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Eight tips for doing business in the Czech Republic

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An emerging economy in central Europe, the Czech Republic is less than a quarter-century removed from the dissolution of the Soviet bloc.

On Jan. 1, 1993, a little more than a year after the fall of the Soviet Union, the former socialist republic of Czechoslovakia peacefully separated into the current states of Slovakia and the Czech Republic, both of which have developed high-growth economies as members of the European Union.

The Czech Republic presents numerous opportunities for business and investment across a wide range of growing industries, including chemical manufacturing, electronics, pharmaceuticals and metalworking. However, there are differences between the Czech business climate and what one might encounter in established Western economies.

Here are some things to know when negotiating the business landscape in the Czech Republic.

  • The Soviet legacy still lingers. A byproduct of the paranoia and anti-capitalist rhetoric of the Soviet era, there are still undertones of distrust among Czechs when engaging in business transactions, particularly when it is with a counterpart who is unknown or unfamiliar. Any outside business party will have to exercise a high amount of patience in winning the trust and support of a Czech business partner.
  • Younger Czechs are more progressive. Czech citizens in their 20s and 30s didn’t come of age behind the Iron Curtain, and as such, are generally more open and receptive to Western business partners and practices. Younger Czech partners can prove integral to business relationships, helping to positively influence older Czechs who were brought up in Soviet-influenced Czechoslovakia.
  • Organizational structures tend to be vertical. Another part of the Soviet legacy, Czech businesses tend to be very hierarchical in structure, led by executives and managers who tend to limit interaction with subordinates and issue direct orders that are expected to be carried out, no questions asked. This is in contrast to the Western line of thinking, which places an emphasis on collaboration and flat organizational structures.
  • Taking the initiative isn’t the norm. A North American or Western European supervisor might have to adjust his or her leadership style to coax subordinates out of their shells. The authoritarian business climate has historically shunned the sharing of ideas and gathering input from subordinates. As such, subordinates maintain a “speak when spoken to” mindset, which can be construed among Western business leaders as demonstrating a lack of initiative. However, that isn’t necessarily the case — Czech employees might have simply been coached to keep their mouths shut and do their jobs.
  • Try to communicate with a softer edge. In the U.S. and throughout the West, blunt, direct and opinionated communication is considered normal in business interactions. In the Czech Republic, it’s considered excessive. Czech society deeply values conduct and decorum, to the point that someone will talk around the issue and avoid eye contact as a means of avoiding conflict. Rather than issuing a direct “no” response, Czech businesspeople will often try to steer the conversation in a different direction. Trying to redirect the conversation back to its original direction is often a futile pursuit. Instead, consider tabling the item and coming back to it later.
  • Don’t get pushy. Because of the nonconfrontational communication style and the legacy of distrust in business, a Western businessperson might find it frustrating when he or she receives a lack of verbal or visual cues in a business discussion. Czechs will often sit back and listen to a proposal, and carefully digest it before responding. Someone looking for instant feedback from a Czech business partner may need to adjust expectations.
  • Titles are valued. In particular, academic titles are considered highly prestigious. When addressing a Czech colleague or superior, always utilize a person’s title before the surname, lest you appear disrespectful.
  • Business dress is casual. Beyond finance and law, casual dress is considered acceptable in everyday business settings. However, bear in mind that the Czech Republic exists in a temperate climate, with high degrees of variation between summer and winter conditions. Take note of the seasons and pack accordingly.