteria.

This�option�is�preferable�for�investors�who:

� need�the�space�as�soon�as�possible;

� only�require�a�small�production�space;

� need�more�flexibility

� can�conduct�their�manufacturing�services�in�a�standard�A-class�warehouse�which�has�been�adapted�to�their�needs.�

7. Real Estate: Rent or Buy?


Buy a facility? Three main options

Option 1: Fee development

Fee�development�is�a�form�of�cooperation�between�an�investor�and�a�developer,�where�the�developer�takes�all�the�responsibility�in�the�development�process�and�provides�the�investor�(i.e.�future�owner)�with�a�facility�built�on�the�Investor’s�site�and�according�to�the�investor’s�technical�specification.The�developer:

� proceeds�with�the�due�diligence�of�the�site�(which�has�already�been�purchased�by�the�Investor�or�is�purchased�by�the�Investor�as�part�of�the�process);

� is�responsible�for�financing�and�leasing�the�whole�investment�process;

� negotiates�with�the�general�contractor,�provides�all�environment�and�building�permits,�telecom�connections,�road�access,�construction,�permit�for�use�and�all�paperwork�for�authorities�and�contractors;

� delivers�the�building�according�to�the�exact�timing�and�technical�specification�required�by�the�investor;

� having�finished�the�development,�hands�over�the�building�to�the�investor�in�the�form�of�a�freehold�title.

After�completion�of�the�whole�process,�the�investor:

� is�the�owner�of�the�site�and�the�building;

� operates�in�a�building,�which�has�been�designed�and�constructed�according�to�the�investor’s�specific�business�requirements;

� can�benefit�from�government�incentives�in�a�form�of�tax�relieve.

Option 2: Own development

The�investor�leads�the�whole�development�process.�This�involves:

� proceeding�with�due�diligence�and�purchasing�the�site�

� determining�the�technical�specifications�for�the�premises;

� being�responsible�for�all�paperwork�and�permits�with�regard�to�authorities�and�contractors;

� organising�the�tender�for�an�architect�and�negotiating�the�conditions;

� organising�the�tender�from�general�contractor�among�construction�companies�and�negotiating�conditions;

� supervising�the�whole�development�process.

The�funding�of�the�project�is�the�responsibility�of�the�investor.

The�investor�is�the�owner�of�the�site�and�constructed�building.

The�length�of�the�project�development�is�dependent�on�the�investor.

Option 3: Acquisition of an existing building

In�this�scenario�the�investor�acquires�an�existing�building,�and�the�land�it�is�on,�according�to�technical�specification�and�location�preferences.

The�building�can�be�adapted�to�meet�all�of�the�investor’s�requirements�and�the�Investor�bears�all�the�costs�regarding�any�improvements.

Tomáš MíčekCountry�Head�Czech�RepublicP3

“The Czech Republic’s industrial property market goes from strength to strength, reflecting how the country’s manufacturing sector has become a key part of the European supply chain. Reasonable labour costs, political and economic stability, plus its proximity to Western Europe continue to make the country an attractive location in which to set up a factory. These pull-factors are reflected in development activity in the industrial property sector last year, which matched the record levels of 2007. What we are seeing across our portfolio, which is one of the largest in the country following our purchase of 11 parks last year, is also the growth in higher value-add output, research and investment into new technologies and services by Czech manufacturers. This is a sign of how far the industrial property market has developed and matured. The Czech Republic’s central location in continental Europe makes it a key distribution centre in the supply chain to the West, particularly Germany, as we see with our auto component supplier customers such as Knorr-Bremse and Grupo Antolin. However, the Czech Republic also serves as a strategic location from which to distribute to Central Europe and Eastern Europe. We recently completed a 40,000 m 2 Build-to-Suit (BTS) project at one of our Prague parks for VF Corporation, the owner of premium designer wear brands Vans, Wrangler, The North Face and Timberland, which will serve as a distribution hub for the region, for example. E-commerce is another emerging trend in locations close to large cities, as we have found in the growing cluster at the Horní Počernice park on the outskirts of Prague. All these developments support the positive prospects for the Czech market, which we are responding to through our Build-to-Suit developments and ample land bank.”


Overview of the permitting process

Once�the�decision�has�been�made�as�to�how�the�property�will�be�acquired,�it�is�necessary�to�go�through�the�steps�of�the�various�legal�and�technical�procedures�in�order�to�obtain�an�occupancy�permit�and�to�be�allowed�to�operate�a�constructed�or�refitted�facility.�The�standard�project�delivery�procedures�are�outlined�in�the�table�below�with�the�provided�average�duration�of�each�step�being�based�on�the�typical�project�and�typical�location.�

The�first�step�consists�of�the�technical�due�diligence�of�the�site�and�the�investigation�of�whether�the�property�is�contained�in�the�local�

master�plan�or,�if�a�planning�decision�will�be�required.�In�addition,�utilities�connection�and�various�consents�relevant�to�the�development,�need�to�be�obtained�together�with�the�environmental�decision.�

The�second�step�is�drawing�up�a�building�design�suitable�for�the�building�permit�in�order�to�obtain�a�valid�building�permit�which�will�allow�the�construction�of�the�facility.�

Finally,�the�commissioning�and�occupancy�permit�procedure�should�be�followed�in�order�to�receive�the�final,�valid�occupancy�permit�which�will�allow�the�operation�of�the�facility.

How quickly can you be operational?

This�largely�depends�on�the�option�chosen,�which�is�discussed�in�the�previous�chapter.�The�options�involving�BTS�for�renting�or�the�fee�development�or,�own�development�of�a�facility�on�a�greenfield�are�the�longest�processes�to�realise�and�have�to�go�through�all�four�steps�which�are�described�in�the�above�table.�This�takes�approximately�62�to�92�weeks�from�the�selection�of�a�greenfield�site�to�an�occupancy�permit�being�issued.�

The�process�of�renting�a�facility�that�will�be�constructed�according�to�the�manufacturer’s�needs�(BTS)�but,�located�in�an�existing�park,�will�

take�less�time�(33�to�65�weeks)�as�the�different�permits�or�work�may,�in�many�cases,�already�be�available,�including�infrastructure�work�and�environmental�decisions.�The�building�permit�can�also�be�obtained�beforehand�so�the�work�can�start�as�soon�as�the�decision�as�to�the�particular�site�is�taken�and�in�parallel,�modification�to�the�existing�building�permit�will�be�requested�to�incorporate�the�specific�building�requirements�of�the�investor/manufacturer.�

Renting�or�acquiring�an�existing�facility�is�the�fastest�way�to�become�operational�in�the�market.�Only�the�modification�of�the�existing�premises�(up�to�10�weeks)�and/or�the�request�for�the�occupancy�permit�will�be�needed.

Permit process and estimated timing

Site selection

Step�1

Technical due diligence (audit) of the plot (2 to 5 weeks)

Zoning (Planning�Decision�required�if�there�is�no�Local�

Master�Plan)

Environmental decision

Utilities connection consents

Building permit design development

Additional consents�which�may�be�required�for�a�particular�development�plot:

–�archaeological�survey–�tree�cutting�permits

–�rainwater�discharge�permit

(3�to�12�months) (3�to�6�months) (2�months) (2�to�5�months) (2�to�6�months)

Step�2 Obtaining a valid building permit (3 to 6 weeks)

Step�3 Construction (20 to 40 weeks)

Step�4 Obtaining a valid occupancy permit (3 to 6 weeks)

The�above�durations�represent�observed�actual�times�of�delivery�for�typical�project�in�a�typical�location.�In�more�complex�situations�the�given�forecasts�might�not�be�sufficient�to�complete�the�particular�activity.�

Source: JLL, 2015


Market practice for leasing space

Leasing space

Lease length typically�three�to�five�years;�seven�to�ten�years�more�common�for�BTS�projects.

Rental basis paid�monthly�in�advance�with�rents�denominated�in�Euro�but�paid�in�CZK.

Lease agreement collateral

bank�guarantee�or�cash�deposit�equivalent�of�three�to�six�months’�rent�and�service�charge,�all�increased�by�VAT.�Along�with�parent�company�guarantee.

Rent increases annually,�according�to�Harmonised�Index�of�Consumer�Prices�(HICP).

Repairs internal,�tenant;�external/structural�and�common�areas,�landlord,�although�recovered�through�service�charges.

Insurancelandlord�covers�costs�of�building�insurance�(recovered�through�service�charges),�tenant�covers�insurance�of�its�own�premises,�contents�and�civil�liability.

Agency fees

15%�to�25%�of�the�annual�rent,�increased�by�VAT,�depending�on�the�lease�length.�Fees�are�typically�paid�by�the�landlord.�Remuneration�may�be�also�calculated�as�a�percentage�of�monthly�rent�or�a�percentage�of�the�total�value�of�a�lease�contact.�In�case�of�renegotiations�on�behalf�of�the�tenant,�remuneration�paid�by�the�tenant�may�be�based�on�the�percentage�of�the�savings�secured�for�the�tenant.

Service Charges ranges�between�30�and�85�Eurocent�/�m²�/�month.�Calculated�on�an�open�book�basis.

Reinstatement negotiable�lease�by�lease.

Other developers’ incentives

partial�or�full�fit-out,�and/or�rent-free�periods:�common�practice�in�the�market,�usually�in�the�range�of�four�to�eight�months’�rent�(in�the�case�of�a�60-month�lease).�Rent-free�periods�and�fit�out�contributions�depend�on�the�transactional�volume�and�lease�length.

Rental Cost largely�depends�on�the�fit-out�requests.

Time frame of the different rental and sales options (based on zoned land)

Source: JLL, 2015

from 13

from 62

from 61

from 13

from 33

from 62

to 46

to 92

to 92

to 46

to 65

to 92

0 10 20 30 40 50 60 70 80 90 100

Acquisition of Existing Building

Own Development

Fee Development

Existing Park

BTS in Park

BTS

Buy

Rent

Weeks


Market practice for purchasing space

Purchasing space

VAT

Asset sale: Transfer�of�plots�of�land�is�subject�to�VAT�in�the�following�cases:��Transfer�of�plots�of�land�on�which�there�are�buildings�fi�rmly�affi�xed�to�the�land��Transfer�of�plots�of�land�on�which�utilities�(water,�gas,�electricity�etc.)�are�built��Transfer�of�plots�of�land�on�which�a�building�can�be�constructed�according�to�a�building�permit

Transfers�of�other�immoveable�property,�including�plots�of�land�other�than�those�listed�above,�will�be�VAT�exempt�after�the�expiry�of�three/fi�ve�years�from�the�fi�rst�approbation�(occupancy�certifi�cate)�or�from�the�date�when�the�fi�rst�use�of�the�structure�commenced,�whichever�occurs�earlier.�There�is�an�option�to�tax�the�transfer�of�immovable�property�after�the�expiry�of�this�period.�Transfer�of�“Intangible”�right�to�build�(i.e.�transfer�of�right�to�build�on�a�plot�of�land�owned�by�the�third�party)�is�subject�to�VAT.�“Tangible”�right�to�build�(i.e.�transfer�of�right�to�keep�a�building�already�constructed�on�a�plot�of�land)�is�exempt�from�VAT�after�3/5�years�from�the�date�of�the�issuance�of�the�fi�rst�permit�to�use.The�3�years�period�applies�for�Buildings�or�“Tangible”�Right�to�build�which�were�acquired�before�2012,�5�years�period�applies�for�Buildings�or�“Tangible”�Right�that�were�acquired�starting�from�2013.�The�VAT�rate�of�21%�VAT�applies�for�buildings�and�land�(commercial�properties)�with�exception�of�the�social�housing.Sale of shares:�is�not�subject�to�VAT.

Real estate transfer tax 4%�of�purchase�price�(typically�payable�by�the�Seller,�but�can�be�agreed�otherwise)

CITAsset sale: 19%�on�the�difference�between�tax�book�value�of�the�assets�and�the�agreed�sales�priceSale of share:�is�not�subject�to�taxation,�subject�to�meeting�certain�criteria

Real estate taxBased�on�the�size�of�the�municipality�and�local�coeffi�cient.�The�basic�tax�rate�is�further�increased�by�the�number�of�fl�oors�in�the�building�(e.g.�RET�on�100�m2�of�offi�ce�space�located�in�Prague�is�approx.�CZK�1,500)

Registration fee Fee�for�the�registration�in�the�Cadastral�Register�is�CZK�1,000�(approx.�EUR�36.50)

Prologis Park Prague – Úžice


Definition of Property under Czech Law

Under�the�principle�“superficies�solo�cedit”�which�is�effective�in�Czech�republic�from�2014�the�space�over�and�under�the�land,�the�buildings�and�other�devices�set�up�on�land�(except�for�temporary�buildings),�as�well�as�everything�embed�in�land�or�attached�to�wall�of�building,�are�parts�of�the�land.

Cadastral Register

All�plots�of�land�and,�with�certain�exceptions�set�forth�in�the�law,�all�construction�thereon�in�the�Czech�Republic�(including�residential�apartments�and�non-residential�premises�that�have�been�categorized�as�separate�assets/units)�are�registered�in�the�Cadastral�Register.The�Cadastral�Register�is�a�record�of�rights�to�real�property�including,�in�particular:�ownership�rights,�mortgages,�easements�and�pre-emption�rights�(where�the�latter�takes�effect�as�a�right�in�rem).�Leases�and�option�agreements�encumbering�an�ownership�right�are�not�obligatory�recorded�in�the�Cadastral�Register,�however�voluntary�registration�is�possible.�The�Cadastral�Register�also�contains�a�Collection�of�Deeds,�which�includes�decisions�of�public�authorities,�agreements�and�other�deeds�based�on�which�the�record�in�the�Cadastral�Register�was�made.�The�Cadastral�Register�is�publicly�accessible;�anyone�is�entitled�to�access�it�in�order�to�make�extracts,�copies�and�notes.�Limited�fees�are�payable.�

Owners of Real Estate

Under�Czech�law,�every�individual�and�legal�entity�enjoys�the�same�right�of�ownership�of�real�property.�The�same�applies�to�foreign�citizens�and�foreign�legal�entities�in�the�Czech�Republic.There�are�no�restrictions�in�acquisition�a�property�in�the�Czech�Republic�for�foreigners.

Transfers of Real Estate

In�order�to�transfer�ownership�title�to�real�property,�the�following�formal�requirements�and�procedures�must�be�met�and�followed:

� An�agreement�on�the�transfer�of�real�property�must�be�made�in�writing.�Signatures�of�the�transferor�and�the�transferee�must�be�affixed�in�the�same�document�and�must�be�officially�verified.

� The�transfer�agreement�must�contain�a�description�of�the�real�property�to�be�transferred.�For�real�property�that�is�subject�to�registration,�this�will�be�the�information�recorded�at�the�Cadastral�Registry.�For�other�real�property�not�subject�to�registration,�as�detailed�a�description�as�possible�is�required.

� The�transfer�of�real�property�that�is�subject�to�registration�becomes�effective�on�the�date�of�registration�of�the�new�owner�in�the�Cadastral�Register.�However,�the�transfer�is�effective�retroactively�as�of�the�date�of�filing�of�the�application�for�registration�with�the�respective�Cadastral�Office.�A�transfer�of�real�estate�that�is�not�subject�to�registration�becomes�effective�on�the�effective�date�of�the�relevant�transfer�agreement.�Since�1�January�2012�standardized�forms�are�used�for�applications�to�the�Cadastral�Register.

Rights to Real Property Owned by a Third Party (Iura in re aliena)

Right to build (právo stavby)

Right�to�build�enables�the�placement�of�a�building/construction�on�a�land�plot�of�a�different�party.�It�is�time�limited�for�the�maximum�length�of�99�years�after�which�the�building�becomes�the�property�of�land�owner�for�the�monetary�compensation.�

Servitudes

� obligation�of�the�owner�to�act�or�refrain�from�action�in�favour�of�a�third�party�

Lease (nájem)

� Right�to�use�a�property�for�a�definite�or�indefinite�period�of�time�subject�to�payment.�

Tenancy (pacht)

� the�right�to�use�and�collect�profits�from�real�estate�for�a�definite�or�indefinite�period�of�time,�subject�to�payment

There�is�no�obligatory�registration�of�the�lease�or�tenancy�in�any�register�in�the�Czech�Republic.�Right�and�obligations�of�the�landlord�from�the�lease�and/or�tenancy�are�automatically�transferred�to�the�acquirer�with�the�transfer�of�the�ownership�right�to�the�leased�property.�

Zoning Plan and Planning, Building and Use Permits

Czech�law�generally�requires�planning�and�building�permits�for�any�property�development.�Any�use�of�the�development,�when�completed,�must�then�be�additionally�approved�by�a�building-use�permit.�A�building--use�permit�must�then�additionally�approve�any�use�of�the�development,�when�completed.

Planning�permission,�as�a�first�stage�permit,�may�be�obtained�only�if�the�application�for�planning�permission�(i.e.�the�development�project)�complies�with�an�approved�urban�study�or�zoning�plan.�If�an�urban�study/zoning�plan�is�not�consistent�with�the�intended�development�project,�a�change�to�the�urban�study/zoning�plan�is�possible.�This�procedure�would�likely,�however,�be�rather�time-consuming.

The�approval�process�for�planning�permission�can�be�extremely�complex�and�protracted,�since�a�number�of�public�authorities�would�be�involved;�these�include�the�Fire�Department,�Department�of�Hygiene,�Heritage�Protection�Office,�Chief�Architect’s�Office,�Transport�Department,�Environmental�Office�and�others.�Permission�itself,�when�issued,�comes�from�the�relevant�Building�Office.

For�construction�works,�a�building�permit�must�be�obtained�from�the�Building�Office.�A�building�permit�is�required�not�only�for�new�construction,�but�also�for�major�reconstruction�and�renovations�or�alterations.�Application�for�a�building�permit�must�be�in�compliance�with�prior�planning�permissions.

8. Real Estate AcquisitionSection provided by PwC Legal


What is the acquisition processes when acquiring from private or public entities?

Acquisition from a private party

This�acquisition�process�is�straightforward�and�comparable�to�other�EU�countries.�‘Private�party’�refers�to�a�private�individual�or�entity.

Process when buying from a private party

Negotiation process

� Preliminary Agreement (not obligatory)

The�period�between�the�preliminary�agreement�and�the�purchase�agreement�can�be�used�to�obtain�fi�nancing.�The�vendor�is�obliged�to�make�certain�that�the�title�to�the�real�estate�is�clear�and�capable�of�being�conveyed�to�the�buyer.�

� Purchase agreement

The�purchase�agreement�must�be�signed�in�a�written�form�and�signatures�of�parties�must�be�on�the�same�deed.�The�signatures�must�be�verifi�ed.

� Proposal to register the transfer to Land Cadastre

In�a�period�of�time�between�proposal�and�permission�to�register�(completion�of�registration)�the�custody�of�purchase�is�often�used�in�order�to�eliminate�the�insecurity.

� Permission to register

Usually�within�2�–�3�month�from�the�submission�of�proposal�to�the�relevant�Cadastral�Offi�ce.

Acquisition from a public entity

A�signifi�cant�proportion�of�real�estate�in�the�Czech�Republic�is�owned��by�the�state�and�local�authorities.�Such�real�estate�can�be�sold:

1.�Via�direct purchase�by�the�purchase�agreement�which�must�be�confi�rmed�by�administrative�body�and�the�purchase�price�must�be�at�arms-lengths�principal�in�given�place�and�time.�

2.�Via�public tender.�

Tender process when buying from a public entity

� Initial contact public entity and investor

The�property�assigned�for�sale�is�published�by�State�representing�offi�ce�in�property�affairs�(Urad�pro�zastupovani�statu�v�majetkovych�vecech).�

� Valuation

The�public�authority�set�the�initial�asking�prices�based�on�the�valuation�by�an�independent�valuator.�The�initial�asking�price�is�mostly�lower�than�usual�price�in�given�place�and�time

� Public tender process

Announcement�–�at�least�30�days�before�the�planned�date�of�the�tender.Payment of deposit –�as�specifi�ed�in�the�auction�terms.�Submission of offers.�Assignment decision�–�the�contract�is�formed�by�the�assignment�decision.�


Introduction

A�major�change�of�private�law,�as�well�as�of�the�law�of�business�corporations,�took�place�in�2014�and�simplified�the�process�of�setting�up�a�business�presence�in�the�Czech�Republic.�

All�forms�of�business�are�accessible�to�foreign�investors,�entities�and�persons�at�the�same�conditions�as�those�of�Czech�nationals.�Below,�we�present�the�main�features�and�requirements�for�setting�up�a�business�in�the�most�frequent�legal�forms�used�in�the�Czech�Republic.�

Limited Liability Company (“společnost s ručením omezeným – s. r. o., spol. s r. o.”)

A�limited�liability�company�is�set�up�by�a�memorandum�of�association�in�the�form�of�a�notarial�deed.

Following�that,�the�founder(s)�deposit�the�registered�capital�in�a�special�bank�account�or,�hand�the�non-monetary�contribution�to�the�registered�capital�over�to�the�entitled�person.�

The�minimum�registered�capital�of�a�limited�liability�company�is�CZK�1�(approximately�3�Euro�cents)

An�application�for�registering�the�new�company�must�be�filed�with�the�relevant�Commercial�Register�within�a�term�of�6�months.�

Czech�regulation�also�stipulates�the�possibility�to�directly�register�a�newly�established�company�through�a�notary�who�draws�up�the�articles�of�association�(please�note�that�this�system�is�not�yet�in�operation).

Setting up a limited liability company includes:

� execution�of�a�memorandum�of�association�or,�a�deed�of�association�in�the�form�of�a�notarial�deed;

� payment�of�registered�capital�in�the�amount�of�at�least�30%�of�the�registered�capital�in�the�case�of�a�monetary�contribution�or�the�whole�contribution�in�case�it�is�non-monetary;

� registration�in�the�Commercial�Register;�obtaining�trade�licences�in�accordance�with�the�scope�of�business;�and

� registration�with�a�tax�office.

The main features of a limited liability company are:

� maximum�number�of�shareholders�is�not�limited;

� ownership�of�a�limited�liability�company�with�one�shareholder�by�another�limited�liability�company�with�one�shareholder�is�permitted;

� nominal�value�of�one�share�is�at�least�CZK�1;

� shareholder�can�own�more�shares�of�several�types�(if�stipulated�in�the�articles�of�association);

� preference�shares�can�be�issued�by�the�company;�

� shareholders�are�personally�responsible�for�the�debts�of�the�company�only�up�to�the�unpaid�part�of�their�share�of�the�registered�capital;

� shares�can�also�be�issued�in�the�form�of��“certificates”�(in�Czech:�kmenové�listy)�similar�to�shares�in�a�joint�stock�company;�Certificates�are�transferable�by�endorsement�and�handover�and�do�not�require�a�written�contract;

� transfer�or�pledge�of�(ordinary)�shares�can�be�made�if�not�restricted�by�the�memorandum�of�association.�For�a�transfer,�a�written�contract�with�verified��signatures�is�required;�

� company�is�represented�by�one�or�more�executives.�Legal�entity�can�also�be�appointed�as�an�executive�of�the�company,�in�that�case�the�executive�of�such�a�legal�entity�represents�the�company;

� creation�of�a�supervisory�board�is�optional�only.

Joint-Stock Company (“akciová společnost – a. s., akc. spol.”)

Incorporation�of�a�joint-stock�company�generally�involves�procedures�similar�to�those�used�for�a�limited�liability�company.�

Setting�up�a�joint-stock�company�involves�the�adoption�of��articles�of�association�in�the�form�of�a�notarial�deed.�Both�natural�and�legal�persons�can�participate�in�a�joint�stock�company.�The�company�can�be�established�by�a�sole�founder.�

A�joint-stock�company�establishes�registered�capital�which�is�divided�into�shares�of�their�nominal�value.�Contribution�to�registered�capital�can�be�made�via�a�monetary�or�non-monetary�contribution.�In�the�case�of�a�non-monetary�contribution,�the�contribution�is�evaluated�by�an�expert�chosen�by�the�founder(s)�or�board�of�directors

After�that,�the�company�then�issues�shares.�The�issue�rate�cannot�be�lower�than�the�nominal�value�of�the�share.�The�establishment�of�a�joint--stock�company�is�effective�when�each�founder�has�paid��(i)�the�share�premium�and�(ii)�at�least�30%�of�the�nominal/book�value�of�the�issued�shares.

Shares

� company�can�issue�either�shares�with�a�nominal�value�or,�so-called�no-par�value�shares,�whose�value�is�set�as�a�proportion�between�the�actual�registered�capital�and�the�number�of�issued�shares

� bearer�shares�can�be�unlimitedly�transferred,�whereas�registered�shares�are�transferred�by�endorsement

� shares�can�be�either�certified�or�book-entry�only

� rights�and�duties�of�a�shareholder�differ�depending�on�the�nature�of�shares.�A�joint-stock�company�is�based�on�ordinary�shares�but�can�also�issue�preferred�shares.

9. Setting-up a Business Section provided by PwC Legal


The main features of a joint-stock company are:

� shareholders�are�not�personally�responsible�for�the�debts�of�the�company

� minimum�share�capital�is�CZK�2,000,000�or,�EUR�80,000�(the�Czech�legal�system�allows�share�capital�to�be�in�EUR�if�the�company’s�accounting�is�kept�in�EUR.)

� founders�of�a�joint-stock�company�shall�decide�whether�the�company�will�be�administered�by�the�board�of�directors�and�supervisory�board�(dualistic�management)�or,�by�an�administrative�board�and�statutory�director�(monistic�management)

Limited Partnership (“komanditní společnost – k. s., kom. spol.”)

A�limited�partnership�can�be�founded�by�at�least�two�persons�where�one�is�responsible�to�an�unlimited�degree�for�the�debts�of�the�company�(general�partner)�whereas�the�other�is�responsible�to�a�limited�degree,�

similar�to�a�shareholder�in�a�limited�liability�company�(limited�partner).�Profi�t�and�loss�are�divided�between�the�company�and�the�general�partners.�Part�of�the�profi�t�allotted�to�the�company�is�distributed�between�the�limited�partners.�Limited�partners�do�not�cover�the�losses�of�the�company.�

Branch of a foreign company (“Pobočka zahraniční osoby”)

The�presence�of�a�branch�of�a�foreign�entity�also�requires�registration�in�the�Commercial�Register.�The�branch�needs�to�apply�for�trade�licences.��The�branch�of�a�foreign�entity�does�not�have�a�separate�legal�entity�and�it�is�represented�by�the�head�of�the�branch�appointed�by�the�foreign�entity.

CTPark Bor


Corporate – taxes on corporate income

The�19%�CIT�rate�applies�to�all�business�profits,�including�capital�gains�from�the�sale�of�shares�(if�not�exempt�under�the�participation�exemption�regime).

There�is�a�special�tax�rate�of�15%�levied�on�dividend�income�of�Czech�tax�resident�entities�from�non-resident�entities�(unless�subject�to�participation�exemption).

Capital gains

Capital�gains�from�the�sale�of�shares�in�a�Czech�company�may�be�exempt�from�Czech�taxation�if�all�of�the�following�conditions�are�met:

� The�Czech�or�EU�parent�holds�at�least�10%�of�the�shares�of�the�subsidiary�for�at�least�12�months.

� The�subsidiary�is�a�tax�resident�of�the�Czech�Republic,�another�EU�member�state�and/or�Switzerland,�Norway,�Island�and�Liechtenstein1.

� Both�the�parent�and�the�subsidiary�have�one�of�the�legal�forms�listed�in�the�Annex�to�the�EU�P/S�directive.

� The�parent�or�the�subsidiary�are�not�exempt�from�corporate�taxation�or�may�not�choose�to�be�exempt,�and�the�tax�rate�applicable�to�their�income�is�greater�than�0%.

Thin capitalisation

Thin�capitalisation�applies�only�to�related-party�loans.�

� The�debt-to-equity�ratio�for�related-party�loans�is�4:1�(6:1�for�the�financial�services�industry),

� Unrelated-party�loans�(e.g.�bank�loans)�guaranteed�by�a�related�party�are�not�considered�related-party�loans�for�thin�capitalisation�purposes.�If,�however,�a�bank�provides�a�back-to-back�loan�to�a�Czech�entity�where�the�loan�is�provided�to�the�bank�by�a�related�party,�such�a�bank�loan�to�the�Czech�entity�is�considered�a�related�party�loan.

� Interest�on�profit-participating�loans�is�not�deductible�for�tax�purposes.

Controlled foreign companies (CFCs)

There�is�no�CFC�legislation�in�the�Czech�Republic.

Investment incentives

Investment�incentives�are�available�only�to�Czech�entities�(including�Czech�subsidiaries�of�foreign�companies).�Incentives�include�income�tax�relief,�financial�support�for�the�creation�of�new�jobs,�financial�support�for�training�or�retraining�of�employees,�cash�grant�on�capital�expenditures,�and�the�transfer�of�land�at�a�specially�reduced�price.

Research and development (R&D) allowance

Up�to�100%�of�specific�R&D�expenses�(or�costs)�incurred�in�a�given�tax�year�may�be�deducted�from�the�tax�base�as�a�special�tax�allowance.�These�costs�are�deducted�twice�for�tax�purposes:�once�as�a�normal�tax-deductible�cost�and�then�again�as�a�special�tax�allowance.��An�additional�10%�may�be�applied�from�the�difference�by�which�the�current�year�qualifying�costs�exceed�those�of�the�prior�period.

Value-added tax (VAT)

VAT�is�charged�at�21%�on�the�supply�of�goods�and�services�within�the�Czech�Republic,�but�certain�supplies�(such�as�groceries)�are�taxed�at�a�rate�of�15%�or�10%�respectively�(e.g.�books).

Real estate transfer tax

Real�estate�transfer�tax�is�governed�by�a�separate�law,�but�the�rules�have�mostly�remain�the�same,�as�well�as�the�tax�rate�of�4%�on�the�greater�of�the�transaction�price�or�the�officially�appraised�value.�The�taxpayer�may�be�contractually�agreed�(previously,�it�was�the�transferor�with�the�transferee�as�a�guarantor).�Currently�an�amendment�is�discussed�by�the�government,�which,�among�others�shifts�the�tax�liability�on�the�buyer.

10. Czech Tax Structure Section provided by PwC Tax

1�As�of�the�relevant�double�tax�treaty�with�Liechtenstein�is�effective.


Information on the content providers

JLL�(NYSE:�JLLs�a�professional�services�and�investment�management�firm�offering�specialized�real�estate�services�to�clients�seeking�increased�value�by�owning,�occupying�and�investing�in�real�estate.�With�annual�fee�revenues�of�$�4.7�billion�and�gross�revenue�of�$�5.4�billion,�JLL�has�more�than�230�corporate�offices,�operates�in�80�countries�and�has�a�global�workforce�of�approximately�58,000.�

JLL�industrial�and�logistics�services�include:

� Tenant�representation� Landlord�&�landowner�advisory� Greenfield�land�search�&�acquisition� Existing�buildings�search�&�acquisition� Built-to-suit�projects�to�own�or�to�lease� Property�market�research�and�consultancy� Technical�due�diligence�and�feasibility�study�for�developments� Construction�services:�project�management,�value�engineering,�

quality�and�cost�control.

Please�visit�www.jll.cz and�www.warehousefinder.cz

PwC�helps�organisations�and�individuals�create�the�value�they’re�looking�for.�We’re�a�network�of�firms�in�157�countries�with�more�than�184,000�people�who�are�committed�to�delivering�quality�in�assurance,�tax,�legal�and�advisory�services.�Tell�us�what�matters�to�you�and�find�out�more�by�visiting�us�at�www.pwc.com.��©�2015�PwC.�All�rights�reserved��PwC�refers�to�the�PwC�network�and/or�one�or�more�of�its�member�firms,�each�of�which�is�a�separate�legal�entity.�Please�see��www.pwc.com/structure�for�further�details.

Hays Specialist�Recruitment�is�the�world’s�leading�company�in�recruiting�qualified,�professional�and�skilled�work.�Today,�with�more�than�40�years�of�recruitment�experience,�the�Group�operates�out�over�245�offices�in�33�countries,�employing�around�7800�staff�worldwide�across�20�specialisms.�We�offer�tailor-made�recruitment�services�on�permanent,�contract�and�temporary�basis�along�with�Executive�Search,�Recruitment�Process�Outsourcing�(RPO)�and�Employer�Branding�Solutions.�Our�role�is�a�straight�forward�but�very�important�one:�we�power�the�world�of�work�by�helping�our�clients�find�the�best�people�they�need�to�develop�their�businesses�and�helping�our�candidates�find�the�best�new�role�for�themselves.�Our�customers�benefit�from�the�specialist�sector�knowledge,�extensive�office�network,�industry�contacts�and�consultants�experienced�in�recruiting�staff�for�various�manufacturing�companies�across�the�CEE�region.�To�find�out�more�about�Hays�please�visit�www.hays.com.

JLL Contacts

Tewfik SabonguiManaging�Director

JLLCzech�Republic+420�224�234�[email protected]

Harry BannatyneHead�of�Industrial�Agency


Ondřej NovotnýHead�of�Research


Blanka VačkovaSenior�Research�Analyst


www.jll.cz

www.jll.eu/cee_research

www.warehousefinder.cz

COPYRIGHT�©�JONES�LANG�LASALLE�IP,�INC.�2015.�All�rights�reserved.�No�part�of�this�publication�may�be�reproduced�or�transmitted�in�any�form�or�by�any�means�without�prior�written�consent�of�Jones�Lang�LaSalle.�It�is�based�on�material�that�we�believe�to�be�reliable.�Whilst�every�effort�has�been�made�to�ensure�its�accuracy,�we�cannot�offer�any�warranty�that�it�contains�no�factual�errors.�We�would�like�to�be�told�of�any�such�errors�in�order�to�correct�them.

JLL Office

MyslbekNa�Příkopě�21Praha�1110�00Czech�Republic+420�224�234�809

Made in Czech - JLL · 1 Made in Czech • Investor’s Guide for Manufacturing and Logistics...

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