During German occupation, Avia manufactured the Bf109G and Me262, Letov manufactured the Ju290 as well as being a major repair depot just to name a few.
Like many countries, Czechslovakia was dealing with budget constraints which hampered develooment as well as "old school" thinking, where aircraft were not as much of a priority as was traditional military doctrine (artillery, tanks, battleships, etc.) however, they did have a very competant aero industry.