This report is the result of SDI's extensive market and company research covering the Czech defense industry. It provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.
Introduction and Landscape
Why was the report written?
The Czech defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Czech defense industry.
What is the current market landscape and what is changing?
During the review period, the Czech Republic's defense expenditure ordered a CAGR of -6.8%, with declining defense budget due to the global economic crisis. The defense budget, which stood at 1.1% of GDP in 2012, is expected to decrease to 1% by 2017, as the country's GDP growth rate is expected to outpace its defense expenditure growth rate; however, the defense budget is expected to marginally increase over the forecast period as the Czech economy recovers from the impact of the financial crisis. During the review period, the country's capital expenditure allocation stood at 13.8% of the total defense budget, and is expected to increase to 15.2% over the forecast period due to reduced equipment purchase allocations and the utilization of the proceeds of sales of obsolete equipment for the procurement of new equipment.
What are the key drivers behind recent market changes?
Peacekeeping operations and the prevention of terrorism are expected to drive defense expenditure over the forecast period. The Czech Republic shares borders with Poland, Germany, Austria, and Slovakia, and is a landlocked country. As it is surrounded by European countries with which it has cordial relations, the country has no border disputes and does not face significant threats to its national security. The Czech Republic is a member of NATO and the UN, and therefore supports overseas peacekeeping operations; in addition, the country depends on international co-operation to prevent and face future threats to its national security.
What makes this report unique and essential to read?
The Czech Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 provides detailed analysis of the current industry size and growth expectations from 2013 to 2017, 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 2013 to 2017, 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.
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 the UK and France. The country's defense budget is expected to further grow 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 the Czech defense industry, corruption has become a major obstacle for foreign companies aiming to enter the 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 company supervisory board made allegations against former Czech deputy defense minister Martin Bartak, alleging that Mr. Bartak requested a high sum for settling Tatra's problems with a military order in 2008.
Key Highlights
Czech defense expenditure declined at CAGR of -6.8% during the review period, to reach US$2.2 billion in 2012. During the forecast period, the country's defense expenditure is expected to improve marginally, with a CAGR of 2.2%, and to reach US$2.41 billion by 2017. The country's cumulative defense expenditure over the forecast period is expected to be US$11.52 billion, of which US$9.77 billion is expected to be invested as revenue expenditure, while the remaining US$1.75 billion is expected to be spent on equipment and infrastructure development costs. In 2010-2011, the Czech defense budget declined steeply due to the global financial crisis and proliferating government debt, and it is expected to register further decline in 2012 due to the government's decision to reduce defense expenditure; however, the decline in the defense budget during 2011-2012 is -10.69% and the pressing need of new procurements will lead to growth during the forecast period.
The Czech Republic's homeland security budget, which covers the police services, fire protections services, law courts, prisons, and research and development, stood at US$16.5 billion during the review period; however it is estimated to decline to US$14.5 billion over the forecast period. The country's homeland security budget is expected to be driven by the prevention of extremism, illegal drug trafficking, espionage, and illegal migration. In order to counter the threats posed by such criminal activities, the Czech Republic must invest in surveillance and intelligence technologies such as electronic identification documents, e-passports, automated border crossing systems and CCTV (closed circuit television) systems.
During the review period, defense equipment imports declined due to budget cuts by the Czech government reeling under the impact of the economic crisis; however, in 2011,defense imports shot up to US$78 million, which is an indication of the recovery of imports in the near future. In 2015, which is the life-cycle expiration of several expensive systems, a possible modernization process is expected to be undertaken, which is anticipated to lead to higher imports over the forecast period.
Table of Contents
Table of Contents
1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence (www.strategicdefenceintelligence.com)
2. Executive Summary
3. Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. Czech defense expenditure expected to register growth over the forecast period
3.1.2. Peacekeeping operations and terrorism to drive defense expenditure over the forecast period
3.2. Analysis of Defense Budget Allocations
3.2.1. Revenue expenditure account for majority of the Czech defense budget
3.2.2. Defense budget as percentage of GDP expected to decrease over the forecast period
3.2.3. Central support and administration expenditure account for the majority of the Czech defense budget
3.2.4. Greater Budget Allocation to Land Forces Compared To Air Force
3.2.5. Capital Expenditure in Air Force spending is expected to decrease in forecast period
3.2.6. Central support and administration expenditure to decline over the forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. Homeland security budget projected to decrease over the forecast period
3.3.2. Police and fire protection services expenditure to decrease during forecast period
3.3.3. Extremism, drug trafficking, espionage and illegal immigration to drive homeland security market
3.3.4. The Czech Republic considered at 'low risk' of terrorist attack
3.3.5. The Czech Republic experienced low terror activity during the review period
3.4. Benchmarking with Key Global Markets
3.4.1. Czech defense budget expected to register marginal growth over the forecast period
3.4.2. Czech military expenditure is limited compared to countries with the largest defense expenditure
3.4.3. The country allocates a lower percentage of GDP to defense than other NATO members
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Sensor imports to rise over the forecast period
3.5.2. Military transport aircraft will provide attractive market opportunities
3.5.3. Demand for wheeled armored personnel carriers to increase
3.5.4. Medium off-road trucks expected to create new market opportunities
4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports expected to be to grow over the forecast period
4.1.2. Spain along with Austria and US account for the majority of the Czech defense imports
4.1.3. Aircraft and armored vehicles are the largest imported military hardware
4.2. Export Market Dynamics
4.2.1. Defense exports registered a decline during the period 2007-2011
4.2.2. Afghanistan and Russia are the largest importers of Czech arms
4.2.3. Aircraft and armored vehicles account for significant portion of exports
5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of supplier: low to medium
5.1.2. Bargaining power of buyer: high
5.1.3. Barrier to entry: medium
5.1.4. Intensity of rivalry: medium to high
5.1.5. Threat of substitution: low to high
6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Offset policy aids the development of the domestic defense industry
6.1.2. The Czech Republic allows XX% foreign direct investment in defense sector
6.2. Market Entry Route
6.2.1. Subsidiaries and branch offices provide attractive market entry routes
6.2.2. Foreign OEMs enter the market through the acquisition of domestic defense companies
6.2.3. Foreign OEMs enter into the market through the formation of consortiums and product development agreements
6.3. Key Challenges
6.3.1. Limited defense budget limits the market entry of foreign companies
6.3.2. Corruption acts as an obstacle for market entry
7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Key Domestic Companies
7.2.1. Aero Vodochody A.S.: overview
7.2.2. Aero Vodochody A.S.: products and services
7.2.3. Aero Vodochody A.S.: recent announcements and strategic initiatives
7.2.4. Aero Vodochody A.S.: alliances
7.2.5. Aero Vodochody A.S.: recent contract wins
7.2.6. Aero Vodochody A.S.: financial analysis
7.2.7. Lom Praha s.p.: overview
7.2.8. Lom Praha s.p.: products and services
7.2.9. Lom Praha s.p.: recent announcements and strategic initiatives
7.2.10. Lom Praha s.p.: alliances
7.2.11. Lom Praha s.p.: recent contract wins
7.2.12. VOP 025 Novy Jicin, s.p.: overview
7.2.13. VOP 025 Novy Jicin, s.p.: product and services
Figure 83: Czech Republic Fixed line calling cost local (Euro per 10 min call), 2001-2010
Figure 84: Czech Republic Fixed line calling cost National (Euro per 10 min call), 2001-2010
The Czech Defense Industry - Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017 published by Strategic Defence Intelligence in November 6, 2012. This report consists of Pages: 136 and the price starts from US $ 1250.
