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INSOLVENCY LAW: HOW TO PROTECT CLAIMS?

OECD’S GOOD EVALUATION OF THE CZECH REPUBLIC

HRADEC KRÁLOVÉ REGION

PLZEŇ WANTS TO OPEN ITS ARMS TO EUROPE

22010

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CZECH PAVILION AT 2010 EXPO

The Czech Pavilion at the 2010 World EXPO in Shanghai

welcomed its half a millionth visitor in the middle of May.

Moreover, the Czech National Day at the Pavilion on 17th

May introduced Czech culture in its many forms. The

exposition entitled “Fruits of Civilis ation” introduces the

Czech Republic as the “crossroads of ideas, culture, and

technologies”. The Czech Pavilion presents a levitating

town with the use of tubes, which contain the various

exhibits, all hanging above an open space, evoking the

Czech undulating landscape. A highlight is the impos-

ing “drop of gold” 80 centimetres high, placed within a glass cube – which can be entered by every

500th visitor to the Czech Pavilion. An extraordinarily good idea was to display the bronze plaques

from the statue of John of Nepomuk on Prague’s Charles Bridge, which tourists touch for good luck.

� INTRODUCTIONQuestions of the Month for Petr Kužel, President of the Czech Chamber of Commerce 4

� ECONOMIC POLICYCzech Industry: From Peak to Bottom and From Bottom Up 5OECD’s Good Evaluation of the Czech Republic 7

� INVESTMENTFDI on Roller-coaster in CEE 8Important Investment in Žatec Triangle Zone 8Czech System of Investment Incentives Among Most Open Ones 9Blu-Ray Discs Will Be Made at Loděnice 10

� CZECH TOPCountry Life, a Pioneer of New Lifestyle 11

� LEGISLATIONInsolvency Law: How to Protect Claims? 12

� WE SUCCEEDOHL ŽS to Build New Junction in Bosnia and Herzegovina 14

� WE ARE INTRODUCINGPlzeň Wants to Open Its Arms to Europe 16

� KALEIDOSCOPECzech SOLVIT – One of the Three Fastest Centres in the EU 18The Czech Republic Has Been among the Best in Economic Endurance in the EU During the Crisis 18First Hopeful Firms in Silicon Valley 18AFSI in Most to Employ Almost 200 People 18What is the Czech Republic’s Position on the EU Internal Market? 19Financial Arbiter’s Services More in Demand 19The Czech Republic has Opened an Exchange of Unused Chemicals Called NECHELA 19Prague Hosted American and Russian Presidents 19

� SERVICESAll-embracing Methods of the Packaging Industry 20Industrial Real Estate Market Stabilised Between Supply and Demand 22

� RESEARCHCzech Scientists Unveil Another of Life’s Mysteries 24

� FIRM ANNIVERSARY15 Years of Quality and Tradition 25

� REGIONHradec Králové Region 26– 34

� PRESENTATION OF FIRMSJ 4 s.r.o.; JIP - Papírny Větřní, a. s.; Hradec Králové Region; M.I.P. Advertising, a.s.; OHL ŽS, a.s.; SVITAP J. H. J. spol. s r. o.; TEAM SERVICE, s.r.o.

| 4

Petr Kužel

I N T R O D U C T I O N

One of the priorities of the Czech

Chamber of Commerce is the support of

exports and foreign relations. How can

you assist foreign businessmen wishing

to enter the Czech market?

Foreign businessmen will find a host of

useful information and contacts in English,

concerning the possibilities of doing busi-

ness in the Czech Republic, on our web-

site: www.komora.cz. Besides giving infor-

mation about the business environment

in the Czech Republic, we organise profes-

sional seminars and bilateral negotiations

between Czech and foreign businessmen

and entrepreneurs within the framework

of “incoming” missions. We also publish

foreign enquiries and offers, search out

potential trading partners in the CR and

supply fresh information about trade fairs

and similar events to be held in this coun-

try. Well-tried and tested informa-

tive instruments for foreign businessmen

are the forums organised as part of busi-

ness missions to other countries and the

presentations of Czech firms at selected

international exhibitions. We co-operate

closely with foreign Chambers, which are

also a useful information source for those

wishing to do business in the CR.

You have launched a project called

“Ensuring joint participation in special-

ised exhibitions and trade fairs in other

countries in the years 2010-2012”, the

purpose of which is the strengthening of

the competitiveness of Czech indus-

trial firms on foreign markets. Which

foreign markets are important to Czech

enterprises and which events will you

support?

This year alone, together with the Ministry

of Industry and Trade and the CzechTrade

Agency, we are organising approximately

fifty specialised fairs on four continents:

besides Europe, also in America, Asia, and

Africa. We are trying to meet the require-

ments of Czech enterprises. Their interest

in subsidised participation in specialised

fairs exceeds all expectations. By the end

of May 2010, about 300 Czech firms and

associations had taken part in the 36 fairs

thus far organised. Therefore, the planned

number of 1400 participations within the

framework of 100 foreign trade fairs over

the three years during which the project

will last is a realistic goal. The firms are es-

pecially interested in engineering, arma-

ment and technical fairs. Of the number

of destinations that are being prepared, I’ll

just mention, at random, Shanghai, Cairo,

and Calcutta. We will also be in Iraq. The

response of Czech exhibitors is absolute-

ly positive. The importance of trade fairs

has been proved by a survey carried out

by the Czech Chamber of Commerce this

year, which found that, according to 25%

of Czech firms, they are the most impor-

tant instrument for successful expansion

to export territories. Foreign missions and

the use of the services of specialised busi-

ness companies were only placed second

after trade fairs.

The Czech Chamber of Commerce has

started yet another project, “The Crisis

Notwithstanding”, the purpose of which

is to find modern business heroes.

Can you tell us something about this

undertaking?

Besides a number of unpleasant impacts,

for most businessmen the recession also

had its positive features. This is what

about two-thirds of the firms stated in our

survey. For one-quarter of the firms, the

main positive effect in production or serv-

ices was the growth of efficiency, followed

by the elimination of latent over-employ-

ment, innovations, and the discovery of

new markets. As far as we are concerned,

the decision was taken, as part of the

“Crisis Notwithstanding” project, to find

and award the most successful “winners”

in the crisis and to use their examples to

show other firms the way. Our partner in

evaluating the firms is the renowned in-

ternational auditing company, Pricewa-

terhouseCoopers. Those wishing to learn

more about the project can find detailed

information on the website: www.komora.

cz/krizinavzdory.

You have long been struggling against

the bureaucratic burdening of enter-

prises. How do we stand when compar-

ing the Czech business environment

with that in the other EU states?

On the one hand, since 2005 the ad-

ministrative burden of businessmen has

been reduced by more than 10% which,

for the business sector means, amongst

other things, an approximate saving of

10 billion crowns (approx. EUR 400 mil-

lion) per year. The process of entering

business and starting a trade is now

shorter, while a number of obligations

towards the trade licensing authorities

are in the process of being cancelled. On

the other hand, in the standard business

environment ratings published by the

World Bank, the Czech Republic unfor-

tunately, generally ranks 80th out of 180

countries.

Within the European Union, I think only

Poland and Greece lag behind us. As for

tax bureaucracy, we are even worse off

– on the global scale we rank 13th from

the bottom. Only Bulgaria, out of the EU

countries, lags behind us. The problem is

that bureaucracy is like the mythical Hy-

dra. You cut off one of its heads, and two

more grow in its place. I am, nevertheless,

confi dent that in the end we will triumph.

Questions of the Month for Petr Kužel, President of the Czech Chamber of Commerce

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5 |

E C O N O M I C P O L I C Y

Czech Industry: From Peak To Bottom and From Bottom Up

The Czech Republic’s economic

development has been recording

an improvement in the last months,

according to assessments by econ-

omists and analysts. Compared to

the commentaries and uncertainty of

6 - 9 months ago, we are now miles

away. The Czech economy has re-

bounded and is moderately growing.

What do we owe this rebound to?

A look at the regularly published monthly

indicators shows that, besides the leading in-

dicators of confi dence, an improvement is re-

corded especially in foreign trade and industry.

Even without a detailed analysis of the causes,

it can be said that industrial production in the

Czech Republic is closely linked with foreign

trade, in both exports and imports. Recovery

abroad has increased demand, from which

Czech industry has profi ted, and the import

of production means and semi-fi nished prod-

ucts has logically risen as well.

� CZECH INDUSTRY RECOVERING SINCE MAY 2009 What preceded this development? Czech in-

dustry peaked at the beginning of 2008. By

the middle of the year industrial production

dropped slightly, during the summer its de-

cline deepened, and from the autumn, and

particularly at the time of the greatest shock to

the global fi nancial system, it tumbled in a free

fall. The downturn stopped at the beginning

of 2009, when industry entered the phase of

stagnation and stabilisation. In monthly data,

the deepest bottom of industrial performance

is May 2009. Since then, Czech industry has

experienced a gradual recovery, and the fi rst

data show that it is entering the beginning of

2010 with rising dynamics.

Interpreting the year 2009 is problematic

– in year-on-year comparison it recorded

a big fall, but this may be oversimplifi ed. On

month-by-month examination of the data,

industry headed steeply to the bottom

roughly at the turn of 2008-2009 and stayed

there throughout the fi rst half of 2009, but

did not fall substantially deeper. From the

peak at the beginning of 2008, Czech in-

dustry fell to the bottom of the beginning

of 2009 by approximately 20%. The average

fall in the EU 27 during the same period was

about 15%, and in the euro zone about 16%.

This means that Czech industry was aff ected

above average. This was important in terms

of the economy as a whole. Czech industry

creates about 30% of GDP, while the EU av-

erage is approximately 20%.

� STRUCTURE OF INDUSTRY Let us have a closer look at the structure.

About 90% of Czech industry is manufactur-

ing, in the more detailed classifi cation the

largest share of industry is accounted for by

the manufacture of motor vehicles (approxi-

mately 20%). It is followed by the manufac-

ture of food and metal products, electrical

equipment, and electric power industry.

The classifi cation is somewhat misleading

as the interrelation of the sectors is high. In

terms of dynamics, the record holder of the

de cade is the manufacture of computers,

which has achieved almost a magic 1 000%

since the beginning of the millennium. The

| 6

E C O N O M I C P O L I C Y

INDUSTRIAL PRODUCTION (2005=100; SA, WDA)

Source: Raiff eisenbank a.s., Czech Statistical Offi ce

share of this segment is small, in the order

of units of per cent, but has been steadily

increasing. The year 2009 brought a 13.4%

fall in industry. As we have said, Czech in-

dustry fell by about 20% from the peak at-

tained early in 2008 to the deepest bottom

and now fi nds itself about 15% below the

highest point. The car industry fell from the

beginning of 2008 to its bottom by some

40%, but now fi nds itself about 10% below

the peak. The highly cyclic character of car

industry development is well known, and

thus also a risk for the Czech economy. Of

course, such a quick return to “mere“ 10%

below the peak would be puzzling if the de-

mand for cars was not boosted by the eff ect

of the scrappage premium for the purchase

of a new car while scrapping an old one in

countries of the area, especially Germany.

For comparison, a number of sectors with

a similar cyclic character fi nd themselves

much deeper below the peak at present

(end of March 2010). For example, the manu-

facture of computer, electronic, and optical

products fell from the peak by about 25%

and subsequently rebounded by some 6%.

But it is about 20% below the peak, which

is much deeper than the motor industry. At

the same time some sectors are not showing

clear signs of a rebound yet. For instance, ma-

chinery manufacture dropped by 30% from

the beginning of 2008 to early 2009 and until

now its fall has deepened to a chilling 34%.

The closer is the interrelation of the diff er-

ent sectors with the car-making industry, the

more similar is logically the course of its cy-

cles. An example is the manufacture of plas-

tics and rubber. In this case, the manufactur-

ing fi nds itself approximately 10% below the

peak, after an initial fall of 20%, which is com-

parable with car production. Adjustment for

the one-off eff ect of the scrappage money

is naturally a problem, especially because of

the interrelation with other segments. If the

car-making industry found itself now where

the manufacture of machinery is, then indus-

try as a whole would stand approximately

3.5% lower than the present level, provided

the other factors remained unchanged. If the

negative eff ect was applied to other sectors,

then the potential decrease could be twice

as strong, about 6 – 7%.

� WHAT IS THE OUTLOOK FOR 2010? Of course, this is merely a graphic theoretical

construction. As we have said, adjustment

in this case is very problematic. The fading

of the eff ect of the scrappage premiums

is a variable which is a nightmare to prog-

noses for 2010. It is obvious that demand for

vehicles which have had the advantage of

the scrappage premium is likely to be weak-

ened this year. However, for the time being

it seems that the prospects of industry in

the euro zone, the main market for Czech

exports, are steadily improving. Also prom-

ising is the growth in sectors which were

not aff ected by the scrappage programmes.

Examples include the manufacture of com-

puters, metal products, the paper industry,

or perhaps the food industry, which, how-

ever, displays diff erent features in terms

of cyclic development. Adjustment for the

scrappage schemes eff ect has other pitfalls.

The competitiveness of the Czech car-mak-

ing industry is high. A year-on-year com-

parison is distorted by the start up of the

Hyundai car factory and the presentation

of new models of Škoda Auto with which

the car maker seems to be scoring success.

The Czech car-making industry has been af-

fected by the crisis in its revenues, but it has

probably gained a larger share of the global

market. Thus it might pull off a surprise in

terms of future yields.

� COMPETITIVENESS IS CRUCIAL Regardless of the recession, the question

for the future is competitiveness, where the

Czech economy has so far demonstrated

a fairly good level. Compared to countries

in the area, the Czech economy has the fast-

est growing manpower costs after Bulgaria

and Romania. In 2009, the average hourly

labour costs in the Czech Republic were

approximately EUR 9 per hour. In 2006 they

amounted to EUR 7, about one euro above

neighbouring Poland. Compared to the

more developed and wealthier Germany,

hourly wage costs in the Czech Republic

are still at about one-third of this level, but

a cause for concern is rather the growth

rate than the present situation. Thus, if la-

bour productivity does not rise adequately,

Czech industry will face competitiveness

problems in future. This might also hinder

the trend of long-term strengthening of

the Czech currency, the crown. Although

industrial production has been slowly ris-

ing in the last few months, a look at the

structure of the recovery advises caution

against strongly positive forecasts.

In 2010 we expect Czech industry to grow

by approximately 2% and next year by 4%.

For Central Europe as a whole we expect

3.7% industrial growth this year and 5.3% in

2011, for euro zone 2.9% and 1.7%, respec-

tively. The uncertainty is high, in the analysts‘

language: the confi dence intervals of the

prognoses are still much wider than what we

had been used to before the crisis, but the

scissors point rather to growth, while a year

ago they were wide open on both sides.

Michal Brožka

Analyst

Raiff eisenbank a.s.

(e-mail: michal.brozka@rb.cz)

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C Z E C H B U S I N E S S A N D T R A D E

OECD’s Good Evaluation of the Czech Republic

During his April visit to the Czech

Republic, Ángel Gurría, General

Secretary of the Organisation for

Economic Co-operation and Develop-

ment (OECD), presented the OECD’s

economic overview in which the

organisation evaluates the current

state of the Czech economy, analyses

economic policy and makes several

suggestions for further reforms. The

OECD prepares this report individu-

ally for all OECD member states.

to catch up rapidly with the devel-

oped economies of the OECD, in particular

to restore public fi nance sustainability and

enhance the business environment. In this

area, the Czech Republic has made signifi -

cant changes in the process of company

establishment (for example, in the decrease

of costs for company establishment) and

in simplifying other legal procedures (from

the registration of a company to insolvency

procedures).

� BANKS REPRESENT THE STRONG POINT OF THE CZECH ECONOMYDespite all suggestions, the overall OECD

balance has been favourable to the Czech

Republic, even in comparison with 30 mem-

ber states. According to Gurría, this is partial-

ly due to the caution of Jan Fišer’s govern-

ment. It was also stressed that, to emerge

from the crisis soon, it is necessary for the

Czech Republic to limit the country’s debt

and also to make some changes in the areas

which increase budgetary expense and dis-

courage the unemployed from returning to

the labour market. According to the OECD

report, banks are the strong point of the

Czech economy – according to the report,

it was positive that banks did not become

involved in risky business practices; and

besides, the Czech Republic does not have

a problem with loans in foreign currencies

(income as well as loans are mainly in Czech

crowns). The greatest problem is said to be

the growing budgetary defi cits. According

to the forecast, in 2010 the Czech Repub-

lic can expect revitalisation with a growth

of 2%. Increased investments and foreign

demand will be the main causes; on the

other hand, low local consumption will be

the greatest growth disincentive. The gov-

ernment should also set a deadline for the

country to join the Eurozone – i.e. the date

of the adoption of the euro.

The economic report summarises its

suggestions for the Czech Republic in

the following points:

� Implementation of an ambitious me-

dium-term consolidation strategy.

The government should formulate a clear

medium-term plan to achieve a structurally

balanced budget. The consolidation eff ort

must be supported by structural reforms

and it should balance the provision of the

income base and the use of savings poten-

tial in cost programmes by increasing their

eff ectiveness and restraining their growth.

It should become the foundation stone of

a wider strategy in the preparation of the

economy to join the Eurozone.� Diversifi cation of risks in health care

and pension system

Due to the pressure of expense caused by

an ageing population, it is necessary to carry

out further health care and pension system

reforms to provide for their long-term fi scal

sustainability. In both cases, the fi rst promis-

ing steps have been taken, but it is neces-

sary to do more, especially to diversify the

sources of pension income.

In recent years, signifi cant reforms in the

tax system and social benefi ts system

have been carried out. Even though

many of the changes are welcome, there

are still some unresolved issues:

� Transferring the tax burden towards

less distortion-causing taxes.

It is possible to use indirect taxation much

more, especially excise, ecological, and

property taxes instead of direct taxation

levied on labour and capital.� Better co-ordination of tax and ben-

efi t policy.

Due to the fact that the policies in these two

areas are not suffi ciently co-ordinated, un-

desirable interaction between the tax and

benefi t systems sometimes occurs. A more

systematic analysis of their interaction could

help to prevent these problems.� Removal of further deformities in

labour and capital taxation.

Diff erent treatment of employees and self-

employed entrepreneurs deforms the be-

haviour of labour market participants. The

law on Corporate Income Tax, which gives

preferential treatment to certain kinds of as-

sets and investment fi nancing resources, has

a negative eff ect on investment allocation.� Further lowering of rigidities on the

product and labour markets.

Despite recent reforms, it is still necessary to

lower the barriers for entry on the product

market, to strengthen economic competi-

tion, especially in network sectors, and to

liberalise labour market regulations.� Further development of initiatives in

the fi eld of e-government.

Greater use of e-government methods

could signifi cantly facilitate the attainment

of these objectives.

According to the OECD, the Czech econ omy

has been aff ected by the global decline in

economic growth, due to its high level

of openness and participation in global

production chains. Its fi scal position also

suff ered a loss and this situation required

a quick change from stimulation policy to

consolidation. The major medium-term

challenge is the creation of conditions

which would enable the Czech Republic

| 8

I N V E S T M E N T

FDI on Roller-coaster in CEE

The Central and Eastern Europe (CEE)

has experienced a roller-coaster ride

in foreign direct investment (FDI) in-

fl ows since 2003. The strong growth

that followed the last two rounds

of EU expansion was halted by the

global recession. FDI infl ows in 2009

were 50% down on the amount

in 2008. Two important factors to

determine the recovery path of FDI

fl ows to the region will be the speed

with which investors’ perception of

country risk moderates, and how

quickly the region’s wages - relative

to countries like Germany - start to

pick up again.

During 2009, the CEE region experienced

a collapse in inward fl ows of foreign direct in-

vestment. Analysis of PricewaterhouseCoopers

experts also suggests that FDI infl ows will not

immediately bounce back to previous highs.

The bust which followed the long boom will

have persistent eff ects in the region. Under our

Central scenario, it will take until 2014 for the re-

gion’s FDI infl ows to surpass the 2008 level. The

collapse coincided with the credit crunch and

the economic recession. The intensity of the

recession was not uniform across the region.

Estonia, Latvia, and Lithuania are likely to have

experienced double-digit rates of contraction

in economic output in 2009; Bulgaria and the

Czech Republic are expected to see milder de-

clines of less than 5% of output. Poland’s econ-

omy is estimated to have grown in 2009.

� KEY SECTORS: REAL ESTATE AND ALTERNATIVE ENERGYThe Czech Republic, which historically has at-

tracted around 10% of FDI infl ows into the re-

gion, experienced a much smaller 2009 decline

than the region overall. In 2008, the Czech Re-

public saw signifi cant FDI from the automotive

sector; investments from Daimler, Volkswagen

and Peugeot-Citroen totaled almost US$1 bil-

lion. Real estate and alternative energy were the

other key sectors for FDI in 2008. In 2009, total

FDI into the Czech Republic declined by 19%.

These key sectors experienced declines in FDI

in 2009 of around 30% in real estate and alter-

native energy, and 65% in automotive equip-

ment and components combined.

� DOZEN YEARS OF GROWTHFDI infl ows into Central and Eastern Europe

grew remarkably in the dozen years to 2008.

The growth was modest at fi rst; FDI rose from

US$20 billion in 1997 to US$30 billion in 2003.

From this base, however, infl ows leaped more

than fi ve-fold in fi ve years, reaching US$155

billion in 2008. The increase in infl ows coin-

cided with the accession of the Baltic and

central European states to the EU in 2004. The

Czech Republic, Poland, and Hungary have

been major regional destinations for FDI in-

fl ows since the mid-1990s. These countries

also saw FDI rise from 2003, although by a pro-

portionately smaller amount than many of the

other nations in the region.

Jiří Moser

Managing Partner

PricewaterhouseCoopers Czech Republic

Important Investment in Žatec Triangle Zone

Solar Turbines, an American company

and a part of the world known Caterpil-

lar Inc. conglomerate, has signed an

agreement of intent in March 2010,

which should result in the construction

of a new high-tech repair centre for

gas turbines of this brand in the Žatec

Triangle strategic industrial zone. If the

investor‘s plans pan out, the only Solar

Turbines factory in the whole EMEA re-

gion to be able to renovate key parts of

turbines necessary for their subsequent

general repairs will be built in northern

Bohemia.

� 450 NEW JOBS WILL BE CREATED

“In view of the current economic situ-

ation and the competition of other Eu-

ropean countries, we consider it a great

success to persuade, with the help of the

CzechInvest Agency, an important com-

pany like Solar Turbines to announce

their intention to invest in the Triangle

industrial zone. We have been trying for

a long time to make the zone more ac-

cessible to smaller businesses that en-

sure the creation of new jobs for the peo-

ple of the region. Thanks to the planned

investment by Solar Turbines, some 450

new qualified positions should be creat-

ed. We plan to increase this number with

the influx of other potential companies,”

said Jana Vaňhová, the Governor of the

Region of Ústí nad Labem.

� TECHNOLOGICALLY CHALLENGING PROJECT “A number of our turbines are deployed in

the EMEA region today, which is why Solar

Turbines decided to strengthen their global

capacities for technologically demanding re-

pairs necessary for general repairs,” explains

Peter Taylor, Vice President of Solar Turbines

Turbomachinery Products. “The Solar Tur-

bines repair centre is a technologically very

demanding project which perfectly utilises

all the advantages of the Czech Republic

– quality infrastructure, excellent geograph-

ical location, experienced employees, and

above all, our long tradition of top machine

production,” recounts Stanislav Martínek,

the Director of the Investments division at

the CzechInvest Agency.

More at www.czechinvest.org Ph

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: ww

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9 |

C Z E C H B U S I N E S S A N D T R A D E

Czech System of Investment Incentives Among Most Open Ones

Investment incentives earned the

Czech Republic CZK 229.972 billion

(approx. EUR 9.2 billion) from their

introduction in 1998 until 2008.

According to the results of a study by

the Deloitte consulting fi rm, which

described the benefi ts and costs of

all investment incentives provided

since the beginning of the system‘s

operation, some 308 thousand new

jobs have been created thanks to the

incentives. This means that almost

10% of all employees in the Czech

Republic today work in companies

supported by the incentives, or for

their suppliers.

Altogether, the state had provided Czech

and foreign investors with support in the

amount of CZK 30.068 billion (approx. EUR

1.2 billion), and collected CZK 260.041 billion

(approx. EUR 10.4 billion) in taxes and em-

ployee payments from the same companies

and their suppliers. The study proved that ap-

proximately three quarters of new jobs, and

state budget earnings as well, are created at

the suppliers used by the investors who had

been supported by incentives. “This proves

that as the infl uence of the incentives mul-

tiplies as they spread through the economy,

many other companies benefi t from them

although they themselves have not been

directly supported,” explains Luděk Nieder-

mayer, the Director of the Consulting Depart-

ment in Deloitte. 486 entities drew on invest-

ment incentives until 2008. The investors put

CZK 357 billion into the supported compa-

nies. Almost one-quarter of all the promised

incentives was acquired by Czech fi rms, with

only German fi rms being more active, albeit

by just one per cent.

� 308 THOUSAND JOBSBy 2008, 308 thousand new jobs were cre-

ated thanks to the investment incentives in

the Czech Republic. Most of the jobs, 73%

to be exact, were created by suppliers, the

remaining 27%, or 83 thousand jobs, were

opened directly by the supported investors.

“The overall results of the study show that in

the long-term, one job created by investors

creates two jobs for suppliers,” says Alexan-

dra Rudyšarová, the General Manager of the

CzechInvest Agency. On top of that, the sup-

ported investors and their suppliers create

jobs in times when other industries let go of

employees. While the years 1998–2000 and

2003–2004 saw the elimination of several

thousand jobs in production, the supported

investors, on the other hand, hired new peo-

ple. “We can expect the number of positions

newly opened by investors and suppliers

to grow in the coming years. A record 265

companies acquired the promise of an in-

vestment incentive between the years 2006

and 2008,” the study says. Employee wages

have been climbing continuously in the

supported companies over the last years.

“However, average wages in the individual

industries do not diff er signifi cantly from

the wages of employees in companies that

have not drawn on the incentives. Therefore

it seems that the supported investors do

not try to push their wages higher to attract

employees from other companies,” adds

Luděk Niedermayer. The key industries in

which the incentive recipients conduct their

business have shown such rapid growth of

turnover that it was undoubtedly a case of

a strengthening of the whole fi eld, and not

only a strategy based upon taking over con-

tracts of existing fi rms.

� ONE -THIRD OF CZECH EXPORT THANKS TO INCENTIVES“The real amount of money transferred to in-

vestors‘ accounts from 1998 out of the CZK

30 billion (approx. EUR 1.2 billion) provided

in the incentives from the state budget was

CZK 6.432 billion (approx. EUR 256 million).

It was used to support the creation of new

jobs, employee retraining, or in the form

of capital support of investments. The re-

maining funds are composed of income tax

abatement and price-cuts on the reduced

prices of land in industrial zones. However,

both of these sums are unrealised income

– not expenditures, i.e. the state does not

have to make any direct payments which

means the funds do not represent any

burden for the state budget. Investors sup-

ported through incentives exported goods

worth CZK 835 billion (approx. EUR 33.4

billion) from the Czech Republic in 2008,

which is 29% of all Czech exports.

| 1 0

I N V E S T M E N T

� INVESTMENTS THAT REMAINForeign companies operating in the

Czech Republic continuously increase

the percentage of their profits they re-

invest. According to data from the Czech

National Bank, CZK 363 990 billion (EUR

14.6 billion) have returned in this way to

the economy, which is 48% of the overall

amount of direct foreign investments in

the industry. “The collected data show

that companies often increase their par-

ticipation in the Czech Republic follow-

ing their initial investment. Thus, their

operation in the Czech Republic is prob-

ably not based on an investment sup-

ported by an incentive and an attempt

to withdraw the profit to their home

company as quickly as possible. The in-

centive is used to make the initial invest-

ment easier with plans to expand it later,”

says Luděk Niedermayer. Three quarters

of the supported investors also demand

that their suppliers conform to quality

certificates, such as ISO, and approxi-

mately one-third of them has stated they

cooperate with universities or the Acad-

emy of Sciences. Both of these activities

help to further improve the quality of

the business environment in the Czech

Republic.

More at www.deloitte.com/cz

(e-mail: tpergler@deloitteCE.com)

Blu-Ray Discs Will Be Made at Loděnice

Loděnice near Beroun is a Czech

town where Central Europe’s first

plant to manufacture Blu-ray discs

will be based. The Czech company

GZ Digital Media, a.s. will purchase

technologies worth more than

CZK 250 million (approx. EUR 10

million). In addition to optical

discs, the company is known for the

manufacture of conventional vinyl

discs, and is actually the world’s

largest manufacturer of those car-

riers. The company is planning to

increase its DVD pressing capacity

and to enlarge the follow-up print-

ing production – the manufacture

of sleeves and all accompanying

printed materials. The plant will

create about thirty new jobs.

� GZ DIGITAL MEDIA, A.S. INTRODUCES ITSELFGZ Digital Media, a.s. is the largest CD

and DVD manufacturer in Central and

Eastern Europe, with an output of around

100 million optical carriers, of which ap-

proximately 80% go for export, mainly to

the UK, the USA, and to continental Eu-

rope. Currently, the company is planning

vast investments, the largest proportion

of which will go into modern machines

and equipment. All the equipment will

be installed in the company’s existing

premises, so that there will be no need to

build new facilities on a green field. That

is one of the reasons why the Czech com-

pany GZ Digital Media has received state

support in the form of partial corporate

income tax exemption.

“Naturally, our branch, too, was hit by

the global economic slowdown. Fortu-

nately, we reacted quickly and with our

comprehensive offer we are prepared

for new customers,” Zdeněk Pelc, Man-

aging Director of GZ Digital Media, a.s.,

explains.

“In the first phase we are planning the

purchase of more advanced and more

econ omical machines for the manufac-

ture of DVD discs and for printing pro-

duction, and Blu-ray technology will fol-

low suit.”

� PREPARING FOR BLU-RAY DISCSThe first new machines are already in op-

eration at GZ Digital Media. All of them,

including Blu-ray disc production facili-

ties, will be fully operational in January

2012, at the latest. “Currently we have an

about four-per-cent share of the EU mar-

ket, and we hope that as a result of this

investment, our share could increase by

at least half a per cent,” Pelc said.

� INTEREST IN BLU-RAY DISCS IS GROWINGAccording to Blu-ray Forum.cz, an organ-

isation associating film distributors, car-

rier producers and player manufacturers,

the sale of Blu-ray film discs in the Czech

Republic and in Slovakia in 2009 is esti-

mated at 90 000. Interest in the discs is

growing rapidly. In the first six months of

2009, viewers and video-distributors in

the two countries purchased 25 538 Blu-

ray films in the Czech language version;

in the corresponding period one year be-

fore, they purchased only 8 538.

Demand for Blu-ray products is grow-

ing worldwide. The sale of Blu-ray films in

the USA last year is estimated at USD 89

million in comparison with USD 24 mil-

lion the previous year. In Europe, Blu-ray

film sales last year are estimated at around

USD 9 million. The Blu-ray format makes it

possible to store an incomparably larger

volume of data than ordinary DVDs. A DVD

can store up to 17 GB of data, but standard

capacity is rather only 8.5 GB, while a Blu-

ray disc can store up to 50 GB.

More at www.gzdm.cz Ph

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1 1 |

C Z E C H T O P

Country Life, a Pioneer of New Lifestyle

It is nearly 20 years since Country Life

s.r.o. was founded, bringing the fi rst

organic food to the Czech market. Ever

since its establishment, the company

has not only been selling organic

and health food, but has also been

growing and manufacturing it, cook-

ing with it, and simply looking upon

health food in an all-inclusive man-

ner. It has been trying to help people

by off ering them a practical change to

their life style and inform and advise

them in this area. And also to educate

more specialists in the branch.

organic farm or the bakery, lectures and a con-

cert. Each year, thousands of people come to

celebrate the Organic Harvest Festival.

� ORGANIC FARM AND ORGANIC BAKERYCountry Life has been running the organic

farm since 1992. On its fi elds it grows grain

crops, vegetables and fruit, all organic. Each

year it harvests more than 60 diff erent kinds

of crops, including the less well-known, such

as topinambures, black root and yakon. It is

also trying to cultivate its own organic seeds

and young vegetable plants, organic cereals

and potatoes.

The organic bakery bakes bread and sweet

pastries, which it sells in its own shops and res-

taurants, and it also supplies them to organic

shops all over the Czech Republic. The bakery

uses grain from its own organic farm, which it

grinds on a stone mill, so that all vitamins, min-

eral substances and fi bre are preserved in it.

� HEALTH FOOD WHOLESALECountry Life is the largest organic product

importer and trader and one of the largest

health-food suppliers in the Czech Republic.

Its wholesale store off ers about 2 000 diff er-

ent products, nearly 1000 of which are in

organic quality. Its range comprises durable

and cooled food, fruit and vegetables, bread,

eco-detergents, and natural cosmetics.

Country Life is an importer and distributor

of world brand organic products and health

food, such as Provamel, Oatly, Ekoland,

Granovita, Eden, Molenaartje, Danival, Emile

Noël, Voelkel, Monki, Muso, Ecover, etc.

� ORGANIC SHOPS AND RESTAURANTSThe Country Life “organic family” also in-

cludes four organic and health-food shops

in Prague. The fi rst was opened in the early

1990s.

Another facility, besides organic shops,

is a restaurant, which off ers a self-service

choice, a hot and cold cuisine, a salad bar

and fruit and vegetable juices. The interiors

of the restaurant and the shops in the centre

of Prague are furnished in a natural style.

� HEALTHCARE AND EDUCATIONAL ACTIVITIESAn inseparable part of Country Life’s ac-

tivities is healthcare and educational pro-

grammes. The company runs a Lifestyle

Institute, which organises courses aimed at

practical education in the area of ecology

and healthy life style. The courses are ac-

credited by the Ministry of Education of the

Czech Republic.

More at www.countrylife.cz

AWARDS FOR COUNTRY LIFE:1993 – Honourable Mention in the Eco-

project of the Year Competition for

Country Life’s organic farm

2005 – Melantrichova shop – Organic Shop

of the Year Award. The winner is

selected by a jury composed of

renowned experts in marketing,

food production, the media and

consumer associations.

2006 – The Best Organic Farmer of the Year

Prize.

The prize is awarded each year by the Pro-

bio Association of organic farmers. The prize

is a challenge cup full of gold pieces.

Country Life is attempting a comprehensive

solution, at all levels of its activity – from or-

ganic farm to wholesale and healthy lifestyle

courses. Besides an organic farm, a health-

food wholesale outlet store and an organic

bakery can be found in the company’s eco-

centre not far from Beroun, where a harvest

festival is held each year. Also, the company

runs several organic shops and restaurants

at diff erent locations in Prague.

� THE FIRST PASSIVE HOUSE IN THE CZECH REPUBLICThe Country Life eco-centre has been in

operation at Nenačovice near Beroun since

2003. Part of it is an organic farm, a wholesale

store, an organic bakery, a stone mill, a pack-

ing department, and the Company’s offi ces.

The offi ce building is a reconstruction of the

former cow-house. It is a low-energy building

with an extension, which has the parameters

of a passive house. It is the fi rst passive house

to be built in the Czech Republic.

� ORGANIC HARVEST FESTIVALThe eco-centre is a place where the Organic

harvest festival is held each year. Since 2004,

every second Sunday in September life in

Nenačovice revives with a festive organic-style

spirit. The programme prepared for visitors

comprises the sale of organic food and other

eco-products, food tasting, excursions to the

Country Life offi ce building

| 1 2

L E G I S L A T I O N

Insolvency Law: How to Protect Claims?

The number of business people

facing fi nancial diffi culties in this

current economic crisis is higher

than ever before. Hence, a higher

degree of diligence is required

when doing business. Which are the

basic principles of the Insolvency

Law in the Czech Republic and the

general recommendations to claim

protection?

The insolvency issue is regulated by

Act No. 182/2006 Coll., on bankruptcy and

the methods for its solution (the Insol-

vency Act). This Act became effective as of

1 January 2008 and, contrary to the former

regulation, it emphasizes the influence of

creditors on insolvency proceedings and

provides more possible insolvency solu-

tions, namely enabling the sanitation of

a debtor‘s business and the continuation

of its business activities, if this is effective

in a particular case.

� INSOLVENCY SOLUTIONS The Insolvency Act recognizes the fol-

lowing fundamental insolvency solu-

tions: (i) straight bankruptcy proceedings

(“Konkurz”), the purpose of which is the

proportionate satisfaction of creditors

from the proceeds of the conversion of

the debtor‘s assets into liquid financial

means, (ii) restructuring (“Reorganizace”),

which enables the subsequent satisfaction

of creditors while continuing to engage

in the debtor‘s business activities within

the scope of the so-called restructuring

plan made with the purpose of sanitising

the debtor‘s business, and (iii) debt relief

(“Oddlužení”), which is applicable only to

non-business debtors and is therefore not

the subject of this article.

� FILING A CLAIMAfter the commencement of insolvency

proceedings and until the termination

thereof, the satisfaction of claims towards

a debtor is possible only through the

proceedings and in a manner that is fore-

seen in the Insolvency Act. A claim can be

satisfied in insolvency proceedings only if

it is registered within the proper time limit

by an Insolvency Court and meets the ap-

plicable formal requirements. This duty is

imposed on most creditors. Only a small

group of creditors, for example the debt-

or‘s employees, are not obligated to file

their claims.

� THE MAIN CLAIM REGISTRATION REQUIREMENTS � Completion of a special Registration Form

(which is available at http://insolvencni-

zakon.justice.cz) and authenticated signa-

ture thereon;� Content – Claim Description, reason for

its origination and its monetary value in

Czech currency (claims in a foreign cur-

rency must thus be calculated in Czech

currency in accordance with the exchange

rate of the foreign currency market, valid

on the date of commencement of the in-

solvency proceedings or their due date, if

they became due prior to the insolvency

proceedings‘ commencement). The value

of non-monetary claims also has to be

evaluated in money; � Attachments – they diff er in accordance

with the kind of registered claim. In prin-

ciple, they shall prove the existence and

amount of the claim; diligent evidence of

all claims is therefore recommended;� Time limit – claims can be registered after

the commencement of insolvency pro-

ceedings. The latest time limit for registra-

tion is set out by the Insolvency Court in

the thus named Decision on Bankruptcy

(“Rozhodnutí o úpadku”). This time limit is

mostly 30 days from the date of publica-

tion of the Decision on Bankruptcy. Failure

to abide by this time limit leads to a refus-

al of the application for claim registration

and the creditor thereby loses the chance

to demand satisfaction for its claim in the

insolvency proceedings.

All information about insolvency pro-

ceedings, including the announcement

of the commencement thereof and any

given decision important for the course of

time limits are published in an Insolvency

Register maintained electronically at ht-

tps://isir.justice.cz/isir/common/index/do.

Gathering information from the Insolvency

Register is free of charge and a particular

debtor can easily be found, based on its

company name or business identifi cation

number (“IČ”). Since creditors have prac-

tically no other possibility of acquiring

knowledge about the pending insolvency

procedure, regular monitoring of this Reg-

ister within due business management is

recommended.

� SECURED CLAIM Whether his claim is secured (for example

with a mortgage or right of retention) is

decisive for the satisfaction of a creditor.

Secured claims are settled prior to the

proceeds of the sale of the assets or re-

ceivables of the debtor to which they hold

a security right, whereas the settlement

can follow at any time during the insol-

1 3 |

C Z E C H B U S I N E S S A N D T R A D E

vency proceedings. Secured creditors are

also deemed to be creditors who do not

have a direct claim towards the debtor, i.e.

creditors of a third person, whose claim

is secured by the assets of the debtor.

Contrary to the former regulation, ac-

cording to which secured creditors were

satisfied at a maximum level of up to 70%,

the amount of satisfaction from secured

assets is not limited. If the claim value is

lower than the value of the security, the

claim is for the difference considered as an

unsecured claim. In determining the rank

of secured creditors, what is decisive is the

moment at which the respective security

right was created. A secured creditor is

obligated to exercise its right to the set-

tlement of its claim from the security in

its registration of the claim and to specify

a particular security right and to prove it

by respective attachments.

� UNSECURED CLAIMUnsecured creditors are satisfied depend-

ing on the specific form of insolvency pro-

ceeding involved (see above). In the case

of straight bankruptcy proceedings, all of

the assets of the debtor forming the in-

solvency assets are sold with the approval

of the creditors‘ council. After settling the

costs of the insolvency proceedings and

claims with priority settlement, the credi-

tors are satisfied (usually in part) out of

the rest of the sales proceeds. Unsatisfied

claims or parts thereof can be enforced

after termination of the insolvency pro-

ceedings. Practically, there are no assets

of the debtor left after termination of the

insolvency proceedings and the debtor‘s

business activity is wound up. The actual

enforcement of such claims is therefore

rare. If insolvency is solved by restructur-

ing, debts are transformed according to

the restructuring plan, i.e. into a share of

the company, new debts, etc.

� GENERAL RECOMMENDATIONS Generally, when entering into a trans-

action, security of the claim by a proper

security right (for example a mortgage),

is recommended. In doing so, it has to be

borne in mind that some legal actions can

be declared ineffective and consideration

gained as a result must be handed over

to the insolvency assets. These legal ac-

tions are: legal actions with insufficient

or non-existent consideration, preference

– for example settlement of a debt before

its due date, security of already existing

debt, etc. and fraudulently disadvantag-

ing transactions, i.e. transactions which

intentionally disadvantage creditors, pro-

vided that the other contracting party

was aware of such intention. In the event

of transactions between companies form-

ing a holding group, it is assumed that

the respective other party was aware of

the debtor‘s intention. Hence, special dili-

gence is required.

Markéta Pechová

Petr Syrovátko

Wolf Theiss, Advokáti s. r. o.

e-mail: marketa.pechova@wolftheiss.com,

petr.syrovatko@wolftheiss.com

| 1 4

W E S U C C E E D

OHL ŽS to Build New Junction in Bosnia and Herzegovina

Bank for Reconstruction and Development

(EBRD). The construction work is expected

to take 24 months. It will be carried out by

OHL ŽS together with Niskogradnja, a local

company based in the town of Laktaši.

We asked Zdeněk Zedníček, Head of the

Foreign Trade Department at OHL ŽS,

to tell us more.

Why do you think you have been entrust-

ed with this contract? In what way were

you better than your competitors?

The tender proceedings were made up of

two rounds – prequalifi cation and the ac-

tual off er. We passed the prequalifi cation

thanks to our references, for example for the

construction of a motorway in Azerbaijan.

Then followed the actual tendering pro-

cedure. In cooperation with Nizkogradnja,

a local construction company, we man-

aged to prepare the lowest price off er. We

obtained the contract in competition with

Croatian, Austrian, Slovenian, and Italian

companies.

What will this construction project entail?

The project entails the construction of a mo-

torway fl y-over junction. This junction will

serve as a connection between the motor-

way currently under construction stretching

from Banja Luka to the border with Croatia

and the future motorway from Banja Luka to

Doboj. The construction will include access

ramps, a motorway segment and two main

scaff old bridges (each approximately 500m

in length), as well as the necessary relaying

of engineering networks.

Foreign contracts make up about 20% of

your revenue. What challenges did you

have to face abroad in the past?

Each project we work on abroad has its

own specifi cs, risks, and stumbling blocks.

Our company has a relatively broad “cov-

erage” of activities. From the mentioned

far-off Azerbaijan to neighbouring Slovakia

or Hungary. One of the greatest and most

interesting of our projects is the project for

the construction of a motorway worth USD

150 million, currently nearing the end of its

execution phase. This project is fi nanced by

the Czech Export Bank and EGAP insurance.

Which other interesting foreign projects

await you this year?

This year we will continue in our business

activities. We are preparing and imple-

menting a number of projects in a vari-

ety of countries where we already have

a “permanent” presence – especially Slo-

vakia, Hungary, Bulgaria, Montenegro, and

Bosnia and Herzegovina. At the same time,

we are attempting to enter new territories

such as Russia, Vietnam, Poland, Serbia,

and so on. Among the most interesting of

projects we have in the pipeline is a project

for the construction of a new railway line in

Russia in the Ural region.

The specifi c element of the motorway junc-

tion is a 580 m long bridge. It will be the fi rst

structure of its kind in Bosnia and Herzegovi-

na. "We value greatly the trust the investor

has bestowed in us. I believe motorists and

future motorway junction users will also

be satisfi ed with our work,“ František Leda-

byl, Vice-chairman of the Board of Directors

and Director of Marketing and Commerce

at OHL ZŠ commented at the occasion of

the signing of the contract. Construction is

cofi nanced by the European Commission,

which provided the Government of the Re-

public of Serbia with a fi nancial donation of

EUR 5 million. The remaining amount, i.e.

EUR 6.5 million is a loan from the European

In March 2010, a contract was

signed between OHL ŽS and Serbian

Motorways for the construction of

a motorway junction worth EUR

11.5 million north of Banja Luka,

the second largest city of Bosnia

and Herzegovina. This motorway

junction will link future motorways

Banja Luka – Gradiška, a town on

the state border between Bosnia

and Herzegovina and Croatia, and

Doboj – Banja Luka.

Ph

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: OH

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www.ohlzs.cz

Modern face of building industry

OHL09-000 inzerat 2009-31 - A4 ENG - NEW.indd 1 30.11.2009 9:26:36

| 1 6

W E A R E I N T R O D U C I N G

Plzeň Wants to Open Its Arms to Europe

This is precisely the purpose of the

project: to bring the Europeans closer togeth-

er through culture. The question whether the

title will be awarded to Plzeň or Ostrava will be

decided by the international committee this

September. “Becoming a European culture

centre in fi ve years‘ time means great prestige,

and for Plzeň it is a challenge which will not be

repeated for a long time. It is really worth to

fi ght for“, says Petr Dvořák, the PR and Market-

ing Manager of the Plzeň 2015 project.

� VISION IS IMPORTANTThe European Capital of Culture event (ECoC)

was launched by a decision of the EEC Coun-

cil of Ministers in June 1985 and the title is

awarded to European cities for a period of

one year. Among Czech cities, Prague was the

proud holder of the designation in 2000. The

cultural and socio-economic dimension of the

event surpasses the present common simpli-

fi ed conception of culture in all respects.

The Art Director of the Plzeň 2015 project

Yvona Kreuzmannová confi rms this: “This Euro-

pean project is not designed to acknowledge

the reputation of the given city as a city of cul-

ture. There is much more to it – what vision the

city has for a period of fi ve to ten years, what

its concept of all-round development is“.

Milan Svoboda, the Plzeň 2015 Project

Director, who worked in the development

branch of the municipal government of the

West Bohemian metropolis from the 1990s,

speaks in a similar tone. “I saw the city of Plzeň

as an area with immense potential already

then. Therefore, after the completion of the

fi rst stage of the city’s transformation focused

mainly on the economic base, the vision was

born in 2003 to develop Plzeň especially in the

area of innovative enterprise, tourism, and cul-

ture. And this is precisely where the Plzeň 2015

project off ers a unique chance .“

� PILSEN-OPEN UP!Although Plzeň presents itself rather as

a conservative city, this does not mean that

it is not opening to new trends. The Plzeň

2015 project and its motto – Pilsen-open

up! – is a strong impulse for this place, which

has an indisputably tremendous creative

potential in the area of art and technologies.

And the important thing is that in the prep-

aration of the strategic document The City

of Plzeň Culture Development Programme

2009–2019, its inhabitants have made it

clear that they defi nitely desire a change in

quality, expect new impulses, and are ready

to participate in this change and revival.

� USEFUL INSPIRATIONThe best example in this respect can be the

results achieved by Glasgow as the European

Capital of Culture in 1990. It was probably the

fi rst breakthrough in the understanding of cul-

ture – not as a consumer area, but as a motor

for kick-starting a healthy development of so-

ciety. This was the reason why the socio-econ-

omic factors in Glasgow greatly improved after

1990, and the level of the region as well as the

gross domestic product rose by 20%.

At present, the European Capital of Culture

event is gradually moving from large metropo-

lises to medium-sized cities which can greatly

boost their development, provided they have

the courage and enlightened town halls. In-

spiration can be drawn from the experience of

Lille in 2004 or Liverpool four years later. Their

economic studies showed that every euro in-

vested in culture brought 8 euros of profi t in

parallel eff ects. Indeed, if the event attracts

tourists, the level of accommodation and res-

taurant services, transport infrastructure, etc.

in the city rises. It is thus clear proof why the EU

is to support not only business, employment,

and the environment, but also culture.

Of course, there are many other inspiring

examples from previous years for the candi-

date city of Plzeň. They include Linz and Graz,

where the organisers succeeded in building

the necessary infrastructure, off ering an ex-

cellent programme and creating a generally

Thanks to its history and tradition,

the West Bohemian metropolis

can be associated with various

attributes. They do not have to be

just the engineering industry, the

world-famous beer, or business

development. In addition, there is

now a real chance that in five years‘

time the city may be graced with

the title of European Capital of Cul-

ture for 12 months. Plzeň (Pilsen)

is one of the Czech candidate cities

(the other is Ostrava) which want

to open their imaginary arms to the

European public within the broadly

conceived event.

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1 7 |

C Z E C H B U S I N E S S A N D T R A D E

favourable atmosphere. “In the German town

of Essen, which has received the title of the Eu-

ropean Capital of Culture for this year together

with Pécs in Hungary and Istanbul, Turkey, the

project has great support from the federal

government. In the Czech Republic we have

not experienced this so far, although there is

support from the city as well as certain po-

litical support from the region. I believe that if

the city of Plzeň succeeds in its candidacy and

wins the title, it will arouse the interest of other

possible partners“, the Plzeň 2015 Project Di-

rector Milan Svoboda says.

� PLZEŇ METAMORPHOSES Sponsors will be needed without doubt. In-

vestment in Plzeň will be required in several

directions. “We are preparing the construc-

tion of a new theatre, the Region is planning

to build a new gallery, a new cultural centre is

to be set up by the conversion of the former

Světovar brewery“, Milan Svoboda lists the key

plans. “There are also projects for the revitalisa-

tion of public areas, for example the construc-

tion of greenways for hikers and cyclists in the

Štrunc Park, where a site is to be created for

the presentation of works of art. The linking of

public areas with art is actually one of our big

themes“, Milan Svoboda emphasises.

For Art Director Yvona Kreuzmannová, it

will be interesting about Plzeň‘s candidacy to

see whether and to what extent this conserv-

ative provincial city will be able to open up to

European culture. It is a fact that according to

statistics, Plzeň is the second city in the Czech

Republic in the number of foreign residents.

The Plzeň 2015 project is a chance to extend

the necessary dialogue with minority com-

munities as well as other nations.

And what cultural events would we see in

Plzeň in fi ve years‘ time? The principal themes

to be highlighted are Art and Technology, Re-

lationships and Sentiments, Transit and Minori-

ties, Stories and Sources. The themes reach be-

yond the dimension of culture, and we want

to address as many people as possible. For

example, in the Stories and Sources cycle we

want to take up Plzeň’s past, which is unique

and which has a strong transatlantic relation

because the city was liberated by the Ameri-

can army in the Second World War, and there

are many events in its history that are worth

recalling“, says the Plzeň 2015 project Art Di-

rector. “We can promise already now that the

themes of the programmes will be strong and

the artists and performers will be remarkable“.

PLZEŇ 2015 PROJECT

WHAT COMPANY PLZEŇ WILL HAVE AS A CANDIDATE� Athens (ECC title in 1985), Paris (1989), Madrid (1992), Lisbon (1994), Stockholm (1998),

Helsinki (2000), Bruges (2002), Luxembourg (2007), Istanbul (2010).

WHAT PRINCIPLES PLZEŇ WANTS TO PROMOTE

AS A EUROPEAN CENTRE OF CULTURE� Openness as courage for disputation and public dialogue.� Openness to new ideas, innovation, and creativity.� Openness to minority genres, trends, and ethnic groups.� Openness, transparency, and sophistication of the candidacy process and public aff airs.

WHAT PLZEŇ WILL GAIN BY THE TITLE OF EUROPEAN CAPITAL OF CULTURE� At present, Plzeň takes 356th place in the EU by its size. In 2015, it can be one of the two

most important cities in all Europe.� In 2009, Plzeň recorded almost three quarters of a million overnight stays of tourists. In

2015 the number may be much higher. � At present, 15 new theatre performances a year can be attended in Plzeň, in fi ve years

the number may reach 365. � A benefi t in terms of sustainability will be the improvement of culture infrastructure. The

city is motivated for buildings that would otherwise not be given such a high priority.� Culture and art can bring important economic benefi t. The year 2015 can show

whether one euro invested in culture will bring at least two more euros to the budget

of the city or the state.

| 1 8

K A L E I D O S C O P E

First Hopeful Firms in Silicon ValleyBoldBrick, Cognitive Security and Imagemetry

– these are the names of the Czech start-up

companies which, by 30 June, were lodged

in the CzechAccelerator of the CzechInvest

Agency in California. CzechInvest has organ-

ised office space for them free of charge in the

unique business incubator, Plug and Play Tech

Centre in Silicon Valley which is the seat of such

giants as Microsoft, Google, and Sun Microsys-

tems. BoldBrick is seeking new clients for their

key product, Mossquito, and opportunities for

financing further development in CzechAccel-

erator. “CzechAccelerator is an ideal opportunity

for us to start our business activities in the US,

which is our key market,” says Ondřej Tučný,

General Manager of BoldBrick. Imagemetry

Company sent part of its trade and research

team, which specialises in the area of digital

image processing and artificial intelligence. It is

seeking an opportunity in California for strategic

support and expansion of their product, aimed

at security aspects of visual data.

Czech SOLVIT –One of the Three Fastest Centres in the EUtion is ten weeks. The Czech SOLVIT centre,

with 126 cases resolved, is evaluate d by the

European Commission as one of the most

successful in the EU. The SOLVIT system

provides free and fast assistance in the case

where an offi ce of a member state violates

the rights granted to a citizen or an entre-

preneur by European law.

The Czech SOLVIT Centre, active at the Min-

istry of Industry and Trade, is a system of

informal problem solving on the EU inner

market. In 2009 the Czech centre was one

of the three fastest centres, together with

those of Ireland and Austria, which resolved

issues within 28 days on average. The dead-

line by which the centre should fi nd a solu-

AFSI in Most to Employ Almost 200 PeopleAlmost 200 people in North Bohemia will

be employed by Advanced Filtration Sys-

tems Inc.(AFSI), the American produ cer

of filters and filter inserts. Production in

the new plant in the Joseph Industrial

Zone in Havraň in the Most Region was

launched in March 2010. “We decided

on the Czech Republic as the location

of our first factory outside the United

States, due to its excellent location in

the heart of Europe, decent infrastruc-

ture, and reliable employees. Another

factor that influenced our decision was

the good reference from our partner, the

Donaldson company, which has been

doing business in Kadaň and in Klášterec

for 10 years,” says Radim Otipka, Head

of the Havraň plant. The Most plant will

manufacture filters and filter inserts for

Caterpillar machines and engines in Eu-

rope, Africa, Asia, and Australia. As of July,

there will be a new generation of filters

for the British Perkins company. The con-

struction of the AFSI plant in the Czech

Republic started in April 2008. To date,

142 people have obtained employment

there and their number should grow to

185 by the end of the year.

The Czech Republic Has Been among the Best in Economic Endurance in the EU during the CrisisThe economic crisis revealed the defi cien-

cies, but it also confi rmed the strong as-

pects, of the Czech economy. As noted by

the mid-year barometer of the Confeder-

ation of European Business (BusinessEu-

rope) representing 40 national employers’

feder ations from 34 countries, the evalua-

tion of the Czech economy in comparison

with the other 28 countries is relatively

positive. The Czech Republic was placed

relatively well and, together with Denmark,

Germany, and Austria, it was judged the

best at resisting the impact of the crisis. To-

gether with Slovakia, Poland, and Hungary,

it is approximating the average economic

level of the EU and it retains an excellent

level of external competitiveness. In com-

parison with other European countries, the

Czech Republic is judged relatively highly in

export performance (4th among 29 coun-

tries). Also in the area of public fi nance (10th

among 29 countries), despite worsening in

2009 and the current worsening, the Czech

Republic is among the countries with better

results. As regards tax burden and budget-

ary adjustment linked to ageing, our coun-

try has attained average results (12th place

in both factors). Labour costs are relatively

higher (18th among 29 evaluated European

countries) and information related to labour

productivity is unfavourable (22nd place). In

labour productivity, the Czech Republic is

behind Slovakia, but ahead of Hungary and

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1 9 |

C Z E C H B U S I N E S S A N D T R A D E

Prague Hosted American and Russian PresidentsUS President Barack Obama and his Russian

counterpart, Dmitriy Medvedev, signed the

START treaty on nuclear arms reduction in

Prague on 8 April of this year. The new Treaty

has supplanted the strategic arms reduction

treaty (START) of 1991, which expired in De-

cember 2009. The negotiations for the new

document took almost a year; Moscow and

Washington could not reach agreement on

certain points of the Treaty. Russia demand-

ed that the treaty be relevant for all nuclear

warheads and their strategic delivery vehi-

cles (rockets, submarines, and bombers),

while the US wanted to concentrate mainly

on warheads. Obama and Medvedev jointly

pledged to liquidate parts of their arsenals

of nuclear warheads, after negotiations in

Moscow on 6 July 2009. They agreed that

they would reduce the number of nuclear

warheads on vehicles from 1675 to 1500 on

each side and the number of vehicles from

1100 to 500. Why have the two Presidents

met in Prague? Mainly because Obama

gave a speech on his vision of a world with-

out nuclear weapons in Prague a year ago

– on 5 April 2009. Thus, Barack Obama has

visited Prague for the second time since his

inauguration, while this was the fi rst visit to

the Czech capital for the Russian President

Dmitriy Medvedev.

Financial Arbiter’s Services More in DemandIn 2009, the Offi ce of the Financial Arbiter in

the Czech Republic received a total of 757

suggestions and complaints from clients of

local fi nancial institutions, which is an almost

100% increase in comparison with 2007. Sug-

gestions were mainly related to problems with

money transfers, to bank and non-bank loans

or incongruities in insurance. The Arbiter also

granted several sanctions and imposed fi nes

of CZK 254 000 (approx. EUR 10 000) on fi nan-

cial institutions, of which CZK 115 000 (approx.

EUR 4 600) was for not observing information

obligations. More about the Financial Arbiter

at www.fi narbitr.cz/en/.

The Czech Republic has Opened an Exchange of Unused Chemicals Called NECHELA

The Internet auction exchange system of

unused chemicals opened in March 2010.

The Ministry of Industry and Trade sup-

ported the establishment of an electronic

auction market, the aim of which is to help

small and medium-sized companies make

use of the remains of chemical substances

and products which they have left over from

production after transformation or end of

production. For a small company, it is more

profi table to sell unused chemicals in time

than to keep them stored and in the end

pay for their ecologic removal or, in a worse

case scenario, for their illegal storage. The

NECHELA (NEspotřebované CHEmické LAtky

= Unused Chemical Substances) allows the

creation of the off er of chemicals on the In-

ternet in the database of unused chemical

substances and products, which is accessi-

ble at www.cmkbk.cz.

What is the Czech Republic’s Position on the EU Internal Market?The Czech Ministry of Industry and Trade has

issued an Analysis of the Competitiveness

of the Czech Republic. For almost six years,

the Czech Republic has been a part of the

EU internal market, which provides Czech

companies with greater opportunities for

business. The results show that, while the

Czech Republic is successful in some areas,

even when compared to the best countries

(technological environment), in other areas

of the comparison we are among the least

successful (institutions and infrastructure). In

the area of infrastructure, the Czech Republic

has too low a share of the motorway trans-

port network and an insuffi cient number of

border crossings for transmission systems.

The Czech Republic has a signifi cant po-

tential for change in increasing educational

structure, especially in technical education.

The necessity for better interconnectedness

in research between public and private sec-

tors is related to this.

Czech Prime Minister Jan Fischer

with US President Barack Obama

| 2 0

S E R V I C E S

All-embracing Methods of the Packaging Industry

An ever greater emphasis is placed in

the Czech Republic, as well as globally, on

the function of packaging from the view-

point of design, which is seen as a feature

that should correspond to the product

brand and publicise it, attract consumers,

and present its contents as sought-after

merchandise. Czech customers look for the

convenience brought on by developments

in the packaging industry, whether it is, for

example, the ergonomy of bottled drinks or

the easy opening of tinned liver pâté. Ac-

cording to surveys, one of the important

factors for consumers, infl uencing their

shopping decisions, has lately also been the

aspect whether environmentally-friendly

materials have been used in the manu-

facture of the packaging. Indeed, when

looking at a packaged product, Czechs

also subconsciously wonder whether the

item of packaging can be recycled. This is

one reason why the Czech Republic ranks

among the top European countries in terms

of the amount of sorted packaging waste.

In 2009, every Czech sorted on average ap-

proximately 35.9 kilograms and 70.9% of all

the packaging introduced on to the market.

It is also important that the manufacture of

packaging is dominated by cardboard and

paper (42%), followed by plastics (32%),

glass (11%), metals (10%), and other materi-

als (5%).

� PACKAGING LAW If you decide to go into the packaging busi-

ness in the Czech Republic, familiarise your-

self with the Act on Packaging 477/2001

Coll., which came into eff ect in January 2002.

A very good system has been put in place

for the management of packaging, which

ranks the Czech Republic every year among

the most successful countries in Europe.

For every packaging that you place on the

market and sell, you must examine and prove

that it does not negatively aff ect the living

environment of the manufacturer. The Act

binds the importers and distributors of pack-

aging to ensure the collection of packaging

and use of packaging waste, and defi nes the

so-called authorised packaging company and

its rights and duties, and states the duty to

fi le for registration in the list of persons who

introduce packaging or packaged products to

the market or in circulation. The Act applies

to business entities (corporate or individual),

i.e. not to individual consumers - citizens and

households. If, during your business activities,

you introduce packaging, packaged goods

or packaging materials on to the market or in

circulation, you must proceed in accordance

with the rules defi ned by this Act.

� AWARDS FOR DESIGNERSTo demonstrate their best packaging ideas

and technologies, as well as to publicise

them, Czech designers were able to enter

their packaging designs, by the end of May

2010, for the 16th competition organised

by SYBA, the Czech Packaging Institute.

This competition, Packaging of the Year, is

intended not only for the manufacturers

and users of packaging, but also for other

participants in the creation of new pack-

aging solutions, such as brand managers,

graphic studios, engineers and designers.

Any solution within one of the following six

categories was eligible for the competition:

consumer packaging, consumer gift pack-

aging, sales packaging and displays, trans-

port and handling packaging, packaging

materials, and also labels, closures, affi xation

and other auxiliary packaging means. Sub-

sequently, the winners can participate in the

global WorldStar for Packaging Competition.

Packaging is not only an important

source of information for custom-

ers (with its shapes and graphic

features), but it also plays a role in

manipulation (i.e. as storage space

for products), and ensuring the

protection of products.

� The “Fromin – Voda z doby ledové“ (Ice

Age Water) bottles are manufactured at

the client’s request to express, by their

appearance, the uniqueness, purity, and

age of the water they contain. Therefore,

this globally unique design creates the

impression of ice cubes melting away. The

eff ect is enhanced by the choice of extra

transparent PET. The use of a translucent

polyethylene label, which does not distract

from the intended appearance, is also unu-

sual. The affi xation of labels and the mate-

rials used respect the maximum ecological

requirements. Consumers also appreciate

the wide bottle-neck which makes it easier

to pour the water. (see Picture)

� Graphic purity, emphasis on product,

original typography, accurately handled

backdrop – these are the main attributes

of this premium line of ethnic rice from the

Vitana company. The quality of the graphic

presentation in every detail, combined with

perfect pre-press, makes this packaging line

an exceptional product with a high poten-

tial of addressing the target group.

More at www.obalroku.cz

FROM THE HISTORY OF THE PACKAGING OF THE YEAR COMPETITION

OR EXAMPLE OF A PRIZE-WINNING PRODUCT

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SVITAPET – IntroductionSvitapet is a highly resistant strapping band, which was designed as an extremely strong substitute for the steel and PP strapping bands and has become their natural successor. It is ideal for use in medium- and high-performance operations requiring the high protection of packed goods, such as corrugated iron, timber, concrete products, and printed matter.

SVITAPET with PrintWe can offer our clients SVITAPET with black print, for which we use highly efficient ink-jet printers, which guarantee a high quality of print. The print is done by the final section of the production equipment.

SVITAPET – Award Svitapet was awarded the GRAND PRIX for the best product at the FOR 3P Fair, held at the Prague-Letňany exhibition grounds on 15-17 April 2009.

SVITAPET – FACHPACKWe will be participating in the FACHPACK Fair in Nuremberg on 28-30 October 2010. We are looking forward to your visit.

highly resistant strapping band

SVITAP J.H.J. spol. s r.o.Kijevská 8, 568 02 Svitavy, Czech Republic

Phone: +420 461 568 198Fax: +420 461 568 300

E-mail: marketing@svitap.cz

www.svitap.czwww.haly-svitap.cz

| 2 2

S E R V I C E S

Industrial Real Estate Market Stabilised Between Supply and Demand

The fall in the demand for industrial prop-

erties rental was observed in the Czech

Republic, especially in the first half of 2009,

when the volume of concluded transac-

tions declined to 150 000 sq.m, while in

the second half the interest increased and

381 000 sq.m were leased. This is a 50%

drop compared to 2008. The number of

industrial properties under construction

also went down significantly. At the end

of 2009, only 63 000 sq.m were under con-

struction, while the three-year quarterly

average of space under construction is

150 000 sq.m.

� MASSIVE CONSTRUCTION DID NOT CORRESPOND TO DEMANDUnoccupied space rate has risen over the

long term in the past years, which was

due to massive building that contrasted

with users‘ demand for industrial real

estate. At the end of the year, the Czech

Republic had approximately 600 000

sq.m of vacant A class industrial real es-

tate, which means heated buildings with

full thermal insulation, and usable height

of 10 metres for logistics or 7 metres for

manufacturing. The halls must have dust-

proof flooring with loading capacity of at

least 5 t/sq.m. Another parameter is light

shafts, the presence of loading bridges

with balancing ramps, and the possibil-

ity to build in offices. The most affected

areas in terms of unoccupied space are

the regions of Plzeň and Ostrava, where

the vacancy rate is up to 25%. In Prague,

too, there are some 250 000 sq.m of unoc-

cupied space, which is about 18%. How-

ever, it should be noted that Prague and

its surroundings still account for 50% of

the industrial real estate market, in both

supply and demand. Given the absolute

The industrial real estate market

experienced a robust development

in the past years and has reached

the line between a developing

market and a saturated one. The

massive speculative construction

of the past years, when developers

were building warehouses without

a secured lease, was greatly slowed

down by the global economic crisis

in 2009. Paradoxically, this situ-

ation has brought market stabilisa-

tion in the supply-demand relation

in this country.

SHARE OF INDUSTRIAL AREAS PER 1000 INHABITANTS IN CENTRAL AND EASTERN EUROPE

Source: CB Richard Ellis

324

159 154

186

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150

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250

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C Z E C H B U S I N E S S A N D T R A D E

INDUSTRIAL REAL ESTATE MARKET IN THE CZECH REPUBLIC

Source: CB Richard Ellis

scaling down of speculative construction

and a stable interest, we expect the unoc-

cupied space rate to decline over the long

term and, in some regions, even demand

to exceed supply. We have witnessed this

situation in Brno for a long time.

� CHANCE IN RELOCATION AND FOUNDING OF NEW DISTRIBUTION CENTRES A great chance for the Czech Republic

is the interest of investors-producers in

the relocation of production lines from

the west, which is accelerated by the

availability of cheap but qualified labour

force. A second trend is the establish-

ment of new distribution centres for the

region of Central and Eastern Europe.

This increased interest is apparent espe-

cially in the Plzeň Region, which is eyed

by many international companies thanks

to the perfect access for trucks, the short

distance to foreign markets in the west,

and the high unemployment rate. Lo-

cal demand is generated by companies

seeking alternatives for their existing

older and to some extent inefficient real

estate. This transfer of companies from

old to new space will continue for many

years to come. The average demand in

terms of size is for 3 000-6 000 sq.m, and

an increased interest has been recorded

recently in smaller units of 1000-2000

sq.m. But modern space of this size is ex-

tremely scarce in the Czech Republic.

� DEVELOPERS‘ AMBITION: LETTING THE EXISTING VACANT SPACE In the long term, the prices of a lease have

been EUR 3-4.50/sq.m/month for storage

space and between EUR 7-9/sq.m/month

for offi ce space or amenities. For the year

2010, we expect a similar result as in 2009,

which means that we expect a total renting

activity in the order of 400 000 sq.m. Devel-

opers will endeavour to focus maximally

on the lease of existing vacant space, and

will build new halls only if lease contracts

can be concluded with new clients. Also,

we do not expect additional developers of

industrial space to enter the market.

Filip Kozák

Head of Industrial Space Leases

CB Richard Ellis s.r.o

(e-mail: marcela.vesela@cbre.com)

LIST OF MAJOR LOGISTICS PARKS CTPARK BOR

CTPark Bor is one of the most successful parks in the Czech Republic. It is an area sought by

tenants who locate their business near the German border (10 minutes from border), situ-

ated close to the D5 motorway.

CTPARK PLZEŇ

CTPark Plzeň is quickly developing into a position of the best park focused on heavy indus-

try. Its location makes it one of the most popular parks in the Czech Republic for foreign

producers and logistics companies. The park is situated on the main Prague - Plzeň - Nurem-

berg motorway.

VGP PARK HORNÍ POČERNICE

VGP Park Horní Počernice is an important industrial park, easily accessible thanks to being

very close to the Prague - Mladá Boleslav - Liberec high-speed road R10, which has an ap-

proach and exit at this place. Combined with the immediate neighbourhood of the capital

city, the features of this location are considered very attractive. A regular bus line has eight

stops in the park connecting it with the Černý Most metro station.

PROLOGIS PARK D1

ProLogis Park D1 is situated about 11 km southeast of Prague, close to the Říčany/Jesenice exit

from the D1 motorway. The history of ProLogis Park Prague D1, formerly known as D1 Logistics

Park, was initiated in 1997, when the AIG/LINCOLN company launched its ambitious project

to build a modern logistics complex. In September 2002, the project was taken over by the

company ProLogis Czech Republic Management to continue its construction and operation.

RUDNÁ LOGISTICS PARK

Rudná Logistics Park is situated near the D5 motorway, exit 5 (Prague – Plzeň – Germany).

It has excellent access to the Ruzyně airport (approx. 10 minutes) and 80 bus connections

daily (Beroun, Zličín).

CTPARK BRNO

In the vicinity of the Brno-Tuřany international airport, this industrial park has an area of 2.2

million sq.m.

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Total leasing activity in 2009 Vacancy rate at the end of 2009

Vacancy rate Czech Republic at the end of 2009New completions in 2009

| 2 4

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R E S E A R C H

Czech Scientists Unveil Another of Life’s Mysteries

A team of scientists at the Laboratory

of Growth Regulators, a joint facil-

ity of the Institute of Experimental

Botany of the Academy of Sciences

and the Faculty of Science at Palacký

University in Olomouc, have made yet

another discovery in the research of

plant hormones. Within a group of so-

called cytokinins, they have discov-

ered an active substance that inhibits

the skin ageing process and cures

certain skin conditions. This modern

elixir of youth goes by the name of

Pyratine-6. We asked Miroslav Strnad

from the Laboratory of Growth Regu-

lators about the future of the project.

100%; however the age expectancy of

human beings can be prolonged.

How is such research actually conducted?

At fi rst we begin by synthesising a large

number of substances, from which we se-

lect the most eff ective ones by diff erent

bio-assays. Furthermore, we select several

candidates from these substances that are

studied more deeply on animal (human)

cells to ascertain whether they are eff ec-

tive but also cytotoxic, mutagenous, and so

on. No substance can be dangerous to the

human organism and at the same time ef-

fective. Next follows the formulation of the

preparation and then clinical testing. The

development of substances is conducted

exclusively in the Laboratory of Growth Reg-

ulators. Only a part of the tests on animal

cells were conducted in cooperation with

Aarhus University in Denmark and clinical

studies were carried out in dermatological

clinics in California. The research is fi nanced

mostly by Senetek of the USA.

Your fi nding has been awarded a number of

patents resulting in a commercial prepara-

tions with cosmetic and healing eff ects. Is

the preparation already on sale?

That is correct, these substances are the

subject of several patent registrations. They

have also been awarded a number of pat-

ents in various countries. Some ten patents

cover the fi nding at present. In the near fu-

ture, there will be dozens of such patents as

we are developing a number of other prep-

arations right now – some of which have al-

ready completed the clinical testing phase.

The patents have been licensed to Senetek.

Sales are underway successfully, especially

in the USA. The company also intends to en-

ter the European market this year.

Do you cooperate with other companies

on a commercial basis?

Our Laboratory is developing several com-

merce-based projects. Firstly, there is the

traditional development of anti-tumour sub-

stances, where we cooperate with Cyclacel, C3

Bio, BioApex and BioPatterns. Secondly, there

is the long-term development of plant growth

regulators in cooperation with Olchemim. And

lastly, we have been very successful in prepar-

ing new growth regulators for agricultural and

biotechnological purposes. Our results have

attracted the interest of a number of compa-

nies such as Fosfa, Sumimoto Chemicals, Bay-

ern Crop Sciences, Syngenta, and others.

Do you cooperate with other similar facil-

ities abroad?

Indeed, we cooperate with a large number

of facilities, and it would probably be diffi cult

to name them all. In order to achieve a high

quality of research, it is necessary to cooper-

ate with facilities abroad. I would go as far as to

say it is absolutely essential. We cooperate on

a number of very diverse projects, the majority

of which focus on plant hormones and their

use in all manner of areas of human activity,

ranging anywhere from agriculture all the way

through to healthcare.

Do you also use EU funds to fi nance you

projects?

Of course. We are involved in a number of

European projects. Most important of all

I consider our involvement in an EU project

for the Centre of the Haná Region for Bio-

technological and Agricultural Research,

launched in March 2010 and fi nanced from

Operational Programme Research and De-

velopment for Innovations.

Jana Pike

In 2009 your facility, the Laboratory of

Growth Regulators, developed an active

substance that slows down ageing. What

exactly is it?

It is a substance of cytokinin origin. Cytoki-

nins are plant hormones that, among other

functions, slow down the ageing process in

plants. Previously, it has been demonstrated

that for instance the plant hormone kinetin

prolongs the lifespan of skin tissue cultures,

possesses antioxidation eff ects and destroys

radicals. The long-term known anti-ageing

eff ects of cytokinins on plant tissues and or-

gans have led to further research and test-

ing of their derivates. Eventually this has led

to the discovery of a substance with a sev-

eral effi cacious properties that slow down

the ageing process - so-called antisenes-

cence activity - in tests on ageing of human

fi broblast cells. The substance goes by the

commercial name Pyratine-6, under which

it is now also marketed.

In your opinion, is Pyratine-6 really the

elixir of youth?

In my opinion, we cannot yet call it an elixir

of youth. Human and animal organisms are

made up of an enormous amount of cells.

This substance displays eff ects on only one

particular cell type. Therefore it may not

function the same way with other cells in

our body. We do, however, want to contin-

ue studying it. Ageing cannot be stopped

Team of scientists at the Laboratory of Growth Regulators

2 5 |

F I R M A N N I V E R S A R Y

15 Years of Quality and Tradition

them in Germany. We have gradually

built a large network of agencies around the

globe. We have made use of the changes on

the political map that took place after 1989

to expand our markets in Central and East-

ern Europe, and Böttcher Česká Republika

was born.

How has the range of products been

changed and expanded during the com-

pany’s long existence?

Far back in history, in the fi rst half of the 18th

century, a certain Jacob Loosen founded his

own tannery in Cologne. A century later, the

plant launched the manufacture of glue and,

later still, the manufacture of gelatine for

press rollers. A second branch of the family

enterprise was founded in Leipzig in the late

19th century, focusing on the manufacture

of press rollers. The two branches merged

in 1910 and the period of expansion com-

menced. Although the two wars were diffi -

cult times, the roller production continued.

But the Iron Curtain divided both Germany

and Böttcher, so the company was re-inte-

grated when Germany was re-united. And

as I have said, the détente of the 1990s al-

lowed us to expand to the markets of the

former East Bloc, and Böttcher Česká Repub-

lika commenced the manufacture of rubber

rollers in the newly built factory in Vyškov in

Moravia.

Please tell the uninformed what Böttcher

actually produces and for what purpose.

The parent company operating in Germany

was in the past and is now the most impor-

tant supplier of rubber-coated rollers, main-

ly for the printing industry. The possibility of

supplies to the Eastern countries naturally

led to the establishment of the manufacture

of these rollers in the Czech Republic. Due to

success on the market, the factory in Vyškov

was enlarged, and a commercial network

of subsidiaries was formed in the countries

of Eastern Europe, specifi cally in the Czech

Republic, Slovakia, Hungary, Poland, the

Baltic countries, Russia, and the Ukraine. At

the same time, we became the most impor-

tant supplier of equipment for the printing

and other industries. As time went on, roll-

ers for the printing industry ceased to be

the only products and the assortment was

expanded with so-called technical rollers,

which are used everywhere that anything

is trans ported, driven or pressed. With the

development of packaging equipment and

the fl exo press, the Vyškov plant began sup-

plying “sleeves”, which are actually the press

form for printing after direct laser gravitation.

The Vyškov experience serves the whole

Group and also manufacture in the USA.

In the course of development, the range

of products was expanded with pressroom

chemicals and detergents for the washing

and care of rollers, which have a noticeable

share in the total turnover of the company.

Last but not least, I want to mention off set

blankets for the printing industry.

What has recently been your pride, what

successes have you had?

We are glad when clients are satisfi ed, as

they confi rm the quality of our products.

We also provide a complete service. Be-

sides success at fairs, the best appreciation

is the satisfaction of clients for whom we

have created a service of consultations free

of charge – within this service, our staff can

solve technological problems of the press or

processes directly on the spot. I believe that

the combination of product-consultancy,

suitable logistics of deliveries, and compe-

tent co-operation with clients are our most

important successes on the market.

How has your branch been aff ected by the

worldwide economic crisis and how are

you tackling it?

The confi dence of clients, our position on

the market, the company structure and

positive balance were preserved during the

crisis at the end of 2008, as well as in 2009,

due to good and competent operations.

How do you see the future, and what are

your expectations?

We are proceeding from a cautious estimate

of market revival. We would like to gain new

territories, and after the revival to make use

of some adverse experiences from the cri-

sis-ridden period. I think that I can proudly

say that this period showed our capabil-

ity to overcome adverse infl uences of the

market, however strong they were. This is

our most important information for clients

– we remain a stable, competent supplier of

high-quality products and a profi cient pro-

fessional service.

Šárka Kratochvílová

www.bottcher.cz

Almost 300 years of fl ourishing operations

is not a usual or frequent viewpoint when

a production company looks back on its his-

tory, but this is the case of Böttcher, a com-

pany which came into being in Germany

in the 18th century. Over the years which

have elapsed since then, the company has

been changing its appearance and range

of products, and expanding on to European

and world markets... and so Böttcher Česká

Republika was established fi fteen years ago.

Its quality and size have gradually made it

the most prominent enterprise in this Group

which operates on all continents. We spoke

to Jiří Volf, Secretary and Manager of Böt-

tcher Česká Republika.

Böttcher Česká Republika is com-

memorating the 15th anniversary of the

beginning of its production in the town of

Vyškov in Moravia. The depth of the com-

pany roots in the past is interesting...

Yes, Böttcher Česká Republika was es-

tablished fi fteen years ago as a company

whose service on the then new and de-

veloping East European market supported

the existing “parent” producers. Böttcher

as such originated in Germany as a family

fi rm whose roots reach back to 1725. At the

present time, we have ten factories, four of

Jiří Volf

| 2 6

R E G I O N

Liberec

Praha

ČeskéBudějovice

JihlavaBrno Zlín

OstravaOlomouc

Pardubice

Hradec Králové

Ústí n/L

Karlovy Vary

Plzeň

The Hradec Králové Region is one

of the most often visited regions

in the country. It can be described

as predominantly agricultural and

industrial, with thriving tourism.

Hradec Králové, the capital of the

Region, is a university city and its

architecture and urbanism make it

a European jewel.

SLOVAKIA

POLAND

Jičín

Hradec Králové

Trutnov

Hradec Králové Region

Náchod

Rychnov n.Kněž.

The regional capital of Hradec Králové is

situated 112 km from Prague. This metropo-

lis, with over 160 000 inhabitants and a rich

history, is an important transport junction,

the seat of many authorities, state institu-

tions, banks and signifi cant industrial com-

panies. A typical feature of the city is that

it lacks predominantly industrial zones.

The range of classical industrial sectors is

represented mainly by medium-sized and

smaller companies; among foreign inves-

tors, we could mention the American Arrow,

a manufacturer of medical devices. Hradec

Králové is also a university city.

It is also the venue for numerous inter-

national congresses and symposia. The

regional capital is not only the centre for

congress tourism, but also the starting

point of many interesting routes leading

to attractions and sites of natural beauty in

the close vicinity. Its unique 20th-century

building complexes contribute to making

Hradec Králové a textbook of modern ar-

chitecture admired throughout Europe.

Hradec Králové District

The Hradec Králové District is the larg-

est district in the Region regarding the

number of inhabitants. It is known for

many cultural and historical sites. The

most significant is the historical centre

of the regional capital. Industry and ag-

riculture are mainly responsible for the

economic production. Main industrial

sectors include the engineering, electri-

cal, chemical, wood-processing, and food

industries.

Jičín District

Jičín profits mainly from tourism and in-

dustry, followed by agriculture. The main

industrial sectors are represented by the

textile, engineering, and food industries.

The production of the Genuine Hořice

Rolls (with the certificate of a protected

original EU product) is worth mentioning.

The Jičín District has a deposit of first-class

glass sand (Hrdoňovice – Střeleč).

Náchod District

The area of the Náchod District makes it

the smallest district in the Hradec Králové

Region. Sectors with the largest share in

economic product formation are industry

and tourism. The main industrial sectors

are the engineering, textile and rubber in-

dustries. Local mineral resources include

mainly the mineral spring waters in Ná-

chod, Běloves and Hronov, and the peat

bogs around Velichovky, together with

the spa town of the same name.

Rychnov nad Kněžnou District

The Orlické hory Mountains, which form

part of the District, were proclaimed a pro-

tected landscape area due to their unique

topography. In total, there are two national

nature reserves in the District, 12 natural

sites and 20 nature reserves. Industry, tour-

ism, and agriculture have the main share in

the economic product formation. The main

industrial sector is engineering.

Trutnov District

The Trutnov District lies in the northern part

of the Region where it changes from the

foothills to the Krkonoše mountain range.

The whole length of the northern border is

formed by the state border with Poland. Its

area is the largest in the Region and it is the

second largest district in the Region regard-

ing the number of inhabitants. Sectors with

the greatest share in the economic product

formation include tourism, industry, and

agriculture. The main industrial fi elds are

represented by the textile, engineering,

and electrical industries. Regarding mineral

resources, the Trutnov District has deposits

of black coal, to a lesser extent there is also

copper ore and limestone.

The Hradec Králové Region lies in the north-

eastern part of the Czech Republic. Over

one-third of the border of the Region lies

on the national border with Poland. The

Region in its current shape was established

in 2000 and today it comprises fi ve districts.

The landscape of the Hradec Králové Re-

gion consists of mountains, valleys, rocks,

and woods. The southern part of the area

is formed by the lowland area of the Labe

River basin; the northern part by the highest

Czech mountains, the Krkonoše (the Giant

Mountains), together with the Orlické hory

Mountains. The Krkonoše with the high-

est mountain peak in the Czech Republic,

Sněžka, are geologically unique and were

proclaimed a UNESCO Biosphere Reserve.

The natural potential of the Region is an

excellent basis for the development of new

types of tourism (Agrotourism, Ecotourism,

Cyclotourism etc.)

GERMANY

AUSTRIA

Ph

oto

: Cze

chTo

uri

sm

2 7 |

C Z E C H B U S I N E S S A N D T R A D E

� ECONOMIC POTENTIALFrom the point of view of productivity and

sector structure, the Region’s economy

can be evaluated as semi-developed, with

a large share of production and services hav-

ing a lower added value. The Hradec Králové

District is characterised by more activities

and a higher added value. The majority of

business entities are small and medium-

sized companies (up to 250 employees).

According to the number of employees,

the prevalent industrial sector is the manu-

facturing industry, and within its framework,

textile production and the production of

electrical and optical appliances and facili-

ties. According to sector structure, the most

prominent are companies focusing on trade

and motor vehicle repairs, enterprises in

the fi eld of immovables, the manufactur-

ing industry, construction and basic metal

production, and the production of metallur-

gical and metal-working products. A signifi -

cant position on the market is also held by

food, beverage, and tobacco production. In

the fi eld of wood processing, apart from the

production of wood processing tools, the

Region also hosts several small and medium-

sized furniture and interior manufacturers.

A signifi cant share in the list of signifi cant

industrial sectors and fi elds also belongs to

the production of rubber and plastic prod-

ucts, pulp, paper and paper products and,

last but not least, publishing and printing.

Heavy industry and the mining industry

(with the exception of smaller mining loca-

tions) are not present in the Region, which

has proved to be a great advantage, espe-

cially during the economic transformation

of the 1990s. The Region was thus, to a large

extent, not aff ected by structural unemploy-

ment caused by the signifi cant attenuation

of this production, nor by a large number

and extent of environmentally damaged

NUTSArea

(in sq. km)Population Municipalities

Population density

(persons/sq. km)

LAU 1 – Hradec Králové 892 163 025 104 182

LAU 1 – Jičín 887 79 669 111 90

LAU 1 – Náchod 852 112 495 78 132

LAU 1 – Rychnov n. Kněžnou 982 79 299 80 81

LAU 1 – Trutnov 1 147 120 372 75 105

NUTS 3 - Hradec Králové Region

4 795 554 860 448 116

NUTS 1 – Czech Republic 78 867 10 506 813 6 249 133

Source: Czech Statistical Offi ce (as of 30 September 2009), NUTS- territorial unit according to the EU classifi cation, LAU 1 = district

Latest data: Hradec Králové Region

Inhabitants as of 31 December 2009 554 402

Gross wages 1st to 4th quarter 2009 CZK 20 621 (approx. EUR 780)

Unemployment as of 28 February 2010 8.74%

INTERESTING FACTS ABOUT THE REGION� The highest mountain range in the Czech Republic

– the Krkonoše – lies in the Hradec Králové Region.

The Krkonoše Mountains hold several primacies:

they are the most visited, highest, oldest, best

known, they have a unique character, combin-

ing highland and alpine vegetation, and a unique

climate resembling northern tundra.� The highest peak, Sněžka, is at the same time the

highest mountain in the Krkonoše and in the Czech

Republic, with an altitude of 1602 m.� The Hradec Králové Region is the birthplace of the

world renowned painter, František Kupka (1871-1957)

areas, such as was the case in other indus-

trial areas in the Czech Republic.

� TRANSPORTThe Hradec Králové Region has a relatively

dense transport network and the regional

capital is conveniently situated.

The progress of the economic attractive-

ness of the Hradec Králové Region is condi-

tioned by the fi nalisation of the construction

of the D11 motorway and the successive

R11 in all its length all the way to Královec

and the R35 road. The density of the trans-

port network is suffi cient. What is missing

are bypasses of towns and villages which

are extremely aff ected by transit transport.

The density of the railway network in the

Region is above the average of the Czech

Republic. The vicinity of the modernised 1st

Railway Corridor in the neighbouring Pardu-

The Krkonoše Mountains

| 2 8

R E G I O N

bice Region, which provides a rail connec-

tion with Prague, the capital of the Czech

Republic, is strategically very important.

The railway network in the main transport

axis covers the decisive transport directions

in the Region and thus its extension in the

future is not being considered; only the re-

construction and modernisation of selected

sections. Air traffi c has only a supplemen-

tary function in the Region. There are eight

public domestic airports in the Region. The

international non-public airport in Hradec

Králové has the potential for development.

A signifi cant factor is the proximity of the

public international airport in Pardubice,

which is one of the fi ve backbone airports

in the Czech Republic.

Distance between Hradec Králové and

other European cities:

� Prague 112 km� Vienna 270 km � Bratislava 280 km � Berlin 450 km

ment for International Relations of the

Regional Office. Within the framework

of its activities, it also administers grants

for the support of international co-op-

eration. The Hradec Králové Region has

signed a contract of co-operation with

these partnership regions: Lower Silesian

Voivodeship (Poland), Banská Bystrica Re-

gion (Slovakia), Seine et Marne (France),

Sibiu (Romania) and Chuvash Republic.

It also has unsigned contacts with the

Region of Jögeva (Estonia) and it sup-

ports Czech compatriots in South Banat

in Serbia.

� Budapest 575 km � Warsaw 750 km � Brussels 1150 km

� EDUCATIONThe Hradec Králové Region has a dense net-

work of secondary and apprentice schools.

University education is provided by the Hradec

Králové University with its three faculties (Fac-

ulty of Education, Faculty of Informatics and

Management, and Faculty of Arts). There are

also the Faculty of Pharmacy and the Faculty of

Medicine of Charles University and the Faculty

of Military Health Sciences of the University of

Defence. There is a great developing scientifi c

and research base, particularly in the fi elds of

Medicine, Pharmacy, and Science, with tech-

nological parks being developed. This highly

developed educational system represents

a strong development potential for the Region.

� INTERNATIONAL RELATIONSInternational relations of the Region are

in the sphere of the work of the Depart-

“The Hradec Králové Region provides many op-

portunities for future investors, thanks to which

new directions in the development of villages

and regions can be created. The Region is ready

to provide the maximum support for the develop-

ment of investment activities in this Region.

I would like to invite you all to the Hradec Králové

Region and I wish you all the best.”

Lubomír FrancPresident of the Hradec Králové Region

2 9 |

C Z E C H B U S I N E S S A N D T R A D E

HRADEC KRÁLOVÉ REGIONAL AUTHORITY

KRAJSKÝ ÚŘAD

KRÁLOVÉHRADECKÉHO KRAJE

Pivovarské nám. 1245

500 03 Hradec Králové

Phone: + 420 495 817 111

Fax: + 420 495 817 336

E-mail: posta@kr-kralovehradecky.cz

www.kr-kralovehradecky.cz

HRADEC KRÁLOVÉ CITY COUNCIL

MAGISTRÁT MĚSTA HRADEC KRÁLOVÉ

Československé armády 408

502 00 Hradec Králové

Phone: + 420 495 707 111

Fax: + 420 495 707 100

E-mail: epodatelna@mmhk.cz

www.hradeckralove.org

JIČÍN MUNICIPAL COUNCIL

MĚSTSKÝ ÚŘAD JIČÍN

Žižkovo náměstí 18

50 601 Jičín

Phone: + 420 493 545 111

Fax: + 420 493 545 222

E-mail: posta@mujicin.cz

www.mujicin.cz

NÁCHOD MUNICIPAL COUNCIL

MĚSTSKÝ ÚŘAD NÁCHOD

Masarykovo náměstí 40

547 61 Náchod

Phone: + 420 491 405 111

Fax: + 420 491 405 298

E-mail: podatelna@mestonachod.cz

www.mestonachod.cz

MĚSTSKÝ ÚŘAD

RYCHNOV NAD KNĚŽNOU

RYCHNOV NAD KNĚŽNOU

MUNICIPAL COUNCIL

Havlíčkova 136

516 01 Rychnov nad Kněžnou

Phone: + 420 494 509 111

Fax: + 420 494 534 440

E-mail: podatelna@rychnov-city.cz

www.rychnov-city.cz

TRUTNOV MUNICIPAL COUNCIL

MĚSTSKÝ ÚŘAD TRUTNOV

Slovanské náměstí 165

Phone: + 420 499 803 111

Fax: + 420 499 803 103

E-mail: podatelna@trutnov.cz

www.trutnov.cz

SELECTED FIRMS IN THE HRADEC KRÁLOVÉ REGION

Name Based in Sector Contact

Veba, textilní závody, a.s. Broumov production of interior textiles www.veba.cz

Farmet a.s. Česká Skalice production of agricultural machines www.farmet.cz

KBA-Grafi tec, s.r.o. Dobruška printing machines and accessories www.kba-grafi tec.cz

PZP Komplet, a.s. Dobruška production of heat pumps and modern industrial technologies www.pzp.cz

Juta, a.s. Dvůr Králové nad Labem production of construction and insulation foils and textiles etc. www.juta.cz

Arrow International CR, a.s. Hradec Králové production of medical equipment www.arrow.cz

Bühler Motor, s.r.o. Hradec Králové production of electric motors www.buehlermotor.cz

Cerea, a.s. Hradec Králové production of livestock fodder www.cerea.cz

Excon Steel, a.s. Hradec Králové production of equipment for chemical and petrochemical industries www.exconsteel.cz

Profi mont, a.s. Hradec Králové sale of welding, bevelling, and cutting equipment, exhaust systems www.quelle.cz

Rubena, a.s. Hradec Králové production of rubber, rubber products and semiproducts www.rubena.cz

Technistone, a.s. Hradec Králové production and deliveries of cured rock www.technistone.cz

KARSIT HOLDING, s.r.o. Jaroměř production of car parts – car seat metal structure, exhaust systems etc. www.karsit.cz

Continental Teves Czech Republic, s.r.o.

Jičín production of spare parts for cars www.contiteves.com

LPM, s.r.o. Jičín production of plastic semiproducts www.lpm.cz

PFT, s.r.o. Jičín production of plastic windows www.pft.cz

Ronal CR, s.r.o. Jičín production of bathroom equipment and light alloy wheels www.ronal.cz

Vk-Sped, s.r.o. Jičín car transport, shipping www.vksped.cz

Federal-Mogul Friction Products, a.s.

Kostelec nad Orlicí components for pro brakes and braking systems www.federal-mogul.cz

Mados MT, s.r.o. Kostelec nad Orlicí building of bridges, roads, water management constructions www.madosmt.cz

Deprag CZ, a.s. Lázně Bělohrad production of pneumatic and clamping tools, screws, and assembly systems www.depragindustrial.com

Ametek elektomotory, s.r.o. Náchod production of electric motors www.ametek.com

Atas elektromotory Náchod, a.s. Náchod production of electric motors www.atas.cz

Ammann Czech Republic, a.s. Nové Město nad Metují production of construction equipment www.ammann-group.cz

Verner Potraviny s.r.o. Nové Město nad Metují wholesale of groceries www.poverner.cz

Avon Automotive, a.s. Rudník production of rubber car products www.avon-rubber.com

Qpor, a.s. Trutnov production of building materials www.porobeton.cz

Esab Vamberk, s.r.o. Vamberk welding and cutting equipment www.esab.cz

Pewag, s.r.o. Vamberk production of strengthening and linking materials www.pewag.cz

Vaspo Vamberk, s.r.o. Vamberk production of machines and equipment www.vaspo.cz

Hašpl, a.s. Velké Poříčí production of nails www.haspl.cz

AGO-HYTOS s.r.o. Vrchlabí fi ltration & fl uid management www.argo-hytos.com

Optrex Czech, a.s. Vrchlabí production of satellite and television equipment www.optrex.cz

| 3 0

R E G I O N

The Hradec Králové Region

has great potential for further

economic development. Investors

will find interesting opportunities

and conditions for the expansion

of their business activities in the

Region.

Hradec Králové Region – Ideal Site for Your Investment

� CONDITIONS IN THE REGIONAL METROPOLISThe regional capital, along with the whole

region, sees its future in the industries with

higher added value. Therefore, it focuses on

attracting investments in the area of strate-

gic services or ICT, which require a qualifi ed

workforce. As it stands, the Region can of-

fer educated employees to investors. These

are mostly graduates from local secondary

schools and universities, the majority com-

posed of graduates who have studied the

development of Information Technologies,

doctors and medics, and liberal education

graduates. The City of Hradec Králové, in col-

laboration with, among others, the CzechIn-

vest Agency, has built a Technology Centre

for fi rms with innovation potential. This

property, which allows entrepreneurs to

lease space, including accompanying serv-

ices, under favourable conditions, is located

on the premises of a former military airfi eld.

� CONDITIONS IN OTHER REGIONAL TOWNSBesides the regional capital, other important

industrial centres include the towns of Jičín,

Trutnov, Náchod, Rychnov nad Kněžnou,

Vrchlabí, and Červený Kostelec. Industrial

zones have been built and partially or fully

occupied in some of them. For example,

Taiwan‘s Textonnia Czech, s. r. o., a producer

of synthetic fabrics and yarns, has its seat in

Červený Kostelec. Saurer Czech, a. s., a mem-

ber of the supranational Schlafhorst con-

glomerate, manufactures textile machinery

in Červený Kostelec in continuation of the

Elitex tradition. Numerous companies today

operate from the industrial zone in Jičín and,

based on this success, the town has decided

to invest in further expansion of the zone.

However, other unoccupied localities are

available to newly arriving investors. Cer-

tainly worthy of mention is the newly built

industrial zone in Nový Bydžov, which has

become easily accessible to transport, due

to the completion of the D11 motorway.

Other industrial zones have been prepared

in Dvůr Králové nad Labem, Hořice, and Po-

lice nad Metují which, because of its loca-

tion, is advantageous to investors with ties

to neighbouring Poland. There is a strategic

industrial zone for Škoda Auto in Solnice

and Kvasiny. The company uses it to manu-

facture the Škoda Superb, Škoda Roomster

and the latest Škoda Yeti vehicles.

� BROWNFIELDS – ONE OF THE OPPORTUNITIESAnother opportunity for investors is in those

areas which were utilised in the past but,

for various reasons, are not being used ef-

fectively today. In the past, the CzechInvest

Agency, in collaboration with the Regional

Offi ce of the Hradec Králové Region, put to-

gether an analysis of unused localities, the

so-called brownfi elds. There were over 250

located in the Hradec Králové Region. This

study is available to investors. Our goal is to

achieve the revitalisation of currently un-

used premises or larger areas.

� USING CO-OPERATION AGAINST COMPETITION Both the traditional and new branches of in-

dustry operate alongside each other in the

Hradec Králové Region. The traditional indus-

tries are still dominated by the textile industry,

even though it must deal with the cheap and

ferocious Asian competition. For this reason,

textile companies, not only from the Hradec

Králové Region, have formed an association

SUCCESSFUL INVESTMENT PROJECTS IN THE HRADEC KRÁLOVÉ REGION

Company SectorCountry of origin

Investor Year Location

AEG Components s.r.o. electronic and electrical Germany AEG 1998 Jičín

Alcan Packaging Skřivany s.r.o. plastics FranceFinnanciere Europeenne D'emballages Pechiney S.A.

2007 Nový Bydžov - Zábědov

Continental Teves Czech Republic s.r.o. automotive Germany Continental Teves 2000 Jičín

Ronal CR s.r.o. automotive Switzerland RONAL 2000 Jičín

Kimberly Clark, a.s. other USA Kimberly Clark 2001, 2003 Jaroměř

JUTA a.s. plastics CR JUTA 2007 Dvůr Králové

SQS Vláknová optika a.s. electronic and electrical CR SQS Vláknová optika 2006, 2008 Nová Paka

Škoda Auto a.s. automotive Germany Volkswagen 2004, 2007 Kvasiny-Solnice

3 1 |

C Z E C H B U S I N E S S A N D T R A D E

called Clutex. They use the association to share

information and experiences, co-operate with

research institutions, and introduce new prod-

ucts. This helps them to maintain their impor-

tant position ahead of their competition. Asso-

ciation and co-operation between companies

can also be seen in the new industries. The

Region of Hradec Králové has great potential

to become an important centre in the fi eld of

computers and software. With this in mind, ex-

isting IT fi rms, along with the Faculty of Infor-

matics and Management at the University of

Hradec Králové, have started a project to build

an IT cluster.

� TRANSPORT IS VITALAny further development of the Region of

Hradec Králové is closely tied to the develop-

ment of the transport infrastructure. The last

remaining part of the D11 motorway should

be completed shortly. This motorway con-

nects Hradec Králové to Prague and work has

started on its extension towards the Polish

borders. A convenient transport link, not only

to the capital, but to the rest of the country

and the whole of Europe is a good basis for

the establishment of new companies and for

the development of the tourist trade. As it is,

the mountainous areas, such as the Krkonoše,

the Orlické hory, and Český ráj, the chateaux in

Opočno and Častolovice, and the safari ZOO in

Dvůr Králové nad Labem are all attractive tour-

ist destinations. The easier it is to reach these

attractions, the sooner tourists will fl ock to the

Region. After all, who wouldn‘t want to enjoy

the snow-covered slopes of the Krkonoše

Mountains or a round of golf in the gardens of

the manor in Hrádek u Nechanic after a mere

two-hour drive from Prague?

Martina Chamasová

CzechInvest

e-mail: martina.chamasova@czechinvest.org

Entrance for Innovation Activities

The project of the Hradec Králové

TECHNOLOGICAL CENTRE (TC HK)

was formed with the cooperation of

the city of Hradec Králové, Hradec

Králové University, and the EPIS

Company with the goal to develop

the innovative environment of the

Region.

� SEAT OF CLUSTERS AS WELL AS INVESTORSDuring the relatively short period of its func-

tioning, the TC HK has become a part of the

national network of science and technol-

ogy parks, a member of Omnipack clusters,

Hradec Králové IT cluster, Hradec Králové

Business Club, it started to cooperate with

several Czech and foreign universities. The

Centre is one of the pillars of the innovation

business in the Hradec Králové Region, it

actively participates on the Hradec Králové

Regional Innovation Strategy and on the

realisation of its pilot project called Czech-

Polish Innovation Portal (www.czeplinn.eu),

whose goal is to create a communication

platform aimed at increasing the know-how

about the innovation environment in the

border regions.

It also supports the entry of projects aimed

at innovation in the Hradec Králové Region,

to foreign investors it provides services relat-

ed to their entry into the Region, assistance

with the establishment of branches and new

companies. In this respect, it cooperates with

several regional and national institutions and

partners in almost all sectors of business ac-

tivities. At the moment (March 2010), TC HK

is preparing in cooperation with the city and

an unnamed multinational corporation an-

other phase of its development with the aim

to build 4000 to 5000 sq. m of top adminis-

trative space in the very centre of the town

intended for innovation activities of its future

clients. It is a unique project within the Hra-

dec Králové Region with the highest stand-

ard. TC HK is already collecting demands from

potential clients for various technological

equipment. A signifi cant advantage lies in

the fact that the whole project is co-fi nanced

from the EU funds.

� MICROSOFT INNOVATION CENTREThe last but not least activity of TC HK is

cooperation with Microsoft, which has

resulted in the opening of the second

Czech Microsoft Innovation Centre. As is

the case with the first Czech MIC in Brno,

the Hradec Králové Centre will offer start-

ing entrepreneurs, students, designers,

and researchers an access to top quality

information. Prospective clients can also

appreciate the top equipment for testing

and development of the latest technolo-

gies built on Microsoft platform, but they

can also expect a wide range of activities

in the field of training and consultancy.

Those interested will also be able to ac-

cess lectures and seminars around the

world through a videoconference and

thus they can communicate and share

their ideas and opinions.

Martin Dittrich

Hradec Králové Technology Centre

e-mail: martin.dittrich@tchk.cz

For more information, go to www.tchk.cz

The modern science and technology centre

was ceremonially opened in June 2008, i.e.

less than a year after the start of construc-

tion. It immediately housed its fi rst clients

and since then TC HK has been off ering its

potential clients variable spaces for innova-

tion activities. With the help of the provided

services it supports technology transfer, in-

novation processes in companies and at

universities and it tries to merge these two

worlds and to remove barriers between

them. Accredited Science and Technology

Park searches for talented students at uni-

versities and using the business incubator,

it helps starting entrepreneurs and compa-

nies with innovation potential.

| 3 2

R E G I O N

Just like many other countries, the

Czech Republic has a system of busi-

ness support, which is intended both

for domestic as well as foreign busi-

ness entities. This system includes

support from national and European

sources, but some are intended only

for selected regions, the so-called

regions with concentrated state aid.

Services for Foreign Entrepreneurs

CZK 100 million (EUR 3.85 million), of

which at least 50% must be covered by own

capital and 60% of the investment must go

into machinery and equipment.

The Operational Programme Enterprise

and Innovation (OPEI) is a second and no

less interesting area of business support. It

is also aimed at companies in the manu-

facturing industry, but in some cases other

areas are also supported. The advantage lies

in the fact that this support takes the form

of non-repayable fi nancial aid, i.e. funding.

The minimum level of investment is from

approx. CZK 0.6 – 1 million (EUR 23 000 –

38 500), depending on the programme and

size of the applicant.

This ranks among the most interesting

programmes in the Hradec Králové Re-

gion, under the OPEI, from which it is pos-

sible to receive funding, for example, for

investment in machinery and equipment

for fi rms with innovation potential; fund-

ing for the purchase or reconstruction (or

construction of an annexed building) of

a company’s property; for introduction of

renewable energy sources, or the construc-

tion of small water power stations; for the

purchase of information and communica-

tion systems; for the development of soft-

ware, for investment into the infrastructure

for Research and Development, for invest-

ment into the infrastructure for education,

for the support of establishing and further

development of Science and Technology

Parks, entrepreneurial incubators, centres

for technology transfer and business an-

gel network formation; for the support of

formation clusters and technological plat-

forms and other activities.

� EXAMPLE OF SUCCESSFUL AID APPLICATIONINNO-COMP BOHEMIA, s.r.o. (Ltd.), Invest-

ment Incentive for the Manufacturing In-

dustries, budget CZK 298 million (EUR 11.5

million). INNO-COMP BOHEMIA, s.r.o. was

considering starting its business activities

in the Czech Republic. Apart from other fac-

tors, the possibility of receiving support at

the time of its entry into the Czech market

was very important to it. In co-operation

with Asistenční centrum, a.s. (Assistance

Centre, PLC), it produced an application

for aid in the form of investment incentive,

which was granted to it at the level of maxi-

mum CZK 119.5 million (EUR 4.6 million).

This investment incentive was provided for

the purchase of technologies, construction

of a new factory, and job creation.

Jiří Zapletal

Asistenční centrum, a.s.

e-mail: zapletal@asistencnicentrum.cz

www.asistencnicentrum.cz

Note: 1 EUR = 25.976 CZK (average monthly exchange rate announced by the Czech National Bank, February 2010)

In the Hradec Králové Region, there are

many opportunities to assist foreign busi-

ness entities in developing their business in

the Czech Republic. This support is aimed

mainly at the manufacturing industry sec-

tor, Research and Development and other

hi-tech fi elds. The most signifi cant forms

of support can be structured into the fol-

lowing tools: Investment Incentives for

Manufacturing Industries, Operational Pro-

gramme Enterprise and Innovation and

other programmes.

� PRESENTING THE TOOLS FOR BUSINESS SUPPORTInvestment incentives are an interest-

ing support opportunity, intended for the

manufacturing industry. Foreign companies

can receive full or partial tax relief (up to fi ve

years). The main condition for obtaining an

investment incentive is a minimum level of

investment in the Hradec Králové Region of

OFFICE SPACE FOR RENT (APPROXIMATE PRICES): Hradec Králové – centre: CZK 3 000/sq.m/year

(without energies) (EUR 115.5)

Hradec Králové – surrounds: CZK 1 000/sq.m/year

(without energies) (EUR 38.5)

Company of the Year: Farmet, a. s.

Farmet, a. s., is a private Czech com-

pany founded in 1992. Since then, the

company has attained a leading posi-

tion in the fi eld of its activities. A small

workshop has now transformed into

a modern company with 200 employ-

ees and some very modern equipment

for the area of construction, design (all

in 3D models), and its own production.

The annual turnover is now EUR 20 mil-

lion, 80% of which is from exports. Especially

in the last few years, the company invested in

the expansion of its production capacities and

modern technology equipment (CNC machin-

ing, laser processing, robotic welding, powder

paintshop, etc.). Top of the line engineering

technologies and qualifi ed employees – spe-

cialists, technicians, and workers – are the basis

and the driving force of the company.

The company‘s main business is the devel-

opment and production of agricultural ma-

chines for soil cultivation and sowing, espe-

cially for large-scale agricultural productions.

The company specialises in high-performance

machines with wide reach that can work with

the biggest tractors on the market (working

reach up to 15 yards), and in design, develop-

ment, production, and complex supplies of

machines and devices for the extraction and

further processing of vegetable oils. In this

area, Farmet focuses on the continuous press-

ing technologies of the so-called dry oil plants

(rapeseed, sunfl ower, soya, fl ax, etc.).

3 3 |

C Z E C H B U S I N E S S A N D T R A D E

WE HAVE CLEAR PROSPECTS AND COMPETITIVE ADVANTAGECzech Business and Trade asked Karel Žďárský,

the only shareholder, board chairman, and

chief executive about the future of the

company.

WHAT DOES WINNING THE

COMPETITION MEAN TO YOU?

It‘s a great pleasure and responsibility. It‘s

a recognition of our work as compared to

many other fi rms from various fi elds. The

award has given me, personally, a lot of energy

to further develop the company.

WHAT PLANS DOES THE COMPANY

HAVE FOR THE FUTURE?

Our company has been, of course, also af-

fected by the current economic crisis, and we

had to cope with a decrease in demand for the

investment products we sold. That was a big

change after many years of growth. Today, we

see a growth in demand again and we have

started to realise our development projects

with the support of European funds. The build-

ing of new and modern production capacities,

and especially the building of a research centre

to fi nd solutions for the screw press extrud-

ing-expelling process for vegetable oils, give us

a clear prospect and a competitive advantage.

We will also continue to develop our business

network and our products to make the Farmet

brand a truly reputable European supplier of

agricultural machines and pressing technolo-

gies. In this regard, we have been successful

in establishing partner relations with foreign

companies with the aim of shared supplies of

subsequent technologies for the processing of

vegetable oils. We very much value our collab-

oration with Alfa Laval, where we realised the

technology for the degumming of vegetable

oils and prepared a number of shared off ers

for the refi nement of vegetable oils. Research

and development as well as the collaboration

with foreign companies must strengthen our

engineering and supplier abilities.

The company development dynamics has

been recognised several times with awards in

various competitions in the category of me-

dium businesses (up to 250 employees), such

as the second place in the Exporter of the Year

competition. Farmet‘s top achievement was

the fi rst place in the Company of the Year 2009

competition in the Czech Republic. The com-

petition is open to all companies with turnover

not exceeding CZK 1.4 billion (approx. EUR 56

million). A professional jury decides accord-

ing to gathered economic information and

a personal presentation by each company‘s

manager. Why has Farmet won? The jury es-

pecially appreciated its clear business vision

supported by investments into own research

and development of products and technolo-

gies, its ability to formulate development inten-

tions and convert them into successful projects

with the use of European structural funds (the

company has succeeded in acquiring funding

from programmes for the support of research

and development, employee training, and in-

vestments in production technologies), and its

long-term eff orts to build a good name for the

Farmet brand on European markets.

More at www.farmet.cz.

PETROF: Year of Crisis and Seized Opportunity

PETROF was founded by Mr Antonín

Petrof in Hradec Králové in 1864. Five

generations of the Petrof family have

owned and managed the fi rm, which

was awarded many prestigious prizes

at international exhibitions and fairs

thanks to the continuous technical

development and quality improve-

ments of its grand and upright pianos.

The master instruments of the PETROF

brand have accompanied the world‘s

greatest artists, they are played in

Milan‘s La Scala or at Sydney‘s opera.

The PETROF brand is associated with such

names as Duke Ellington, Ray Charles,

Ella Fitzgerald, Charles Aznavour, Rudolf

Firkušný, or Svjatoslav Richter. The world

famous opera singer Peter Dvorský owns

a PETROF grand piano and Paul McCartney,

the famous ex-Beatle, bought one in 2000.

The company has entered 2009 think-

ing of both the 145th anniversary of its

founding and fears of the world-

wide economic recession. The company

had been forced to adopt some crisis

measures at the end of the year before

last and it continued to observe them

during the last year. The development

of a new series of PETROF grand pianos

had been completed in 2008, which then

allowed the company to focus more on

supplementary manufacture of special

products. Besides musical instruments,

Petrof now also manufactures high qual-

ity custom furniture and interior accesso-

ries, with emphasis on first class surface

finish.

� INSTRUMENT WITH SOULIt was the quality of surface finish as well as

the characteristic and noble sound of the

PETROF master grand pianos that caught

the attention of the audio legend and jazz

musician, Mark Levinson. Levinson is leg-

endary for his extraordinary auditory ca-

pabilities and his feeling for music, which

is why his nickname is “the Golden Ear”.

For his project that includes an edition of

recordings with “the natural sound of in-

struments” which he has been dreaming

about for a long time, he had been look-

ing for a musical instrument that would,

according to his own words, “have a soul

and would be capable of arousing emo-

tions. It all depends not only on perfect

preparation but also on the selection of

the right instrument, preferably acoustic.

I had been looking for it for quite a long

time but in the end I was lucky to find it

in the PETROF piano.”

The intensive collaboration between

Mark Levinson and Petrof in 2009 resulted

in a new series of high quality speakers of

the Daniel Hertz brand, manufactured by

Petrof. Mark Levinson says: “Every activity

and every product from Petrof makes it

clear that the people from this company

are not just ordinary workers, business-

men, or managers, they live for music.

Petrof not only understands music, but

also the importance of vibrations, sounds,

and the quality of workmanship. All this

stems from manual work and craft skills

that are disappearing from today‘s world.”

Jan Ryšavý

Petrof, spol. s r.o.

e-mail: marketing@petrof.com

| 3 4

R E G I O N

Education is the key competitive fac-

tor today. The pressure is increasing

on a better education as one of the

basic conditions for a career on the

labour market and a better position

in life. In the Hradec Králové Region,

increasing the educational level of the

inhabitants is an integral part of the

regional development strategy. The

University of Hradec Králové, and par-

ticularly its Faculty of Informatics and

Management, represents top quality

in the fi eld of university education.

Top University Education in the Hradec Králové Region

nies. The Faculty co-operates with numerous

regional, national, and international compa-

nies on conducting educational IT courses or

communication and managerial skills. In co-

operation with partners from the commercial

sphere, interesting workshops are organised

(Student Business Forum in co-operation

with the Technology Centre, Hradec Králové,

IT Full Power – IBM Technical Academy, Mi-

crosoft Academic Conferences etc.), as well

as competitions (Best Java Programmer in co-

operation with FG Forrest, and Top Ten ORTEX

in co-operation with ORTEX Company).

� VARIOUS INTERNATIONAL PROJECTSThe Faculty also co-operates with other Eu-

ropean, Taiwanese, and American universi-

ties in participating in various international

projects. Every year, more than 60 students

of the Faculty study at a European institu-

tion under the Erasmus Programme, 18

students attend Taiwanese universities, and

two students attend universities in the USA.

Currently (in March 2010), co-operation is

continuing during the summer months,

working on the VitalMind Project with Cog-

niFit Ltd., Haifa, Israel, and Philips Innovative

Lab, Eindhoven, the Netherlands.

The Faculty also fully supports a close link

with the practical life sphere. Many seminar

and Bachelor’s papers and theses deal with

very practical topics - cloud computing and

company solutions, modern tools for creat-

ing context, help for company decision-sup-

porting systems of the GIST Company, mod-

ern open-source technology for Business

Intelligence, Version Control of SW products

in multiproject environment etc. Signifi -

cant professionals are invited to lecture at

the Faculty, for example, top managers of

companies such as PricewaterhouseCoop-

ers, SUN Microsystems, Microsoft, and Tesco

Stores ČR.

The Faculty of Informatics and Management

is a member of the Hradec IT cluster. The main

activity of the cluster is to ensure benefi cial

services for cluster participants, with the aims

of improving the quality of management, in-

creasing innovation potential, reducing costs

and developing commercial opportunities

for individual companies. The University of

Hradec Králové, nineteen companies, and the

Hradec Králové Technology Centre have since

provided active co-operation. These days,

several projects are being prepared, which

the Faculty is participating in with other

member companies, e.g. innovative meth-

ods of performance analyses of database

servers, research of tools, procedures and

organisational structures which could be ap-

plied in the process of product management

optimisation with impact on managing the

new ICT product development; research and

application of tools for mutual integration of

algorithms and data in Java and Micro Focus

Cobol environments; proposal and defi nition

of XMPP standards for the GIS area etc.

Petra Poulová

Vice-Dean of the Faculty of Informatics and

Management of the University

of Hradec Králové

www.uhk.cz/fi m

The Faculty of Informatics and Manage-

ment educates university-qualifi ed profes-

sionals for a broad range of opportunities in

the private and state sectors. Apart from the

programmes delivered in Czech, there are

also two Bachelor’s degree programmes in

Information Management and Applied Infor-

matics, a follow-up two-year Master’s degree

programme in Information Management

and a Doctoral study programme in Informa-

tion and Knowledge Management, delivered

in English. Economic-management skills are

an integral part of all fi elds of studies, along

with a great emphasis on the eff ective use of

modern Information Technologies.

� SEVERAL ADVANTAGEOUS PROGRAMMES The Faculty of Informatics and Management is

aware of the necessity of maintaining strong

relationships with industrial and research in-

stitutions. These links with the private sector

help us to ensure that our students receive

the most up-to-date education and that they

work with academic staff who keep pace

with changes. The valuable contact between

the prospective employers of our graduates

and our academic staff ensures that students

benefi t from a realistic learning environment.

Therefore, the Faculty has developed several

advantageous programmes with businesses

and institutions in our region, e.g. the IT Clus-

ter Project, including more than ten compa- Ph

oto

: FIM

arc

hiv

es

Hradec Králové

Regionplace for investment

opportunitiesArea . . . . . . . . . . . . . . . . . . . . . . . . . . 4 758 sq. km

Population . . . . . . . . . . . . . . . . . . . . . . . . 554 000

Centre . . . . . . . . . . . . . . . . . . . . . .Hradec Králové

Division . . . . . . . . . . . . . . 15 municipalities withextended competences

Contacts:

Lucie VomočilováDepartment of Regional Development, Tourism

and Culture, Section of Regional Development,

Hradec Králové Regional Authority

Pivovarské náměstí 1245

500 03 Hradec Králové

Czech Republic

phone: + 420 495 817 450

e-mail: lvomocilova@kr-kralovehradecky.cz

www.kralovehradeckykraj.euwww.kr-kralovehradecky.cz

Jana SmetanováSpecial Consultant

Centre for European Projects Development

Regional Development Agency

Centre for European Projects Development

Regiocentrum Nový pivovar - Evropský dům

Soukenická 54

500 03 Hradec Králové

Czech Republic

phone: + 420 495 817 815

GSM: + 420 724 971 702

e-mail: smetanova@cep-rra.cz

www.cep-rra.cz

Example of industrial zone more on the enclosed DVD or web pageswww.kralovehradeckykraj.eu

www.kr-kralovehradecky.cz

THE CURRENT INVESTMENT OPPORTUNITIESIN THE HRADEC KRÁLOVÉ REGION

2010

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| 2

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are built for longevity. � We use precision, thin-cutting saw blades (as thin as 0.9 mm).� Our machines produce accurate lamellas, ready for face-gluing

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ONE CUT AHEAD THROUGHOUT

THE WORLDWORLD LEADER SINCE 1793

3 |

C Z E C H E C O L O G Y A N D A G R I C U LT U R E

Czech Ecologyand Agriculture

Supplement of

Czech Business and Trade 2/2010

CONTENTS

Editorial 4

ANALYSIS

Towards a Common European Policy in

Food Production and Agriculture 4

Get Acquainted with Czech Agriculture 6

INVESTMENT

Brownfi elds to Turn into Shopping Centres and Eco Farms 8

LEGISLATION

Investments in Renewable Energy Sources in the Czech Republic 11

CZECH TOP

Champion among Czech Vintners 13

WE ARE INTRODUCING

Crisis Boosting Demand for “Green Buildings” 15

ENTERPRISE

Together to Support Trade Opportunities 16

Surface Finishing under the Wings of CzechTrade 18

Agriculture Is Drawing Finance from Various Programmes 20

SURVEY

Poll of Successful Companies Operating in the Areas of Ecology,

Agriculture, and Wood Processing 21

PRESENTATION OF FIRMS: NEVA - TRADE s.r.o.; PP Agency s.r.o.

MK ČR E 6379This magazine is published as a supplement

of the economic quarterly Czech Business and Trade.

Managing Editor: Šárka Kratochvílová

Graphic Design: Art director: Nina Nováková

Graphic Designer: Jiří Hetfleisch

Production: Anežka Zvěřinová

Address: PP Agency s.r.o., Myslíkova 25, 110 00 Praha 1

Czech Republic, Phone: +420 221 406 622

Fax: +420 224 930 016, e-mail: journal@ppagency.cz

www.ppagency.cz

Deadline: 15/4/2010

Attitudes expressed by the authors of articles in this magazine

are not necessarily consistent with the viewpoint of the Publisher.

© PP Agency, Company with the ISO 9001 certified quality

management system for publishing services

Co

ver

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: ww

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u; p

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IN THE NEXT SUPPLEMENT TO CZECH BUSINESS AND TRADEThe manufacture of machine tools and forming machines has been the main branch of Czech

engineering for dozens of years. Export is essential for the sector as a whole. What is the

present situation of the branch in the Czech Republic and what are its prospects? This is the

theme of the next Supplement to Czech Business and Trade.

| 4

A N A LY S I S

Dear Readers,

Environmentally friendly agriculture,

organic food, renewable sources of

energy, low-energy “green” build-

ings... these are themes very fre-

quently discussed in the Czech Re-

public, Europe, and other countries

around the globe. It is not by chance

that ecology has been at the centre

of public interest for several years.

Individuals, institutions, enterprises,

and governments are facing the

decision how to make our planet

healthier, and how to change con-

duct and habits and thus alleviate

the impacts of inconsiderate treat-

ment of nature. We, too, have been

dealing with ecology and agriculture

in this supplement.

An analysis of the agricultural

sector has been conducted by the

ČEKIA agency. After you have read

it, you shall know how this sector is

supported by the Government, what

it is focused on most of all, and also

how agro-tourism is developing in

the Czech Republic.

The possibility of using brown-

fields, i.e. dilapidating industrial com-

plexes, deserted former agricultural

co-operatives, former military areas

and the like and their enumeration

are contained in another article of

this supplement.

Export alliances facilitating foreign

contacts of Czech enterprises have

been established under the wings

of the CzechTrade Agency in the

last years. We are introducing two of

them - Czech Water Alliance and the

alliance České povrchové úpravy – in

this supplement

Šárka Kratochvílová

Towards a Common European Policy in Food Production and Agriculture

The future role of the common European

policy in food production and agriculture

in the globalised world is a basic issue in

the current period, when debates on the

future of European agriculture are com-

plicated by the current economic crisis.

Jakub Šebesta, Minister of Agriculture of

the Czech Republic, has shared with us his

view of the common European agro-food

sector.

What can we do for European food

production and agriculture to fl ourish?

An important thing is to promote regional

specifics and quality, combined with in-

novation and education. Globalisation is

not a negative phenomenon, its benefits

are rapid development and progress. We

must keep pace with all that is new and

adjust our activities to demand. We can-

not expect that everybody will be satis-

fied with current achievements for 50

years. Consumers are very demanding. If

anyone opts for a conventional product,

the product must be of the highest qual-

ity. If people do not want tradition, they

must be offered new things.

A great challenge is the rising volatil-

ity of agricultural commodity prices. It is

therefore necessary to find correspond-

ing market instruments that will help to

mitigate the negative impacts of such

fluctuations and see to it that the manu-

facturer is in a position to maintain ad-

equate income.

The development in the past few years

has shown that even a long period of rela-

tive stability and good economic results can

be followed by a sobering chill.

What challenges and dangers are facing

the agro-food sector?

Defi nitely it is the current economic crisis

and in the long run the pressure of cheaper

imports. I am confi dent that we can face up

to these problems by higher added value of

production, based on innovation and top

technology. Emphasis must be placed on

high safety, quality, and tradition of Euro-

pean production. This, in my opinion, is the

way we must follow.

With the accession of new member

states, the European market has gradu-

ally grown into a compound, which in

2009 comprised some 500 million peo-

ple. Acute problems have emerged espe-

cially in connection with the accession of

new states in the past relating to the fu-

ture form of the future common agricul-

tural policy, which must now be tackled.

As a result of joining the EU, a number of

changes have taken place in the Czech

Republic, such as restrictions in sugar

and milk production, which have mark-

edly affected us, while on the other hand

a number of new opportunities have

opened up for us, which Czech business-

men have used to great advantage.

What are the impacts of the economic

crisis on food production and agriculture

in the Czech Republic?

In the current economically complicated

situation consumers are rather looking for

cheaper products, which is not a favourable Ph

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5 |

C Z E C H E C O L O G Y A N D A G R I C U LT U R E

trend. It is to be expected that as soon as the

situation starts improving, food buyers will

once again be seeking better quality, which

means higher added value. In the EU, the

fall of agricultural trade in 2009 was not so

sharp as in other parts of the world, which

testifi es to the ability of the EU to cope with

the global economic crisis in agriculture.

Two-thirds of EU exports are processed agri-

cultural products, where the impact of price

fl uctuations is less in evidence.

At the same time it has become evident

that the global market needs to be liberal-

ised to the highest possible degree. If the

market opens up to such a degree, and I am

persuaded that sooner or later this is what

will happen, we must be prepared for it and

be able to react to the supply of cheaper

commodities. I am certain that the Europe-

an market will be capable of such reaction

only if European consumers become aware

that domestic production is of a high stand-

ard and will under all circumstances retain

that standard. Great attention in the EU

market liberalisation process, however, will

have to be paid to ensuring the competi-

tiveness of European producers in the face

of third-country producers, especially as re-

gards high standards in the area of hygiene,

welfare, and quality of production, which EU

manufacturers must meet.

Can European food production exist

without European agriculture, and vice

versa?

The only clear answer is NO, it can not. Not

only because there are local and traditional

links within the agro-food sector, but also

that we cannot neglect the environmental

and social aspects of the entire sector. What

has been grown at home must also be pro-

cessed at home. It can hardly be explained

why we should import raw materials from

across the world if we are able to produce

them at home. I know, it is not the cheap-

est way, but Europe sees to the observance

of its traditions, so let us observe them also

in agriculture and food production, only this

is the way to top-standard production, to

which we are all used and which consum-

ers in third countries expect from European

production.

How active is the Czech Republic in this

respect?

I am pleased to say that it is very active

indeed. The Czech Republic has 24 pro-

tected geographic indications or appel-

lations of origin, with several more ap-

plications being in the pipeline. A great

achievement was the registration last year

of the Czech Beer geographic indication,

which is of great commercial and econ-

omic significance for traditional Czech

beer brewers. Protected indications en-

able better protection against abuse by

other, rival trade or manufacturing part-

SELECTED EXHIBITIONS AND FAIRS

Flora Olomouc 19-22 August 2010

� international gardening exhibition

www.fl ora-ol.cz

Earth the Provider,

České Budějovice 26-31 August 2010

� restoration and development of the countryside, crop

and livestock production, farming equipment, food pro-

duction, forestry and water economy, gardening and

cultivation, services for agriculture

www.vcb.cz

Ekostyl, České Budějovice 26-31 August 2010

� creation and protection of the environment, environ-

mentally friendly technologies

www.vcb.cz

Pragolinga / Tooltex, Prague 4-6 November 2010

� 11th contracting and sales exhibition of machines,

tools, equipment, and materials for the woodworking

industry / 15th specialised exhibition of machines, tools,

and hardware

www.pragolinga.cz

ners prone to sponge on the repu tation

of established indications. In the area of

guaranteed traditional specialties, the

Czech Republic co-operates closely with

colleagues in the Slovak Republic – four

joint Czech-Slovak applications for the

registration of selected traditional meat

products have been submitted in Brus-

sels. In connection with traditional and

regional foodstuffs, a project has just

been launched in the Czech Republic,

the aim of which is an information cam-

paign and effort to raise consumer inter-

est in regional products. Regional prod-

ucts especially have a great potential as

regards quality.

| 6

A N A LY S I S

Get Acquainted with Czech AgricultureVladimír Melichar, analyst, Czech Capital Information Agency, e-mail: melichar@cekia.cz, www.cekia.cz

Before 1989, Czech agriculture was a strongly

privileged sector within the country’s direc-

tive system, which resulted in its dispropor-

tionate size. In spite of this, its economic ef-

fi ciency was relatively high. The transition to

a market economy system put high pressure

to bear on farmers, forcing them to adjust to

the new economic conditions and sales pos-

sibilities as regards the size, structure, and ef-

fi ciency of their farming enterprise.

Adjustment to EU Agricultural PolicyFarming in the Czech Republic comprises

all crops characteristic of the country’s geo-

graphical position and its climatic condi-

tions. In addition to all the main grain crops

(wheat, barley, rye, oats, and maize), farmers

grow sugar beet to make sugar, potatoes, oil

bearing plants (rape), fl ax, hops, fruit, veg-

etables, and grapevine. The livestock sector

produces mainly cattle (for milk and meat

production), pigs, and poultry. Products of

the Czech agrarian sector are used for both

fi nal consumption and further processing,

especially in the food industry. The Czech

Republic’s agrarian policy has developed

in two stages. The fi rst stage (revitalisation),

focusing on the recovery and stabilisa-

tion of the farming sector, was terminated

in 2001, while the second stage (adapta-

tion) concerned itself with the institutional

preparation of the country’s accession to

the EU. The concept of the second stage

(adaptation) was aimed at the fastest pos-

sible general adaptation to the conditions

of the EU Common Agricultural Policy in all

its areas (structural, regional, environmental,

and rural).

Support to Agrarian SectorAn important milestone in the development

of the sector was the Czech Republic’s acces-

sion to the EU (1 May 2004). For the agrarian

sector, it meant a more than double growth

of support it received and an important

increase in the share of EU states in Czech

agrarian trade (in exports, a rising share of

raw materials, in imports, a growing share

of products with higher added value). This

was accompanied by greater interest in farm

land, leading to changes in the structure of

its ownership and to higher rentals, and the

enlargement of the eco-farming area by ap-

prox. 40% in comparison with the pre-entry

period. At the same time, higher claims were

placed on farmers resulting from participa-

tion in the EU Common Agricultural Policy,

while the structure of the Czech national

economy was brought closer to that of the

EU, which resulted in a reduced share of agri-

culture, forestry, and fi sheries in GDP genera-

tion and employment.

Analysis of Agricultural EntitiesAt the end of 2009, altogether 115 674 busi-

ness entities were registered in the Czech

Republic, whose core business was agricul-

ture, game keeping, and related activities.

79.4% of this fi gure was accounted for by

natural persons and 36.2% by enterprises

(dominated by limited liability companies),

cooperatives and other entities. The core

business of most enterprises (50.2%) ac-

cording to the register was combined pro-

duction. Engaged in pure crop production

are 11.9% of enterprises and 9.5% enter-

prises devote themselves to pure livestock

production. The overwhelming major-

ity (90.7%) of companies are controlled by

Czech entities. Besides conventional agri-

cultural primary production, a number of

enterprises pursue additional activities, add-

ing value to their own production, such as

seed, fertiliser, and fodder mixture produc-

tion and sale, slaughter-house operation,

food production, agricultural services, rental

of farm machinery, etc. In connection with

environmentally friendly energy production

requirements, Czech farmers have greatly

increased the cultivation of crops suitable

for that purpose, such as rape, which is also

used for bio-fuel production. Another such

crop is sugar beet.

Competition Is GrowingSince the beginning of the 1990s, the share

of agriculture in the country’s economy

and in total employment has been declin-

ing, with a gradual dampening down of

activity in certain manufacturing branc hes

within the sector. The main causes are

growing competition pressures and addi-

tional investments needed for the observ-

ance of standards applying to breeding

equipment technology, environmental

protection, and other hygienic regulations.

After the country’s accession to the EU and

the opening up of its market, Czech agri-

culture was faced with growing imports

of cheaper foodstuff s. Self-suffi ciency in

vegetable products, with the exception of

rape, has greatly increased and in all these

commodities domestic production ex-

ceeds domestic demand. In livestock pro-

duction, on the other hand, self-suffi ciency

has been reduced.

Poultry Is Growing, Cattle DecliningLivestock production covers commodi-

ties such as meat, milk, and eggs, which

are placed on both the domestic and for-

eign markets. The animal category has also

declined, especially as regards sheep and

goat breeding. Cattle and pigs, too, have

witnessed a decline in production. On the

other hand, the poultry sector has been

growing. Ph

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7 |

C Z E C H E C O L O G Y A N D A G R I C U LT U R E

Arable Land Is in the LeadFarmland in the Czech Republic covers an

area of 4.2 million ha. The decisive part of

this area is arable land, on which diff erent

crops are rotated depending on the specifi c

production region and the farmer’s own

choice. Permanent cultures are grass stands,

grape vine and hops. The most widely

grown crops are cereals, covering an area of

approximately 1.6 million ha, the largest pro-

portion of which each year is accounted for

by wheat and barley. For the past few years,

fodder crop, rape, and technical sugar beet

cultivation has been on the decline. How-

ever, despite the general decline, Czech ag-

riculture as a whole is showing a production

surplus.

Development after Joining the EUAfter the Czech Republic’s accession to the

EU, the share of EU states in Czech agrarian

trade increased signifi cantly. Logically, the

country’s foreign trade turnover rose sub-

stantially, with slightly lower dynamics of ex-

ports; the overall balance of trade, however,

remains unfavourable. Trade with third coun-

tries has been limited. The Czech Republic’s

accession to the EU also meant higher trade

exchange in eco-farm products (by 40% in

comparison with the pre-entry period). After

joining, agro-environmental measures were

introduced and money spent on eco-agro

policy has practically trebled in comparison

with the period before entry.

Agro-tourismThe number of people working in agricul-

ture has dropped to one-quarter of the

pre-1989 level. After joining the EU, year-

on-year decreases stabilised at 2% to 3%,

which means a faster decrease in farming

jobs than in the rest of the EU. The compet-

itive environment on the commodity mar-

ket forces farmers in the EU to set up pri-

mary production enterprises with the aim

of raising their own competitiveness. Such

entities hold an important position, there

are strong marketing organisations linked

horizontally and vertically (production

– processing – marketing). In this respect,

the Czech Republic is still lagging behind

the EU, in a number of commodities mar-

keting organisations are far from having

a signifi cant, let alone a decisive share of

the market. Nevertheless, the situation is

changing gradually. For domestic farmers,

agro-tourism still represents a mere alter-

native source of income and is developing

very slowly. Domestic demand is limited

primarily by the domestic phenomenon

of holiday cottaging. Approximately one-

third of agro-farm clients are foreign tour-

ists (mostly from Germany, Poland, and the

Netherlands), whose favourite destinations

are the Šumava, South Bohemia, and the

Krkonoše (Giant Mountains).

Recommendations for the FutureCzech agriculture will continue to be under

the pressure of rising labour and land costs.

Investments are needed in technological

modernisation with the aim of raising pro-

ductivity of labour and overall production

effi ciency, in addition to “non-productive”

investments linked with the ever stricter

cross-compliance requirements and other

legislative restrictions. In the years to

come, the land market will open up fully

to buyers from EU states and third coun-

tries. The most sensitive problem is live-

stock production with all the scenarios of

the EU Common Agricultural Policy giving

absolute predominance to vegetable pro-

duction and massive reduction of livestock

production.

The article is based on the Agriculture Sec-

tor Analysis published by the Czech Capital

Information Agency (www.cekia.cz), which

concerns itself with supplying economic in-

formation about fi rms.

| 8

I N V E S T M E N T

Brownfi elds to Turn into Shopping Centres and Eco Farms

Jiří Sochor, e-mail: jiri.sochor@czechinvest.org, www.czechinvest.org

Abandoned and neglected brownfi eld lo-

calities cover more than three hundred

square kilometres on the map of the Czech

Republic. Fortunately, not all lie next to each

other – if they did, the three hundred square

kilometres would be equivalent to a city of

half a million. For an area of just this size,

public support in the order of billions of

euros can be drawn thanks to the European

Union and national grants.

Dilapidating industrial structures, aban-

doned farmsteads of former agricultural co-

operatives, derelict housing estates, former

military areas, unused factories and old cas-

tles falling apart. The list of brownfi elds scat-

tered all over the Czech Republic would be

very long indeed. After all, perhaps the same

as in any other country. In the Czech Republic,

there are more than 11 000 such localities ac-

cording to CzechInvest Agency, which is try-

ing to manage their regeneration centrally.

At least some of them, especially those

near large city centres, provide interest-

ing investment opportunities. Their sup-

ply, however, has been declining in recent

years. Large repaired brownfi eld projects, or

projects still under reconstruction, are to be

found in Prague, Brno, Ostrava and practi-

cally in all larger cities across the country.

The cooling down of global economy,

however, has resulted in a slowing down

of project re-generation or postponement

until a later time. On the other hand, the

burst of the property bubble made brown-

fi eld owners in the city centres speculating

on further property price rises and reluc-

tant at the moment to sell dilapidating

buildings in attractive localities, start think-

ing. Moreover, the property bubble was

not extremely infl ated in the Czech Repub-

lic, and subsequently for the past two years

property prices have been rather stagnant,

as they did not have anywhere to fall.

Billions from the EUVery interesting in this connection is the fact

that the European Union has resources from

which it makes generous contributions for

the regeneration of abandoned cultural

complexes, and from which projects in the

Czech Republic, too, can benefi t. Support

can be obtained from 13 EU or national

subsidy programmes. Dozen billion crowns

can be obtained for projects ranging from

railway siding reconstruction to the build-

ing of new research and development cen-

tres. When choosing a suitable subsidy pro-

gramme, one has to decide fi rst of all what

purpose the brownfi eld should serve. The

Business and Innovation Operational Pro-

gramme can help investors wishing to use

the recuperated area for manufacturing in-

dustry projects, strategic services or applied

research and development; for brownfi elds

to be used in agriculture after revitalisation

investors can draw support from the Rural

Development Programme.

In other cases, support can be obtained

from Regional Operational Programmes.

Projects in Prague are supported by the

Prague – Competitiveness Operational Pro-

gramme. Contaminated brownfi eld sites

can draw support from the Environment

Operational Programme. This programme

also supports the decontamination of

brownfi elds in protected areas. In addition,

there are also national subsidies, such as

the Programme for the Support of Business

Property and Infrastructure Development, Ph

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Building of the Zlín Technology Centre after reconstruction

9 |

C Z E C H E C O L O G Y A N D A G R I C U LT U R E

administered by CzechInvest Agency. Each

year, the Ministry for Regional Development

also launches support programmes for

army brownfi elds coming under commu-

nity ownership.

Helpful AdministrationA great advantage of abandoned industrial

complex regeneration projects is that they

are unlikely to run up against opposition

from the authorities. This may be of key im-

portance for certain branches of business.

Squeezing a new foundry into the regional

development plan would need a good deal

of courage from the mayor. If, however, such

a project is to be set up on a site where activ-

ities in the same line of business were oper-

ated maybe for decades except the past few

years, the investor will not only fi nd a quasi-

developed infrastructure and trained and

experienced employees, but also a warm

reception from the local population.

The essential problems of brownfi elds in

the Czech Republic – as in any other coun-

try anywhere in the world – is that dozens of

owners may claim possession of one site. Of

course even the claim by just one of them

may be a problem, and the regeneration

may come to nothing. The second problem

is that physically it is not possible to describe

in detail the more than 11 000 brownfi elds

which can be found on the map of the

Czech Republic.

Brownfi elds OnlineCzechInvest Agency helps in solving both

problems with its online database of Czech

brownfi elds (ww.brownfi eldy.org/). Cur-

rently, the database off ers several hundred

brownfi elds described to the slightest de-

tail, which are prepared for regeneration,

with all property issues already solved.

The database is freely available 24 hours

a day from anywhere. It has been in opera-

tion since 2008, when one of the stimuli for

its launching was the experience of an en-

terprise in the north-east of the Czech Re-

public. The core business of the enterprise

is metalworking. A few years ago, the enter-

prise was faced with the problem of space,

which at that time was not suffi cient for it

to cope with its new orders. Considering

the line of its business, the brownfi eld was

a clear choice. The fi rm’s managers spent

several weeks searching for an ideal site to

meet their expansion plans. In the end, they

found an ideal brownfi eld completely by

chance on their way home from one of their

visits to another brownfi eld.

Before setting up the database, CzechIn-

vest undertook a study, the fi rst ever to be

compiled, which mapped all brownfi elds in

the Czech Republic. One of the very positive

conclusions of the study was that only 7%

of Czech brownfi elds were provably aff ect-

ed by an ecological burden. On the other

hand, however, another 37% of such locali-

ties may be assumed to have such a burden.

Nevertheless, this means that not more than

under 50% of brownfi elds in the Czech Re-

public are contaminated, which in itself is an

unexpectedly good result.

Look for a Tractor on the Brownfi eldMost brownfi elds in the Czech Republic

have their origin in agriculture, followed

immediately by industrial activity. Taken to-

gether, they account nearly to the dot for

two-thirds of all brownfi elds in the country.

Also important is the share of brownfi elds

from abandoned houses of culture, stores

and other such facilities. Together with

housing, these two categories account for

over 15% of all abandoned complexes in the

Czech Republic. A scar on the map has been

left by the army, which is responsible for 5%

of all localities.

As regards the area of the brownfi elds, the

situation is considerably diff erent. The share

of army grounds, for example, will jump

from the original 5% to nearly one-quar-

ter. This shows that the former shooting

grounds and barracks and other facilities of

the former Czechoslovak People’s Army oc-

cupied an absurdly vast area of the country’s

surface at the time of the Warsaw Treaty. The

share of industrial brownfi elds, in terms of

surface area, too, is very large, accounting

for more than 40% of the total area. After

1990, a number of overgrown giants, fed by

centrally-managed economy, went bank-

rupt, and the brownfi eld areas left behind

are beginning to be turned into industrial

parks or are being re-built into residential

quarters. About 20% of the total brownfi eld

area remains for agriculture, which is still

a very important fi gure.

What Next with CzechBrownfi elds?Besides the original purpose of brownfi elds,

the study prepared by CzechInvest also con-

cerned itself with proposing their ideal new

use in the particular locality. This was done

on the basis of the history of the locality,

previous activities pursued there, the geo-

graphical position of the brownfi eld, and

everything that could be important for the

ideal new use of the site.

It is not surprising that the new recom-

mendations completely eliminated the

army. On the other hand, the share of

brownfi elds recommended for “mixed ur-

ban functions”, a good technical term for

PRAGUE: PALLADIUMThe former owner of land on which the Palladium

shopping centre was constructed a few years ago

was, from the 1780s, the army, which built a vast bar-

racks complex there, complete with spacious stables.

A number of famous personalities of the Czech nation

served at the barracks. Worth mentioning is Czech

dramatist Josef Kajetán Tyl, actor, novelist, and jour-

nalist, who composed the Czech anthem there. The

army owned the former George of Poděbrady Barracks

for the next two centuries until 1996, although in the

latter half of the 20th century it did not practically

use it and the whole compound went into decay. At

the time when the barracks were used by the army,

the compound was closed to the public. Finally, in the

early 1990s, the Ministry of Defence decided on its

more suitable use.

BRNO: VAŇKOVKAVaňkovka, since 2005 serving as a shopping and cultural

centre, stands in the place of a former factory founded in

1865. The structure comprises some of the original build-

ings of the former factory, to which new structures have

been added. In the reconstructed building of the original

machine plant in the eastern part of the original factory

now stands the Wannieck Art Gallery. The name Vaňkovka

is the distorted name of the German founder and original

owner of the former factory. The reconstructed buildings

of the original factory are examples of neo-Gothic indus-

trial architecture.

OSTRAVA: KAROLÍNAKarolína is a vast regeneration project standing in the

place of a former coal mine and coking plant. Histori-

cally on the outskirts of Ostrava, the complex has become

completely encompassed by the massive development of

the city, so that on completion New Karolína will link up

smoothly with the now historic parts of the city. Coal min-

ing in the locality started in 1837, and the coking plant

was established in 1858. Both activities grew massively

with time. Coal was brought to the plant by cable-cars

from several galleries. In addition to coke, the plant also

made briquettes. In 1905, an electric exchange was built

there, which supplied the galleries with power. The cok-

ing plant closed operations in 1964, the electric exchange

closed down ten years later. Two of the administrative

buildings have been preserved and are protected as reg-

istered monuments.

| 1 0

I N V E S T M E N T

small businesses, gymnasiums, cinemas,

theatres, cultural facilities, playgrounds

etc., increased signifi cantly. This indicates

that originally a large number of today’s

brownfi elds were located on the outskirts

of towns. The dramatic town development

over the past few years, however, has sur-

rounded these localities by new construc-

tion, and renewing former factories now

standing in the middle of a residential

quarter wouldn’t make much sense.

On the other hand, somewhat surprising

may be that the study has recommended

an even larger number of brownfi elds for

industry than the original number of such

structures. At the same time, however, the

recommended use for most of such sur faces

is a combination of light industry manufac-

ture and services, i.e. the combination of

small-scale industrial production with shop-

ping centres.

A similar situation exists in agriculture. The

centrally planned economy produced huge

collective farms in agriculture, which associ-

ated farmers from far and wide. This is where

heaps of infrastructure were left behind,

which could hardly be used for good ben-

efi t over the past twenty years. Here, too, the

study in a number of localities recommended

the combination of agriculture with other

activities – eco-farms, accommodation in

a natural environment, restaurants, and other

such structures and activities.

In the Czech Republic, as in other indus-

trialised economies the world over, oppor-

tunities for greenfi eld investment are be-

coming scarce. As a result, brownfi elds are

necessarily becoming increasingly attrac-

tive. Ideally, in the long term, would be for

brownfi elds to be equally attractive for new

investments as greenfi elds. This of course is

a very ambitious goal, so that a realistic tar-

get will be bringing the attraction of brown-

fi eld investments as close to greenfi eld ones

as possible.

PREVIOUS USE OF BROWNFIELDS - NUMBER

Region/use army housing tourismcivic

amenitiesindustry agriculture other

South Bohemia 21 20 1 32 62 68 8

South Moravia 19 1 0 17 72 64 9

Karlovy Vary 11 8 2 46 66 33 34

Hradec Králové 18 11 0 41 78 81 15

Liberec 2 9 7 30 79 52 23

Moravia-Silesia 9 2 0 29 116 50 26

Olomouc 10 9 5 24 35 105 18

Pardubice 11 13 0 12 60 79 6

Plzeň 24 5 0 26 62 95 2

Central Bohemia 11 1 0 8 35 34 3

Ústí nad Labem 9 12 7 18 87 100 24

Vysočina 1 4 0 21 22 43 7

Zlín 5 0 0 0 11 17 2

TOTAL 151 95 22 304 785 821 177

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zech

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PREVIOUS USE OF BROWNFIELDS - SURFACE

Region/use army housing tourismcivic

amenitiesindustry agriculture other

South Bohemia 38.47% 8.04% 0.12% 1.57% 27.16% 22.49% 2.15%

South Moravia 19.33% 0.17% 0.00% 3.37% 52.48% 23.11% 1.56%

Karlovy Vary 17.78% 0.56% 0.06% 3.40% 43.00% 12.19% 23.02%

Hradec Králové 44.24% 0.48% 0.00% 3.19% 27.10% 20.40% 4.59%

Liberec 10.61% 1.07% 2.03% 6.27% 45.13% 29.35% 5.56%

Moravia-Silesia 10.41% 0.26% 0.00% 4.02% 63.95% 6.71% 14.65%

Olomouc 34.18% 1.54% 0.30% 1.97% 26.78% 28.87% 6.35%

Pardubice 37.91% 1.14% 0.00% 0.71% 41.55% 13.43% 5.22%

Plzeň 35.75% 0.13% 0.00% 2.65% 32.04% 24.47% 4.97%

Central Bohemia 21.09% 0.48% 0.00% 6.37% 38.39% 28.49% 5.20%

Ústí nad Labem 4.44% 0.55% 1.03% 0.77% 50.18% 15.15% 27.88%

Vysočina 41.56% 0.06% 0.00% 20.70% 7.06% 12.42% 18.19%

Zlín 17.65% 0.00% 0.00% 0.00% 55.52% 24.85% 1.99%

TOTAL 23.10% 0.90% 0.22% 4.03% 42.64% 18.08% 11.04%

1 1 |

L E G I S L AT I O N

Investments in Renewable Energy Sources in the Czech Republic

Jakub Adam, Markéta Pašková, Wolf Theiss Advokáti, s.r.o.,

e-mail: jakub.adam@wolftheiss.com, marketa.paskova@wolftheiss.com, www.wolftheiss.com

In the EU Accession Treaty, the Czech Re-

public committed itself to raise the propor-

tion of electricity made from renewable

sources to 8% of gross electricity consump-

tion by 2010. Within the meaning of the

law, renewable sources are renewable non-

fossil natural energy sources such as wind

energy, solar energy, geothermal energy,

hydropower energy, soil energy, air energy,

biomass energy, landfi ll gas energy, sewage

gas energy, and biogas energy.

FINANCIAL INCENTIVES TO PROMOTE ELECTRICITY GENERATION FROM RENEWABLE SOURCES

Feed-in Tariff s or Green BonusesAs investment in renewable energy sources

would most probably not be profi table for

potential investors without further incen-

tives, the Czech Parliament passed Act No.

180/2005 Coll., on the promotion of use of

renewable sources (“Renewable Sources

Act”) in 2005, to promote the use of renew-

able energy sources and ensure continuous

increase in the renewable energy share in

the consumption of primary sources of en-

ergy; the Act gives investors the option to

choose between two incentives to renew-

able energy generation: guaranteed feed-in

tariff s for electricity supplied into the grid

(feed-in tariff ), or “green bonuses”, a sur-

charge on the generated electricity which

is used directly by the producer or sold di-

rectly to the producer’s customer. The Act

hereby transposes Directive 2001/77/EC of

27 September 2001, on the promotion of

electricity produced from renewable energy

sources in the internal electricity market.

These two types of incentives may not

be combined in a single calendar year. The

producer of electricity is obliged to inform

the transmission system operator by 30 No-

vember each year of the incentive for which

they opt for the following calendar year as

of 1 January. In the case of newly built facili-

ties, the notifi cation must be made no later

than one month before the launch of the

production.

The level of feed-in tariff s and green bo-

nuses is set annually by the Energy Regula-

tory Offi ce (“ERÚ”) in its decrees (the current-

ly applicable ERÚ Price Decisions are Nos.

4/2009 Coll. and 5/2009 Coll.). The green bo-

nus consists in a premium on the electricity

market price. A producer of electricity that

sells electricity generated from renewable

energy sources at an agreed market price

to any end customer or electricity trader, or

that directly uses the generated electricity,

is entitled, upon the submission of relevant

documents, to collect green bonuses on top

of the price from the transmission system

operator (TSO) or the regional distribution

operator. The drawback of the green bonus

system is its higher risk, as the producer has

no guarantee of selling all the generated

electricity on the market, and of the price. It

must actively seek its electricity consumers

and negotiate the purchase price.

Interesting Investment OpportunityThe minimum incentive period guaranteed

to the investor for generating electricity from

renewable energy sources is 15 years from

putting the generating facility into opera-

tion, which is an interesting investment op-

portunity. The maximum incentive period is

not explicitly specifi ed by the Act. The ERÚ

Regulation (a piece of secondary legislation

of lesser legal force), however, stipulates that

the feed-in tariff is guaranteed for the lifetime

of the electricity generating facility. The life

expectancy pursuant to the ERÚ Regulation

is 30 years for small hydro-plants, 20 years for

biomass, biogas, wind, geothermal, and pho-

tovoltaic power plants, and 15 years for sew-

age, landfi ll, and mine gas power plants.

Investors receive feed-in tariff s or green

bonuses in the amount set by the ERÚ Price

Decision eff ective in the year in which the

facility was put into operation; feed-in tar-

iff s – except for biomass and biogas incin-

eration plants – are indexed by a minimum

of 2% and a maximum of 4% year-on-year

depending on the industrial price index de-

velopment. When designing a new facility,

,investors may take the ERÚ Price Decision

as a guide, as the feed-in tariff s set by ERÚ

for the following calendar year may not be

less than 95% of the feed-in tariff s applica-

ble in the year in which the decision on the

new feed-in tariff s has been made.

The Senate is currently debating a Govern-

ment Bill to the Renewable Sources Act al-

ready passed by the Chamber of Deputies of

the Czech Parliament, which is to change the

guaranteed feed-in tariff s for renewable en-

ergy from those sources whose rate of return

is less than 11 years. This change will concern

especially photovoltaics, where, as a result of

the reduction of photovoltaic panel prices by

up to 40%, investment costs have declined Ph

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L E G I S L AT I O N

signifi cantly (their rate of return is allegedly

estimated to be 8 to 10 years). Under the cur-

rent legislation, ERÚ may reduce the feed-in

tariff for electricity generated by new facilities

by mere 5% year-on-year. ERÚ estimates that

if the Government Bill is passed, solar electric-

ity feed-in tariff s will be reduced by 30% start-

ing from 2011.

Tax Benefi tsIncome from the operation of small hydro-

electric power stations with an output up

to 1 MW, income from wind power stations,

heat pumps, solar facilities, facilities for the

production and use of biogas and wood gas

for energy purposes, biomass-based elec-

tricity and heat generation facilities, facilities

for the production of biologically degrada-

ble substances defi ned by special regula-

tions, and facilities for the use of geothermal

energy are exempted from personal and

corporate income tax in the calendar year in

which the facilities were fi rst put into opera-

tion and in the following fi ve years.

Other Potential AdvantagesThe Ministry of Industry and Trade and the

Ministry of the Environment off er subsidies

for “green energy”. The recipients of the

subsidies, however, are restricted to private

individuals and municipalities. Other incen-

tives can be obtained for combined electric-

ity and heat generation and for secondary

sources of energy.

LEGAL FRAMEWORK FOR RENEWABLE ENERGY GENERATIONConditions for running business in the area

of electricity generation are regulated main-

ly by Act No. 458/2000 Coll., on business

conditions and public administration in the

energy sectors and on other amendments

(“Energy Act“). The Energy Act sets out con-

ditions under which ERÚ may issue licences

for energy generation, transmission, and

distribution. This Act transposes Directive

2003/54/EC of the European Parliament and

of the Council concerning common rules for

the internal market in electricity and Direc-

tive 2003/55/EC of the European Parliament

and of the Council concerning common

rules for the internal market in natural gas.

The use of renewable sources is regu-

lated primarily by the Renewable Sources

Act mentioned above and by the ERÚ Price

Decisions, which stipulate the level of feed-

in tariff s and green bonuses. As mentioned

above, the applicable decisions for 2010

are Decisions Nos. 4 and 5/2009 Coll. The

electricity market rules are set out by ERÚ

Regulation No. 541/2005 Coll. Decrees Nos.

475/2005 Coll., 51/2006 Coll., and 140/2009

Coll. were used as a basis for the implemen-

tation of certain provisions of the Renew-

able Sources Act, for setting the conditions

for connecting the sources to the grid, and

for electricity price regulation. Specifi c con-

ditions for the use of biomass in electric-

ity generation are laid down by Regulation

No. 482/2005 Coll. of the Ministry of the

Environment.

Licensing ProceduresThe following steps must be taken be-

fore electricity generation from renewable

sources may start:

1. Prove the title to the land and buildings, if

applicable, where the electricity generat-

ing facility is to be built (ownership title to

the property, tenancy).

2. Perform fact-fi nding procedure under Act

No. 100/2001 Coll. on the Environmental

Impact Assessment (“EIA“). The procedure

is required especially for the following

projects:� Fuel incineration facility with rated heat

output of 50 MW to 200 MW;� Wind power plants with total installed

output of more than 500 kWe or with

tower height exceeding 35 m;� Hydro-power plants with a total in-

stalled output capacity 10 MWe and

above;� Hazardous waste disposal facilities;� Projects that might aff ect bird protec-

tion areas and natural sites of European

importance.

Facilities with outputs below the above-

mentioned levels are subject to EIA only if

the authority concerned has issued a de-

cision to that eff ect. The actual procedure

lasts 5-8 months; in case that special docu-

ments have to be prepared, it may last up

to two years.

3. Change of the zoning plan in case that

the existing zoning plan does not allow

for the construction of a power plant.

4. Obtain the zoning and building permits.

The competent authority is the building Ph

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C Z E C H T O P

offi ce of the relevant municipality. The

building offi ce, similarly to other admin-

istration authorities, has to issue its deci-

sion within 30 days from the opening of

the proceedings; in more complicated

cases the period may be prolonged by

another 30 days.

Binding positions of the respective au-

thorities must be obtained for the issu-

ance of the zoning and building permits.

The respective authorities issue their posi-

tions within the same statutory deadlines

as the building offi ce. Depending on the

location of the land, the following author-

ities may be involved in terms of public

interest protection:� Authorities of environmental protec-

tion, nature and landscape conserva-

tion, water management, farmland

protection;� Authorities of forest conservation, air

protection, and waste management;� Health-care authorities;� Railway administration offi ce;

whereas the relevant state administration

tasks are usually performed by respective

departments of the concerned munici-

pality authority.

5. Obtain the fi nal approval for use of the

electricity generation facility. The com-

petent authority is the building offi ce of

the relevant municipality, whose deci-

sions are subject to the above-mentioned

deadlines.

6. Obtain the licence from ERÚ for electricity

generation. In specifi c cases, the licence

may be obtained before the issue of the

fi nal approval for use. Licences are issued

for no more than 25 years.

The preconditions for individuals to ob-

tain the license are: (i) minimum age of 21

years, (ii) full legal capacity, (iii) integrity,

and (iv) professional competence, or the

appointment of an authorised representa-

tive, where professional competence usu-

ally means completed technical university

education plus three-year experience in the

fi eld, or completed secondary technical ed-

ucation plus six-year experience in the fi eld;

for smaller facilities, lower-level education is

usually suffi cient.

For legal entities, conditions (i) to (iii)

must be met by members of the statutory

body. A condition for awarding a licence to

a legal entity is also the appointment of an

authorised representative. The person ap-

plying for the licence is required to prove its

ownership title to or the right of use of the

power generation facility to be used for the

licensed operation, or the consent of the fa-

cility owner. The applicants must also prove

their fi nancial capacity for the operation for

which the license is required, and the capac-

ity to discharge their obligations for at least

fi ve years.

7. To have the facility connected to the

grid, the producer must file (i) a written

application, supported by (ii) the con-

sent of the transmission or distribution

system operator, and (iii) a contract on

connection between the applicant and

the transmission or distribution system

operator. The operator is required to

give priority to plants generating elec-

tricity from renewable energy sources

if the producer applies for connection

and meets the conditions for electricity

connection and transmission under the

Energy Act.

8. The last step is a contract with the

transmission or distribution system op-

erator on electricity supplies or a con-

tract on the payment of green bonuses

(see above).

Acquisition of Projects in ProgressAs it is obvious from the above, the li-

censing procedure is not a simple affair.

Potential investors in renewable energy

may want to purchase a project already

in progress, at a certain stage of comple-

tion. In view of the current uncertainty

regarding possible reductions of feed-in

tariffs for electricity obtained from solar

power stations beginning from 2011, an

interesting alternative is the purchase

of solar power stations already erected

and connected to the grid, where the

projection of future revenues is quite

simple.

Champion among Czech VintnersMiroslav Majer, Vinselekt Michlovský, a.s., e-mail: majerm@michlovsky.com, www.michlovsky.com

Czech vintners know their 2009 champion.

The wine-maker of the year is Vinselekt

Michlovský, based in the well-known vine-

growing village of Rakvice in South Mora-

via. It persuaded the jury not only with the

excellent taste of its wines, but also its sen-

sitive approach to vine-growing. Vinselekt

thus became the historically fi rst winner of

the new competition.

Wine-maker of the Year – a Somewhat Diff erent CompetitionThe Wine-maker of the Year 2009 compe-

tition was announced by the Wine-mak-

ers’ Fund and the National Winery Centre

in co-operation with the Association of

Wine-makers of the Czech Republic. The

prestigious title is awarded as an all-round

appreciation of the winery which in the

previous year best proved a steadily out-

standing quality of its wines, carried awards

from domestic and foreign competitions,

participated in promoting Czech wines

at trade fairs and exhibitions, organised

dissemination activities and wine tourism

events for the public, and used innova-

tive technologies in vine improvement

and cultivation and in wine making. The

aim of the competition was choosing the

best domestic fi rm which breaks rank in

a positive way among wine-making com-

panies. The wine-maker of the year com-

petition diff ers signifi cantly from standard

competitions in the country, in which the

competing wines are those selected by in-

dividual makers.

The Wine-maker of the Year 2009

competition assessed the vineries’ work

throughout the year, using a number of

criteria. In mid-January 2010, the assess-

ing commission visited five vineries which

had won the most nominations, awarded

points to them, and finally chose the of-

ficial winner.

| 1 4

C Z E C H T O P

Vinselekt Michlovský a.s., established in 1993, in 2003 became a joint-stock company. Today it

has about 60 employees. It has 120 hectares of vineyards, where cultivation strictly observes

integrated production rules, with part of the area practicing ecological vine-growing. In addi-

tion to its own grape production, it purchases about the same quantity from other suppliers

under long-term contracts, who observe the same strict rules and instructions. The company’s

annual production is more than one million bottles of wine.

The highest production series is Premier, wines with a distinct taste of wines made from per-

fectly matured grapes processed by the most natural technologies and bottled without filter-

ing. The Premier series include Vinum Palaviense with certified origin of the grapes coming

from Pálava’s limestone hills, Chateau Dowina – extractive wines with a characteristic bou-

quet, ripening in French oak barrels. Other product series are Latitude 49, Harmony, Passio

Christi, Standard, and Private Archive for collectors. A separate category are original bottle-

fermented effervescent wines Crémant de Vinselekt .

Bio Wine, Winner of Vinex Grand Prix CompetitionVinselekt vinery is linked with the per-

sonality of Miloš Michlovský, currently

one of the most important Czech vine

growers. A pioneer in biological vine cul-

tivation, he farms 8 hectares of eco-vine-

yards and sells not only wines, but also

ciders made from grapes bearing the BIO

label. For his wine Hibernal 2008 late col-

lection BIO, he won the champion title

at the Grand Prix Vinex competition. It is

the first time in the seventeen-year his-

tory of this competition that the cham-

pion was a bio-wine. The untraditional

Hibernal variety has minimum require-

ments for chemical protection. With its

primacy, Vinselekt Michlovský defended

its last year’s victory in competition with

another wine.

Vinselekt Michlovský company is his-

torically one of the most successful par-

ticipants in this competition. It won its fi rst

Vinex title in 2006, and in 2010 gained the

prize for the best single maker wine collec-

tion. The competition was entered by 373

samples, with one in every ten samples

being a foreign entry.

Vinselekt Michlovský Collecting PrizesAt the Wine-maker of the Year prize award

ceremony, the owner of the company, Miloš

Michlovský, commented on his remarkable

success saying: “I am tremendously happy

that the fi rst title in history has been as-

signed to our Vinselekt. Although accord-

ing to the competition statutes, the award

should have refl ected

our 2009 results, I think

the Jury also took into

account our ‘merits’ of

the previous year, our

continuing and unending innovations,

the improvement and successful launch-

ing into practice of new hardy varieties,

the large number of wines we have been

sending to the Wine Salon of the Czech

Republic each year, and our successes in

regional, national, and international wine

competitions.”

In the past few years, Vinselekt

Michlovský wines have been cham-

pions in probably all Czech competi-

tions. At Austria’s Awc-Vienna, Vinselekt

Michlovský a.s. figured repeatedly among

the world’s 100 best vineries, Vinselekt

wines were decorated with MUNDUS Vini

gold and silver medals in Germany and

at Vinalies Internationales in France. Pál-

ava 2007 grape selection is the first wine

in the history of Moravian viniculture to

become absolute champion in a world

competition – Terravino Israel – held un-

der the auspices of O.I.V.

Miloš Michlovský, owner of the compa-

ny, appreciates the prestigious titles they

have won, but at the same time says, in

exaggeration, that they actually did not

deserve the credit. “First of all I must thank

the vineyard and the wine. The wine is the

winner.”

Wine is doing well in the Czech Repub-

lic, its consumption over the past few

years has been rising. While in 1993 wine

consumption amounted to 12 litres per

person and year, now it ranges around

17 litres. Even so, however, the Czech

Republic is lagging behind the rest of

Europe, where average consumption is

between 25 and 32 litres.Miloš Michlovský, the founder of Vinselekt

Ph

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W E A R E I N T R O D U C I N G

Crisis Boosting Demand for “Green Buildings“www.cbre.com

These days, we are witnessing a growing

demand for low-energy, or at least energy-

saving residential building projects. In com-

mercial construction, this trend is as yet not

so much in evidence, but even there the

number of “green buildings” is steadily ris-

ing. A favourable feature is that the would-

be tenants of those buildings are becoming

increasingly aware that at the cost of higher

rent they will save on energies.

Interest in “Green Offi ces”It might be expected that at the time of

economic crisis all fi rms looking for offi ce

space will only be interested in the locality

– standard – price combination. Surprising-

ly, it is not so. Recently, it has appeared that

with the decline in commercial offi ce space

rentals would-be tenants and owners are

increasingly willing not only to buy “cheap”,

but also to invest in “green buildings”.

Environmentally friendly buildings are in

short supply, and so certain tenants and buy-

ers are willing to invest in re-building their inte-

riors so as to create a better working environ-

ment, but also to obtain a certain certifi cation

label used for energy-saving buildings, which

can also be obtained for separate spaces.

There is no uniform system in the world to

assess buildings with regard to environmen-

tal aspects. In a number of states there are

non-government organisations dealing with

this issue. In the USA, the best-known certifi -

cation label is LEED (Leadership in Energy &

Environmental Design), in the UK it is BREE-

AM, in Germany DGNB. All these systems dif-

fer from each other, but in principle all assess

the “friendliness” of the building and its parts

to the environment and its users.

Purchase CostsTo obtain the certifi cate, the building or the

offi ce spaces must meet specifi c require-

ments, for which points are allotted and the

total number of points then determines the

particular category. The LEED certifi cation

system has three degrees, and to attain the

highest – platinum – practically all require-

ments must be met. The range of the areas

concerned is very wide. Emphasis is placed

not only on the location of the building (good

public transport accessibility), the materials

used, which must be based on renewable

sources and provided by local suppliers, the

use of renewable energy sources and various

saving measures, but also things such as the

possibility of using a bike for transport.

The purchase costs of environmentally friend-

ly buildings are somewhat higher, but in future

they will yield considerable savings. Also, it is to

be expected that companies will give priority to

“green buildings” and a good working environ-

ment, that they will take the environment into

consideration, and in return will gain the benefi t

of lower operating costs and other advantages.

Low Energy IntensivenessIn view of the global economic crisis and

problems with developer project fi nancing,

the number of “green buildings” is not grow-

ing so fast. The keen interest of investors in

these buildings, however, is putting pres-

sure on building them. The recently pub-

lished survey carried out by Skanska Offi ce

Index reveals that in looking for new offi ce

space, Czech fi rms place emphasis on the

following factors: satisfaction of employees

and a good working environment, parking

availability, and close vicinity of main roads.

As regards cost saving in offi ce spaces, the

most important consideration for Czech fi rms

is energy cost savings (58% of respondents).

A full 79% of respondents said they accept-

ed measures to reduce the environmental

impact of their activities. The main eco-activ-

ity of the companies, according to the survey,

is “waste sorting”. The survey also showed

that the lowering of energy costs is the most

important factor for Czech fi rms in looking

for and renting new offi ce space. A full 77%

of Czech respondents also said that in their

opinion, energy saving was an indivisible

part of every ecologically-minded building.

Futurama Business ParkAn example of a “green” offi ce building can be

Futurama Business Park Administration Cen-

tre in Prague’s Karlín District. It is designed as

a complex of energy-saving buildings, which

use the most up-to-date technologies. Ac-

cording to the criteria laid down by Directive

2002/91/EC of the European Council on the

energy performance of buildings, the Park was

awarded Class A certifi cation, acknowledging

its high energy-saving standard. There are sev-

eral ways of saving energies in the complex.

For example, the glazing and shading system

is design so as to prevent excessive heat losses

in the winter season and on the contrary to

limit by shading the penetration of outer heat

into the interior in the summer months. The

centrally controlled shading of glazed surfaces

brings up to a 20% saving of energy for cool-

ing in comparison with buildings, which have

no shading system at all. The main heat source

in the complex is a heat pump in combination

with an exchanger station. Heat losses will be

prevented by the cooling and heating system,

which will prevent the simultaneous cooling

and heating of diff erent spaces. The air-con-

ditioning units are designed so as to use the

heat from waste air by recuperation.

| 1 6

E N T E R P R I S E

Together to Support Trade Opportunitieshttp://czech-water.czechtrade.cz

In 2004, an export aliance named Czech Water

Alliance (CWA) was established with the help

of CzechTrade government agency, which

is entrusted with activities aimed at facilitat-

ing Czech fi rms’ entry on foreign markets.

Czech Water Alliance associates Czech fi rms

with experience in all areas of water manage-

ment; it currently has 14 members special-

ising in investing, construction, designing,

and planning projects concerned with water

management, hydroelectric power stations,

water reservoirs and other structures, pump-

ing equipment, cleaning and revitalisation of

water courses, diagnostics and the treatment

of all types of water (communal, industrial,

etc.), construction and reconstruction of civil

engineering systems for whole residential

quarters and separate units, geology, hydro-

geology, waste-free technologies, control

systems used in ecology and related branch-

es across the entire water economy.

The Alliance is a response to current trends

of the world economy, such as internation-

alising business, merging of competitors,

production outsourcing and raising added

value in procedurally managed companies.

The principal aims of the Alliance are pro-

motion of its members and enhancement

of the reputation of the Czech Republic in

water related issues and their solutions. The

ways of supporting the members of the Al-

liance include the organisation of seminars,

publication of catalogues, overseas cooper-

ation and ensuring participation in presen-

tations and exhibitions, for example in Rus-

sia, China, Libya, Romania, Kuwait, Croatia,

Egypt, Italy, and Greece.

The Alliance as a tool of raising the competitiveness of enterprises on foreign marketsIn 2004, Czech Water Alliance became one

of the fi rst parts of the Alliance Project of the

Czech trade promotion agency CzechTrade.

The Agency decided to choose the most

advanced Czech export-oriented branches,

which it associated in Export Alliances with

the aim of promoting Czech fi rms, their

products and technologies, and acquaint-

ing foreign customers with them. “I am

persuaded that Czech water management

fi rms are absolutely legible to their foreign

partners,” says CWA’s leader Ivan Nikl, direc-

tor of MAEP, s.r.o. in Chomutov.

What is the main aim of the Czech

Water Alliance?

We are trying to improve the position of

Czech fi rms in the area of service and technol-

ogy exports in water management. Thanks to

the fi rms associated in this alliance we are in

a position to provide practically the full range

of services, from the presentation of the fi rms

and their technologies to the preparation of

the project, its delivery and realisation.

To ensure the success of any project, one

has to choose the right strategy. What is

actually your export strategy?

Our strategy is in harmony with the Export

Strategy of the Czech Republic for the years

2007-2011, i.e. promotion of Czech exports.

Our intention is to raise the export share of

services and technologies supplied by the

fi rms associated in the Alliance. In pursuing

this aim, we want to use primarily simple

tools. As before, we want to provide services

for potential foreign clients and furnish sup-

port services to Czech exporters. I must not

forget the effi cient use of European funds

available to fi rms operating in the area of

water management. We are also taking ad-

vantage of the valuable assistance provided

by CzechTrade, which is helping us make the

public aware of the benefi ts the fi rms asso-

ciated in CWA bring to the Czech economy.

Which are the benefi ts Czech

water management fi rms can

bring to foreign partners?

I am convinced that Czech water manage-

ment fi rms are absolutely legible to their

foreign partners, mainly thanks to the coun-

try’s membership of the European Union, its

strategic geographic position in the centre

of Europe, and in particular the wide range

of its reference deliveries and realisations

throughout Europe and beyond. I think

that a great asset is the availability of highly

educated and trained experts with a corre-

sponding knowledge of foreign languages.

The products and technologies are unequi-

vocally of the highest world standard. If, how-

ever, we do not make our foreign customers

acquainted with those facts, there can be no

talk of any expansion to foreign markets.

The words which you have just said may

be understood subjectively; can they be

measured in an objective way?

You are right. They may sound subjective.

But they can be easily supported by facts. It

is CWA’s aim that the fi rms it associates be

continuously benchmarked against foreign

competitors. We make our own surveys to

CZECH EXPORT ADVANTAGESWhat is the potential of the Czech Republic in exports?

The principal advantages are the country’s well-edu-

cated manpower, reasonable cost of the work of technical

specialists, strategic geographical position of the Czech

Republic in the heart of Europe, and close relations with

Eastern Europe.

WHAT ARE EXPORT ALLIANCES?An export alliance is an association of fi rms operating in related

branches of business, whose products or services complement

each other and the aim of which is concerted action and op-

eration on foreign markets. Export alliances are a way of getting

easier access to orders which smaller Czech fi rms have less of

a chance of winning. The point is to get together an association

of fi rms that will completely cover a large project, from designing

and plan preparation to the supply of all parts and their assembly,

and with follow-up service. CzechTrade Agency has so far initiated

the creation of 21 export alliances.

SERVICES AVAILABLE TO FOREIGN PARTNERS� Czech consulates� 33 CzechTrade offi ces� Information service� Help with choosing a partner� Business trips and meetings� Investment help and advice

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C Z E C H E C O L O G Y A N D A G R I C U LT U R E

fi nd out whether foreign companies are in-

terested in fi rms associated in CWA. In this re-

spect, we cooperate very closely with Czech-

Trade, specifi cally with the agency’s offi ces

abroad. We also promote cooperation with

the economic and commercial sections of

Czech embassies in other countries.

You also mentioned services

for foreign partners; which specifi c

services can you off er?

The character of such services is more or less

informative. Nowadays, information is one

of the most valuable and most expensive

commodities. We want to off er foreign part-

ners assistance in their search for suitable

suppliers in the Czech Republic and off er

them tailor-made business trips and meet-

ings with Czech water management fi rms.

Where, besides getting information for

your surveys of interest, do you see the

usefulness of CWA’s cooperation with

CzechTrade offi ces abroad?

The employees of CzechTrade’s foreign of-

fi ces are the best ambassadors of the fi rms

associated in CWA we can have abroad.

Their experience and know-how are instru-

ments that lead to the provision of services

for foreign partners, as we said before.

What achievements can CWA and the

fi rms it associates pride themselves on?

I wouldn’t speak of separate achievements.

We are a team, and the fi rms associated in

CWA look upon their achievements as the

success of the entire Alliance. Confi rmation

of this is the export success, for example of

ASIO, s.r.o. Other successful exporters are Tes-

la, a.s., Centroprojekt a.s., Vapo, s.r.o., Rekuper

Sychrov s.r.o., PRESSKAN system a.s. and Teco

a.s., to name just some of them. Complete

CWA deliveries to foreign markets are worth

dozens of millions of EUR. These results could

never be achieved if the fi rms’ experts were

not prepared to put all their professional skills

and experiences to work to ensure their com-

mon success in meeting the highest – quality

requirements placed on the technology they

supply.

Does CzechTrade also fi gure in these

endeavours in some way?

Of course it does. CzechTrade did not help

us only to attain our good results. Recently,

thanks to the Agency’s cooperation, in par-

ticular to Mr Martin Hlavnička, we scored an

export success at the presentation of water

management fi rms in Petersburg, specifi cally

the fi rms PRESSKAN and VAPO. We managed

to address and win new customers, and now

we are at the stage of preparing a project for

the entry on the market by several members

of the Alliance. With the support of the Minis-

try of Industry and Trade, we are now prepar-

ing for participation in exhibitions in Moscow,

Munich, and Lyon.

LIST OF CWA MEMBERS

ASIO spol. s r.o.

Supplier of container packed wastewater

products i.e. wastewater treatment plants, oil

separators, grease traps, shaft pumping, etc.

www.asio.cz

BKG úprava vody s.r.o.

Leasing manufacturer of water treatment

plants for process, drinking, and ultrapure

water focusing primarily on the various de-

velopments of membrane technology.

www.bkg.cz

CENTROPROJEKT a.s.

Provider of professional design and consulting

engineering services with more than 80 years

experience in the civil engineering sector.

www.centroprojekt.cz

CINK Hydro-Energy k.s.

One of the leaders in deliveries of technolo-

gy for small and medium-sized hydropower

stations. The goal of the development team

of CINK Hydro-Energy is to change water

potentials in cooperation with our custom-

ers all over the world into profi table and en-

vironment–friendly sources of energy.

www.cink-hydro-energy.com

ECOFLUID Group, a.s.

Highly innovative organisation oriented to

the realisation of the innovation project of UP-

FLOW SLUDGE BLANKET FILTRATION (USBF)

technology used in the chemical treatment of

surface and ground water for municipal and

industrial use as well as the biological treat-

ment of municipal and industrial waste-water.

www.ecofl uid.cz

HSI com s.r.o. Plzeň

One of the Czech most noted solution work-

places of Integraph and Bentley Systéme

companies. Its activities are mostly targeted

on geographical information systems. HIS

COM develops CAD applications.

www.hsicom.cz

MAEP s.r.o.

A leader of CWA, company developing busi-

ness relations between the Czech Republic

and the EU and the countries of the Russian

Federation and Asia.

www.maep.cz

MARVES v.o.s.

The company’s core business is the pro-

vision of comprehensive services in the

area of technological process automation.

It manufactures a variety of electronics

components.

www.marves.cz

MICO, spol. s r.o.

The company provides services and under-

takes repairs of all industrial valves including

separators, pressure vessels and exchangers.

www.mico.cz

PRESSKAN system, a.s.

The company off ers its own know-how to

design pressure systems and is the exclusive

supplier of the PRESSKAN® low-pressure

sewer system.

www.presskansystem.cz

REKUPER SYCHROV s.r.o.

The company’s core activity is the manu-

facture of ventilation units with heat re-

cuperation, intended in particular for hall-

type buildings, including their design and

installation.

www.rekuper.cz

TECO, a.s.

Is an important supplier of TECOMAT in-

dustrial controllers used by water sup-

ply and waste water plants. As TECOMAT

is a powerful general purpose control

system, it can be used in central heating

plants, the food industry, the chemical in-

dustry, and other sectors.

www.tecomat.cz

TESLA, a.s.

The Water Treatment Solutions Division of

the company has been successfully oper-

ating for several years in waterworks en-

gineering and in water supply and waste-

water treatment plants. It supplies drinking

and industrial water plants, including devel-

opment, planning, production, and putting

the units into operation.

www.tesla.cz

VAPO, s.r.o.

VAPO specialises in two fi elds: rubberised

fabric products and moulded mechanical

rubber parts. The rubberised-fabric products

include sealing bags for piping, lifting bags,

sealing bags for fi ssures, sealing wedges

and pipe rehabilitation packers. Other rub-

berised-fabric products are made to the

specifi c requirements of customers.

www.vapo-sro.cz

| 1 8

E N T E R P R I S E

Surface Finishing under the Wings of CzechTradeMartin Mokroš, Leader of Czech Surface Finishing Alliance, e-mail: mmokros@galatek.cz, www.galatek.cz

The Czech Surface Finishing Alliance (CPU)

was established in June 2006 with the aim

of off ering potential clients a strong group

that will solve their problems in the area of

surface fi nishing comprehensively, with the

corresponding guarantees. It is an associ-

ation of four fi rms – ALTA, EST+, GALATEK

and OTECO – all supplying equipment for

the surface protection of materials. The

fi rms’ production programmes are designed

so as to complement each other, thus

eliminating competition within the Alliance

and strengthening its competitiveness as

a whole, primarily on foreign markets.

Czech ExperiencesThese Czech fi rms off er their experience

and know-how in dealing with surface fi n-

ishing issues. They have a strong intellectual

and material potential and in co-operation

with the specifi c customers they are in

a position to realise the surface fi nishing of

their products to a high level. All the associ-

ated companies are certifi ed in accordance

with ISO 9001:2000 quality standard and ISO

14001:2004 environmental management

standard.

Comprehensive Execution of OrdersAs part of their engineering services, these

Czech fi rms are in a position to meet the

specifi c requirements of customers at all

stages of the project. They propose the use

of the most suitable technologies, with veri-

fi cation, prepare the complete project, in-

cluding its approval, evaluate the economy

of operation, and prepare expert opinions.

Under the Wings of CzechTradeCPU was established under the auspices of

CzechTrade state-run agency, the main initi-

ator of its establishment being its represen-

tation in the Russian Federation, specifi cally

Ekaterinburg. The Offi ce has signifi cantly

infl uenced the development of the new Al-

liance. It recommended that in addition to

arranging exhibitions, it should also focus

on the presentation of their supplier pos-

sibilities, addressing potential customers,

while taking advantage of the information

backing and the experience of CzechTrade.

Very successful, for example, were the pres-

entations in the Russian Federation, specifi -

cally in Chelyabinsk, Ekateringurg, and Pe-

tersburg and in Zagreb, Croatia.

Establishment of Trade ContactsThe result of all these presentations is not

only information about the possibilities of

the Czech fi rms, but also the establishment

of a large number of contacts, some of

which have already led to the realisation of

business deals. Much of the success of these

presentations is due to CzechTrade Agency,

which is well acquainted with the local en-

vironment. Each of CzechTrade’s represen-

tations – in Ekaterinburg, Petersburg, and

Zagreb – has prepared for the Alliance, on

Alta Concrete Works Kiev – a technological unit of ALTA company

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C Z E C H E C O L O G Y A N D A G R I C U LT U R E

the basis of its knowledge, a list of potential

partners and customers. All of them have

organised their own presentations, with the

participation of representatives of the Czech

State and local state organisations.

Trade Fairs and ExhibitionsOther important activities of CPU are its par-

ticipation in selected trade fairs and exhibi-

tions. The Alliance participates regularly in

ExpoCoating in Moscow, as well as in other

events, such as national exhibitions, mis-

sions of businessmen, etc.

All these activities are of great economic

importance. Thanks to CzechTrade’s back-

ing, greater attention is paid to the Alliance

in various programmes, and jointly organ-

ised events, such as participation in select-

ed trade fairs, are subsidised fi nancially. This

brings valuable cost savings, especially in

the area of marketing.

Membership of CPU has a number of other

advantages. Besides the amalgamation of

fi nancial means for joint promotion the

member fi rms benefi t from the exchange of

information about potential customers and

the experiences gained in the realisation of

joint projects.

CPU Members Introduce ThemselvesEST+, A. S. BASED IN LEDEČ NAD SÁZAVOU

Paint Shop Equipment with Accessories

EST +, a.s. is the only manufacturer of pro-

fessional spraying technology in the Czech

Republic. It commenced development and

manufacture of this equipment as far back

as 1951. From the very beginning, its pro-

gramme has been oriented towards the

development and production of spraying

equipment for the application of liquid and

powder paints, with deliveries of sets for

surface fi nishing.

EST+, a.s., Podolí 1237, 584 01

Ledeč nad Sázavou, Czech Republic,

Phone: +420 569 726 097, +420 569 726 094,

Fax: +420 569 726 096, e-mail: est@estplus.cz

www.estplus.cz

OTECO CZ, SPOL. S R.O. BASED IN BUČOVICE

Shot Blasting Equipment

OTECO CZ, spol. s r.o. was established in 1992

as a manufacturing fi rm for Austria’s OTECO

GmbH Wien, a company with a long shot

blasting tradition. Today it manufactures the

full range of blasting equipment in its plant

in Bučovice. Its products comprise both

compressed air shot blasting machines and

shot blasting machines with impellers. The

machines are manufactured serially or are

“made to measure”, according to the specifi c

requirements of customers.

OTECO CZ, spol. s r.o., Slavkovská 853,

685 01 Bučovice, Czech Republic

Phone/Fax: +420 517 383 506,

+420 517 383 519, e-mail: oteco@oteco.cz

www.oteco.cz

GALATEK, A.S.

BASED IN LEDEČ NAD SÁZAVOU

Paint Shops and Accessories

GALATEK, a joint stock company established

in 1990, supplies complete paint shop

equipment and surface fi nishing lines. Its

machines and equipment for surface fi n-

ishing shops comprise surface preparation

equipment, paint cabins for the application

of liquid paints, cabins for powder plastic

compound application, drying and burning

furnaces, transport and handling machines

and application equipment.

GALATEK a.s., Na Pláckách 647, 584 01

Ledeč nad Sázavou, Czech Republic,

Phone: +420 569 714 111, +420 569 721 121,

Fax: +420 569 714 202,

e-mail: lakovny@galatek.cz,

www.galatek.cz

ALTA, A.S. BASED IN BRNO

Comprehensive Commercial, Financial,

and Engineering Services in the Area of

Engineering

Since 1991, Alta, a.s. has specialised in trading

with Central and East European countries.

The company’s core business is engineer-

ing. Its activities comprise comprehensive

commercial, fi nancial, and engineering serv-

ices, which ensure the high competitiveness

of the company. It has a network of foreign

representations: in the Russian Federation

(Moscow, Ekaterinburg, and Petersburg), the

Ukraine (Kiev, and Komsomolsk), and Belarus

(Minsk, and Zhodino). These representations

are one of ALTA’s greatest assets. It special-

ises in the export of whole plants, machine

tools, engineering goods, and machinery

for the heavy industry. Its main import items

are metallurgical and power generating ma-

chines and equipment.

ALTA, a.s. – offi ce, Štefánikova 41,

602 00 Brno, Czech Republic

Phone: +420 541 550 111,

Fax: +420 541 550 555, e-mail: offi ce@alta.cz

www.alta.cz

GALATEK Continuous lines OTECO CZ machinery

| 2 0

E N T E R P R I S E

Agriculture Is Drawing Finance from Various Programmes

Communication Department, Ministry of Agriculture, www.eagri.cz

In the Czech Republic, the agriculture

sector does not account for the larg-

est share of GDP and employment, but

its role in supplying the population with

foodstuffs and its importance for the so-

cial area and the natural environment are

irreplaceable.

The primary sector creates about 3% of

total gross added value and accounts for

3.8% of total employment. A characteris-

tic feature of Czech agriculture is its large

farming enterprises, whereby it differs no-

ticeably from the structure of European

agriculture formed mostly by small, often

family farms. The average surface of tilled

land per farming enterprise in the Czech

Republic is 84.2 ha. The priority task of ag-

riculture, besides supplying good-quality

food, is to ensure environmental protec-

tion, including good living conditions for

animals, use of renewable energy sources,

and care for the countryside.

Rural Development Raises Competitiveness Not Only in AgricultureThe Czech Republic’s Rural Development

Programme covering the 2007-2013 period

is an instrument for obtaining EU support

from the European Agricultural Fund, which

serves four rural development purposes: to

improve the competitiveness of agriculture,

food production, and forestry (axis I), raise

biological diversity, protect the water and

the soil and mitigate climate change im-

pacts (axis II), improve the quality of rural life

and support the diversifi cation of the econ-

omy of agriculture (axis III), and help the

local population in rural micro-regions to

prepare their own development strategies

based on the “from bottom to top“ principle

and support projects for their development

– the LEADER method. The total volume

of fi nance available for the Rural Develop-

ment Programme, together with a contri-

bution from the state budget, amounts to

about CZK 100 billion (EUR 3.6 billion) for

2007-2013.

The following measures are focused on

business promotion outside the agricul-

ture sector within axis III:

Measure III.1.1 Diversifi cation of non-agri-

cultural activities. The measure supports

farmers wishing to start activities in the

area of production and processing, or en-

large them. The support is available for

selected areas of economic activity. An im-

portant part of the support is reserved for

the construction of facilities for renewable

energy source processing and use. The

budget for the entire period of the pro-

gramme is approx. CZK 3.8 billion (approx.

EUR 150 million).

Measure III.1.2 Support for starting en-

terprises and their development. The

measure is aimed at supporting the start-

ing of new enterprises of the smallest size

– micro-enterprises and the development

of existing ones in the area of production

and processing. The aim of the measure is

primarily to create new jobs and develop

the economic structure of non-agricul-

tural activities. The support is mainly fo-

cused on small businesses and trades (e.g.

joinery, carpentry, smith craft, upholstery,

etc.), services for farmers (e.g. machine

and equipment repair services), and retail

trade. Support is also available for the con-

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S U R V E Y

More detailed information about the terms and con-

ditions for obtaining a subsidy under the above meas-

ures can be found on the web sites of the Ministry of

Agriculture (www.eagri.cz) and the State Agricultural

Intervention Fund – SZIF (www.szif.cz).

facilities – the budget for the programme

period amounts to approx. CZK 2.6 billion

(approx. EUR 100 million).

Measure III.1.3 Tourism support is designed

to support the promotion of agrotourism,

especially the construction of low-capacity

accommodation facilities, including cater-

ing and sports surfaces. Support can be

obtained for pedestrian path building and

marking, with rest areas or riding paths; the

budget for the programme period is approx.

CZK 2 billion (EUR 80 million).

Application ProcessingAll the measures mentioned above ap-

ply to projects submitted within applica-

tion reception deadlines. The applicant

requesting the subsidy must fi rst prepare

the project according to a binding project

outline shown in the Applicant Rules (the

Rules are available at www.mze.cz or www.

szif.cz), to which the required annexes

must be attached. As soon as the reception

of applications opens (usually announced

once a year), the applicant will complete

the application form and submit his project

to the regional department of the State

Agricultural Intervention Fund, which is

the fi nancing agency. At that moment the

applicant can start work on the actual realis-

ation of the project. As in the case of most

measures, the subsidies are paid in retro-

spect. The applicant will fi rst realise the

entire project and pay for it, and after that

will submit an application for payment, to-

gether with the required documents. If all

requirements are met, the subsidy will be

paid. In the case of the above-mentioned

measures, the subsidy is up to 60% of eli-

gible expenses.

Fisheries Operational ProgrammeAnother subsidy title for drawing money

from EU funds coming under the compe-

tence of the Ministry of Agriculture is the

Fisheries Operational Programme 2007-

2013 (Fisheries OP). Under this programme

money can be drawn from the European

Fisheries Fund (EFF) for the years 2007-2013

for the fi sheries sector. Subsidies made avail-

able from the Fisheries OP amount to CZK

1 billion (approx. EUR 290 million). The sub-

sidies are designed for micro-enterprises

and small, medium-sized, and certain large

enterprises.

Subsidies are provided on the basis of

applications to be submitted within the

time limit announced by the Minister of

Agriculture. Subsidy applications are to

be addressed to the regional department

of the State Agricultural Intervention

Fund in the region, in which the project

is realised. The subsidy amounts to 60%

of the eligible costs of the project and is

paid out after the payment application is

approved.

Poll of Successful Companies Operating in the Areas of Ecology, Agriculture, and Wood Processing

NEVA-TRADE, s.r.o.Husova 537, 378 21 Kardašova Řečice

Phone: +420 384 377 121

E-mail: neva@neva.cz, www.neva.cz

Turnover: EUR 5 million

Number of employees: 130

Export: 90% of production

NEVA is a Czech engineering company with

a long tradition of excellence in the manu-

facture of thin-cutting machinery. The com-

pany fi rst opened its doors in 1793 and now

NEVA machines are in production in over 30

countries worldwide.

Neva machines are designed to cut wood

into precision thin slats and are known

world-wide for their quality, reliability, and

longevity. We produce:� Thin-cutting frame saws� Thin-cutting band saws� Saw blade and band grinders� Stellite saw blades and bandsaw blades

The machines and tools that we produce are

designed for cutting very thin and accurate

wooden lamellas. These lamellas can be used

without further processing in a variety of ap-

plications including fl ooring, parquets, multi-

layer boards, windows, doors, furniture, sport

equipment and music instruments.

Your company is a regular participant in

the various international exhibitions that

occur throughout Europe. What do you

expect to achieve by participating? Has

your participation brought good results

for sales?

Our company participates in these events in

order to get new contacts and trade part-

ners. We frequently introduce new machin-

ery and technology, and also use these oc-

casions to strengthen our existing contacts.

In recent years, our focus has been more

about meeting with our current customers

and enhancing our position in the market.

How are you tackling the consequences of

the economic crisis, and how do you see

the future of the company?

We have adjusted the capacity of pro-

duction to meet the lower demands,

and have reduced our costs, just as most

companies are doing. We are seeking

new markets and are being creative in

our marketing in order to increase sales

and reduce costs.

| 2 2

S U R V E Y

TOP FIRMS IN CZECH AGRICULTURE, ECOLOGY, AND WOOD-PROCESSING INDUSTRY

Name Based in Sector Contact

Imos Brno, a.s. Brnoconstruction of water-management, engineering and ecological

structureswww.imos.cz

AGRICO s.r.o. Třeboň grain processing and storage, breeding www.agrico.cz

ŽDB Group, a.s. Bohumín wire production, foundry, and metallurgy www.zdb.cz

Dřevotvar - Řemesla a Stavby, s.r.o. Chýnov cabinet-joinery, special building work www.drevotvar-ptak.cz

Veolia Voda Česká Republika, a.s. Praha water production and distribution www.veoliavoda.cz

Živa zemědělská obchodní, a.s. Klášterec nad Orlicí machines sales and service, farming, wood production www.ziva.cz

A.S.A. České Budějovice, s.r.o. České Budějovice waste disposal and communal services www.asa-cz.cz

Beskyd Agro, a.s. Palkovice agricultural and forestry production www.beskydagro.cz

Zemcheba, s.r.o. Vodňany agriculture, fruit-growing, livestock production www.zemcheba.cz

GEOtest Brno, a.s.Šmahova 112, 627 00 Brno

Phone: +420 548 125 111

E-mail: trade@geotest.cz, www.geotest.cz

Turnover: EUR 16 600 000

Number of employees: 133

Export: Turnover of exported services rang-

es around EUR 1.1 million; services are the

same in the Czech Republic and abroad.

GEOtest Brno, a.s., is one of the largest Czech

companies operating in geology and envi-

ronmental protection. It is a reliable partner

with a tradition of more than 40 years and an

established, experienced team of profession-

als with a long practical international expe-

rience. GEOtest Brno, a.s. provides services

in the following branches: protection and

remediation of groundwater and rock envi-

ronment, disposal of old ecological burdens,

hydrogeology, geotechnical work and engi-

neering geology, geophysics, environmental

studies (Environmental impact assessment

– EIA, environmental audit, environmental

risk assessment, feasibility studies), manage-

ment systems (ISO 9001, ISO 14001 or EMAS,

IPPC, OHSAS), waste management, landfi lls,

cleaner production, hydro-chemical labora-

tories, and soil-mechanics laboratories.

Where do you see the main interest of

your clients at this time?

It is especially engineering geology research

for motorways and roads.

Can you mention some of the largest and

most important projects of your company

abroad?

Very important are our operations in Bos-

nia and Herzegovina – we are supplying

technology for the introduction of an in-

tegrated system of waste management in

the Una-Sana Canton. Another large project

is in Mongolia, where we are helping in ar-

eas suff ering from drinking water shortage;

technology for water treatment and protec-

tion of water resources.

JIP - Papírny Větřní, a. s.Papírenská 2, 382 11 Větřní

Phone: +420 380 909 231

Fax: +420 380 909 274

E-mail: info@jip.cz, www.jip.cz

Turnover: EUR 80 million

Number of employees: 750

Export: Exports go to Germany (16%), Slo-

vakia (11%), the United Kingdom (8%) and

other countries.

JIP – Papírny Větřní, a. s. endeavour for long-

lasting prosperity is based on tradition, high

quality, fl exibility, and super-standard rela-

tions with our business partners. Due to suc-

cessful sales around the globe, we have ex-

tensive experience in the fi eld of wrapping

and printing paper and can off er a broad

range of paper for all purposes.

What are the advantages of the paper

you make? What properties would you

emphasise? How are they achieved?

We are focused on special thin paper prima-

rily designed for food wrapping. Our main

segments include paper bag manufacture,

paper waxing, lamination and printing, and

other production includes ribbed paper,

and wet-strength and grease-proof paper.

JIP has equipment for the annual manufac-

ture of 3 000 tons of paper bags, 10 000 tons

of sheets, and 500 tons of paper with fl exo-

graphic print. The main advantages of JIP

paper are super-standard quality and hygi-

enic accreditation for food contact awarded

by the renowned company ISEGA.

Great emphasis is being laid on environ-

mentally friendly manufacturing. How is

your company taking care of the environ-

ment in this respect?

We are in compliance with all valid envi-

ronmental standards. The most recent sig-

nifi cant investment in this area included

the construction of a new waste-water treat-

ment plant, and the change of fuel from coal

to natural gas. Reference must be made of

the increasing share of recycled paper, which

is coming close to 1/3 of the total fi bre con-

sumption. The planned strategic investment

will be focused on ecology, specifi cally on

further increase in the share of recycled pa-

per and change of fuel to biomass.

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