The following article was contributed by Mr. Jiri Havel, a graduate student of Economics at Yonsei University in Seoul.—Ed.
Cooperation between Czech Republic and Korea can produce future leaders. Czech Republic is a small country that is highly dependent on international trade with other countries.
With most of its trade partners, Czech Republic has a trade surplus, which means that the value of exports from the country exceeds its imports.
A notable exception to Czech Republic’s trade surplus is the Republic of Korea (south). From the UN trade statistics, it is reported that the value of imports from the ROK to Czech Republic is nearly five times the value of exports to South Korea.
In other words, Korean firms sell many products to Czech customers but very few Czech firms sell to Korean customers. Why does this trade imbalance happen? Are Czech products not attractive to Korean customers?
To anyone who is aware of Czech brands and products, the answer to the second question is certainly no. Korean customers are interested in Czech products which can be seen in various examples such as beer. Nearly every convenience store in Korea offers two or more types of Czech beer which is renowned for its long tradition and delicate taste.
Another example, even though not as economically important, is the Czech animated series for children Pat and Mat which gained a lot of popularity among children in Korea.
Besides those products, most Koreans recognize Czech Republic as a popular tourist destination and the capital, Prague, ranks among the top destinations by Korean tourists.
The examples of beer, TV shows, and tourism are easily recognizable to the average person because they can be seen in everyday life.
However, those examples are just tiny fractions of the total trade between the countries and most of the trade value is generated in the business-to-business market in industrial goods.
More than half of all the trade between the countries is in vehicle parts and machinery. Examples of Korean firms in this industry that expanded to Czech Republic are Hankook and Nexen, but most importantly Hyundai that built its first European car manufactory in Czech Republic.
Hyundai produces around 300,000 vehicles per year in its plant and its cars have gained increasing popularity among Czechs. This popularity of Hyundai and other Korean car brands has come in the expense of domestic car manufacturers.
The equivalent to Korea’s Hyundai is Czech Skoda, a car brand owned by the Volkswagen group that is one of the most popular car brands in Europe.
The entry of Hyundai increased the competitive pressure in the European car market which in turn benefits the end consumers the most.
Many Czechs switched to the cheaper and better-equipped Hyundai which surprised the old dominant Skoda. In spite of this rising rivalry between the two car brands, there is potential for future cooperation.
The automobile industry is experiencing a rapid change which comes in various ways such as electric mobility or autonomous vehicles. Both Hyundai and Skoda have attempted to keep up with these trends, but, let us be honest, they are both far behind some of the world’s leading technology firms in this industry.
It is exactly in this area where cooperation between Korean and Czech firms has high potential. Combining the superior ICT industry of Korea and the car engineering resources of Czech Republic, the field of autonomous mobility could be further researched by combining efforts.
In both countries, there is a demand in the market for innovative enterprises that could help those aging car manufacturers to survive in the coming future of mobility.
Furthermore, a potential cooperation can be enhanced by the already existing ties between various Czech and Korean engineering colleges.
In electromobility, the progress of Hyundai and Skoda are more visible, but again, nowhere near the industry leaders.
A particular opportunity in this market can be discovered in Czech Republic’s natural resources. In 2017, a lithium underground deposit was discovered in Prague which is reported to be the largest in Europe.
Lithium is a key element used in electric batteries and car manufacturers increasingly research their capabilities in producing superior batteries for the electric models of their cars.
An opportunity is waiting for a forward-looking enterprise that could utilize the technological and engineering advances of Korea and Czech Republic in future mobility.
By Jiri Havel Graduate student of Economics at Yonsei University.