Chapter 2: Czech Republic
(continued)
From this point of view, local manufacturers of environmental technologies enjoy the unparalleled advantage of cheaper products, lower installation costs, and local technical service. It is also worth to note that a clause in the Act on Public Competition (see Section 4.3) legislates that a purchase from a domestic technology supplier takes precedence over a foreign supplier, if the domestic technology is of the same or similar quality and efficiency, and the price is the same, or up to 10 percent higher.
When foreign technology is preferred by end-users, it is because of its unique technical parameters, unmatched by comparable local products, or because a product is not manufactured locally. Foreign products are often viewed as technologically more advanced, of better quality, and more reliable than local technologies. Recognition of brand names is an important factor as well.
Local environmental companies, driven by a wide variety of goals, buy the exact technology they need to provide environmental services. The country of origin of the product is not a key decision factor, and, unlike in other respondent groups, the price is not the key factor, either. Such environmental firms provide, among other things, lab testing services, remediation work, field research, drilling, pollution measurements etc., and require reliable and sophisticated technology manufactured by renowned world producers. The criterion "quality and purpose first" was mentioned by 75-80 percent of interviewed environmental service providers.
Local technology producers and suppliers determine which technologies to buy according to cost-benefit analysis and their clients' preferences. For example, a domestic contractor for a wastewater treatment plant constructs the plant according to its own design, and bulk construction materials (structured steel, piping, cement) are bought at local sources, thus saving time and money. Critical technological parts, such as pumps, electric motors, process control systems, are either bought from local producers, or from abroad. According to customer's preference, the contractor can install locally produced pumps (e.g. with a shorter term of warranty), or imported pumps of better quality (with a longer term of warranty). While this approach will slightly increase the total cost of a wastewater treatment plant, the increase due to installing foreign components may well be offset by better parameters and reliability.
Overall, most local environmental technology producers try to find a balance between the quality and price of their products. It is extremely important to offer the client as low a price as possible, but product reliability and the length of the warranty period are considered by clients as well.
Universities and R&D centers are often unable to make any purchase due to the pervasive lack of funds. However, when they do buy equipment, quality and purpose take precedence over price considerations.
"Available credit" and "good after-sales service" were rarely mentioned as strengths of foreign products, even though they are important in some projects (e.g. air pollution control, waste incineration). Several respondents even mentioned the superficial and careless approach of foreign companies to after-sales service. Low price of foreign technologies was not mentioned in any single case.
Note that the term "foreign technologies" was interpreted to mean "Western technologies." Technologies from other Central and Eastern European countries (mainly from Poland and Hungary) are not considered to be competitive with Czech products. The products generally fall in a similar price and quality range, and Czech buyers therefore choose domestic technologies.
Foreign environmental technology suppliers enjoy a significant advantage over domestic competitors if they manufacture a unique product that is not manufactured in the target country (due to the limited size of the local market). Such specific technologies are intended for small and specialized numbers of clients, such as equipment for nuclear waste handling, transport, and storage. Additionally, multi-purpose technologies which can be a basis for a wide variety of product modifications may also give foreign technology suppliers a notable advantage. Solid waste salvage trucks, loaders, and incinerators are a few examples of multi-purpose competitive equipment.
Finally, several respondents noted that foreign environmental technology products which can use locally produced spare parts or replacements (e.g. filters, chemical substances for water and wastewater treatment systems, and lab chemicals) had a significant advantage over other foreign technologies. Adopting this approach will reduce costs, delivery time, and service requirements.
The price of some foreign technologies is so high (e.g. municipal water and wastewater treatment systems) that it is taken as uncompetitive in advance. On the other hand, highly sophisticated foreign technologies that have no match among domestic products can find their niches. For example, expensive and sophisticated high-efficiency systems for air pollution control in power plants and large heating stations are frequently of foreign origin. The same applies to incinerators and some technologies for waste reuse or recycling (tire recycling, plastics). In some cases, the disadvantage of high price is offset by characteristics such as product quality, life-span, after-sales service (e.g. landfill liners, municipal waste collection containers, tap water purification systems, etc.)
"Ensuring authorized technical service and maintenance" was mentioned as a problem by 30-40 percent of the interviewed parties. Finally, between 20 and 30 percent of respondents pointed out other disadvantages of foreign technologies, such as "lack of reliable product information," and "products not suitable for local conditions."
Some specific disadvantages listed by respondents included:
It is interesting to note that varying customs duties and border taxes are often applied to products from different countries. Treaties with many countries removing double-taxation also play an important role. With respect to EU providers, the customs fee inconsistencies are expected to be eliminated in the near future.
