Dalius Simėnas
The Israeli-capital companies operating in Lithuania work in sectors well known to Jews: they control real estate, develop the IT business and, as an example, make cash registers. The heads of Israeli companies in Lithuania welcome the first Israeli ambassador to Vilnius but say that opening an embassy isn’t enough, hard work awaits for Israeli business to discover Lithuania as a country in which to invest and expand.
Direct Israeli investments in Lithuania, according to the Lithuanian Department of Statistics, are not especially great this year, comprising 12.71 million euros. The main sector, worth 10.5 million euros, is real estate, with the remainder going to refining and refinishing industry, IT and other spheres. This doesn’t compare to the much more significant investments made by EU partners in Sweden, Denmark and other Nordic countries, nor to US investments.
In terms of direct foreign investments, Israel ranks 31st in Lithuania today, while Lithuania has no ranking at all in Israel. Even so, there are 17 Israeli companies operating in our country today.
New Stage in Relationship
Besides the best-known Israeli investment in Lithuania made in 1999 in the work of the generic pharmaceuticals company Teva’s research and development unit Teva Baltics/Sicor Biotech, other investments for more than a decade had been typical small and medium-sized business examples.
Last year, though, saw a number of Israeli IT companies arrive.
It is likely there will be further imports of technological progress with Israeli investment following the establishment of the first Israeli embassy in Vilnius, Lithuania.
Amir Maimon, the first Israeli ambassador, continued his spree of introductions to the nation’s leaders and institutions, emphasizing that besides what has already been achieved in economic, political and cultural cooperation, Israel can also share its experience in, for example, cyber-security, and can offer weapons to the Lithuanian military in this period of instability in Europe.
Experts Converge on Vilnius
One of the latest investments by an Israeli company was the establishment of Wix.com in the Vilnius Old Town in the spring of 2014. IT specialists who have been flocking to the Lithuanian capital for three decades now are creating internet sites for 60 million registered users around the world.
Wix.com director in Lithuania Monika Laukaitė says Israeli business still hasn’t discovered our country.
Israelis are looking more towards Asia and other markets, she says, but that the skills of our workforce are reaching the Israeli business community now more quickly than was ever considered possible before.
Laukaitė says she’s proud of the fact that their main company, headquartered in Israel, offers products to investors on the New York exchange, many of which have had contributions from programmers in the Lithuanian unit.
“The Wix experimental development bureau is located in Vilnius and its programmers work with the company’s strategic projects and create new products. The managers want the company, which now has 31 employees, to expand more quickly, but the market itself dictates the pace of growth,” Laukaitė said. Only the best make it through the many stages of the selection process for hiring at the company, and, depending on their skills and experience, earn from 1,500 to 3,500 euros monthly.
Headaches over Overtime
Asked what challenges dampen the company’s plans for expansion, the director said labor relations regulations were a problem. The company has even learned to do without the Byzantine overtime bookkeeping in Lithuania.
“The biggest question arose when the Lithuanian team made a product for whose functioning they themselves were responsible, that is, if the system you created ‘hangs’ outside of work-time, or doesn’t work in some sense, the problem has to be solved as quickly as possible. After all, you are not going to ask 60 million registered Wix users to wait till tomorrow,” Laukaitė recalled.
In order to do this legally in Lithuania, one must create an official ‘on-call’ schedule and so on, Laukaitė explained. In comparison, it’s much simpler in Israel. “So we agreed one group of experts would take over from staff from other bureaux: on Sundays that would be the Israeli bureau, and in the evening we would expect help from colleagues in the US units,” Laukaitė said.
Progress in Employment of Foreigners
[photo: Monika Laukaitė, director of Wix.com in Lithuania]
She said all these obvious problems connected with labor relations in our business environment are compensated by the labor pool in Lithuania and their knowledge, and by the ability to hire foreigners here.
“We are very pleased that it has become easier to employ foreigners in Lithuania. We have one Macedonian. At this time there are on-going negotiations with several candidates from Ukraine and Belarus,” Laukaitė said.
She said it was also easier for the company to operate now because of direct flights between Vilnius and Tel Aviv.
“Employees have to travel to Israel quite a lot, and this has made the journey shorter, and decreased the expenses. We try to coordinate all our business travel with the schedule of Wizzair, which does direct flights,” she said.
An Embassy is Only Half the Work
The director of the Wix.com bureau in Vilnius said it’s not sufficient to open an embassy and set up several business delegations in order to achieve closer business cooperation between Israelis and Lithuanians.
“There must be constant work for Israel to discover Lithuania as a place to invest and expand,” Laukaitė said.
Israeli citizen Vulf Lurie, who makes cash register trays in Kaunas, also says the opening of an Israeli embassy in Vilnius will change little, and that there had always been a way to contact the embassy in Riga before if needed.
Lurie established HPC System in 1999. By 2014 the company’s turnover had topped 1.5 million euros. The product’s export has a wide geography, but Israel is not part of it. Lurie says he’s focusing more on markets in the East instead.
“Initially we were making 2,000 cash register trays per year. We have grown continually and this year we are second in Europe according to amount of production: from 2009 to 2014 we have produced annually from 55,000 to 70,000 cash register trays,” Lurie said.
Reorienting Export to the West
Vulf Lurie said his company was expanding heavily into Russia until the conflict between Russia and Ukraine, and had earned “a very good name” in Russia as a maker of quality cash trays.
“We also attempted to establish ourselves within the rising Ukrainian market, but after the Crimean crisis [in spring of 2014] the Russian and Ukrainian markets shrank drastically. Now we are reorienting. We have a lot of contacts with companies in the Western market. We sell our product to all the Scandinavian and Baltic states, and to Poland, France, the United States and Germany,” Lurie explained.
Since last year the company has tried to occupy a new niche: making bank-card reader equipment. This production is expanding quickly as well. Lurie, who employs 31 people in Kaunas, says regulation of overtime needs to be eased to encourage greater and progressive investments from Israel.
“Israeli export is founded on IT. But this is a sector where products often have to be produced very quickly. Sometimes you need people to work 14 to 16 hours per day for several months in a row. Lithuanian laws don’t allow this,” Lurie noted.
Verslo žinios
February 18, 2015