Future of the Czech Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

Future of the Czech Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain a market share in the Czech defense industry.

What is the current market landscape and what is changing?

Czech defense expenditure decreased at a CAGR of -5.91% during the review period and valued US$2.15 billion in 2013. The focus of the Czech government will be on peacekeeping operations and counter-terrorism activities

What are the key drivers behind recent market changes?

Peacekeeping operations and counter-terrorism activities are the major drivers of the Czech defense industry.

What makes this report unique and essential to read?

The Future of the Czech Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

Key Features and Benefits

• The report provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators, and also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas
• The report includes trend analysis of imports and exports, together with their implications and impact on the Czech defense industry.
• The report covers five forces analysis to identify various power centers in the industry and how these are expected to develop in the future.
• The report allows readers to identify possible ways to enter the market, together with detailed descriptions of how existing companies have entered the market, including key contracts, alliances, and strategic initiatives.
• The report helps the reader to understand the competitive landscape of the defense industry in Czech Republic. It provides an overview of key defense companies, both domestic and foreign, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.

Key Market Issues

• With a defense budget of US$2.4 billion, the Czech Republic invests a relatively small portion of its GDP towards defense in comparison with other European countries such as France and the UK. The country's defense budget is expected to expand marginally over the forecast period. Currently, capital expenditure accounts for only 22% of the country's total defense budget, which translates to a reduced allocation for the purchase of equipment and high-technology arms and ammunition. Consequently, the country's relatively small defense budget has become a barrier to entry for foreign companies. In addition, the supply of equipment from domestic defense companies is more than adequate to fulfill Czech defense requirements. This is a factor that causes many domestic companies to focus on the export of their products to other countries with more attractive opportunities and larger defense budgets. Although the country maintains an open economy and provides a number of investment incentives, a small defense budget, along with the existence of domestic companies with the ability to meet the requirements of the domestic defense industry, act as a key challenge for foreign companies interested in entering the Czech defense industry.
• Corruption has become a major obstacle for foreign companies aiming to enter the Czech domestic defense market, as it can result in unfair contract awards. In November 2010, former US ambassador to Prague, William J. Cabaniss, and the head of the Tatra's company supervisory board made allegations against former Czech deputy defense minister Martin Bartak. It was alleged that Mr. Bartak requested a large sum of money to settle problems faced by Tatra in connection with a 2008 military order. In February 2011, the Czech anti-corruption police proposed that charges be brought against 54 people; they were to be prosecuted for the extensive manipulation of public orders by the Defense Ministry during 2005-2007. Those involved included Defense Ministry employees and organizations that fell under its direct control. Whilst these have been relatively isolated case, it does indicate the extent to which corruption might prevail in the country, and has caused the Czech Ministry of the Interior to maintain a high level of focus on anti-corruption activities.

Key Highlights

• Foreign legal entities are allowed to conduct trade activities, including the acquisition of real estate, under the same conditions, and to the same extent as Czech companies. The establishment of a subsidiary provides the foreign company with easy access into the defense market, and assists in their connection with domestic companies as a number of the country's defense companies specialize in aviation services. Market entry through the formation of a subsidiary is a popular entry route into the Czech defense industry
• The Czech Republic imports the majority of its defense equipment from Spain, Austria, and the US. As fellow members of the European Union, Spain and the Czech Republic share a strong trade relationship. The Czech Republic has signed a leasing agreement with Sweden for the supply of 14 Swedish Gripen jet fighter airplanes during 2005-2015; Sweden's share of the country's overall arms imports is expected to increase over the forecast period as the lease deadline is achieved. The other main import partners of the Czech Republic include the US, Italy, Austria, and Germany.
• During the period 2008-2012, aircraft and armored vehicles accounted for 92.4% and 3.8% of the Czech Republic's arms exports respectively. The share of aircraft in the Czech Republic's overall defense exports increased from 92.4% in 2008 to 100% in 2011 due to an increase in exports to Afghanistan as a result of the Czech Republic's participation in peacekeeping operations in the country. During the forecast period, Czech defense exports are expected to grow, largely as a result of a number of deals that are expected to commence during the period such as the deal with Iraq for 28 L-159 trainers.

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