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Laying Lithuania-Sweden bridges.

Although foreign capital companies have been delaying their plans to start-up a business in Lithuania because of the economic crisis and fear that the litas might devalue, it could in fact be the best time to enter the Lithuanian market. Carl Berneheim, the chairman of the board of the Swedish Chamber of Commerce, spoke with TBT about some of the current possibilities.

What are the main fields of activities and objectives of the Swedish Chamber of Commerce?

The Swedish Chamber of Commerce--SCC--is a non-profit organization "owned" by its members, which are companies, organizations and institutions in Lithuania and Sweden. The main objective and purpose is to encourage and expand contacts, trade and investments between Sweden and Lithuania.

This is performed in many ways. SCC arranges meetings and seminars on topics of interest to its members and to a wider society. SCC also offers a platform for its members to present themselves and their products. One of the services offered by SCC is to provide information related to businesses in both countries and to assist in finding partners or products or conducting market analysis.

A direct advantage of membership is to be part of a very useful network of professionals working in both Lithuania and Sweden, which gives many opportunities to share knowledge and experience.

Through SCC members also have access to the Chambers in Sweden, with intimate knowledge of the Swedish market.

Are there many Swedish capital companies in Lithuania and Lithuanian capital companies in Sweden?

Swedish companies are among the largest investors in Lithuania. In 2008 Sweden accounted for 229 investors and was the third biggest investor in the country. Lithuanian companies are competitive and some companies have successfully entered the Swedish market.

SCC is ready to assist Lithuanian companies who are interested but need some help.

What attracts Swedish investors to Lithuania?

The geographical and cultural nearness makes Lithuania a logical extension of the "home market."

The potential of the market is huge when comparing the GDP per capita. There is still a large difference in salaries, which makes it cheaper to produce products or services in Lithuania. However, some of that advantage is lost because of lower efficiency.

Investors also agree that Lithuanian managers in general are well educated, hard working and very responsible toward their companies.

Another attraction is that Lithuania is an excellent "bridge" for expansion further into Eastern Europe--mainly to Belarus, Russia and Ukraine. Lithuanian managers are better equipped than their Swedish counterparts in understanding how to conduct business in these markets. The obvious advantage is the language, but also better understanding of the culture of the people in the former USSR.

What problems might be faced by foreign investors in Lithuania?

All serious investors value transparency, fair competition and predictability, which allows for long term planning. Lithuania does not score well on these criteria. This is due to corruption and nepotism, which is a huge problem for Lithuania to deal with. A related phenomenon is the monopoly or oligopoly in some sectors and the influence of some financial groups, which seriously reduces competition and efficiency.

Has there been a change in investment flows from Sweden to Lithuania during the recent crisis?

The current financial crisis has probably delayed the expansion plans of many companies, mainly because liquidity is needed to consolidate existing positions. On the other hand, those companies who have the possibility should take the opportunity to enter the market now, when prices for land and construction are lower and good people are available at reasonable salaries.

It could be that the possibility of a devaluation of the litas makes some investors wait with their decisions.

Does your organization also help Lithuanian exporters and/or investors in Sweden?

It is our main purpose to support trade and investments between Sweden and Lithuania, and we are happy to assist Lithuanian companies to enter the Swedish market. We probably have better knowledge of the Swedish market than the Lithuanian market and can most definitely assist exporters or investors. We do this by providing information on markets and companies, arranging promotion and meetings, participation in exhibitions, contacts with lawyers, recruitment agencies, municipalities, clients, etc.

What will be the influence of the prospective Sweden-Lithuania power bridge on business' possibilities?

The power connection between Sweden and the Baltic states should give investors greater confidence of uninterrupted energy supply. However, there will be several years between the closing of Ignalina and the opening of the "power bridge." It will be necessary to convince investors that a secure alternative is available in the meantime.

It is not sufficient to ensure a secure supply. Investors also require competitive pricing. This will only be the case when the energy market is deregulated. At this moment and for the foreseeable future it seems that companies operating in Lithuania will have a high cost of energy.

In your opinion, what future awaits Lithuanian-Swedish business connections in a year or two?

The connections will remain very good, because of already existing involvement in important sectors of Lithuania, such as banking, telecom, furniture production, textiles, timber, retail and logistics. There is also a great deal of transfer of knowledge through consultancy companies and cooperation between municipalities. The connections between the states on a political level are also very good, of which the physical connection of the two countries by the power bridge is another sign.

All this speaks for a further expansion of business and we believe that both Swedish and Lithuanian companies will become more active as soon as the world economy starts to recover.
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Title Annotation:Special
Author:Vaige, Laima
Publication:The Baltic Times (Riga, Latvia)
Article Type:Interview
Date:Jun 10, 2009
Words:921
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