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	Czech Republic: Why do business there? The Czech Republic is today considered one of the most stable and prosperous countries of Central and Eastern Europe (CEE), and the Czechs are enjoying their best time ever! Their quality of life is constantly improving – consumer spending keeps breaking new records again and again, more and more Czechs frequently travel for business or leisure, and the country’s population shows increasing appreciation of healthy food, quality branded products, environment-friendly and energy-efficient products etc., and continue to move into new homes funded from record-high salaries and mortgages. The Czech Republic has not been directly affected by the recent turmoil in the US and global financial markets. The country’s entry to the Schengen zone in December 2007, which allows free travel across land borders to other EU member states, follows NATO entry in 1999 and EU accession in 2004 as another landmark in Czech Republic’s integration into Western Europe. According to a recent study by the Bertelsmann Foundation, the Czech Republic is the most successful transition country in the world in terms of development of democracy and market economy. For the Czech Republic, the Bertelsmann Transformation Index (BTI), an international comparative study of 125 transition countries, stands at 9.56 on a 10-point scale. Following behind are Slovenia, Estonia, Taiwan, Hungary, and all others. The Czech crown has been heavily strengthening against all major currencies, including the dollar as well as the Euro, frequently breaking historic records; it now stands at CZK 16.8 for a dollar, while only in 2000 the dollar traded for as much as CZK 42. Czech exporters continue to grumble about it, but in reality their output grows nevertheless with increased productivity and better marketing - stories on more successful penetration of foreign markets are omnipresent. On the other hand, the local currency appreciation opens the Czech market for more foreign exporters, as imports are now more affordable than ever before. The weakest dollar ever makes U.S. exports desirable and affordable on the Czech market, thus creating a case for U.S. businesses to enter the country. While Prague may now be a bit more costly for American tourists to visit, it is a great time for US businesses to offer their products to Czech buyers. Already in 2007, US exports to the Czech Republic were over 20% higher than just one year earlier. In 2007, the Czech Republic enjoyed its ninth consecutive year of growth after its GDP growth peaked at an 11-year maximum of 6.6% surpassing all previous expectations. Despite a forecasted slowdown under 5% in 2008 and 4.5% in 2009, GDP growth is expected to remain above rates predicted for most other EU countries. Czech industrial production has been growing for 63 consecutive months since September 2002. This robust growth is fueled by higher spending by households stemming from rising wages and salaries as well as low interest rates, which lead to increased usage of credit cards and higher demand for loans and mortgages. Borrowing by Czech households increased by one third to USD 35.7 billion in just one year (2007), with mortgages accounting for three quarters of all the money borrowed. The demand has been driven by people born during the country’s population boom of the 1970’s who now need to resolve their housing needs. Czech market analysts do not believe the local mortgage market is threatened by households defaulting on payments. The country attained the lowest unemployment rate of the decade at 4.9% at the end of 2007. Many companies have moved, and continue to do so, their support operations as well as production and assembly plants to the region due to favorable costs, availability of talent, as well as strategic location in the center of the region and excellent infrastructure. This trend has curbed the talent supply available, which has consequently led companies to offering more money and better benefit packages, i.e. to salary inflation - and hence also bigger purchasing power. Retail sales in constant prices increased by 6.8% experiencing the best year of the decade in 2007. In 2008, they are expected to rise at a slightly slower pace (5%) due to higher inflation and tighter monetary policy. The retail market is strongly concentrated and dominated by Western-owned chains: the combined share of the ten largest FMCG retailers has been steadily rising since their market entry in early to mid-1990’s, and now reaches some 66%. Prague is the twelfth richest region in all of the European Union; its per capita GDP is 60 percent above EU average (London is the highest in Europe with 303%), which makes Prague the richest region in the twelve member states that joined the EU in 2004 and 2007. Other Czech regions are below 75 percent of the EU average and therefore, regarded as developing, which entitles them to receiving heavy EU subsidies in 2007-2013. For companies wanting to take advantage of the thriving market in the Czech Republic, they are in luck! The Division of International Trade is leading a trade mission to the Czech Republic and Hungary June 16th-20th. Space is limited, so call your local Trade Manager today to learn more or visit our website at http://www.exportvirginia.org/events/. You can also call the mission leader, Terri Noll, at (804) 545-5764 or contact her via e-mail at tnoll@yesvirginia.org for more information. Ms. Pavlina Klimova will be the main contact in the Czech Republic for arranging companies meetings. Ms. Klimova is affiliated with EasyLink Business Services. EasyLink is a leading Central European consultancy providing professional market research and market entry services to foreign companies seeking sales, investment or sourcing opportunities, commercial intelligence and/or business partners/customers in the CEE region.