Opinions expressed by Entrepreneur contributors are their own.
While the demise of communism in Europe's Eastern bloc hasmeant more global opportunities, these countries' rapidlyshifting political and economic climates make such venturesrisky.
Among the bloc nations, the Czech Republic is seen as the moststable, and its economic growth means more demand for foreignproducts and services. Export opportunities abound, particularly incomputer hardware and software; the Information TechnologyAgreement (ITA) of 1997 promises that technology tariffs will beeliminated by the end of 2000. There are also opportunities forcompanies offering management consulting, marketing, PR, legal orfinancial services.
Those opportunities were apparent to Howard Woffinden, 42, andGreg Gold, 43, soon after filming a series of Claudia Schifferfitness videos in Prague. Receiving a flood of inquiries abouttheir experiences, they joined Prague partner Tomas Krejci in 1996to form Los Angeles-based Milk & Honey Films, a productioncompany supporting U.S. filmmakers shooting abroad and overseasshops shooting in the United States. According to Woffinden andGold, the Czech Republic offers inexpensive, top-quality resourcesand, Gold adds, "a large labor pool of highly skilled, highlyeducated craftspeople."
Yet they admit that working in the Republic can be challenging.Here's their advice:
- Don't rush familiarity. Czech society is veryformal. "Unless you know people well, use a formal manner ofspeaking," says Woffinden. This includes using titles like"doctor" and "mister." It's rarelyappropriate to use first names unless you're closefriends.
- Build relationships. What matters most isn't money,says Gold, but "being referred by someone you've donebusiness with, building personal relationships or [cashing in]favors owed."
- Find a Czech partner. Because the Republic was communistfor 40 years before becoming a capitalist democracy, Wof-findensays, "the method for getting things done is different fromours." You'll need a local to deal with still-prevalentcommunist attitudes.
- Expect limited resources. Woffinden points out that thecountry's infrastructure, though improving, is stillunderdeveloped. "When we arrived five years ago, the phonesystem was archaic. Often, you can't call someone-youhave to physically locate them." Frequently, suppliesaren't available, but Woffinden says this is sometimes anadvantage: "When faced with a problem, [Czechs] find creativesolutions; they don't just throw money at it." One suchsolution has been the Internet, facilitating communication in theabsence of personal phones.
- Hire local professionals. Milk & Honey Films uses aCzech accountant to handle the paperwork required by Czech taxes(including a VAT tax of 17 to 22 percent) and red tape. It alsoemploys a bilingual attorney to interpret differences between Czechand U.S. law.
- Establish who's in charge. Companies must have a"responsible person" (jednatel), who is in chargeof all aspects of the business. Woffinden notes that Czechs oftenwant to work directly with this jednatel rather than companyreps.
- Visit Prague. Prague is the place to look for tradingpartners, professional services and workers.
According to Woffinden and Gold, the challenges are worth it."We've brought hundreds of clients into the Republic to dobusiness, and they all want to go back as soon as possible,"says Gold. "The people, the country, the business environmentare fantastic."
Moira Allen is a freelance writer in Mountain View,California, and an editor of Global Writers' Ink, anelectronic newsletter for international writers.
Next Step
- www.czech.cz/washington/ekon/ekon_us
Embassy of the Czech Republic Web site
- www.muselik.com/czech/frame.html
Includes currency rates, Czech business directory and more
- home3.americanexpress.com/smallbusiness/resources/expanding/global/reports/11114020.shtml
American Express report on Czech Republic export issues
- www.ijs.com/naafetee
North American Association for Exports to Eastern Europe site
Contact Source
- Milk & Honey Films, (323) 993-9600, www.milkandhoneyfilms.com.
