Czechs and Brexit Britain: Part 2 – New business opportunities

21-02-2020

Britain is currently the Czech Republic’s fifth largest export market and a successful conclusion to post-Brexit trade negotiations is therefore a top priority for Czech diplomats. However, Czechs are also trying to tap in to new business opportunities in the UK and the British government’s promises to invest in its northern infrastructure and hospitals have been identified as potential new avenues for exports.

Libor Sečka, Tomáš Petříček, Lord Mayor of Manchester Abid Latif Chohan, photo: Tom McEnchroeLibor Sečka, Tomáš Petříček, Lord Mayor of Manchester Abid Latif Chohan, photo: Tom McEnchroe According to an analysis published last year by the accounting firm Deloitte, a no deal Brexit, which is still a possibility, could cost the Czech state CZK 10 billion and 40,000 jobs. Even in the case of an “average free trade agreement”, which Deloitte defines as an agreement with no toll costs but average tariffs, the country would lose some CZK 6 billion crowns off its total GDP. Finding the solution towards a good trade deal between the EU and Britain is therefore very much in the Czech Republic’s interest.

Transport and healthcare

This remains the obvious priority, Foreign Minister Tomáš Petříček said during a recent visit to the northern English city of Manchester. However, he also pointed out that new business ties between the two countries are being explored in parallel.

“Our aim is also to look for new areas of cooperation. For example, there is potential for future growth there in the health care sector. We would like the automobile sector to remain an important factor in our trade relations.

“I am visiting Manchester because it is another area of growth in the UK. There is huge investment here in infrastructure and services. We would like to open up these possibilities to Czech companies as well.”

Britain’s recently elected government has made pledges to help revitalize the previously neglected north of England, with infrastructure projects such as the HS2 railway line, connecting London with Birmingham, Manchester and Leeds. Furthermore, the government promises to build or refurbish 40 new hospitals.

Infrastructure and healthcare in the north of England are therefore precisely the sorts of projects that the local Czech mission is now paying special attention to, says the Czech Ambassador to the UK Libor Sečka.

“If possible we would like to take part in the social and economic developments in the northern part of England and the United Kingdom.”

“We are very much observing what is going on here in the UK and are noticing the special attention being paid by the government to northern areas.

“The minister is therefore here in Manchester also to explore the options for Czech industry in this area and support them. He had a nice discussion about it at the Manchester City Hall today about the possibility of cooperation. We know there are plans for enlarging the local transportation network here. There is one large producer of trams and train transportation that we have – Škoda Transportation.

“So what he did today is he introduced this excellent Czech producer of trams and trains for future opportunities. There was a sort of introduction and he also wanted to find out more about the plans over here. If possible we would like to take part in the social and economic developments in the northern part of England and the United Kingdom.”

Not an automobile manufacturer, Škoda Transportation is the lesser known Plzeň branch of the famous historic Czech manufacturer Škoda. Currently majority owned by PPF, the investment group belonging to Czech billionaire Petr Kellner, it is one of the world’s largest manufacturers of trams and propulsion units for trolleybuses as well as an important regional producer of trains.

Škoda Transportation, photo: archive of Czech GovernmentŠkoda Transportation, photo: archive of Czech Government In December, the company signed a multi-billion tram delivery deal with the German city of Bonn and there are hopes it could find buyers in British cities such as Manchester as well.

In the other major sector identified by the foreign ministry – healthcare – Ambassador Sečka says that Czechs could profit from their established reputation in Britain, especially when it comes to cardiovascular surgery.

“We have excellent Czech doctors not just in London, but also in other parts of the UK. We have a lot of cardio surgery doctors, but also the knowledge and equipment that we can provide in this area.

“For example our system of preventing heart conditions, gives you the right to be at a specialised health care clinic in 30 minutes if you have a heart attack.

“Some areas in the UK, with the help of Czech doctors, are building similar systems, so this is, I would say, a knowledge technology transfer, so we are very interested what would happen in this area.”

“Aviation may be a really big area of cooperation in the future. I was informed for example that when it comes to ultra-light planes, Czech producers are taking over a huge part of the market.”

While far behind machinery in terms of export volume, healthcare equipment such as surgical and general medical devices still accounted for some CZK 2 billion worth of exports to the UK in 2018, ranking together with optical devices within the top 10 Czech products traded to Britain in 2018.

The embassy has also been working on boosting the networking opportunities between Czech and British doctors for some years now. For example, in 2018, organised a special “Czech Heart Day” seminar on its premises in London, says Ambassador Sečka.

“Colleagues from both countries met at our embassy and exchanged information on the latest approaches in this area. It was a fantastic knowledge sharing exchange, where old friends met. As a follow up we also held a seminar on Czech medical instruments.”

Aircraft manufacturing

Photo: Tom McEnchroePhoto: Tom McEnchroe Aside from discussing infrastructure investment plans with the Lord Mayor of Manchester Abid Latif Chohan, the delegation of the Czech foreign minister also visited Manchester’s Chamber of Commerce. Here, a new app developed by the Moravian company Ad Astra was presented to entrepreneurs.

Described as a “holographic guide to plane design”, the app enables tablet and phone users to see detailed descriptions of the various aircraft components when aimed at a selected plane model. Its designers say that the basic function of the app can also be applied to other machinery and hope that it could lead to a simplification of business presentations.

The most interesting part of the presentation, however, was the details on the aerospace cluster in the Moravian region of the Czech Republic, which is a major international producer on the ultra-light plane market.

Foreign Minister Petříček shared further details about its relevance to Czech-British trade after the meeting.

“I met with a representative of the Czech and British aviation industry and there is actually very promising cooperation [going on there] that can bring also new achievements new innovations.

“We support these clusters to work together. Aviation may be a really big area of cooperation in the future. I was informed for example that when it comes to ultra-light planes, Czech producers are taking over a huge part of the market.”

“We are working with quite a big level of uncertainty for the future, with uncertainty today. However, we have been living with a great level of uncertainty for three years already, so we are used to doing it.”

According to CzechTrade, one in every four ultralight aircraft in the world is manufactured in the Czech Republic. Although the entire aircraft industry is currently only responsible for around 1 percent of Czech GDP, this niche may pay off in the next decade, as some estimate the light and ultralight aircraft market will nearly double by 2030, reaching USD 13.9 billion dollars in total value.

It should be noted that despite the various potential avenues for expanding Czech-British trade in the coming years, future predictions and the associated planning remain fragile due to the unpredictability of Brexit negotiations.

However, Ambassador Sečka remains calm when asked about how this affects sealing new business ventures.

“Yes, you are absolutely right. We are working with quite a big level of uncertainty for the future, with uncertainty today. However, we have been living with a great level of uncertainty for three years already, so we are used to doing it [laughs]. It is not that surprising and people know how to deal with it.

21-02-2020