Last updated: Thursday, May 23, 2013
Czech Republic: The Door for Vietnam to Enter the EUPosted: Monday, June 18, 2012
In the mind of many Vietnamese people, especially those who have lived, studied or worked in the former Czechoslovakia, the old country is very friendly. In 1993, Czechoslovakia was split into the Czech Republic and the Republic of Slovakia. After nearly 20 years of development, relations and cooperation between Vietnam and the two countries has been strengthened and enhanced.
The Czech Republic is a country poor in natural resources (with only small amounts of coal, lignite, iron ore, kaolin, sand for glass, etc.) but its industry has quite developed, with a number of key branches such as machine tool manufacturing, power plants, automobiles, petrochemicals, medical equipment, glass and beer. Before the 1990s, its economy was ineffectively developed. Since 1990, the Czechs have focused on implementing privatization, open door policies and restructuring the economy. The period of 1993-1996 saw its reform achieving initial results with good economic growth (the GDP in 1996 up 4.8 percent). In 1995, Czech was admitted as member of Organization for Economic Co-operation and Development (OECD).
The 1997-1999, the Czech economy was in a recession and until 2000, it started to recover. The Czech Republic’s accession to the EU (1/5/2005) created favourable conditions for attracting investment, restructuring and economic development. Czech economic growth rate is about 3.5-4 percent, it attracts FDI $ 5 billion dollar per year. From 2005 to 2007, Czech economic growth reached the average of 6 percent.
The potential market
The Czech Republic is a gateway market for Vietnam’s goods to enter the European market. This is also a consumption market for traditional export goods of Vietnamese enterprises. However, Vietnamese enterprises still haven’t fully exploited this market. According to Mr Martin Riman, Czech Republic Minister of Industry and Trade, the gap of two-way trade between the two countries is large. As a country with quite strong and sustainable economy and located in an important position in Europe, the Czech Republic has been a potential market for traditional export items of Vietnam for a long time. Many Czech consumers are familiar with Vietnam’s products such as agricultural products, foodstuff and garments. However, the majority of Czech companies buy Vietnam’s goods through partners in third countries such as Sweden, the Netherlands or Denmark, because they haven’t known about the Vietnamese enterprises.
Looking back on the bilateral cooperation between Vietnam and the Czech Republic, Dr Doan Duy Khuong, Vice President of Vietnam Chamber of Commerce and Industry (VCCI) said: A lot of the strength of both sides has not yet been exploited, and many of Vietnam’s strong export items have not been presented in Czech market. Therefore, in the near future, enterprises of both countries need to change their outlook for the market of each country.
According to experts, for a long time Vietnamese enterprises have maintained their outlook that the Czech market is small with low consumption capacity, but in fact it is not small. The evidence of this is that billions of garments, footwear, toys and consumer goods originating from China and Thailand with average quality are consumed in the Czech market.
Open the “back door”
After the separation into two independent states (1/1/1993), the Czech Republic and the Republic of Slovakia inherited the relations between the former federal Czechoslovakia and Vietnam. Relations between Vietnam and the Czechs developed, and the two sides signed the Protocol on inheriting the previous agreements signed between Vietnam and Czechoslovakia and some agreements providing a legal framework for cooperation in the new period: double tax avoidance agreement, investment encouragement and protection agreement, and air transport agreement. The Inter-Governmental Committee for Economic and Commercial Cooperation was established in 1998. The two sides have signed an agreement on economic cooperation (13/9/2005) after the agreed termination of the Bilateral Trade Agreement from May 2004 after Czech’s accession to the EU. The 2nd Vietnam-Czech Intergovernmental committee took place in late September 2010 in Hanoi. The Czechs established the Trade Promotion Agency Czechtrade in Ho Chi Minh City in November 2007, contributing to the strengthening of information exchange between enterprises and further promoting economic-trade cooperation between the two countries.
Vietnam currently exports to the Czech Republic some goods including coffee, pepper, dried and fresh fruits, peanuts, tea, rice, rubber, seafood, footwear, textiles, handicrafts, computer components and accessories. Vietnam imports from the Czech Republic textiles fabrics, garments, leather goods, airplane components, milk and milk products, mechanical products, plastics and plastics products, and glass products.
After the Czech Republic’s deeper integration to the region, trading relations expanded, national borders with EU countries are no longer separated, and Vietnam’s goods exported to the Czech Republic are not only sold to Czech customers but also in many neighbouring countries such as Germany and Austria.
Therefore, on the part of Vietnamese enterprises, it is necessary to build long-term business strategies with Czech partners, regularly paying attention to improving product quality, innovating package designs, building brands, diversifying export products and especially focusing on enterprises’ reputation for long term business.
The Czech Republic is developing relations with various countries in other regions in the world. In Asia, Czechs pay attention to relations with major countries such as China, India, and Japan, as well as long term relations with Vietnam.
Mr Luong Thanh Phuong
Chairman of Board of Management of Vinh Gia Luong JSC
Vietnam and Czechoslovakia (now Czech Republic and Slovakia) have maintained a good relationship for a long time. I believe that mutual efforts need to be made by the two nations, particularly by the enterprise communities, with a view to being good partners. Czech Republic and Slovakia enterprises expect Vietnamese partners to follow discipline in terms of working style, punctuality and plans for implementation. In fact, administrative procedures for Czech and Slovakian partners to enter Vietnam are quite simple. Meanwhile, Vietnam entrepreneurs still face difficulties regarding visa application to the Czech Republic and Slovakia. It is crucial that the two governments further create favourable conditions for enterprises of the two nations to expand collaboration and investment opportunities.
Mr Vu Ngoc Minh
Chairman of Old IKA Corp
Being a fast food manufacturer, IKA identifies that it will focus on quality and churn out high quality food with the flavour of Czechoslovakia. I highly appreciate the relationship between Vietnam and Czech Republic and Slovakia, since this is a traditional diplomatic tie and there is a large community of Vietnamese who have been living, working and studying in this country. However, to further improve the cooperation efficiency, I believe that it is necessary to further promote advantages and potential areas for cooperation.
Mr Nguyen Dinh Hoa
Director of Viet Ha Limited Company
Having spent time learning in Czechoslovakia, I have good affection for this country and its people. Viet Ha is currently cooperating with a partner here and this collaboration is getting better and better. It is of my opinion that Vietnam should organize more effective investment promotion delegations. Organisers of these events should have a clear agenda in advance to avoid costly but ineffective business trips.