DEVELOPMENT OF TRADE IN CZECH REPUBLIC IN 2004

Transcription

1 DEVELOPMENT OF TRADE IN CZECH REPUBLIC IN 2004 MAY 2005 DEVELOPMENT OF TRADE IN THE CZECH REPUBLIC IN 2004 The yearbook Trade in the Czech Republic in 2004 links to the previous analogical publications based on continuous analysis of trade development and related industries of the national economy, including their impacts on the living standard of households in the Czech Republic. In the effort to ensure the latest available information related to 2004, the Yearbook works with data available at the time the book was being prepared as well as with preliminary data or estimates. Ultimately, it shows the key phenomena and trends of the recent period in order to be immediate statisticaleconomic service providing valuable information to the trade management, top business institutions, central state and regional administration and the training process in both educational and business areas. Methodologically, the publication, as usual, relies on the analyses of secondary data released by the state statistical service and findings received from advisory and consultancy companies engaged particularly in trade, and from education area. It also results from continuous authors contacts with Czech Statistical Office, Ministry of Industry and Trade, Ministry for Regional Development and Czech Confederation of Commerce and Tourism (SOCR CR). The publication also complies with the statistical-economic service rendered by the Czech Confederation of Commerce and Tourism on its website. As far as methodology is concerned, the Yearbook respects the valid standard classifications, registers, code lists, observed by the economic activities in the country and harmonized with the EU documents and materials. Individual entities are classified according to their prevailing activities, i.e. mostly within CZ-NACE G and H. To specify the data in the followed time series, the authors appreciated publication by the Czech Statistical Office from March 2005, code , and in order to get revised data in the time series 2002 and 2003, the appropriate branch of the Czech Statistical Office provided specifically data on trade, hotels and restaurants (July 2004). The Yearbook draws the data from I. IV. quarter 2004 on non-financial business (code ), from quarterly issued publications on households account statistics, new time series indicators on receipts development in retail according to months and in the structure according to OKEC on trade, hotels and restaurants. The publication is also based on data from wide range of press and mainly web site materials of the Czech Statistical Office according to its editorial activities. In particular parts, The Yearbook draws the data from regularly quarterly published publication Macroeconomic prediction of the Czech Republic by the Ministry of Finance. The publication is also based on data from materials of Ministry of Industry and Trade, including usual data on small and medium business activity development prepared for the government and Chamber of Deputies of the Parliament of the Czech Republic. As to the accessible and up-to-date important information on trade, information on retail sale development proves to be urgent, as census from 1998 has become outdated.

2 Besides the state statistics, the Yearbook draws from sources furnished by foremost consultant firms, (particularly GfK Praha, Incoma Research, ČON, Sapiens, MAG Consulting i.e.) engaged in the research of market, business, economic and trade evaluation and prediction made by central authorities (mainly The Ministry of Finance and Ministry of Labour and Social Affairs) and by banking area. It also uses domestic and foreign specialized literature, professional journals focused on the issues of economy and trade, professional conferences on issues of commerce, hotels and restaurants and tourism including the conferences on trade and tourism organized in 2004 and 2005, in particular the 10 th and 11 th year of the Conference on Trade Development in CR (Czech Retail Summit), the Economic Forum on trade and tourism organized in October 2003 and 2004 and the 5 th and 6 th Conference on Tourism Development (April 2004, 2005). The Yearbook concentrates on key phenomena and problems of trade and domestic market in macro-and selected micro- relations. It pays special attention to statistic information and analyses in connection to the EU accession and comparisons or parallel phenomena in the EU member countries. In order to keep links to the previous yearbooks and to take into account the generally given scope, the Yearbook 2004 aims at priorities in the development, trying however to present an overall picture of the development of the following spheres: Macroeconomic relations of the development of trade in 2004 Development in business structures and distribution networks Aggregate economic results of trade, development of employment and remuneration in trade in 2004 Influence of large-sized business (trade chains) on development of trade and a role of smaller and mediumsized business, position of independent trade Development of domestic (consumer) market and final consumption of households Foreign trade development Relations of foreign trade and tourist industry development. Providing basic information and their analysis the emphasis is put on economic views and comparisons in the time series of development. The text part of the Yearbook includes brief numeric overview and charts and is linked with large table appendix. Both the text part and authors evaluations of phenomena result from consultations and discussions with central authorities, consultant and advisory firms and contacts with foremost confederations, unions and associations in trade or other area (among others Economic Chamber of the Czech Republic, Confederation of Industry of the Czech Republic, The Association of Czech and Moravian Consumers Co-operatives SCMSD, National Federation of Hotels and Restaurants of the Czech Republic, HO.RE.KA., Spolhost, Unihost etc.). Macroeconomic Relations of the Development and Position of Trade The economic results in 2004 have to be considered along with the launched public finance reform and fulfilment of expectation concerning entry of the country into the European Union in May The results of the EU entry were mainly positive and it is necessary to link them with favourable economic development both in Europe and worldwide. The economy of the Czech Republic reached faster dynamics the GDP in 2004 increased by 4 %. Quality of the GDP growth changed, being supported by investment activities and substantial export growth. On the other side, the final consumption slowed as a result of reform steps and inflation development (from zero rate in 2003 to 2,8 % growth in 2004). The final household consumption slowed on half compared with 2003, the final consumption in state and public institutions felt below the 2003 level. The economic profits were accompanied by better income situation in business in general and in trade. The most negative impact of reform is the basic VAT rate imposed on catering services, which caused, along with such consumer price growth, that the real receipts slowed. The retail trade reached triple digit growth of receipts, the motoring-related trade suffered from fall of new car sales and continuing increase in fuel prices. The wholesale trade recorded substantial growth, in particular in connection with international trade. Better results proved in the course of year in tourism, mainly in incoming tourism; number of visitors at collective accommodation establishments rose by almost one fifth, being accompanied with increase in foreign tourism income by 6 %. Available evaluation of the development proves that the trade, hotels and restaurants in 2004 managed to keep its position in key economic criteria and relations of the previous years in the national economy. It is apparent in particular in the share of GDP on employment, where the trade rather strengthened its position and business structures prove that fact. The wages development stayed bellow the average of that in the national economy, as it was in the past. Next parts 2

3 of the text include features of the position of trade in the economy: Share of trade, hotels and restaurants (NACE G and H) in %: gross added value (in current prices) 15,5 14,7 14,1 14,1 employment in national economy, incl. self-employed entrepreneurs 16,2 16,6 16,9 17,1 employment of women in national economy 20,3 20,6 20,6 20,4 share of entrepreneurs in total number of employees 27,3 27,7 27,6 26,3 the number of entrepreneurial units in national economy (RES) 35,3 35,5 34,1 33,7 relation of average wages in trade (G) to average wages in national economy 96,4 96,3 92,9 94,7 relation of average wages in hotels and restaurants (H) to average wages in national economy 56,1 51,3 55,0 59,1 Source: Czech Statistical Office, MAG Consulting In the context of the country s accession into the EU, the Yearbook also presents some basic economic and market comparisons with the other EU member countries. Available sources provides following review on GDP development (y-o-y growth in % in constant prices) in the European Union and in selected countries in Europe and worldwide: GDP growth v % v s. c estim predikce EU ,6 1,7 1,1 0,9 2,3 2,2 EU 15 3,6 1,7 1,0 0,8 2,2 2,0 Euro zone 3,5 1,6 0,9 0,5 2,0 1,7 Germany 2,9 0,8 0,1-0,1 1,6 1,2 France 4,0 2,2 1,0 0,5 2,4 2,1 Great Britain 3,8 2,1 1,6 2,2 3,0 2,6 Austria 3,4 0,8 1,4 0,7 1,9 2,0 The Czech Republic 3,9 2,6 1,5 3,7 4,0 4,0 Hungary 5,2 3,8 3,5 3,0 4,0 3,9 Poland 4,0 1,0 1,4 3,8 5,4 4,5 Slovakia 2,0 3,8 4,4 4,2 5,5 5,2 United States of America 3,7 0,8 1,9 3,0 4,4 3,5 Japan 2,8 0,4-0,3 2,5 2,7 1,7 Source: The Finance Ministry, OECD Development of Business Structures and Distribution Networks As the year 2004 proved, the forming process of organisation architecture of trade has obtained more and more qualitative elements, i.e. instead of significant changes in total numbers of organisation units or entrepreneurs, there have become more visible differences in characteristics of individual categories or entrepreneurial groupings, in commercial and economic efficiency, encompassment of new, especially electronic technologies and competitiveness on the market. Internationalisation in business structures of trade has become a constant phenomenon, though this process has modified in the way that the business environment has been influenced by globalisation elements rather than by a further increased number of firms under foreign control. Hence some strong companies act also on other EU countries. It is quite characteristic of this period, that discount units strengthen their position in the competition with new forms of business units. It is also characteristic phenomenon, that a lot of smaller and medium-sized Czech business entities, being pressed by competitive environment and endeavouring to ensure a good position on the market, applied various forms of co-operation business, associated in business alliances of a purchasing and retailing character, creating thus units capable of an adequate marketing in competitive environment, particularly that of retailing, hotels and restaurants. Such co-operating associations are formed in a co-operative form, applying franchising and other forms of contractual or otherwise bound connection of independent traders (though their independence often becomes quite relative). In spite of an increasing dominant role of large trade chains, usually under foreign control, smaller and mediumsized business realised the prevailing volume of sales receipts in 2004, mainly in motoring-related trade, in the 3

4 wholesale and in hotels and restaurants. The dominance of large-sized companies was growing up in business undertaking, especially in retailing and in affiliated wholesale activities. Market share or share on realised receipts represent the position of various types of categories of companies concerning their size. In both trade and hotels and restaurants the share of companies with 100 and more employees grows while number of companies with 0-99 employees decreases and the category employees kept its position. The indicated process is more substantial in retail sale, where companies with 100 and more employees make up more than 40 %, including multinational companies with 70 % share. category of companies Index incomes excl.vat 2003/2 Index incomes excl.vat 2004/03 Year 2002 % shares Year 2003 % shares Year 2004 % shares all types of companies 105,1 109,3 100,0 100,0 100,0 G 50,51, and more empl. 111,4 117,1 28,9 30,6 32,8 trade 0 99 employees 102,5 105,9 71,1 69,4 67, employees 105,9 108,0 30,9 31,1 30,8 all types of 103,7 103,8 100,0 100,0 100,0 companies H 55 hotels, 100 and more empl. 113,3 108,8 17,8 19,5 20,4 restaurants 0 99 employees 101,6 102,5 82,2 80,5 79, employees 104,1 117,1 13,9 13,9 15,9 The dynamics of large multinational corporations stabilized rather in the past years; nevertheless predictions proved true that mainly in food industries and day-to-day goods they would gradually reach a decisive - double thirdshare and influence on the general development of trade, especially in retailing. The increasing role of large-sized business, particularly chains, also resulted in a higher quality of relations between the trade and its suppliers in the free competition, when on the side of production one could follow concentration and internationalisation trends especially in day-to-day goods with a view to ensure their sales, and to reduce distribution costs. Suppliers enter into a direct cooperation with the trade and vice versa, which is enabled mainly thanks to an intensive use of mutual electronic communication in logistics of supplies and commercial-administrative interconnection. Like in previous years, the main sources of the development of business in trade, hotels and restaurants are represented by business registers (Licensed Business Register - ŽŽ MPO and Register of Business Entities of the Czech Statistical Office RES ČSÚ), which constantly gather all the relevant data. Both the registers record new business entities or issued licensed business authorizations (ŽO), though they include not only those really active business entities or really used authorizations, but also those that do not show any business activities in this period. Multinational (chain) retailing firms as well as domestic ones, trade companies and co-operations connect their activities with investments and expand their trading capacities especially in a form of large-capacity formats such as hyper-markets (as many as over 160 units in the Czech Republic in 2004), supermarkets, discount units, hobby-markets, a large network of specialized non-food stores according to the assortment orientation etc. When concentrating such big units with shops of smaller and medium-sized business and services like in many foreign countries, various urban and suburban multi-functional shopping centres and zones come into existence (in the Czech Republic about 60 various types). The biggest trade alignment at the internal market in 2004 were consumers co-operatives joined together into the Association of Czech and Moravian Consumers Co-operatives (SČMSD). Co-operatives reached the volume of CZK 27 billion in retail trade in 2004 in 3,100 own and 1,300 leased selling units; employees of the co-operatives exceeded the number 16,3 thousand, the number of member co-operatives amounted to about 340 thousand. Consumers cooperatives ran six own trade chains in 2004 with more than 400 selling units of various formats, which reached over 9 billion CZK receipts. Important integrative role in cooperative integration played centralized wholesale trade in two stores COOP (Centrum, Morava), with receipts of CZK 10,4 billion, or CZK 2,9 billion. Analogous to previous years, the year 2004 witnessed a slow-down of the expansion of big trade chains as well as activities related to the solution of a co-existence of smaller and medium-sized businesses (SMSB) in the trade, or the 4

5 so-called independent trade, with big companies. There have also increased the activities of both the businessmen of SMSBs, following mainly various forms of co-operation and association to carry out trade activities, and central authorities, following the support of SMSBs to maintain the proportionality of individual segments of entrepreneurship and trade networks. This concerns the alliances in the area of joint purchase activities or voluntary chains of retailers with joint wholesale and further joint activities supporting their position in the market. As to the support of SMSBs provided by the state in the area of trade within generally valid supporting programmes - suitable programmes for trade in various forms of grants and returnable support were also declared in 2004 in volume of almost CZK 1 billion. Hotels and restaurants continued in 2004 to enhance the quality of their network of establishments for catering and transient stays; chain firms both in hotels and restaurants asserted themselves, a lot of them being of an international character. Economic Results of the Trade In 2004, the internal market developed in very dynamic way; receipts in trade (without GDP) in current prices increased by 9,3 % supported by general national economic dynamic, high growth in international trade and increase in household incomes and favourable conditions for use of credits on purchases in retail sale. Other economic indicators of trade, hotels and restaurants were also affected by the rise in receipts. Indicator - y-o-y index 2004/03 CZ- NACE G trade of this CZ-NACE CZ-NACE H hotels Recipes in current prices (without VAT) 109,3 108,1 112,6 103,4 103,8 Average number of active enterprises Average number of working persons x) 100,7 99,1 101,3 100,7 100,9 Average number of employees 101,1 98,7 101,7 101,2 101,4 Average monthly wages in CZK Activities 114,4 120,5 118,1 105,5 103,7 Activity consumption 119,2 126,5 123,8 106,5 102,4 Book added value 108,8 112,0 111,0 104,5 106,1 x) incl.self-employed entrepreneurs The employment in trade remained stable in 2004 and it decreased only in motoring-related trade. The share of entrepreneurs in the total number of working persons in trade dropped slightly. Further growth was reached in the development of average wages in both trade and hotels and restaurants in 2004 and was in mutual relation with the growth in efficiency and productivity. The indicators of activities, activity consumption and total book added value increased and corresponded with the positive economic results of the country. The economic results improved compared to 2003 as show substantially better results of large-sized business and increase in number of profitable companies. Development of Domestic Market and Final Consumption The year 2004 recorded an increase in retail sales and motoring-related trade by 2.5 % (in constant prices) along with growth in the index of consumer prices (inflation) by 2.8 %. In retail sales, receipts increased by 3 % in constant prices. The structure of receipts for foodstuffs was affected by price growth and receipts increased by 2,6 % in constant prices. Non-food goods reached 3,3 % growth in receipts accompanied by slightly decreasing price level. The highest sales reached repeatedly the wholesale sales unit of both multinational and domestic companies (chains). Sales in motoring-related trade (1.6 % growth in constant prices) were affected by the decrease in sales of new automobiles and by the development of sales and prices of fuel. Index of consumer prices increased in 2004 by 3.4 %, while hotels and restaurants recorded a growth of 5,9 %; catering with higher VAT rate recorded price increase by 8 % after 1 May. Incomes of average household showed a nominal increase in 2004 by 3.9 % and real increase by 1 %. The expenditure growth was slower by 2,5 % in nominal numbers and there was stagnation in real numbers related to inflation. The final household income in retail market 5

6 reached 60 % of the total. The structural development of the final consumption of households on a basis of the statistics of family expenditure surveys (SRÚ), illustrates gradually a structure of final consumption of households of higher quality. The share of retail realisation in family expenditures on consumption has gradually reduced. Expenditures on housing and recently on communication and telecommunication etc. show a constantly higher rate of growth, though they do not belong to the retail market. A general purchasing atmosphere, considerably higher use of credits on consumer purchases and departure from savings were significant factors of home demand. Results of Foreign Trade and Tourist Industry General results of foreign trade are traditionally included into the Yearbook for their key significance in the economy as a whole and for their close connection to the economic results of business entities, especially the establishments engaged in wholesale activities (CZ-NACE 51) and in other sectors of trade industry. Foreign trade in 2004 was characterized by trade transformation within the EU and towards third countries on one side and by significant growth of its turnover on the other side. Under these circumstances, the trade balance deficit decreased significantly. Thanks to the international trade, the offer on national domestic market reached higher quality. Foreign trade was orientated mainly on developed countries, particularly on EU member countries, among them on Germany. An intensive strengthening of the Czech koruna rate reflected in the general development of foreign trade relationships. The tourism development was positive in particular in incoming and it has positive effects on economic results of the hotel industry. Both outgoing and domestic tourism developed positively as well, although the reserves remain still in tourism development in the Czech Republic. Foreign trade along with tourism had positive impacts on the balance of payments of the country. * * * 6