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Latvia’s Exports keep growing Fast

Submitted by on 28 Mar 2013 – 15:08

By Guntis Rubīns, Head of the Representative Office of Lativian Investment and Development Agency in the UK

When economic and financial crises hit Latvia in 2008 the only way for companies to survive and prosper was to export. At the Business Forum held in Riga in December 2009 a question was posted from the audience to some prominent panellists: “What markets should I look at for my products if I decide to establish a manufacturing company tomorrow?”. The answer was short: “External”. Although many sectors were already export driven, like engineering, woodworking, pharmaceutical, logistics, some were still primarily focused on the internal market. Construction companies who only occasionally exported their services and building materials before, changed their focus completely. While construction works done by Latvian constructions companies in external market were around 20 million EUR in 2008, it was already over 100 million EUR in 2012. Export of construction services also dragged significantly in the export of construction materials. A similar story can be applied to the food and agricultural products industry whose export reached 1.5 billion mark in 2012, almost doubling its export in the last 5 years.

Reasons behind this growth are many:

Scandinavian countries, Germany, Russia and its neighbouring Baltic states that are traditional destination for Latvian exports did rather well during the recent crises compared to South European countries.

Latvian companies started more and more to produce their own products as well as adding more value to them, instead of continuing to be subcontractors. Just to name a few:

Real Sound Lab developed a unique technology for measurement and equalization of Acoustic Power Frequency Response (APFR) of loudspeakers that is built in a number of products of Acer, JVC Kenwood, Hitachi and Panasonic.

Infogram, which is a developer of software for data visualization from Riga Tech Hub, was among 100 best start-ups globally in 2012.

Jelgava city has long traditions in machine building and is a base now for a newly created company UAV Factory that specializes in unmanned aircraft platforms and subsystem design and manufacture. Today it supplies its unmanned aircraft, pneumatic catapults, onboard generator systems and portable ground control stations to customers in 16 countries.

Some companies took advantage of franchising. By the end of 2012 natural cosmetics producers Stenders had 222 shops worldwide and Attirance is present in more than 45 countries.

Established Latvian producers started to set up their productions in their core export markets or where they can secure raw materials and skills needed. SAF Tehnika, a manufacturer of point-to-point microwave data transmission equipment in almost 100 countries opened its production in Brazil in 2011. Latvian Finieris, a birch plywood manufacturer expanded its production to Estonia and Lithuania.

Latvians who moved abroad for different reasons in the last decade have started to develop their own businesses too. Graduates of Margarita Belska Beauty School in London are employed in some of the UK and Ireland’s top salons and mobile agencies, or had set up their own businesses and trading. Nordic Construction, a wide profile one-stop construction company has successfully been building houses, apartment buildings, offices, warehouses, shopping centres, industrial facilities and multi-storey car parks in Southern England, East Anglia and the South Midlands since 2006.

In the Logistics sector, whose service was mainly the transit of goods from CIS countries to the West and vice versa, was the only sector that did show even slight growth during the crisis years, and they continue now to service local producers with globally competitive logistics solutions for moving goods “Made in Latvia” to the most distant corners of the world.

Latvian government red tape is moving in the right direction to keep Latvian exporters growing by investing in the expansion of governmental structures representing Latvia abroad, by cutting taxes for labour.

The world must begin to get used to Latvia as a place where innovative products and services are created and produced for the global market.