INVESTMENT OPPORTUNITIES IN THE CZECH REPUBLIC CZECHINVEST Investment

INVESTMENT OPPORTUNITIES IN THE CZECH REPUBLIC CZECHINVEST Investment and business development agency Barbora Račan-Ježková Connect & Support March, 2018 www. czechinvest. org

2 Basic data Connect & Support

NORWAY 3 Czech Republic Basic financial data – key indicators KEY INDICATORS 2017 2018* 2019* GDP growth (constant prices, %) 4. 3 3. 4 2. 6 General government debt (% of GDP) 34. 6 33. 1 - Average inflation rate (%) 2. 5 2. 6 2. 1 Unemployment rate (avg. , %) 2. 9 2. 4 2. 3 Labour productivity (increase in %) 2. 7 2. 4 Average nominal monthly gross wage (EUR) 1, 120 1, 244 1, 324 Exchange rate – CZK/EUR (avg. ) 26. 32 25. 4 25. 0 Exchange rate – CZK/USD (avg. ) 23. 36 21. 2 20. 8 Note: *forecast Source: Ministry of Finance, Czech Statistical Office, Ministry of Labour and Social Affairs, 2018 Connect & Support

4 Country overview – key indicators 2017 4. 3% 1120 EUR GDP growth Average gross monthly wages 2. 5% 2. 9% Inflation rate Unemployment rate Note: exchange rate 1 EUR = 26. 325 CZK (year average for 2017, Czech National Bank) Source: Macroeconomic Forecast of Ministry of Finance, February 2018 Connect & Support

5 The Global Competitiveness Index Ranking 2017/2018 Czech Republic is the most competitive country in the CEE region (Global Competitiveness Index – GCI) 5. 86 6 5. 85 5. 71 5. 65 5. 51 4. 77 5 4. 56 4. 33 4 1 st place Switzerland (GCI – 5. 86) 3 2 31 th place CR (GCI - 4. 77) 1 137 th place Yemen (GCI – 1. 38) 0 Switzerland United States Singapore Germany United Kingdom Czech Republic Poland Slovak Republic Hungary Source: World Economic Forum, Global Competitiveness Report, 2017 -2018 Connect & Support

6 Attractiveness of the Czech Republic Best investment destination countries according to German companies placed in CEE Region 1 Czech Republic 4. 13 2 Poland 4. 09 3 Slovak Republic 4. 00 4 Estonia 3. 94 5 Slovenia 3. 92 6 Latvia 3. 70 7 Croatia 3. 68 8 Lithuania 3. 66 9 Hungary 3. 58 10 Romania 3. 40 Source: German-Czech Chamber of Industry and Commerce, 2017 Connect & Support

7 Investment Opportunities in the Czech Republic Connect & Support

8 Priority sectors Investment opportunities Aerospace Electrical Engineering and Electronics ICT Automotive Nanotechnology & Advanced Materials Research & Development Life Sciences Business Support Services Advanced Engineering Source: Czech. Invest, 2018 Connect & Support

9 Czech Engineering Industry at a Glance Over 80% of output is exported 3 rd Largest MFG Industry in the Czech Republic 13% Revenues of all MFG industry 115 000 6700 More than 115 ths employees Production base of 6700 companies Source Czech Statistical Office, 2016 Connect & Support

10 Robot Market Czech Demand is growing rapidly due to increased need for automation • 2016 turnover = 40 billion USD • Industry 4. 0, linking the real-life factory with a virtual one, will play an increasingly important role in global manufacturing • Vision and sensing devices, coupled with analytics platforms, will pave the way for new industry business models • Machine Learning will drive many robotics developments over the coming years • Robots which are easier to install, program and operate will unlock entry barriers to the large, untapped market of SME‘S Source IFR Report Connect & Support

11 Robotization in the Czech Republic Growing and steady • 93 robots per 10. 000 employees (in MFG) • Above the world average and growing • Expected growth of 40% until 2020 • 10% of work done by robots – expected 25% in 2025 • Huge potential foreign companies to penetrate Czech market – need for automation grows • Necessary attribute to maintain competitiveness • 140 ths jobs to be layed down until 2025 • Automotive industry is stagnating, opportunities in Source: www. shutterstock. com aerospace, electro engineering, life science Source IFR Report, 2017 Connect & Support

12 Czech Automotive at a Glance • The largest industry in the Czech Republic • Over 9% of GDP • Around 1000 companies affected by the industry • Revenues over USD 48 billion • More than 23% of both Czech export and manufacturing output • More than 150 000 employees (2. 8% of total employees) Source: AIA, CZSO 2017 Connect & Support

13 National Action Plan for Clean Mobility • Expansion of charging infrastructure • Road tax exemptions • Interoperability between infrastructure operators • Traffic lanes • Free and reserved parking in cities • Low-emission zones • Obligatory sharging stations in new buildings • R&D support • New university and high school programmes Source: National Action Plan for Clean Mobility 2016 Connect & Support

14 The largest testing ground for autonomous cars in EU • Government active support for development of autonomous driving technologies • Government initiative for autonomous driving testing ground • Implementing favorable policy for R&D and new technologies • Agreement on AV testing in real traffic on a highways and selected cities Connect & Support

15 Case study – The main success of 2017 BMW Group intends to build the testing center in the Czech Republic • The first testing area of company in East Europe • Designed for test of electrification, digitalization and autonomous driving • Planned launch of operation within the area of 500 ha after the year of 2020 Source: Czech. Invest, 2018 Connect & Support

Účastním se soutěže od GSK – mám udělat kampaň na pastu Sensodyne. Mohl bys mi, prosím, vyplnit dotazníček, ať mám nějaká data? Investment into the R&D % GDP EU Avg. 90 85. 1 2. 5 80. 1 77. 9 80 70 1. 78 60 50 88. 7 50 1. 85 49. 9 1. 31 40 1. 24 1. 94 50. 9 1. 3 1. 93 53 1. 97 62. 8 72. 4 2. 01 1. 79 2. 03 1. 91 2. 04 1. 97 2. 03 1. 93 2. 03 2 1. 68 1. 56 1. 5 1. 34 % GDP bil CZK Bilion CZK 16 1 30 20 0. 5 10 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Eurostat, ČSÚ; 2018 Connect & Support

17 R&D Engineering Segment • The total investment exceeds 2% of GDP, which is above the EU 28 average • Extensive cooperation between industry and academia through CIIRC, RCMT, other technical Universities • The highest global innovation index in the Machinery segment of CEE countries • The quality of scientific research institutions is the highest from CEE region and equals to many western countries (f. e. Italy, f. Di Benchmark) • Vital role of foreign investors Source: fdi Benchmark Connect & Support

18 Advanced Manufacturing Research Centers • RCMT is the main research base for manufacturing technology in the Czech Republic. Cooperation with the industry is among RCMT's core activities – • Advanced simulation models; • Virtual prototyping and virtual testing; • Development of advanced feed drive control techniques and vibration suppression methods; • Application of unconventional materials and structures; • Advanced monitoring and diagnostics of machine tool condition; • Compensation of machine tool thermal errors and design of additional measuring systems; • Multi-axis machining technology; • Minimizing the environmental impact of machine tool operation. Connect & Support Source RCMT, 2017

19 Czech Institute of Informatics, Robotics and Cybernetics (CIIRC) CTU Prague • Established in 2013 • Start of collaboration with Sungkyunkwan University Korea • Research: • • Cyber-physical systems • Industrial Informatics • Industrial production and automation Projects: • Safe Human-robot interaction • Artificial Intelligence for Large-Scale Computer. Assisted Reasoning • Smart factory • Structures, learning, cognition • Robotic sorter Connect & Support

20 Czech. Invest Connect & Support

21 Czech. Investment and business development agency Business and Investment Development Agency Czech. Invest, is an agency of the Ministry of Industry and Trade. Established in 1992, the agency contributes to attracting foreign investment and developing domestic companies through its services and development programs. • Our Mission • to support foreign direct investment • to develop local companies • to implement business-development programs • to improve the business environment Source: Czech. Invest, 2018 Connect & Support

22 Our services for potential investors • Business intelligence • Consultancy on available financial support for investment projects (investment incentives) • Identification of green/brownfield sites, production facilities and offices • Identification of potential acquisition, joint-venture and supply partners • Tailor-made visits to the Czech Republic • Liaison with government bodies • Aftercare services All Czech. Invest’s services are free of charge as part of the Czech government's business support measures Source: Czech. Invest, 2018 Connect & Support

23 Reasons to invest in the Czech Republic • Strategic location • Innovation and research • Transparent investment incentives • Highly skilled and educated labour force • Well developed supplier base • Tradition of industry • Czech. Invest´s services Source: Czech. Invest, 2018 Connect & Support

Thank you for your attention! Please contact us germany@czechinvest. org D-A-CH Region Operations Tschechisches Haus Martin-Luther-Platz 28 D-40212 Düsseldorf Connect & Support www. czechinvest. org