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BUSINESS FOCUS - ASIA II - INVESTORS APPRECIATE LOW COSTS BUT WOULD WELCOME REFORMS IN THE SCHOOL SYSTEM

Japanese stress education

THE VOLUME of Japanese investments in Slovakia is significantly higher than official statistics show, experts say.
Japanese companies prize most highly Slovakia's low cost of labour, but stress that Slovakia needs to invest more in education if the country wants to maintain its high degree of qualification.
"According to our statistics, there was $35 million (€28.4 million) in Japanese investments in Slovakia as of the end of December 2003," Ondrej Žember, the spokesman of the Slovak Investment and Trade Development Agency, told The Slovak Spectator.

THE VOLUME of Japanese investments in Slovakia is significantly higher than official statistics show, experts say.

Japanese companies prize most highly Slovakia's low cost of labour, but stress that Slovakia needs to invest more in education if the country wants to maintain its high degree of qualification.

"According to our statistics, there was $35 million (€28.4 million) in Japanese investments in Slovakia as of the end of December 2003," Ondrej Žember, the spokesman of the Slovak Investment and Trade Development Agency, told The Slovak Spectator.

"This is really a small amount, considering the fact that there are important Japanese companies here. The actual volume is probably much larger. The reason for the difference is that, although they are Japanese companies, their base is often in different countries and thus the origin of the investments is listed as other than Japan."

Japanese investments in Slovakia are mainly focused in electronics and the car components industry.

"The reason to come to Slovakia and this area is the sufficient amount of qualified labour and lower production costs," Stanislav Žák from the Human resources department of Matsushita Electronic Components Slovakia in Trstená told The Slovak Spectator.

"Slovakia offers an excellent location in central Europe with close access to the East and West, connection to highways, proximity to an international airport - this means many logistic advantages.

"There is also qualified labour and a great potential for cooperation with suppliers in Slovakia or neighbouring countries," said Ľubomír Kollár, general manager of the customer service division of EE TEC, a company recently created by uniting Sony Slovakia in Trnava and Sony in the Hungarian town of Gödöllö.

The firms operating in Slovakia consider their experience in the country a positive one.

According to companies, the developing chain of suppliers, duty abolishment thanks to the EU, progress in the labour law, income tax cuts and the introduction of the flat tax, and laws on depreciation are all positive aspects of the business environment in Slovakia.

However, they also say that bureaucracy, unwillingness to meet client needs, and healthcare centres still need improvement to make Slovakia a more attractive target for investment.

"Our experience has been positive. Our growth in Slovakia proves the fact that Sony is content here," said Kollár.

"As for cultural clashes, they are noticeable to a certain extent. It is mainly working discipline, the relation to work and the workplace - mainly punctuality and a clean environment. Here it is possible to see differences compared to Western Europe, but especially to Japan," he continued.

Companies also agree that reforming and increasing the level of education, mainly at the secondary level but also in universities with technical specialisations, is a need that must be met.

"A change in tuition programmes would increase the attractiveness of the environment because schools in the field of electrotechnics now often provide graduates with insufficient knowledge and skills in modern electrotechnics," said Žák.

He stressed that the structure of universities should be revised as they release too few electrotechnical university graduates.

"It seems to us that electrotechnical universities focus mainly on information technologies at the expense of other fields of the electrotechnical industry," Žák pointed out.

Kollár sees the problem in the level of education, mainly in specialised secondary schools: "Every year we see a worsening level of knowledge among graduates from these schools. They often do not have basic knowledge and skills in the specialisation they studied.

"Sometimes they even lack the basic social habits like a sense for duty and work. Naturally, education through the family, which is not in the best shape, also has an impact on this situation.

"I think that now is the time to invest in education and support families. Teachers need to be well paid to prevent a situation where only people who cannot find another job go into teaching," he said.

However, he added that it was possible to trace some progress and that he hoped the government would have the courage to carry out its reforms, rather than ending them halfway.

Matsushita Electronic Components Slovakia, Panasonic Audio Video Company, EE TEC, Yazaki Wiring Technologies, SEWS Slovakia, and Trim Leader belong among the largest Japanese investments in Slovakia.

Some of them started operating in the country on green-field investments and some established their plants on the site of troubled or bankrupt Slovak companies.

EE TEC, previously Sony Slovakia, began its activities in the country in 1996. At about the same time, another Sony plant was established in neighbouring Hungary, both companies recently united to form EE TEC.

"Arrival in Slovakia was a logical step after the increasing demand for Sony production after the fall of the iron curtain in central and eastern Europe," said Kollár.

EE TEC produces TV sets and their components in Trnava. It exports the components mainly to Spain, Great Britain, and the USA. The TV sets go to all of Europe. The company employs around 1,500 people.

Matsushita came to Slovakia in 1997 and operates in Trstená and Stará Ľubovňa. It mainly produces electronic components, the majority of which are exported to Europe. It employs about 1,100 people.

Panasonic Audio Video Company Networks is based in Krompachy. It manufactures consumer electronic products such as DVD players, and video recorders. The company currently has more than 900 employees and was established in 2000.

Yazaki Wiring Technologies in Slovakia produces cable bunches for cars in the eastern town of Michalovce. The overall investments of the company in Slovakia in 2001 to 2004 should reach Sk640 million (€16 million).

The company should start new production for Ford Motor Company and DaimlerChrysler this year.

Dieter Hartwich, the general manager of Yazaki told the daily Hospodárske noviny that the new production projects follow a critical year when the company had to decrease production and undergo large layoffs because Ford's demand for supplies sank by 23 percent.

"Now that is behind us. Sometimes we are up, sometimes down. The automotive market is large," said Hartwich. Thanks to new projects, the number of the company's employees should reach about 2,200 people in 2004.

SEWS Slovakia in Topoľčany produces car cable bunches as well, while Trim Leader in Košťany nad Turcom near Martin produces car upholstery.

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