The British automotive company MG Rover has been seeking new potential trade partners in the Czech Republic to supply automotive parts to the UK. The suppliers should be globally competitive, because Central Europe is only one of many geographical areas where MG Rover has sent its envoys.
Mike Dudley, who is MG Rover's special projects manager for international sourcing, has spent several weeks in the Czech Republic visiting factories, holding talks, and looking for quotations from Czech companies. I met him at the Czech government's trade promotion agency, CzechTrade, and asked him whether it was easy to find suppliers who would meet MG Rover's requirements:
"We are looking for suppliers who have TES or TQS or ISO standard - a good quality standard. We are looking for a supplier who is already supplying somebody like VW or Skoda. We are looking for a supplier who wants to export, who wants to expand his business and work with other manufacturers. We want to work with collaboration with these people from the point of view that they are competitive as they are quoting against India or China in terms of their prices."
Do Czech companies against such competitors?
"I think they do. I think there is a degree of specialisation. The labour rates in places like India and China are cheaper, that is for ceratin, but the technology is different. We are trying to find the right kind of supplier, the right technologies within Eastern and Central Europe, suppliers whom we can work in a more modular fashion rather than single-component."
Many automotive companies have moved their operations to the Czech Republic. Are you considering doing the same or just looking for partners to supply their parts to you in the UK?
"At the moment, we are not looking to set up any manufacturing facilities. We are purely looking for suppliers to make parts for us and then ship them to the UK where we will assemble the cars."
Are there any particular problems you meet with when negotiating with potential partners here in this country?
"Our experience over the past weeks is that we struggle to get quotations and that may be for a number of reasons. We have found that suppliers have not been ready to quote for us, we had to chase around, to make more phone calls, in order to get the quotation on time, whereas from Asia - India and China - suppliers have been very keen, very hungry to quote, very excited about doing business with us. And that has not been the case so much in the European countries."
Do you think Czech companies are not excited about doing business with you?
"That's a very good question, I am not sure what the answer is - maybe they have the answer and maybe they'd like to tell me. I think they rely more on the internal market. Skoda is a very big manufacturer here and we have new companies also coming to the Czech Republic. I think they look very much more internally to their market place rather than externally. It appears to me it is more of a nuisance to think about quoting and sending parts further away."
Could a language barrier be a problem?
"That can be, but having spent four months in China, three months in India, and visited places like Korea and Thailand, the language barrier exists there, too. And if they really want to do business, then we can make a way around these problems as we have done in other countries. It should not really be a barrier - it could be if you let it."
We are talking here on CzechTrade's premises, can CzechTrade help you or the Czech companies overcome these problems?
"CzechTrade have done a lot of work for us in setting up meetings and organising events with suppliers here in the Czech Republic and we thank them for that, they have done a good job. I think they can help the automotive industry here in the Czech Republic by making sure they are available in terms of being able to be found. There is a publication but I found a lot of suppliers actually are not in it, and therefore it is difficult for companies like MG Rover to find these companies to start with in order to talk to them about supplying."
Having been here for a few weeks, do you see a chance of finding suppliers in this country despite all the problems you have mentioned?
"Yes, absolutely. We are currently in talks with three specific companies about potential final outcome and I think there is a very real opportunity to supply from the Czech Republic to the UK and it is my task to make sure that we find somebody and I would like to do that very quickly."