On May 25 and June 2, the Faculty of Business of Kaunas University of Applied Sciences together with Kaunas Chamber of Commerce, Industry and Crafts and the Enterprise Europe Network organized online meetings with the former Ambassador of Nicaragua to eight European countries, including Lithuania, Ricardo Jose Alvarado Noguera. With years of diplomatic experience as his basis, he sees immense potential in Lithuania to branch out its various products to the industries of North and Latin Americas. While most of Lithuania’s trade partners are European, some of our Scandinavian neighbors are already familiar with the lesser known endless possibilities elsewhere, which Ricardo presented in his webinars.
Access to new markets in Latin America and the Caribbean
Latin America has about 650 million inhabitants across 33 countries, big and small, each unique. A region full of diversity, culture, traditions, known for the hospitality of its people. Latin American people are open, friendly and enjoy dancing, according to Ricardo. The European Union already has a multitude of Free Trade and Economic Partnership agreements with various parts of Latin America, however, emphasis was put on the EU-Mercosur trade agreement. Consisting of Argentina, Brazil, Paraguay and Uruguay, to more than 60 thousand European companies this region presents the opportunity of over 260 million consumers. Being the 5th largest economy outside the EU with an annual GDP of €2.2 trillion, with closed markets posing high tariff and non-tariff barriers, it is a major destination for EU goods, services and investments, with €381 billion in investment stocks in 2017. Currently 59 Lithuanian companies export a wide range of goods and services to Mercosur, nearly three quarters of these being small and medium-sized enterprises (SMEs), with around 600 jobs in Lithuania being supported by these exports. The EU-Mercosur agreement will make business with this region easier and cheaper, providing a boost to jobs and exports. Ricardo pointed out that exports to Latin America make up a very small percentage of Lithuania’s total exports and that this number has a lot of potential to grow thanks to its technological and clean energy advancements.
Numerous examples of Finnish businesses finding success in Latin America were presented. One such example was Vaisala, a provider of weather, environmental, and industrial measurement devices. Despite being a seemingly small company of around 2000 people, it has offices in close to a dozen Latin American countries and has been doing business there for over 70 years with sales ever-increasing. Kemira, a chemicals company, has completed the expansion of its hydrogen peroxide plant in Uruguay less than a decade ago and has recently invested in a new pulp mill there. Etsimo, a healthcare platform provider founded in 2016 has expanded into Brazil and Peru. HEI Schools early education model has also found itself a place in Argentina, while the Tampere University of Applied Sciences provides a digital education and teacher training program in Barbados. Other examples of companies active in the region include Wärtsilä, a global leader of smart technologies, Neste, an oil refining and marketing company, Kone, an engineering and service company. It’s not all Finnish however, as Ricardo also presented other Scandinavian examples. The Swedish IKEA will soon open its first stores in South America, while H&M already has dozens of stores there and is currently expanding into Central America. Other notable enterprises are the Danish Vestas, Ramboll, as well as the Norwegian Equinor. Some examples of Lithuanian companies exporting to Latin America include AB „Akmenės cementas“, „Naïve“ and various dairy product manufacturers.
As areas of immense business opportunities Ricardo highlighted fintech, blockchain, automation and robotics, internet of things and big data, mobile applications, cleantech and mobility, education and health. Latin America houses some of the fastest growing countries to adopt internet and mobile, especially now during the pandemic, meaning that it’s a promising market with little competition and thus very attractive to investors. The majority of Latin American population is underbanked, around 40% of which is unbanked, meaning that they do not have access to conventional banking services. This creates a large opportunity for fintech enterprises. Meanwhile, in the energy sector, demand for wind power is on the rise.
How to access the Latin American market? From experience Ricardo claims that having good contacts and making friends is very important as the business approach is less conservative. For help, he recommends reaching out to Honorary Consuls in the target country or contacting appropriate organizations such as the Enterprise Europe Network, though a lot of technical information on the matters is also available online.
How to Protect Your Intellectual Property in Latin America?
During the meeting, Nicoletta Favaretto, Chief Project Officer of the EU-Latin America IP SME Helpdesk, also delivered a presentation on the main IP barriers of doing business in Latin America. Intellectual Property is a key business asset as it can protect your competitive advantage, attract investments, increase control and decrease risk when outsourcing, and it can be the key to entering new markets. Trade marks, patents and utility models, industrial designs, copyright and trade secrets all fall under IP. Two ways to protect one’s intangible assets are IP rights and Trade secrets. The internal barriers are lack of awareness and IP knowledge, which can lead to loss of collaboration and exploitation opportunities as well as mismanagement of resources when managing IP. Regarding external barriers, not all Latin American countries are members of the most relevant international agreements, you need to have a local domicile or representative to register, there’s also time for registration, costs, bureaucracy, time of enforcement. With The Latin America IP SME Helpdesk you can receive free of charge, first-line confidential assistance on IP protection, management and enforcement in Latin America.
Access to new markets in North America
Although the US and EU do not have a trade agreement, they have a long historical relationship of trade – US goods and services trade with the 27 EU countries reached $1.1 trillion in 2019. The Transatlantic Economic Council was however set up in 2007 for the purpose of economic cooperation between the two. The TEC is the only EU-US high level forum in which economic issues can be discussed in a coherent and coordinated manner. Exports to the US made up 5% of Lithuania’s total exports in 2018 and Ricardo hopes that this percentage will increase in the future. It is not easy to export to / import from the US and Mexico, as there is a lot of paperwork, requirements and various issues. Nonetheless, there are many companies in Lithuania and other EU countries exporting to this region. For information on doing business in the United States, Ricardo recommends the US Customs and Border protection website, as all the requirements are explained quite clearly there. Of course, the quickest, most effective way to start doing business in the US is to have a reliable customer or business partner that knows how to import into the country. European Commission’s Access2Markets page is another helpful tool for product-by-product information.
As for Canada, the European Union is its second-largest trading partner, their commercial relationship is estimated at $1 trillion. The Comprehensive Economic And Trade Agreement (CETA) between the two cuts tariffs and makes it easier to export goods and services, benefitting people and businesses in both regions. Around 150 Lithuanian businesses, 80% of which are SMEs, already participate in trade of various goods and services to Canada and CETA is no doubt helping. Ricardo calls it an immense market and with the value of Lithuanian exports to Canada being €173 million, he thinks there is room for much more growth. For plenty of information on the various requirements he once again recommends browsing the appropriate websites, such as the Canada Border Services Agency site.
For Mexico, the EU-Mexico Trade Agreement is currently in the works to replace the existing EU-Mexico Global agreement. This will lower the duties for various products to as low as 0%. Mexico is also one of the fastest growing economies and is expected to be the 7th largest in the world by 2050. 62 companies are currently exporting from Lithuania to Mexico and 76% of these are SMEs. For help entering the Mexican market he recommends the Mexican Customs Authority and European Commission’s trade websites for information.
There are many market opportunities in North America and Ricardo believes that Lithuania has a lot of potential to branch out into these regions with its technologies. He presented various examples of the potential, such as Lithuania being the fourth most powerful fintech hub in the world, based on Findexable’s Global Fintech Index 2020. He pointed out that there are various business conferences and forums being organized all the time and that it’s important to participate in them to meet potential business partners and gain more insight into these new markets. The importance of local contacts was also highlighted, as some businesses might open up to you more after some friendly direct communication.
Article prepared by Gytis Dubovikas, student of
English for Public Relations, 2nd course