Investment climate
Investment climate

German Business Culture Highly Valued in Lithuania

January 09, 2015

EuropaService, Germany

Lithuania, the largest of the Baltic states, introduced the Euro on January 1. This offers businesses from Germany new investment opportunities, says Justinas Pagirys, an expert in Investment Assistance at Invest Lithuania.

DSZ: What’s in store for the Lithuanian economy with the introduction of the Euro?

Justinas Pagirys: One can already get a feel for the value of Euro introduction. The ratings agency Standard & Poor’s (S&P) has raised Lithuania’s credit rating to A- for 2015. This means that long-term borrowing costs are lower than they have ever been. At the same time, the upgraded credit rating reflects the increased stability of Lithuania’s tax and currency policies, adopted as a result of the planned introduction of the Euro. Not only has the country fulfilled all of the convergence criteria, but it also remains one of the most economically stable countries in the EU, showing robust economic growth and no visible macroeconomic imbalances. The examples of Estonia, Slovenia, and Slovakia, which have already introduced the Euro, clearly demonstrate that a country’s attractiveness to investors is not just dependent on its currency. It is absolutely essential to concentrate on improving the investment environment, and it is precisely this that Lithuania has focused on to the greatest degree. In 2014 alone, changes to national laws were passed in order to streamline land use regulations, labour administration, and immigration procedures for highly-qualified, skilled employees from third party countries.

DSZ: Germans often speak of the Baltics as an economic region. However, the Baltic states attach a great deal of significance to their individuality. How does Lithuania distinguish itself from Latvia and Estonia?

Pagirys: Lithuania distinguishes itself in that it has industrial centers as well as fairly distinct regional production competencies. Panevezys boasts mechanical and electrical engineering capabilities. Schmitz Cargobull, a manufacturer of semitrailers, superstructures, and hitch trailers, is based here. The Klaipeda region, which is home to the only ice-free port in the Baltic States, possesses notable shipbuilding, chemical, and plastics expertise.

DSZ: When it comes to establishing the physical presence of a business, one recurring theme is that of advancement. In this regard, how do things look in Lithuania? Does the Partnership Agreement that runs from 2014 to 2020 offer new opportunities in this area?

Pagirys: Lithuania has planned full support with a maximum intensity of 25%. In Germany, this number lies somewhere between 10 to 15 percent. This is exceptionally useful for R&D projects and businesses in terms of added value. For R&D projects, EU-financed investment promotion instruments are responsible for securing 50 to 80 percent of financing; moreover, the vocational training of highly-qualified personnel is also guaranteed. But even without EU support, Lithuania distinguishes itself by the extent to which it has made things easier for business ventures to set up here. For example, special economic zones exist in seven different regions; they offer zero percent income tax, zero percent taxation on dividends, and zero percent property tax for the first six years of operation.

DSZ: In which industries do you see the greatest opportunities for German SMEs in Lithuania?

Pagirys: SMEs make up 99 percent of all economic enterprises in Lithuania, so the country’s economic structure is perfectly suited for them. Lithuania is attractive for production projects thanks to highly specialised sectors that attract fresh new talent. The number of graduates in mechanical engineering, production, and construction are more than double the EU average. The know-how available in Lithuania makes it possible to manufacture efficiently, cost-effectively, and with a high level of quality. Products can be delivered to customers in any European or CIS state in fewer than six days by rail, road, or sea.

DSZ: You are the contact person for businesses in German-speaking countries. How far does one get in daily business life using the German language?

Pagirys: More and more young people are learning to speak German. After English and Russian, German is the third most spoken foreign language in Lithuania. Over 15% of skilled Lithuanian workers between the ages of 20 and 29 speak German fluently.

DSZ: With what types of questions do German businesses come to you?

Pagirys: German businesses are interested in business conditions, taxes, operating costs and the possibility of finding qualified personnel. Invest Lithuania provide potential investors with all the necessary information, organise visits, and give details on the strengths and weaknesses of potential business locations. Additionally, we advise businesses that make inquiries concerning EU support. Even after a business has been founded, we continue to look after our customers. It’s important for foreign businesses to have trusted partners when establishing themselves in a new country. For this reason, we strive to be a trustworthy intermediary between businesses and institutions.

DSZ: You deal with both German and Lithuanian businesses. Are there notable differences in business life between the two? What should German businesses avoid at all costs?

Pagirys: Lithuanian and German work cultures are very similar – equal treatment is important to both of them. Lithuanians are modest, but they understand just as Germans do that one must apply oneself in order to achieve goals. For this reason, they are also hard-working.

Lithuanians value German business culture greatly because it facilitates employee development and offers possibilities for advanced vocational training. German firms such as Schmitz Cargobull, Lidl, Festo, Kurz Elektronik, Heinrichs, Metec, Ergo and Bio-Circle Technology have quickly discovered synergies with Lithuanian employees, enabling them to jointly realise increases in productivity. The similarities between the two business cultures help to avoid difficulties when founding a business in Lithuania. And even when such difficulties do arise, Invest Lithuania stands ready to provide any assistance and advice needed to help you resolve them, and all at no cost.

The EuropaService [European Service] of the Sparkassen Financial Group [Savings Bank Financial Group] reports on selected investment conditions in Lithuania in its country profile and as an additional service offers the opportunity to seek out business partners within Lithuania. More information can be found at europaservice.dsgv.de

 

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    Aistė Žebrauskienė Press Officer
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