Country Focus
March 2010
Thumbs Up Change of attitude needed as direct selling becomes more acceptable
The natural reticence of the Czech people combined with a lack of knowledge of direct selling has seen comparatively slow growth in this market. Nonetheless the future looks bright, as Judith Wojtowicz discovers.
IN the 20 years since Communism was swept away the industry has steadily established itself here as multinationals promote high standards and people explore the opportunities to become financially independent.
Reluctant to do anything that might be seen as being ‘too forward’, it has taken a while for the local population to embrace and understand the benefits and potential of this way of working. For many there is still the feeling that a conventional job offers more security. Lenka Halkova, General Manager of Vorwerk, believes this is a challenge for any direct selling organisation entering the country. As she explained: “Direct sellers are self-employed and this is a big difficulty for the Czech mentality. After a long history of Communist state control the people prefer a secure job as an employee.
“At the same time they are afraid of leaving their current job, even if they are dissatisfied and have a low salary, because they believe direct selling does not offer career prospects. The word ‘entrepreneur’ does not have such a good reputation here and in my experience there is not the same ambition as in some other countries although I believe the younger generation has a different opinion.”
Fact FilePopulation: 10 million |
Her view is shared by many other companies who point to the fact that privately-owned business was banned after 1948 despite direct selling having been on the scene prior to the war thanks to pioneers such as Lux. While in neighbouring countries the local barber or grocer was tolerated, in the former Czechoslovakia entrepreneurship of any kind was illegal.
The situation changed after the so-called ‘Velvet Revolution’ in the early 90s following the dramatic political changes of 1989 which inevitably had an impact on economic and social conditions across central and eastern Europe.
Direct selling organisations were quick to seize the opportunity, entering this new market to meet a growing need for all things western, not previously available. Companies like Zepter, Vorwerk and Avon came together to form a professional organisation (see Letter from DSA Page 18) with the primary objective of educating people and raising awareness.
Today, the Czech Republic is one of the most stable and prosperous of the post-Communist states thanks partly to its desire to maintain an open investment climate, a key element of its transition to a functioning market economy of which direct selling is now an integral part.
As a member of the European Union (since 2004) it is considered an attractive option for foreign investment thanks to a well educated workforce, relatively low cost structure and central location in the heart of Europe.
Despite the global financial crisis the conservative financial system has remained relatively unaffected compared to many of its neighbours. While the economy fell sharply in the last quarter of 2008, this was due mainly to a drop in demand for Czech exports from western Europe, a situation which has stabilised.
Chairman of the Direct Selling Association (DSA) Jan Stransky says more and more people are starting to consider direct selling as a good opportunity for running their own business with little or no risk. Conditions are friendly with no legal obstacles and a growing public awareness. “The industry is subject to our general legislation and civil code, and since the adoption of the Unfair Commercial Practices directive in 2008 we have not encountered any issues,” he added.
