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1.2 The Czech consumer profile

The Czech Republic has a population of 10.5 million, slightly more than the 10 million-strong Hungary, but far less than Poland which has a population of nearly 40 million. While children and teenagers aged below 20 account for 20% of the population, retired people aged 60 or above account for 22%. Still people aged between 20 and 59, who are largely considered the working force, account for some 58% of the population. Nevertheless, the country is facing an aging problem in view of a declining birth rate, as today’s Czech couples prefer to have fewer children. In fact, the average age has been increasing year after year, from 39.0 in 2001 to 40.6 in 2009.

Although the preference for fewer children may seem to hinder the growth of the children’s product market, average Czech parents have become more willing and able to spend more on each child. Coupled with the fact that Czechs have a higher income in the region, Czech parents thus tend to buy relatively better quality products at higher prices for their children, although the saleable children’s products may still be considered lower-priced items when compared with their Western European counterparts.

Chart: Czech Republic's population distribution, 2009

Although the Czech Republic is not Hong Kong’s largest export market in Central and Eastern Europe, it enjoys the highest purchasing power among Hong Kong’s major export markets in the region, as measured by GDP per head at purchasing power parity (PPP)[1]. This partly explains why the country, with a small population of slightly more than 10 million inhabitants, can be top listed in Hong Kong’s export roster there. While Czechs’ purchasing power was ineluctably affected by the global crisis, with a 4% decline for 2009, the country is expected to continue its lead in buying power beyond the global downturn.

Purchasing power of Hong Kong's major export markets in CEE

 

Export Value (US$ million)

GDP per capita (PPP)

Market

Value

% Share

% Growth

(in 2008 US dollars)

Hungary

1,193

 

23.6

 

+3.6

 

19,800

Russia

1,100

 

21.8

 

+22.7

 

16,100

Poland

726

 

14.3

 

+18.6

 

17,400

Czech Republic

715

 

14.1

 

+22.8

 

25,900

Romania

281

 

5.6

 

+72.7

 

12,200

Ukraine

226

 

4.5

 

+11.7

 

7,400

Slovakia

181

 

3.6

 

+36.5

 

22,000

Estonia

126

 

2.5

 

+0.8

 

21,400

Latvia

88

 

1.7

 

+61.1

 

17,300

Lithuania

76

 

1.5

 

+95.1

 

17,800

Total

5,057

 

100.0

 

+19.4

 

(EU-27: 33,700)

Source: Census and Statistics Department, HKSAR Government, CIA

Chart: Average gross income in the Czech Republic

As regards spending patterns, the relatively higher income of Czechs has resulted in a lower share of income spent on basic necessities. In 2009, average household consumption expenditure amounted to CZK 115,309 or US$6,000 per annum. The major expenditure of Czechs included food, beverages and tobacco, housing and utilities, as well as transport. Together this accounted for more than 50% of Czechs’ household expenditure. For the remainder, the major expenditure items included recreation and culture, accounting for 10.3% of the total, followed by furnishings and household equipment (6.7%), restaurants and hotels (5.2%), and clothing and footwear (5.0%). Despite a slowdown amid the global recession, improvement in the overall long-term income of Czech consumers is poised to further bolster spending on consumer goods, which should hold great promise for Hong Kong exports.

Average retail prices of selected consumer goods
in the Czech Republic*

Specification

Price (in CZK)

Men’s two-piece suit – per piece

5,261

Men’s trousers – per piece

1,162

Men’s long-sleeved cardigan – per piece

766

Ladies’ winter coat – per piece

4,380

Ladies’ blouse – per piece

778

Ladies’ summer dress – per piece

1,035

Children’s tracksuit – per piece

533

Men’s shirt, standard – per piece

502

Men’s socks of cotton – per pair

46

Ladies’ bathing suit – per piece

769

Ladies’ tights – per piece

33

Men’s all-year city footwear of leather – per pair

1,426

Ladies’ all-year city footwear of leather – per pair

1,271

Children’s all-year city footwear of leather – per pair

584

Automatic drum-type washing machine (for 5 kg) – per piece

9,947

Electric refrigerator with ice box – per piece

8,749

Electric vacuum cleaner – per piece

2,755

Mountain bicycle – per piece

9,000

LCD TV set – per piece

15,891

Portable radio and cassette/CD player – per piece

2,083

* Average in December 2008
Source: Czech Statistical Office

Chart: Structure of household consumption expenditure, 2009

While Czechs have become more cautious about spending since the outbreak of the global economic crisis, they have been more conscious overall about quality in addition to price, thanks to rising incomes and increased access to imported goods in recent years after accession to the EU. Indeed, many families have already enjoyed full and unblocked access to durable items such as TV sets, refrigerators, freezers and washing machines, and individuals are used to shopping for clothing, personal goods and other consumer items, both at home and abroad. With improving living standards and a continued influx of foreign products and brands, consumers are more willing and able to afford better quality and branded items to replace the inferior products bought during Soviet times. Such a rising trend of consumerism, though interrupted by the global crisis, is unlikely to stop in years to come, as evidenced by the continued influx and expansion of foreign retailers and brands during the current economic fallout. In tandem, Czechs are now better equipped with product knowledge and fashion sense, merely “imported goods” without attractive features, designs, quality or brands cannot succeed as they did in the past.


[1] GDP at PPP (purchasing power parity) eliminates differences in price levels between countries, and calculations on a per head basis allow for the comparison of economies significantly different in absolute size.

Content provided by Hong Kong Trade Development Council
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