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Home » Archives » Business

Vietnamese state company expands into ČR

Close ties between countries helps Asian nation gain a stepping stone to Europe

By Kristina Alda
For The Prague Post
April 11th, 2007 issue

Jan Přerovský/THE PRAGUE POST
Kunert says Constrexim is "just starting."
Ask any Czech about Vietnamese entrepreneurial activities in the Czech Republic and he or she will most likely rattle off a litany of clichés about open-air market stalls selling inexpensive brand-name knockoffs.
This irks Nguyen Huu Loi, director of the Czech branch of Constrexim Holdings, a Vietnamese real estate company that has had a toehold on the Czech market since 2004. “It’s still a common image that Vietnamese people are just trying to make money by selling cheap clothes,” says Nguyen. “But the Vietnamese are also starting to make big investments here.”
Jan Přerovský/THE PRAGUE POST
Constrexim's Czech branch, 51 percent of which is owned by Vietnam, plans a series of developments.
In an interview with The Prague Post, Nguyen confirmed recent reports that Constrexim, a large state-owned company, plans to significantly step up its investments in Europe, beginning with the Czech Republic.
The company signed a contract with the Czech investment company Lofidami Group for projects in Brno and Prague totaling around 840 million Kč ($40 million) during President Václav Klaus’ visit to Vietnam last fall. Another 200 million Kč project in Mariánské Lázně, west Bohemia, is also in the works.
Constrexim may be the first large Vietnamese investment in the Czech market, but it’s not likely to be the last.
Recent years have seen a flurry of economic activity between the countries. The robust economic growth of both countries, the Czech Republic’s recent European Union accession, communist Vietnam’s gradual transition from a centrally planned economy to a market economy and the historic ties between the two nations are all important factors driving the trend, says Aleš Uchytil, an economist at the Industry and Trade Ministry’s department of international trade.
“It’s a market we know very well,” Nguyen says. “When you do business, you have to start with what you know.”
Nguyen certainly knows the Czech Republic. He has been living here since 1988, when the Vietnamese government sent him to apprentice under a Karlovy Vary porcelain manufacturer. He decided to stay, eventually founding his own porcelain company.
His office, a 10-minute drive outside Karlovy Vary, west Bohemia, reflects his ties to both countries: Wooden hand-carved Buddha statuettes sit on a shelf next to Czech-manufactured cups, saucers and teapots. On a wall nearby hangs a family portrait of his Czech wife and his three sons.
Constrexim is Nguyen’s latest venture. He owns 49 percent of the Czech branch of the company. The Vietnamese government owns the rest.
Building bridges
Vietnam’s economy grew 8.17 percent last year; along with China, it’s one of the fastest-developing Asian countries. The Czech economy, meanwhile, continues to grow at a steady rate, averaging 6.1 percent last year, well above the EU average.
Recent years have seen the Vietnamese government relax its grip on investment and trade abroad, as well as on foreign investment in Vietnam. This January, Vietnam joined the World Trade Organization — another sign, economists say, that Vietnam is well on the way to becoming a free-market economy.
These recent developments mean that the Czech Republic can expect more Vietnamese investment in the future, says Pham Si Van, head of the business department of the Vietnamese Embassy in Prague. He notes that the trend works the other way as well: Czech companies are becoming increasingly interested in the liberalized and rapidly expanding Vietnamese market.
Most recently, during a trade trip to Vietnam April 5, a delegation from the Chamber of Deputies announced several initiatives it was developing with the Vietnamese, including direct flights to Hanoi, the opening of Czech-backed banks and the construction of a 500 megawatt power plant.
Vietnam and Czechoslovakia had strong economic and cultural ties for decades, with both communist governments sponsoring cultural and student exchanges between the countries. Throughout the 1970s and 1980s, hundreds of Vietnamese students came here to study or to train with state companies. Some, such as Nguyen, ended up staying.
This helped pave the way for an influx of Vietnamese entrepreneurs arriving in the 1990s after the Velvet Revolution. Today, an estimated 36,000 Vietnamese live in the Czech Republic, according to Uchytil. Many run small businesses, selling food and textiles.
The long-standing ties between the countries have given the Czech Republic a leg up in cracking Vietnam’s market of 84 million potential consumers.
“The Vietnamese people who have lived here since the ’80s are helping build bridges between the business communities of both countries,” says Pham from the Vietnamese Embassy.
Pham expects more Vietnamese state companies like Constrexim to enter the Czech market within the next few years.
Testing the waters
So far, Constrexim is still feeling out the market, starting with smaller projects in regional cities. Its first major project here was a recently completed residential development on the outskirts of Karlovy Vary. The company invested some 43 million Kč into developing 40 lots. Nearly half of the lots have now been sold to the municipality, which began constructing single-family houses on the properties.
Next up is the Mariánské Lázně project, where Nguyen plans the construction of 120 to 150 apartments. The project is still awaiting municipal approval.
Despite having lived here for nearly 20 years, speaking fluent Czech and regarding Karlovy Vary as his home, Nguyen still can’t get used to the sluggishness of Czech bureaucracy.
“It takes a year just to get the ground plan approved,” he says with some exasperation. “With the Marianské Lázně project, we have everything ready, but we’re still waiting for the necessary paperwork to move forward.”
Also in the works is the constuction of warehouse facilities in Mariánské Lázně and Brno.
František Pavel Kunert, Constrexim’s architectural director, who works closely with Nguyen, says the company has purposefully not focused on just one area of the real estate market.
“It’s important to remember that this company is just starting out. We’re in the mapping out stage,” he says. “We’re still developing contacts and testing the waters.”
Which isn’t to say Constrexim doesn’t have big plans. The directors of Constrexim back in Vietnam see the Czech Republic as a gateway to investment in the rest of Europe. Once firmly established on the Czech market, Constrexim plans to fan out across the EU.
“This is just the first step,” Nguyen says.

Kristina Alda can be reached at kalda@praguepost.com


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