Business Leaders 2012

Business.

Leaders 2012

Foreign direct investment annually increase the employment by several thousands This year public enterprises will transfer to the budget much more than last year Export markets do not lack for buyers of Lithuanian goods Transport and logistics business is flying without brakes Product of the Year title raises product’s turnover by about one tenth Visaginas will soon become the largest construction site in Lithuania 2012 | March

Companies | Entrepreneurs | Money | Investment | Economics| Development | Employment

Well-aimed shots of Lithuanian entrepreneurs

CONTENT

Business.

Leaders 2012

FORESIGHTS Experts: business is moving forward by fighting the challenges 4 The financial system will not avoid changes 77 a closer look No shortage of buyers at the Lithuanian counters in abroad 8 State enterprises are climbing out of losses 20 Port: the engine of business in Klaipeda and Lithuania 43 Investors create thousands of new jobs 46 FOREIGN TRADE Foreign trade and investment growth 12 HISTORY Lithuanian quality mark 14 LEADERS The largest taxpayers and employers 16 INNOVATIONS Two decades of success 19 E-health shortens the queues in polyclinics 74 DIRECTION Transport and logistics business is flying without brakes 22 Modern traffic information system helps to supervise the Lithuanian roads 25 Cargo carrier routes reach even Asia 26 BREAKTHROUGH The market leader’s name – “Mida LT” 27 “Callcredit Information Group“ will promote IT development 50 Things are humming in “Žalgiris” arena 56 Young people certainly can 58 “Vikonda”: the stimulus of success – reputation and optimism 59 Focus on students’ clothing in “Garlita” 60 “Superturas”: socially responsible partner 61 “Minijos nafta”: a leader of new projects 66 “Trevena”: a reliable fellow-traveler 67 PANORAMA Passed the exam of changes 28 Long experienced business fears no challenges 29 Lithuanian post: keeping pace with the time 30 A.Šileika: it is important not only to survive but also to grow 32 “Kautra”: the company functioning for eight decades is building up its strength 34 “Tête-à-tête”: challenges make us stronger 36 Orthopedic company “Pirmas žingsnis” is available all over Lithuania 39 Leading company in lottery business 40 Golf courses – a sign of prosperity of the country 42 LOGISTICS Chart curves rise 44 Let’s join the shores together! 45 FACTS Business chooses the capital 52 Kaunas entices with attractive conditions 54 The world acknowledged Klaipėda 62 ENERGY “Fortum Klaipeda”: a Scandinavian model of energy 64 VNPP will to be a future giant of Lithuanian business 68 Lithuanian business will receive orders worth billions 70 MANAGEMENT A second pair of eyes observing business 71 New products and Russia saved from the crisis 73 The polyclinic marked by the sign of work quality 76 PLANET Technology gurus rule the business of the world 78 Estonian pride 80 The leading countries of the future 82

editor Stasys Gudavičius journalis ts Valentinas Beržiūnas, Vidmantas Matutis, Lina Mrazauskaitė, Virginija Spurytė, Irma Verbienė, Jolita Žvirblytė Photos Andrius Aleksandravičius, Gediminas Bartuška, Vytautas Liaudanskis, Artūras Morozovas, Vytautas Petrikas, Tomas Ragina, Simonas Švitra, BFL, „Scanpix“, „Shutterstock“ design Tomas Mozūra l ayout Tomas Avižinis, Arnoldas Juodis Technical editor Jurgita Jurevičiūtė Printing pdf only office Labdarių g. 8, 01120 Vilnius. Tel. (8 5) 262 4242, faks. (8 5) 279 1379 advertising department Tel. (8 5) 279 1370, (8 37) 302 230, (8 46) 397 715 Dis tribution Tel. (8 5) 261 1688 publisher JSC „Diena Media News“ Available at websites diena.lt, kaunodiena.lt, kl.lt

Business. Leaders 2012

3

FORESIGHTS

Experts: business is moving forward by fighting the chall Lessons from the crisis were learned

Rimantas Žylius Minister of Economy

T

he last year was favourable for business. It turned out that the shock experienced by the economy in 2009 failed to tear our business community. Business has been growing immediately after the drop, and the growth of the last year was one of the largest in Europe. Under these circumstances, the state’s efforts to use the EU structural funds’ resources were very important. It is also important to mention that the business has managed to significantly increase export volume – last year it was the largest in the history of independent Lithuania.

The global crisis impeded conditions, but our companies have managed to quickly recover, stop looking back at the shut doors and seek for new ones. They have proved that they are able to find customers in both the old and the new markets – the increase in sales in the Nordic countries is the evidence for it.

On the other hand, our exports to the rapidly growing areas – Asia, Arab countries, Latin America – is too small, therefore, we have raised the goal to attract investors of these zones to Lithuania. Of course, the business culture has the opportunities to be brought up. The most striking fact is that industry representatives don’t have enough discussions with the public about their proposals provided to the politicians. There is also a very large shortage of management qualifications. As a result, the lost money heavily affects the competitiveness of businesses.

4

Business. Leaders 2012

Lithuanian entrepreneurs and companies overcome the challenges of economic crisis quite well. The experts note that, despite the various, sometimes even systemic, problems related to business development and state’s approach to the regulation of economic life, the Lithuanian companies are able to cope, quickly respond to demand, find export niches. However, there are still many uncertainties on how economic scenarios will unfold in the near future.

lenges

Danas Arlauskas

Director General of the Lithuanian Business Employers’ Confederation

W

e had a very rapid transition from one economic system to another, as if we were thrown into the swamp

Ugnius Savickas

Director at ISM Executive School

T

he nature of business is to adapt, exploit opportunities, vary. There is a little of romance in business – the market is like a living nature and it could clearly be observed during the economic crisis – the strong survived, the weak had to leave. Numerous examples prove that during the crisis there were businesses which were successfully continuing their activities and even grew, as well as businesses which experienced a serious economic shock and took drastic measures for reorganization and efficiency, and those measures have been proved to be efficient, so now these companies are much stronger and better prepared for future challenges. Of course, there were quite a few companies to which this economic correction was the last.

In summary, I would say that the market has been purged, and the survived businesses have proved that they are able to cope, therefore, the current business map seems to be far stronger.

I would name three major failures or weaknesses of Lithuanian business: they are localism, creativity and analytics. Localism is the distrust of the Lithuanian businessmen in their own strength, excessive provincialism, lack of courage and ambition to develop business in the global market. Lack of creativity and innovation leads to more traditional business development and direct fierce competition instead of exclusive search for competitiveness, new business

and forced to get out of it by ourselves. Therefore, within a short period of time we have attained so many business skills as any other country in the world, and, therefore, our business is alive. However, we are bothered by failure to live in the community: we are not able to be one strong power which could force the politicians to create a favorable environment for business, and they use this. Usually we singly search for the politicians’ door trying to solve the local problems.

Of course, joining the EU has helped our business, since the markets

opened; new rules of the game were created. This cultural environment strongly pushed the business to understand that the balance should be sought. Moreover, a look at other civilized countries increased the intellectual, emotional and cultural potential of business.

I would also like to stress that the country needs to find a unique position, the strongest business direction, which would be supported by government policy. I think we could be strong in the service sector, but the direction should be crystallized by itself.

forms and discovery of areas.

Of course, we cannot claim that we do not have it at all, but the good examples are far from being a mass phenomenon. And analytics, – specifically, its lack, – is the still alive stereotype, even the myth, that everyone can do business. Not nearly everyone, therefore, much better results are achieved by those businesses which are based on management analysis, forecasting of economic phenomena, observation of consumer behavior.

I would also add the lack of patience – instantaneous maximum result is sought from the business. Probably there are areas where it works. Personally, I am proud and happy with those examples of Lithuanian business, where business is developed in consistent and systematic manner and today scores a deep mark in the global business map.

The easiest way would be to say that at any point, as well as related to business, the government failed to do so. However, I would seek for the answer somewhere else.

First of all, the Lithuanian level of entrepreneurship is important, i.e. the extent of the Lithuanian population which would be likely to take their own businesses. The statistics is really disappointing. This is a consequence, and it really must be highly prioritized by the state.

Entrepreneurship is directly dependent on creativity, human freedom and confidence. This result is the consequence of the whole education system, and only later the state regulation of business conditions becomes relevant.

No matter how you regulate, if the society is suffering from depression and does not feel to be the master of its fate, then any deregulation will not motivate to develop business.

Of course, I agree that it is difficult to start business in Lithuania, therefore, I support the policy of some countries to exempt the reinvested result of the

first year of business, to promote the easier registration of new companies, to reduce the network of business supervisory agencies, to consult young businesses. I see a systemic failure of approach and policy – preclusiveness, i.e. when the politicians create one or another decision, they immediately think how to prohibit rather than to encourage. Then the perverse attitudes are being formed – if the law prevents, it is necessary to find the way how to drive through, and when this way is found, the politicians again rack their brains how to prohibit, – thus, the state is involved in the circle of prohibitions and avoidance. There is a way to escape from this circle but brave and decisive decisions should be made.

In my opinion, the business leaders in Lithuania are those who develop the successful businesses, earn for themselves and for the state, develop a transparent, fair and socially responsible business. The extent is not so important, the high business culture and morality are the most important. Of course, we are happy with those businesses that we see in the world market, and we wish that the experience of “Get-Jar” and “Fermento” would serve as an example of success and courage for more and Lithuanian businesses and entrepreneurs.

I think that for a small country it is the most necessary to find a unique competitive uniqueness and to provide maximum attention and resources for it. As a state, we are still wandering among the priorities. I would pay special attention to the intelectual businesses, and there is no need to look far for good examples – we already have especially successful and globally operating businesses in laser, solar energy, electronics, medical industries. Therefore, I would pay special attention to the technology and business innovation management, i.e. to abilities to commercialize the potential present in Lithuania.

Business. Leaders 2012

5

FORESIGHTS Lessons from the crisis were learned

Žilvinas Šilėnas

President of the Lithuanian Free Market Institute

L

ithuanian business, at least its major part, coped with the crisis: optimized its activities, restructured and successfully continues to operate, step by step it gives a profit. This is particularly evident as compared to the public sector, which failed to reduce its own costs and live agreeably with diminished possibilities. There would be even more reserves of flexibility and adaptability in the absence of strict government regu-

lation. The government simply needs to acknowledge that the business is not only a source of taxation, but also a developer of economic goods and workplaces. There is a lack of awareness that favorable conditions for business are not just election slogans, short-term initiative, but an essential condition for a good life in Lithuania.

We may explore how the costs for essential factors of production are raised by the efforts of the government (i.e. taxes). The labor force is taxed about 40 percent. Capital taxes are as follows: dividends are taxed by 20 percent, a profit – by 15 percent. Fuel excise duties do not meet the financial opportunities of people and business. Electricity is taxed not only with VAT but also with harmful PSO levy, which represents about one-third of the final electricity price.

Other barriers – the regulation related with territorial planning and environment. Communicating with the bu-

siness community it is possible to hear the implausible stories. For instance, one development project on the paperwork lasted... 9 years. Or the company engaged in natural resource extraction from the body, which was being exploited for decades, suddenly receives a message that the body falls within the state forest area, so the activity should be restricted.

Clearly, there are good examples.

For example, the reorganization of the business supervisory authorities is a great initiative, but is necessary to ensure that it is carried out continuously.

That would be made not only for the purpose to change the way of, communicating on the supervisor‘s arrival to the business company, but in order to reduce the visits to the companies in general. The situation must be changed so that such initiatives as the reorganization of the supervisory authorities would dominate, rather than they would be an exception. To

predict which business area is promising – is not the government's work, and even government officials are not competent to decide which business areas are worth to be developed in Lithuania. This must be done by entrepreneurs and investors who risk their money and have a direct interest to invest only in reasoned business projects. The government is responsible for ensuring that the Lithuanian business would like to implement as much initiatives as possible so that investors would see a safe environment and favorable conditions for investment in our country. Business development in Lithuania would be intensified if the stability were ensured for the market participants. The latest study conducted by the Lithuanian Free Market Institute shows that even 54 percent of the country’s entrepreneurs this year associate the main threats with potential internal policy decisions.

The latest study conducted by the Lithuanian Free Market Institute

54

percent

This year even 54 percent of the country’s entrepreneurs associate the main threats with potential internal policy decisions.

Sigitas Besagirskas

Director of the Economics and Finance Department at the Lithuanian Industrialists’ Confederation

T

oday the conditions are not favorable to business throughout Europe – it hardly competes with growing and low-regulated markets, particularly of Asia and Latin America. The conditions to conduct a business in Lithuania are not very favorable too, because we have some outstanding issues which don‘t bother other EU or neighboring countries.

We have probably the highest prices of energy resources in the region, in addition, due to the long processes, we are totally unfavorable coun-

try for greenfield investments. The country’s financial instability shouldn’t be forgotten as well as the record high tax changes. Even three years ago nobody could have predicted that Lithuania would create such conditions for entrepreneurs and investors that they would not be certain about the future. After all, sometimes it is better to pay higher but stable taxes and to know what is worth of taking. Otherwise, entrepreneurs automatically refrain from investing or more serious activities in the country, and they try to partly evict the business from here. And concerning the business perspectives, it will grow in the coming year, perhaps mostly in the EU. However, the long-term perspectives do not promise anything good, especially since we do not do our homework: we do not arrange the territorial planning processes, do not liberalize the Labour Code and do not take any other simple recipes for success due to which many countries have perfectly survived.

Rimantas Šidlauskas Director General of the Association of Lithuanian Chambers of Commerce, Industry and Crafts

T

he companies have hardly gone through a difficult period, and this year also does not promise anything good, because the context in which the business resides is not favorable. The euro zone, EU, the market part of which we are, is facing

difficulties, and there is no significant growth in our traditional export markets. It shouldn't be forgotten that this year the Seimas election will be held in our country, and in Russia – Presidenti-

al election, and political transformations always have an impact on often politicized relations with neighbours.

The situation within markets is difficult, and our economy is running at one and the same engine – export, because until now no efforts were made in order to combat unemployment, there are no signs that the domestic consumption is getting better.

No matter how unfortunate it is, many initiatives have faded away: neither the famous Sunset or Sunrise Commissions which had to change the business environment, nor the glorified Single Window principle are working.

Of course, we have advantages too.

Despite the winds in the market, carriers, logisticians and several other sectors are able to adapt and compete.

Maybe some sectors will start to breathe, but I am not optimistic about the breakthrough in the business. Considering the context, I believe that 2012 will be dificult year for business survival.

There would be even more reserves of flexibility and adaptability in the absence of strict government regulation.

6

Business. Leaders 2012

FROM THE NEARNESS PRICES ARE FALLING, BUT NOT THE EXTENT OF EXPORT

No shortage of buyers at the Lithuanian counters abroad

16.6 % 10.2 % 9.3 % 7%

Exporting entrepreneurs rush to correct the statisticians claiming that the export of Lithuanian goods recedes: prices are falling, but not the extent of export.

Jolita Žvirblytė

M

ost exporters this year are planning to increase the production and sell abroad even more.

The slowdown WAS not felt

Although last year, when the autumn was coming, Europe was shaken by the euro zone debt crisis, it did not manage to influence Lithuania’s export performance last year.

“Last November, everybody talked a lot about a possible drop in demand, but so far we have not seen any extreme tragedy. A lot of talk and fears, but there is no real decrease in the demand of our production in export markets”, – confidently said Mindaugas Gedvilas, General Director of the company “Amilina”. According to him, the starch produced in Panevėžys, which is widely used in the world’s paper industry, endlessly travels further to the key export markets – Finland, Germany, Poland and other countries with a total of about 30.

The company “Mantinga”, which exports about 50 percent of frozen bread and bakery products made in Marijampolė to almost 38 countries worldwide, also doesn’t feel any worse situation in the export market. As it was said by the spokeswoman of the company Viktorija Masaitytė, currently there is no reason why one should worry about production sales in the Baltic, Scandinavian and Western European countries. Since the work goes at full capacity and partners of sales abroad regularly update the orders, no risk of export decline is felt in “Mantinga” factory in Marijampolė as well as in Panevėžys.

Currently, slightly more complicated situation is observed in the companies of the dairy sector. As it was said by Dalius Trumpa, the Chairman of the Board at the company “Rokiškio sūris”, the sales in Italy have already gone out of the normal rate in autumn. “The situation is still tensed there. Earlier, when we worked in this market, the fluctuations were more or less predictable, but now, every time when you go to extend the contract, you can’t

2011 became a record year for exports as compared with the whole period of existence of independent Lithuania.

8

Business. Leaders 2012

Lithuania’s most important export partners in 2011 16.6%

Russia Latvia Germany Poland

10.2% 9.3% 7%

Other In total EFTA**

8.6% 2.3%

In total EU

27.7%

61.4%

In total CIS*

know whether the customer will extend it”, – said D. Tumpa. According to him, the situation is not bad, but there is a certain degree of uncertainty.

The beginning is always difficult for furniture manufacturers. Currently it is also observed, but they do not associate the lower sales of this season with the euro zone’s economic slowdown.

“The market has slightly fallen not because of seasonality, but due to some kind of stressful tendencies. So far everything is normal”, – said Virginijus Brundza, the Production Manager of the furniture manufacturer “Freda”.

THE RECORDS WERE IMPROVED

Statisticians estimated that the year 2011 became a record year for exports as compared with the whole period of existence of independent Lithuania.

The companies also were improving the records.

“2011 was one of the best years in the company’s history. The sales increased by about 40 percent per year. Our products were sold very successfully abroad, and the demand was really very high. I think that the success of the company was caused by the appropriate choice of manufacturing products and technologies”, – clearly said V. Brundza.

According to him, if not that, the growth could be more moderate. The furniture made at the fac-

tory “Freda” has been sold in the Swedish global network of stores “IKEA” since 2011, therefore, the extent of production at the furniture factory located in Kaunas reflects the global consumer trends. “The sector of cheaper furniture hasn’t lost customers”, – stressed the interviewer.

* Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. ** Iceland, Liechtenstein, Norway, Switzerland.

THE YEAR OF DISCOVERIES

Martynas Grigalavičius, Marketing and Sales Director of the Group of Companies “Alita” considers 2011 as the year of discovery of export markets. “We have started to export to Switzerland and Russia. Alcoholic beverage exports in volume terms have increased by 63.5 percent as compared with those in 2010”, – he said. Although the group of companies exports the sparkling wine, which accounts for the largest share of export, to various countries, the most stable sales remain in Latvia where the Lithuanian brand is known not less than the local “Riga Balzams”.

Last year, Danish pastries which were made by the special Danish recipe by the company “Mantinga” in Marijampolė have been in high demand in the slightly further Danish market.

Kazimieras Jakutis, the Director of mattress manufacturer “Lono mažmena” also welcomes the new Danish market. The company

Export during 2006–2011 (in billions of litas) Year

Total export

Export of Lithuanian origin goods

2006

38.9

28.2

2007

43.2

29.5

2008

55.5

38.8

2009

40.7

28.3

2010

54

36.6

2011

69.6

45.9

Source: Statistics Department

Business. Leaders 2012

9

FROM THE NEARNESS PRICES ARE FALLING, BUT NOT THE EXTENT OF EXPORT

COMMENT

Aleksandras Izgorodinas

Expert of the Lithuanian Confederation of Industrialists

L Demand: according to exporters, the demand for Lithuanian goods is not decreasing abroad.

located in Jonava decided to establish themselves abroad by producing and exporting beds. According to the company’s Director K. Jakutis, negotiations with the Danes took about half-year, but it is expected that this year the modest collaboration will grow into strong twinning relationships.

THE GROWTH IS BEING PLANNED

All the interviewed entrepreneurs plan to continue growing this year, and it is most linked to success in export markets. “This year will not be worse than 2011. We are planning to increase the production by 10–15 percent, the income will not grow like this, because the downward trend in prices is felt in global markets. Therefore, it will be necessary to produce more, but for cheaper”, – said M. Gedvilas, General Director of the company “Amilina”.

The company of furniture industry “Freda” also plans to increase its production approximately in the same extent. “On the basis of forecasts we are planning that our product sales will grow by 10–15 percent. Significant purchaser “Ikea” allows us to expect that we will receive stable orders, however, the success depends on us as well. At least so far the furniture manufactured in Lithuania is well appreciated by the buyers from different countries”, – said 10

Business. Leaders 2012

V. Brundza, the Production Manager of the company. Although the step into the Danish market was successful for the Director of the company “Lono mažmena” K. Jakutis, he says that he was surprised of some things. “We did not expect that the Danish company would make the orders chaotically, and the conditions and requirements would constantly change. Previously we thought that the Scandinavians plan their work better. Of course, this is just trifles and subtleties of activity, but it is necessary to be aware of them”, – said K. Jakutis. However, the company currently exporting only 5 percent of the production promises to sell more not only in Denmark but also in other countries.

69.6

BILLION LITAS

is the amount for which the exports from Lithuania were made during 2011.

ast year was very successful for exporters, but at the end of the year we saw quite negative trends of export. It seems that the last quarter of 2011 brought more modest contracts for the Lithuanian producers in foreign markets.

Exporters faced not only decreasing demand, but also unfavorable changes in exchange rates. Last year, the exchange rate of the Polish zloty and the Belarusian ruble apparently dropped.

However, one shouldn’t dramatize the situation, as it is shown by the Lithuanian industry expectations index.

Half of the heads of large companies believe that the extent of export will remain stable, quite a significant part of heads – 39 percent – believe that exports will continue growing. This suggests that the risk that Lithuania’s exports will shrink is very low. Therefore, the most likely scenario is the further growth of export but at the slower pace than last year.

The export growth will be influenced by several factors. Firstly, preliminary economic indicators of the euro zone, which reflect the changes of GDP in the future, recently have obviously stabilized. It is expected that the euro zone will still be stagnating in the first half of the year, and in the second half – the economy will start growing again.

Secondly, the euro zone crisis has mostly affected the peripheral countries, i.e. Greece, Spain and Portugal. The further economic growth is expected in all major Lithuania’s export partners that have less suffered from the crisis.

Thirdly, Russia will significantly contribute to the Lithuania’s export growth this year. It is predicted that this year Russia’s economy will grow at the same pace as last year, about 4 percent.

FOUNDED BY

ISM EXECUTIVE SCHOOL ISM Executive School provides master of management studies and supplies the services of training and consultancy to success-focused mangers and companies.

TRAINING Today, we have got strong and welldeveloped professional competences in the major business management areas such as: ▪ Finance Management ▪ Sales ▪ Leadership and Personal Development ▪ Human Resource Management ▪ Changes and Organisation Development ▪ Project Management ▪ Marketing Strategy and Management ▪ Strategic Management ▪ Process management

ISM consultants are experts with practical and international experience who use best practice in the training programme development. Specific company problems are solved in a tailor-made way by applying new problem solution methods and techniques.

Training sessions may be conducted in Russian or English.

RESEARCH CONSULTING +370 5 212 3954 executiveschool@ism.lt www.ism.lt/executiveschool

INTERNATIONAL PROJECTS

FOREIGN TRADE GOODS EXPORTED IN 2011 Value (million LTL) Mineral fuel, mineral oils and products of their distillation; bituminous materials; mineral waxes

Share The change as compared (percent) to 2010 (percent)

17 649.7

25.3

39.7

Ground vehicles other than railway or tramway rolling stock; their parts and accessories

4 988.1

7.2

Nuclear reactors, boilers, machinery and mechanical appliances; their parts

4 277.8

6.1

34.3

Plastics and their products

4 037.5

5.8

16.6

42.6

Furniture; bedding, mattresses, mattress supports, stuffed furniture accessories; lamps and lighting fittings; illuminated signs and similar articles; prefabricated buildings

3 562.5

5.1

23.9

Fertilizers

3 356.4

4.8

61.2

Electrical machinery and equipment, their parts; sound recorders, television image and sound recorders and reproducers, their parts and accessories

2 906.2

4.2

18.2

Wood and wood products; charcoal

2 321.6

3.3

24.5

Milk and milk products; birds' eggs; natural honey; food products of animal origin

1 673.0

2.4

16.1

2 886.8 mln. LTL

GOODS IMPORTED IN 2011 Value (million LTL)

Share The change as compared (percent) to 2010 (percent)

Mineral fuel, mineral oils and products of their distillation; bituminous materials; mineral waxes

26 351.1

33.7

35.0

Ground vehicles other than railway or tramway rolling stock; their parts and accessories

6 242.3

8.0

48.5

Nuclear reactors, boilers, machinery and mechanical appliances; their parts 5 545.7 Electrical machinery and equipment, their parts; sound recorders, television image and sound recorders and reproducers, their parts and accessories 3 970.0

7.1

31.3

5.1

14.7

Plastics and their products

2 710.2

3.5

19.3

Organic chemical products

2 402.8

3.1

21.3

Pharmaceutical products

2 168.5

2.8

15.4

Iron and steel (ferrous metals)

1 585.9

2.0

42.4

Edible fruits and nuts; citrus fruits or melon peels and seed-coats

1 426.4

1.8

18.0

60.5 %

In 2011 as compared to 2010, exports to Western Europe rose the most to France.

Striking foreign trade and investment growth Karolis Urbonas

Head of Economic Research Group of Research Institute “Social Dynamics International”

I

n 2011 Lithuania has significantly increased its foreign trade activity. Export and import of goods have grown by more than a quarter as compared to 2010: export grew by almost 29 percent, and import – by nearly 28 percent. This is a positive new, as it shows that Lithuania is becoming

12

Business. Leaders 2012

a more active participant in global exchanges, and this provides more opportunities for the country’s entrepreneurs and citizens.

Normally, the main trading partners of Lithuania were neighboring countries - Russia, Latvia, Poland. Also it was very actively traded with Germany from which the production of more than 7.6 billion litas worth was imported.

The activity of Lithuania was also observed in the field of investment.

The investments have substan-

tially increased in both directions – in Lithuania and abroad. Foreign direct investment in Lithuania has increased 78 percent, and Lithuania’s investment abroad - more than double. It is worth emphasizing that Lithuania’s commitments for the EU have also been growing, and last year we had to transfer more than 1.1 billion litas to the EU budget. The biggest investors in Lithuania were in Sweden (over 3.2 billion litas of investments), Canada (over 1.2 billion litas of

investments) and Poland (over 1 billion litas of investments). The foreign investments were attracted the most by the financial sector, oil extraction (all the oil extracted in Lithuania is exported), the pharmaceutical industry and trade areas (both retail and wholesale).

The rapidly growing pace of foreign trade and foreign direct investment shows that the business situation is becoming easier and the investment environment in Lithuania is improving.

2010–2011 Export of 2011 11 537.1

2 484.3 mln. LTL

mln. LTL –

Russia was the largest export partner in 2011 4 624.2 mln. LTL

5 187.4 mln. LTL 1 625.0 mln. LTL

4 266.3 mln. LTL

3 606.6 mln. LTL

4 863.7 mln. LTL

85.1% 6 474.6 mln. LTL

In 2011 as compared to 2010, imports from Belarus increased the most.

CHANGES IN EXPORT AND IMPORT DURING 2010 - 2011 Change in export in 2011 as compared to 2010 (percent) Change in import in 2011 as compared to 2010 (percent) 36.4

Russia

29.0

40.7

Latvia

34.6

21.2

Germany

18.5

16.4

Poland

31.8

69.6

Estonia

25.8

42.1

holland

42.0

27.0

85.1

8.6

Belarus United Kingdom

60.5

France

20.3

27.2

Sweden

30.6

18.0

Ukraine

27.8

24.8

Business. Leaders 2012

13

HISTORY AWARDS ARE APPOINTED BY THE EXPERTS

The real business leaders are also revealed through receiving awards from the associated, independent organizations for achievements in industry, services or other areas of business.

Lithuanian quality mark Sta­sys Gu­da­vi­čius

O

ne of the most famous awards – “The Product of the Year” medals which were born 15 years ago in the Lithuanian Confederation of Industrialists (LCI) and which are annually granted for dozens of business innovations.

The LCI began to give the nominations of “The Product of the Year” in 1997. “This award was born from the campaign “Buy Lithuanian Product“. The experience of foreign countries was taken into account“, – said the President of the LCI Gediminas Rainys.

“I would call it the assessment of annual inovations in various industrial and manufacturing areas, the incentive for manufacturers who are looking for innovations and who perform their work qualitatively and creatively. In addition, the consumer’s attention

is drawn to the achievements of Lithuanian industry”, – he added. The Head of the LCI agreed with the comparison that “The Product of the Year” is the Lithuanian quality mark.

Over the past 15 years, the gold and silver medals of “The Product of the Year” were received by more than one thousand various goods or services born in Lithuania. Approximately 70–80 medals are distributed every year. In recent years their number has slightly grown – 105 awards of “The Product of the Year” were appointed last year.

The LCI informed that the evaluation system of two levels works during the election of “The Products of the Year”: “First of all, the experts of the 16 areas – food industry, clothing and textiles, machinery and equipment, construction and construction

materials, and other – select those products which, in their opinion, are worth of the title of “The Product of the Year”. Later on, the Commission created by the Presidium of the LCI appoints the nominations in accordance with expert opinion.”

“The main criteria for nominations – the product must be manufactured in Lithuania, the winner usually becomes a novelty of the same year, although there are the honorees for the production of some previous years. This must be the original product which hasn’t been present in Lithuania previously. Even the packaging and presentation can be the determined factors, sometimes even the original name”, – stated the President of the LCI. The LCI hasn’t conducted a single study on whether marke-

tability or popularity of the product is affected by “The Product of the Year” title. “However, we all know and see that the winners do not hide the fact that they have received “The Pro-

Over the 15 years, the gold and silver medals of “The Product of the Year” were granted to more than one thousand Lithuanian products.

14

Business. Leaders 2012

COMMENTS

Valdemara Rita Kazlauskienė

Director of the JSC “Liūtukas ir Ko”

T

o receive the nomination of “The Product of the Year” for our company means that we

Dmitrijus Čudakovas Director General of the JSC “Valdorfo didmenos”

W

e are not the only company in the market which offers the food of this type. It is important that our efforts to produce high quality products are appreciated not only by consumers but also by experts. This motivates to make further efforts and improve our products, to

Mindaugas Snarskis duct of the Year” award. Usually the award logo is placed on the most seen place of the package.

Thus, it is understandable that this award can attract the customers”, – said the Head of the LCI. According to him, the nominees themselves state that the sale of the product which is appointed by “The Product of the Year” award grows about 10 percent.

Director General of the JSC “Fazer kepyklos”

T

he JSC “Fazer kepyklos” is one of the leading bakeries in the country which sells bakery products marked with “Gardėsis” trademark. In 2011, even three products were awarded with the gold medals of “The Product of the Year”: “Gardėsis” black bread “Jorė”, the black bread “Jorė” seasoned with sunflower seeds, and coffee-flavored flaky pastries “Puri”. “Gardėsis” long loaf “Gero

are appreciated for producing an attractive product. Thus, the innovativeness of our company is appreciated as well as its high quality production.

Organic dumplings with beef produced by the company “Liūtukas ir Ko” were awarded with the gold medal of “The Product of the Year” of 2011.

I think that this product was awarded due to the fact that it is ecological, exclusive, because there wasn't any such product in the Baltic countries, and I don't know whether the analogical one is produced across Europe.

Now we take this product to demons-

trate in various exhibitions and also receive recognition there.

These dumplings are made from only certified organic products – starting with flour, pepper, salt, and ending with the meat of beef grown under special conditions. All the raw materials are granted with the ecology brand.

The production of dumplings is also modern and meets all quality requirements. We are the leaders in this sector of production. In 2008, the award of “The Product of the Year” was granted to our new product made then – potato sticks with cheese.

seek for better results.

In 2011, “Valdorfo” tomato sauce “Senovinis” was awarded with the gold medal of “The Product of the Year”.

This sauce produced by our company meets the high standards of quality, has a great taste. It is made according to authentic recipe, combining the ancient manufacturing experience with modern technology. We also tried to create as authentic product appearance as it was possible. These reasons probably determined that “Valdorfo Senovinis” became “The Product of the Year”of 2011.

The nominees are elected by the authoritative commision composed of high-level professionals. This is not just one man’s decision. We know from our experience that it is not easy to obtain this nomination, and not

every product receives the title of “The Product of the Year”. Perhaps this is why this year we proposed the best, in our opinion, tomato sauce “Senovinis” and we received the recognition.

The company has already received two nominations of “The Product of the Year”. In 2009, our gourmet Mexican sauce “Salsa” was awarded with the gold medal of “The Product of the Year”, and in 2010, our other hot sauce “Macho Salsa” also achieved the gold medal. And, of course, the latest nomination for “Valdorfo Senovinis” tomato sauce. All these products are popular and well-liked by customers. It is difficult to say whether the nominations have any influence on that. However, a good evaluation from consumers and experts is harmless for the products.

apetito” received a silver medal.

In case with “Jorė” we can see that we were awarded for the combination of the exceptional flavor of the product, trademark which is memorable for consumers and package. This is why the black bread “Jorė” seasoned with sunflower seeds became the most popular product in the category of bread with accessories in a short period of time in Lithuania. We value these awards as a nice evaluation of our teamwork and the incentive to make further efforts in baking daily bread, searching for new solutions and offering innovations.

For many years we have been among the leaders in packaged cakes sector in Lithuania, thus, presenting a new family of cakes “Puri”, we knew that consumers’ expectations will be very high. We believe that we’ve found a way to please

the today’s fastidious buyer by offering not only delicious cakes, but also convenient packaging that allows to enjoy the product not only at the table, but also when you are quickly snacking in a car or walking down the street.

Well, we believe that long loaf “Gero apetito” was chosen for the richness of flavor and natural ingredients. A natural leaven derived by the experts of the Food Institute of Kaunas University of Technology is used for making this long loaf. Since 1999 “Gardėsis” products have received “The Product of the Year” title six times. So, 2011 was very successful in respect of awards – we received even four of them. Receiving these awards influences the popularity of the product – helps to stand out in the large bakery product offerings. This, of course, can also help to increase sales.

Business. Leaders 2012

15

LEADERS EXCISE DUTIES INCREASE THE CIRCULATION

The retail trade giant “Maxima” remains the largest Lithuanian company within the existing number of employees; last year the most of taxes were paid to the state by the oil refinery “Orlen Lietuva”. It is shown by the data provided by “Sodra” and the State Tax Inspectorate (STI).

The largest taxpaye

Trade networks climb to the top of the list o Stasys Gudavičius THELEADER:“ORLENLIETUVA”

The most of taxes are transferred to the budget by the companies engaged in excise goods: fuel, tobacco and alcoholic products, as well as retail companies and monopolistic enterprises in energy and other fields.

STI reported that in 2011 “Orlen Lietuva” became the 16

Business. Leaders 2012

only company of the country that paid more than a billion litas of taxes – 1.279 billion Litas.

Other companies are far behind in terms of this indicator.

The tobacco company “Philip Morris Baltic“ remains in the second place as it transferred to the state treasury a little more than 0.5 billion litas. The third – the company engaged in the wholesale trade in alcoholic beverages

“Mineraliniai vandenys”, which paid taxes in the amount of a little more than 0.4 billion Litas.

THE FIRST HUNDRED BROUGHT A HALF OF TAXES

More than 100 million Litas were paid to the budget by “Lietuvos dujos”, “Statoil Lietuva”, “Maxima LT”, “Lukoil Baltija”, “Stumbras”, as well as the fuel selling company “Okseta”, the company providing

yers and employers 30 Lithuanian enterprises and institutions according to the number of insured employees* Company

JSC “Maxima LT” Budget Institution “Accounting of Budget Institutions” JSC “Lithuanian Railways” Hospital of Lithuanian University of Health Sciences, Public Institution Kaunas Clinics JSC “Palink” JSC “Lietuvos paštas“ Vilnius University JSC “Norfos mažmena” SC “Lesto” JSC “Senukų prekybos centras” Public Institution Vilnius University Hospital Santariškių Klinikos Kaunas University of Technology Lithuanian University of Health Sciences JSC “Rimi Lietuva” Public Institution Siauliai Republican hospital SC “Teo LT” State Enterprise Ignalina Nuclear Power Plant JSC “Orlen Lietuva” Public Institution Panevezys Republican Hospital Public Institution Kaunas Clinical Hospital JSC “G4S Lietuva” Vilnius Gediminas Technical University SC “SEB bankas” State Enterprise Centre of Registers Public Institution Klaipeda University Hospital Public Institution Republican Vilnius University Hospital Public Institution Kaunas Republican Hospital Department of Culture, Education and Sport at Kaunas District Municipality Administration JSC “InterSurgical” SC “Žemaitijos pienas”

of the largest employers. warehousing services “Ave-Matrox”, the wholesale trader in alcoholic beverages “Bennet distributors”, energy companies “Inter RAO Lietuva”, “Dujotekana” and others. Excise taxes, as compared to others, are several times higher, and thus they elevate the companies which pay them to the top of the largest tax-payers.

According to the taxes paid to the state budget last year, the first

hundred of companies transferred 7.656 billion Litas to the state treasury, and that is about a half of the total state budget collected from the value added, personal income, profit and other taxes, including excise duties.

TRADERS – THE LARGEST EMPLOYERS

According to the data provided by “Sodra”, the biggest num-

Number of employees

14 098

13 333 10 506 6 923 6 657 6 581 4 285 2 937 2 825 2 816 2 690 2 621 2 202 2 176 2 127 1 973 1 973 1 908 1 906 1 874 1 818 1 797 1 710 1 571 1 548 1 453 1 415 1 366 1 353 1 308

* Data of the second quarter of 2011 provided by “Sodra”

ber of socially insured full-time employees is in “Maxima”– more than 14 thousand.

A few years ago this retail trade network got ahead of the public company “Lithuanian Railways” which was considered to be the largest employer in Lithuania for many years. Formally, the second according to the number of insured employees is the capital budget office “Accounting of

Budget Institutions”. This company, which covers all educational, cultural and sporting facilities of the Vilnius City Municipality, holds all teachers of the capital, employees of cultural and sports facilities dependent on the budget – a total of 263 persons working in offices, which makes more than 13 thousand of employees. “Accounting of Budget Institutions” Business. Leaders 2012

17

LEADERS EXCISE DUTIES INCREASE THE CIRCULATION itself is comprised of nearly 90 people.

“Lithuanian Railways” has more than 10 thousand insured employees. Kaunas Clinics employs nearly 7 thousand people, the company governing the retail trade network “Iki” – “Palink” and the Lithuanian Post Office have 6.5 thousand each.

The largest employers of Lithuania include not only the number of trading companies, but also education and health institutions.

The retail trade networks are lining up among the largest employers in other countries too.

The largest employer in France is the food and drug retail giant “Carrefour” – about half a million employees, in the United Kingdom – “Tesco” (almost 470 thousand). The title of the world’s largest employer for many years goes to the American retail network “Wal Mart” which has employed even 2.1 million workers throughout the world.

Small number of employees working in banks

Experts of the Lithuanian Free Market Institute note that re-

aching the top of the list of the largest employers by the trade networks is not surprising because these companies provide labor-intensive services. Their activities require a lot of handwork. However, the trade networks in Europe do not take as many places among the first twenty largest employees as in Lithuania. Industrial companies invade into the largest employers in Europe: oil companies, car manufacturers. In Lithuania, the greatest number of employees is engaged by the service companies.

According to the public opinion survey data, the most desirable employer is a bank. However, only a few thousand people work throughout the country’s financial sector. Even the country’s largest bank “SEB” doesn’t fall into the list of the first twenty largest employers. The company’s size is also shown by its annual turnover and profits. However, based on the data provided by the Centre of Registers, these rates of 2011 will be known only at the end of spring and in the beginning of summer, upon the confirmation of all financial statements of the previous year.

Record: oil refinery located in Mažeikiai, owned by Polish Concern “Orlen”, brings almost one tenth of total tax revenue per annum into the budget.

18

Business. Leaders 2012

50 Lithuanian enterprises according to the TAXES PAID in 2011* 1 279 183

Percentage of total budget tax revenue 8.58

JSC “Philip Morris Lietuva”

505 059

3.39

JSC “Mineraliniai vandenys”

421 298

2.83

SC “Lietuvos dujos”

411 960

2.76

JSC “Lietuva Statoil”

341 533

2.29

JSC “Maxima LT”

307 485

2.06

JSC “Lukoil Baltija”

242 460

1.63

SC “Stumbras”

182 717

1.23

JSC “Okseta”

165 595

1.11

JSC “Ave-Matrox”

156 204

1.05

JSC “Bennet distributors”

147 596

0.99

JSC “Inter RAO Lietuva”

142 092

0.95

JSC “Dujotekana”

124 007

0.83

JSC “Ekoenergija”

122 927

0.82

SC “Vilniaus degtinė”

114 877

0.77

JSC “Bendida”

114 660

0.77

JSC “Senukų prekybos centras”

108 539

0.73

JSC “Švyturys-Utenos alus”

103 721

0.7

JSC “Klaipėdos nafta”

101 247

0.68

JSC “Palink”

89 740

0.6

JSC “Tele2”

73 044

0.49

SC Group of Companies “Alita”

71 915

0.48

SC “Teo LT”

69 678

0.47

SC “Lesto”

66 840

0.45

JSC “Omnitel”

64 831

0.44

JSC “Kalnapilio-Tauro grupė”

63 125

0.42

JSC “Rivona”

62 155

0.41

Gintas Vaičėnas’ company “Šoklys”

55 345

0.37

JSC “Latvenergo prekyba”

54 889

0.37

JSC “SilberAuto”

53 493

0.36

JSC “Skulas”

52 028

0.35

SC “Lithuanian Railways”

48 715

0.33

SC “Lytagra”

45 352

0.3

“Iberdrola Ingenieria y Construccion S.A.”

45 288

0.3

JSC “Rimi Lietuva”

45 114

0.3

JSC “Eugesta”

44 858

0.29

Company SC “Orlen Lietuva”

Taxes paid (in Litas)

SC “LITGRID”

44 335

0.29

Joint Lithuanian - USA Venture “Sanitex”

41 364

0.27

JSC “Bitė Lietuva”

41 158

0.27

JSC “ALSO Lietuva”

41 052

0.27

SC “Volfas Engelman”

40 834

0.27

JSC “Grivzas”

40 733

0.27

SC “SEB lizingas”

39 227

0.26

JSC “Swedbank lizingas”

37 733

0.25

SC “Lietuvos energijos gamyba”

37 541

0.25

JSC “Nordea Finance Lithuania”

36 990

0.24

JSC “Naftos dujos”

36 474

0.24

JSC “Kauno termofikacijos elektrinė”

34 892

0.23

JSC “Terminal LT”

33 545

0.22

SC “Swedbank”

32 112

0.21

* Preliminary data provided by the State Tax Inspectorate

INNOVATIONS

Two decades of success Stasys Gudavičius

T

he history of the Group of Companies “Init”, which began more than two decades ago, could be described as a period of successful innovation, progression and confidence-building.

The “Init” Group owns the brands “Vinita”, “Init”, “Sugardas”, “Elekta”, “Druskininkų televizija”, “Teletronika”, “Birštono televizija“, and the television of two cities “Init TV”. The history of the Group of Companies “Init” began in 1990, when the innovative firm “Init” was founded, – said the Group’s founder, promoter, General Director Assoc.

Dr. Paulius Živatkauskas. In 1992, “Init” started to provide cable television services.

Currently, cable television and Internet services are provided in Vilnius, Kaunas, Panevėžys, Visaginas, Druskininkai, Ukmergė, Lentvaris, Trakai, Birštonas.

According to P. Živatkauskas, the telecommunications company “Init TV”, which was founded 18 years ago, is no less important. “Its rise broke the tradition to broadcast the regional program in only one city.

New digital technologies have enabled the “Init TV” to become Vilnius and Kaunas TV. Since 2012, its programs can be watched by the population of the greatest Lithuanian cities. Today this television shows topical publicistic broadcasts which reflect the main life

events of Vilnius and Kaunas, as well as of Lithuania, the latest movies, and focuses on the history of Lithuania”, – stated General Director.

Currently “Init” joins about 120 thousand households and is the leading cable television operator in Lithuania.

The last decade was characterized by technological changes. “According to the statistics, Lithuania is one of the most advanced countries of the world in terms of average Internet bandwidth. “Init” started to provide Internet services in 2002. And, a coupleof years ago, we introduced the advanced technology that allowed us to offer customers the ambitious pace of Internet traffic of 120 Mb/s”, – said P. Živatkauskas.

In 2007, “Init“ was the first company in Lithuania that introduced a high-definition television technology in cable networks, which provides an exceptional broadcast quality.

In 2006, “Init” introduced another new service – digital television. The increase in users of “Init” digital television until recent years amounted to about 850 percent.

“Init” sells the service of digital television at a price close to the price of the service of usual cable analogue television, and subsidizes the digital equipment.

Development of digital television

Leader: P. Živatkauskas has established the Group of Companies “Init” providing cable television services which is now leading in Lithuania.

“Init” also offers its subscribers perhaps the greatest digital television set in Lithuania – even of 160 programs. It is planned to continue to expand it.

The year 2012 is special for the Group of Companies “Init”, because the analogue terrestrial television will be switchedoff in Lithuania on 29 October.

On the one hand, this change will not affect cable network subscribers – they will continue to see television programs.

On the other hand, this is the opportunity for the company to fight for new subscribers.

2011 was full of changes and challenges – fully updated television service patterns, service packages were unified in the companies of the group, the price formation changed, previously uncoded digital television was coded.

“We work with the end users to whom our provided services are associated with recrea-

Currently “Init” joins about 120 thousand households.

tion or leisure. Even the slightest change often leads to a wave of discontent, so everything is planned very carefully. This year, the Group of Companies “Init” is preparing to move to a single brand – it will ensure clear communication and more effective management of the service packages”, – said the Marketing Manager of “Init” Olga Belova.

“Recently, our competitors have become stronger, the money of investment funds entered the cable television business. However, we positively assess market consolidation because previously the market had a lot of small operators.

Most of them were focused on rapid subscriber growth, so, instead of competing for quality, companies often embroiled in price wars. The money of investment funds allows to quickly develop the technology base.

The Group of Companies “Init” is a private Lithuanian capital company, so in order to cope with competitive pressure, needs to look for effective and rational solutions”, – said P. Živatkauskas.

Business. Leaders 2012

19

from the nearness

State enterprises are climb MORE RETURNS ARE BEING MADE

According to experts, the main reason for the success of companies is the pressure from the Virginija Spurytė

M

any state-owned enterprises were booming last year – even those enterprises which had been counting losses for a few previous years worked with profit.

A RECORD WAS REACHED

“The year was not bad, even good”,– repeated the interviewed heads of the state-owned enterprises. After reviewing the activity results, it can be clearly stated that last year the state-owned enterprises lived not in the mood of crisis but of the economic boom.

Currently, the state owns 151 enterprises. According to their business profile, they are divided into four sectors: energy, transport, forestry and other enterprises. Some enterprises of each sector did not do very well, but many of them enjoyed a significant increase in profits.

One of these companies is the Klaipėda State Seaport Authority.

The port, which has existed for several hundred years, has reached the best result in its entire history: it received a record amount of cargo, and that guaranteed the unexpected number in the line of profits – 85 million Litas, whereas two years ago it was 54 million Litas.

According to Eugenijus Gentvilas,

Results of the State transport enterprises Company “Lithuanian 2011 Railways” 2010 Klaipėda 2011 State Seaport Authority 2010 Lithuanian 2011 Post Office 2010 Lithuanian 2011 Airports 2010

Profit (in million Litas) 181 78 85 54 0.3 –12 –3.9 –10.4

Source: Ministry of Transport and Communications

20

Business. Leaders 2012

the General Director of the Klaipėda State Seaport Authority, good performance indicators were caused by thoroughly prepared strategic plans and investments in the most cost-effective facilities. The Head of the port stated that his goal is to use good results in order to prove to the public that state-owned enterprises can operate successfully. 2011 was finished profitably by many state-owned enterprises of the transport sector. Excellent results were achieved by the “Lithuanian Railways” – their profits went up from 78 million Litas in 2010 to 181 million Litas last year.

PROFIT AFTER THREE YEARS

“I am satisfied with the last year’s results, however, there is always a room for improvement”, – said Skirmantas Skrinskas, the Director of the Lithuanian Road Administration, which last year controlled 11 state enterprises supervising roads of state significance.

The Director was delighted with the results because the state-owned enterprises were profitable last year and it happened after a three-year break. It s preliminary estimated that last year the state-owned enterprises received about 4 million Litas profit, while in 2010 they had experienced a loss of more than a million Litas.

The enterprises managed to earn, because they took not only the state orders, but some additional work.

“During the year, the enterprise paid fees in the amount of about 70 million Litas, and it will also pay the profit tax. In addition, from the earned money they paid the part for the funds required for road maintenance, therefore, it wasn’t necessary to wait for them from the state budget”, – said S. Skrinskas.

The General Director of the company “Smiltynės perkėla” Darius Butvydas also used the word “record” when he was talking about the last year’s performance. The number of transferred vehicles was a record – 615.5 thousand. “The flow of passengers was slightly reduced, and that was influenced by the reconstruction of Dolphinarium in the Lithuanian Sea Museum. However, the flows of vehicles eliminated the lack of passengers, so we finished the year profitably”, – said D. Butvydas.

According to preliminary data, the profit reaches nearly a half million Litas, its majority will be allocated to dividends.

A GREATER SUCCESS IS EXPECTED

The year 2011 was also good for the airports of Vilnius, Kaunas and Palanga. They did not receive a profit, but they managed to decrease the losses from 10.4 to 3.9 million Litas.

However, the airport executives still

All state-own ceived 326 mi

COMMENT

bing out of losses state to maximize profits.

rejoice: the number of served passengers was record in the country’s history – 2.7 million people. Aviation market in the Baltic region had the fastest increase in Europe. Last year the total passenger traffic in the five largest airports in the Baltic countries – Riga, Tallinn, and Vilnius, Kaunas and Palanga – grew approximately 15 percent and significantly exceeded the European average, which was 4.5 percent. Last year, the number of passengers increased at all international airports in Lithuania, and the highest increase was observed in the capital.

This year new directions are planned from all three airports of the country, it is hoped that 2012 will be even more successful for these state-owned enterprises.

The Lithuanian Post Office calculates the profit obtained last year, although it is minimal. The enterprise was pulled out from the losses, which amounted to 12 million Litas in 2010, by new marketing, cost reduction, increased sales of goods and services.

A BOOM IN THE FOREST ENTERPRISE The forestry sector also experienced a boom last year. According to the representatives of the General Forest Enterprise, the state forestry sector was profitable last year – the unaudited pre-tax profit amounts to 39.2 million Litas.

In general, 2011 was more successful than 2010: business taxes and income tax paid to the state budget were 1.8 times higher. The annual generated return of property used in the activity of the state forest sector (forestry enterprises), as compared with 2010, increased by 1 percent – from 17 to 18 percent. In 2010, the business (including special taxes) and income taxes paid to the state budget amounted to 51 million Litas, and last year – to more than 92 million Litas.

This year’s forecast shows that timber sales prices will drop by 10 percent, but the overall profit rate of 5 percent of sales revenue will be maintained.

All state-owned enterprises earned 5.107 billion Litas revenue and received 326 million Litas net profit during nine months of the year 2011.

ned enterprises earned 5.107 billion Litas revenue and remillion Litas net profit during nine months of the year 2011.

Ingrida Šimonytė Minister of Finance

C

ertainly last year’s results were better because the year was better for Lithuanian economy in general and for the majority of companies including the state-owned ones. Therefore, this year, it is expected that the state-controlled enterprises will pay to the budget more than half a billion in dividends.

This amount is calculated after the detailed assessment of the enterprises performance indicators and their ability to pay dividends without jeopardizing enterprise development plans.

It should be noted that the amount of dividends paid by the state-controlled corporations is consistently growing, because this Government does not apply the prior practice to exempt companies from paying dividends. Last year, the state-controlled corporations paid over 85 million Litas in dividends, whereas before the crisis they were paying 30–50 million. Upon the replacement of the State-Owned Enterprises Act, the obligation to pay a certain amount of profit into the budget was set not only for corporations, but also for the state enterprises that previously did not pay such fees.

We believe that profitable state-controlled companies must contribute to the achievement of budgetary targets because, in particular, their shareholders are taxpayers and they have a reasonable right to expect a return from their property. Such budget revenues at least partially replace the tax burden and help to make out a better balance in the budget deficit reduction burden attributable to individual public and business groups.

Second, the state-controlled enterprises are interested in neat state finances, because only in this case the state may provide its affiliated companies with support (by guarantees or other forms) which may be necessary for the development of their businesses and the implementation of strategic plans. The Western countries’ experience shows that not only the privatization, but also transparent principles of business governance can help to achieve the same efficiency in the activity of the state-controlled companies as it would be in the activity of the companies controlled by the private owner.

Opportunities for privatization of a large part of the state-owned enterprises are limited, because we are talking about the infrastructure or the objects otherwise significant for the state.

But even such specific enterprises have every opportunity to act transparently and generate a maximum return for a shareholder, only if tasks are properly formulated and the business governance is based on professional management.

Business. Leaders 2012

21

DIRECTION GROWTH IS BACK

Transport and logistics business is flying without brakes Jolita Žvirblytė

P

reviously learned lessons and gained confidence of clients rescue carriers and forwarders from the euro zone problems.

NO SHAKE CAUSED

BY THE EURO ZONE CRISIS

“The need for transport is present. If not we, others will do it”, – when asked about the situation in the transport sector, said Jonas Grybauskas – the Head of the logistics company “Lietmaz-servis”, which is located in Vievis , but has the truck fleet in Western Europe.

His opinion is supported by Rimvydas Stropus – the director of other local and international transportation company “Colourstone”. “We feel that some confusion exists, but it has no foundation. There are no signs of pre-crisis yet: the number of orders is not decreasing, our service costs are not falling”, – said the Head of the company located in Klaipėda.

According to J.Grybauskas, in the beginning of the year, some customers tried to push and sought to reduce the 22

Business. Leaders 2012

Freight trucks from Lithuania, running on the European r costs of transportation services, but the carriers stood out against it. “It was felt from the Russian customers, since the country joined the World Trade Organization and many people hoped that the customs fees would be reduced. As this didn’t happen, they started to press the carriers, but we didn’t agree to transport cheaper, since we would have to make the extra pay for the freight delivery out of our own pocket”, – said J. Grybauskas.

According to him, the situation has already stabilized.

According to carriers, sometimes they have to argue with customers for the pricing, but the negotiations are a normal business practice. “Comparing the current situation with the previous crisis, a double pressure was felt then. Fuel prices were drastically raising and the costs were falling. Although fuel prices still become higher, but not in such leaps. We manage to maintain our prices as well. Last year, our market was hit by stability – stabilization of prices, customers and routes. We expect the same this year”, – hoped R.Stropus.

uniformity of demand has frightened

Although carriers say that the transport business got back to normal last year, this sector has been and is the most unpredictable.

According to Algimantas Kondrusevičius – the President of the National Road Carriers’ Association “Linava”, the major problems were emotional in nature. “Last year we did not feel the Christmas mood, and it was bad, as we lowered our potentials as we could. Entrepreneurs became afraid of the future, refused to invest in commodities, because the future of the euro became unknown. This had an impact on the importing companies, but this trend has stabilized in the beginning of this year, and it was started to talk about balanced cargo flows. Russian, Belarusian, Ukrainian entrepreneurs are forming their cargo flows and they are stable importers as well as bread givers of our carriers and logistics specialists”, – said A.Kondrusevičius. According to him, customers began to organize logistics so that the flow of cargo would be smoother due to the perception of risk.

The Head of the “Lietmaz-servis”

roads, see no reason to turn the wheels back home.

J. Grybauskas acknowledged that the absence of the Christmas mood scared him a lot at the end of last year when the demand for transportation services jumped a few times.

“Usually the great year holidays are the busiest periods for us. As demand was increasing, we had to raise prices, so it used to be a hard but very profitable period. But there wasn’t anything like that last year, because the distribution of cargo flows was planned in advance. On the other hand, it is not bad, because the rhythm of our work has become more stable,” – considered J. Grybauskas.

A WISH TO WORK IN CHINA

According A.Kondrusevičius, carriers didn’t panic, took into account the needs of our customers, and even in January, when usually there is less work, quite a lot of orders were received. “I haven’t heard that any carrier would be very distressed or would not have any work. The number of TIR Carnets issued by the association “Linava” did not decrease, which best reflects the performance of our members”, – he said. According to the interviewer, if carriers do not have work

anywhere, they circle in those places where it can be found. “From the old times, it happened that the Lithuanian carriers became some kind of the Eastern and Western intermediates. We have already gained sufficient authority in Western Europe, successfully compete in our service quality and flexibility. Also we have already established in the Balkan region. We would like do the same in the East, but so far there are some obstacles.

For example, some companies are working in Kazakhstan, Central Asia, even in Afghanistan. The distance from there to the huge Chinese market is almost within arm’s reach.

But this country is not open for us yet. In the absence of the cross-border contract on the road transport between Vilnius and Peking,

Customers began to organize logistics so that the flow of cargo would be smoother due to the perception of risk.

neither Chinese nor we let each other in. Our government has already proposed a draft agreement for China, but they are still delaying. I hope that sooner or later this market will be open, because there are huge opportunities”, - A.Kondrusevičius considered.

CHALLENGES ARE BEING HANDLED

If the distant markets don’t unclose soon, the Lithuanian carriers won’t be toast by working in the regular markets of their activity. They learned the lessons from the crisis very well and try to save wisely.

This year, the Lithuanian carriers were struck by a lot of financially unfavorable changes. The list of the latter is really long: the changes in the Road Transport Licensing rules, the increased European road taxes and vehicle insurance charges. Also it is worth mentioning that the increase in road user charges is being planned.

“Most of the costs of transport companies, about 40 percent, are the purchase of fuel and road taxes. It is not possible to control the price changes of these factors. However, carriers have the opportunity Business. Leaders 2012

23

DIRECTION GROWTH IS BACK one palette of raw materials or goods today, and tomorrow – even the whole truck”, said Andrius Balkūnas – the General Director of the international parcel delivery company “Lex system”. He estimated that those companies, which abandoned their fleet, not only save up to 40 percent of transportation costs, but also eliminate the risk unrelated with the direct company activity.

Every year, as the number of parcels increases, it is just needed to invest in logistics systems, and that is assisted by the information technologies (IT). “Our shipments are distributed, monitored and managed by the IT systems specially developed by “Lex system”.

Moreover, unlike other market participants, we can adapt to accounting or business management programs used by clients, therefore, companies are able to link, for example, the processes of production and transportation of goods to the “Lex system” systems without any extra costs. We believe that clients have to dictate their own terms, and parcel carriers must adapt to these needs and satisfy them to the maximum. For example, by using the IT systems and logistics solutions, we have modeled a unique solution – the goods located in the customer’s central warehouse in Poland can reach Latvia, Estonia, Lithuania, Czech Republic and other European countries the very next day. The customer not only saves money but also reduces the transit time. One customer needed the special freezing boxes as he was carrying vaccines which must be maintained at a certain temperature. Other carriers didn’t want to invest in such equipment, but the “Lex system” wasn’t scared of this and today we take care of the whole logistics system of that company”, - said A. Balkūnas.

that the demand for these trucks could be stimulated if lower taxes are applied for vehicles of this class. Namely for this purpose, in some countries (for example, in Austria), separate rates are introduced for vehicles which comply with the “Euro 6” standard.

to retrospectively review the fuel and other services purchasing habits, as this analysis may help to assess the effectiveness of car fleet management”, – said Artūras Michejenko – the director of the fuel card management company “DKV Euro Service Baltikum”. He notes that large transport companies constantly monitor the fuel and road tax changes, and, if possible, adjust the car park management plans. Whereas smaller companies usually become aware of the changes, that directly affect their business, from the providers of services.

According A. Machejenko, as the needs of transport market participants were growing, the profile of its managed company also was changing. Previously, it was needed just to sell the fuel cards, but now there is a need to advise carriers.

For example, currently most of the carriers deal with an issue whether the environmentally friendly engines and trucks, which meet the emissions standard “Euro 6”, will help to reduce the road taxes.

A. Michejenko says that it won’t happen.

First of all, it must be noted that the tax rate increases, regardless of the deployment of advanced technical solutions in the transport sector. Their growth is being driven by many other factors, such as inflation, economic situation of the country, road condition. The latter factor is relevant in transit countries (the case of Poland). Secondly, due to the growing demand for more environmentally friendly vehicles and their use, the road tax rates will increase for non-environmentally friendly or less environmentally friendly trucks”, – he says. According to the interviewer, it would be fairer to say

IT STRENGTHENS THE ADVANTAGE OF LOGISTICS

Parcel delivery companies note that a range of manufacturing and trading companies already a few years ago started to abandon their transport and to employ parcel delivery companies. This happens for several reasons. “It is difficult for them to predict the exact cargo flows, hence it is difficult to plan how many loaders, drivers, vehicles are needed, the warehouse of what size will be needed this month and after six months. Those companies, that entrusted their cargo to the parcel delivery companies, can ask to deliver

FREIGHT TRANSPORT (THOUSAND TONS) Exported Imported

992

991

981 814

806

924

890

647

562

I

II

III 2008

IV

I

917

877

659

Quarter Year

1091

1042

965

915

II

607

III 2009

1275

1270

1254

1237

1185 1093

693

IV

740

655

I

II

787

III 2010

712

IV

932

768

I

II 2011

III

Source: Lithuanian Department of Statistics, “Creditreform Lietuva”

24

Business. Leaders 2012

Modern traffic information system helps to supervise the Lithuanian roads

Quality: another modern control system of the means of transport and mechanisms facilitates the performance of “Kaunas Regional Roads” functions.

“Kaunas Regional Roads”, founded 17 years ago on the basis of road management companies operating in Kaunas region districts, became the leading company in the field long ago. It puts constant efforts to ensure as safe and convenient road conditions as possible to the drivers in the area of the region from Elektrėnai to Kryžkalnis and from Balbieriškis to Gudžiūnai.

Vilija Žukaitytė Due to constant changes of weather conditions in winter, the companies supervising the roads of our country require modern means in order to control the situation on the roads of national significance. Having received the funds from the European Union and the Lithuanian Road Administration under the Ministry of Transport and Communications, modern equipment has been implemented, which enables the roadmen to get accurate information about the state of the roads quickly. Lithuania is the first from the Baltic countries, where the information system of the state of national roads, weather conditions and surface has started been initiated.

This system is good because it can be used not only by roadmen, but also by an ordinary driver on the website www.eismoinfo.lt. The website presents the information about traffic, weather conditions on the roads, stretches of roads under repair, roundabout ways, state of the surface, etc.

Vidmantas Lisauskas, the Di-

rector of “Kaunas Regional Roads”, spoke about the advantages of the system: “This system is one of our work tools. By analysing the data the specialists can forecast the state of road surface and expeditiously plan their work. The coefficient of friction is constantly recorded: its value enables deciding when it is getting slippery.

Moreover, video cameras allow us to see the processes happening on the road and evaluate the results of the work that has been done.”

The major part of data is collected from the road weather stations (RWS) into the information system. Sensors that are installed in the equipment take the weather temperature, heaviness of precipitation, its type, wind speed, road visibility, depth of freeze, the state of the road surface. At the moment there are 91 stations of this kind in Lithuania.

The data collected from the stations is processed, supplemented with information from the duty companies supervising the roads, the traffic participants, and then is presented to the society.

Tomas Mockus, the assistant manager of the company under the supervision of the roads, said: “For the meantime the whole

system is working under the test mode. It is being improved by developing the number of performed functions. The network of the stations is going to be extended in the future.”

Another modern control system of the means of transport and mechanisms facilitates the performance of “Kaunas Regional Roads” functions. Almost all cars are installed with mechanisms which collect information about the geographical location of the vehicle at every moment, engine operating mode, i.e. the state of combustion, engine speed, accumulator voltage, fuel remainder in the tank. The received information is transmitted to the official station, where it is collected and analyzed.

V. Lisauskas, the Director of “JSC ELJUNGA”, said: “The installed system of the “JSC ELJUNGA” enables the control all means of transport. Due to it we can see the beginning and end of vehicle operation, its route and the amount of fuel consumed. Therefore, the comments of some internet users about thefts of fuel or deviations from the indicated route are not justified.”

Business. Leaders 2012

25

DIRECTION Exclusivity – a wide range of services

Every day the trucks of the freight transport company “Vitransa”, which is located near Klaipėda, move from the warehouses in different directions.

The company transports cargo not only from Europe but also from the Asian countries to the most distant corners of Russia.

Cargo carrier routes reach even Asia Transport Asta Aleksėjūnaitė EXCEPTIONAL SERVICE OFFERINGS

The transport logistics company of “Vitransa”, which successfully operates in the port of Klaipėda, offers its customers a full range of services. “Our company’s uniqueness is that we can offer all the services necessary for our clients - cargo collection, storage, sorting, packing and conveyance to the place”, – assured company’s General Director Vidas Augaitis.

The long-term rent of storage space or temporary storage of cargo, cargo handling are offered in the company’s warehouses, which are located near the highway Klaipėda-Vilnius, in Sudmantai. “We have as many customs warehouses as simple ones. There are 5 thousand square meters of warehouses 26

Business. Leaders 2012

in Sudmantai. We also have another warehouse of 2 thousand square meters”, - said the Head of the company V. Augaitis.

increasing volumes of cargo in the port

The company founded in 1996 managed to gain the image of reliable and responsive partner within a few years.

We do not seek after insurmountable plans, the most important thing for our company is to keep its customers and meet their expectations. It is important for us to keep our word and implement our promises”, - said the Head of the company. According to V. Augaitis, the company doesn’t feel the peer competition and treats them rather as partners.

The channel deepening in the port of Klaipėda has provided the opportunity for larger ships

Directions: the company “Vitransa” transports cargo not only from Europe but also from the Asian countries to Russia.

carrying containers to stop in the port. “We believe in future projections. Cargo traffic at the port of Klaipėda is growing. Previously, carriers transported the Asian goods, for example, only through the European ports, and now Klaipėda is able to compete”, – assured the Head of the company. The cargos of “Vitransa” customers, which reach the port of Klaipėda, are stored in the company’s warehouses, and are distributed to other countries from there. A part of them are transported directly to Russia, the CIS countries.

Reliable employees are appreciated

According to V.Augaitis, the company is currently carrying furniture, household appliances and other goods not only from Germany, Austria, Denmark, France, but also from ot-

her Western European countries. Shipments are transported by trains to Russia, Kazakhstan and other CIS countries.

The cargos from China and other Asian countries are shipped to the port of Klaipėda in containers. After the cargos are received at the “Vitransa” logistics center from the port, according to the customer’s wishes, they are complemented and sent to Russia, and there they are distributed according to orders.

The company transports cargos in various types of containers. Forwarding takes place from any port in the world to the Baltic ports. “We provide the services of document preparation, representation in customs, additional security”, - said the Head of the company. However, the company’s team was named by V.Augaitis as the greatest guarantee of the company’s success.

Breakthrough Warranty of longevity

The market leader’s name – “Mida LT” Justė Labutytė

c

ompany “Mida LT” is a well known to business professionals of construction, which has five decades of experience. The company is the only bituminous roofing manufacturer and market leader in the Baltic countries.

POPULAR EVEN IN AFRICA

Today “Mida LT” exports most of its production to other countries. However, the Lithuanian company conquered an important part of bituminous roof tiles market not only in Europe.

The production of “Mida LT” is becoming increasingly popular in the Asian region, New Zealand and even Africa.

The company’s director Jonas Dromantas is convinced that the competitive advantage of both local and foreign markets has been achieved through continuous investment in the most advanced technologies, flexibly responding to customer needs.

“Mida LT” pays a particular attention to the product’s quality, so the products of this Lithuanian company are comparable to and often even better than the Finnish, Canadian, Belgian manufacturers’ production.

The company is continually upgrading bitumen tile production line, so “Mida LT” may offer the products characterized by longevity which are made under the most advanced technology and has a warranty up to 50 year.

“Mida LT” has earned the repu-

tation of reputable manufacturer not only because of the high quality products. The company pays special attention to service: technical consulting and after-sales service departments are ready to solve all outstanding issues.

THE MOST RESISTANT COATING

According to the head of “Mida LT”, in recent years, bituminous roofing tiles have become more and more popular in Lithuania.

Now everybody seek to build the houses from warmer and lighter materials. Bitumen tiles, unlike the ceramic ones, are light, such roofing is very hermetic, easily laid. I think that in terms of price and quality it is a highly optimized version”, – said the Head of the company.

The pride of “Mida LT” is the flexible bituminous laminated tiles “JAZZ”. This is a high-class coating with the best technical indicators. It is also intended for original design decisions and customers appreciating the aesthetics. The assembled tiles compose the reliable coating of 3-4 layers which have good resistance to UV rays, wind, excellent sound insulation.

ADAPTED FOr THE CLIMATE

The following bitumen tiles of the form of trapeze and others are very highly valued by builders: “Accord”, “Hexagonal”, “Delta”, “Beaver” (“Bebro uodega”) and “Trio”. All these tiles are manufactured according to the requirements of the European technical approval and have the CE marking. The products are tested according to the requirements of the EN standard, laboratory tests for durability are being carried out.

“Mida LT” produces the roofing considering the climate of that country for which tiles are produced. In addition, the production is carried out socially responsibly, respecting the environment.

Substantial part of the company’s products also includes roll roofing for flat roofs.

“Mida LT” is a part of the corporation “TechnoNICOL”

which is the world leader in the production of roller coating and is one of the largest producers of bituminous roof tiles in Europe and Asia.

The quality management system, which is certified under ISO 9001:2008 international standard, is introduced into the production of flexible bituminous roof tiles. This guarantees a high quality of product for the buyer.

“Mida LT” continuously invests in production and sales network development – the products are distributed through the distributors as well as major retail chains across Europe. www.mida.lt

The choice: “Mida LT” produces the roofing considering the climate of that country for which tiles are produced.

Business. Leaders 2012

27

Passed the exam of changes All Lithuanian business basically can be divided into three peculiar generations, three “age groups”.

Stasys Gudavičius

T

he first would include the oldest business companies appeared several decades ago, during the Soviet period.

These typically are the industry, manufacturing companies, often very large. Formerly appeared as the state companies belonging to the “workers”, they managed to survive the new market economy changes before twenty decades and the challenges of privatization. It is not true that everything that was born a few decades ago, today has already collapsed, dead.

There is more than one exception. And today some of these companies are alive, evolving, moving forward. One representative of the oldest business generation is the Lithuanian Post Office, such companies as “Kautra”, “Ortopedijos technika”, Western Shipyard.

When Lithuania restored

its independence and began to live under the market economy conditions, a number of new companies have appeared in the country. Usually they are involved in trade in various services, brokerage, logistics. In recent years, such companies celebrate their twenty-year. Among these companies are and are presented such as “Tête-à-Tête”, “Pirmas žingsnis”, “Lotelita”.

But the life is moving forward.

Every year the face of Lithuanian business is also changing.

New companies appear. The latest generation companies should also include those which occurred quite recently, a few years ago, such as “National Golf Resort”. They appeared under the challenging circumstances – during the rampageous crisis, under the economic downturn. However, such challenges only temper, promote to flexibly respond in the situation of demand-supply, to move forward in accordance with the philosophy of challenges. Each company developed under the certain circumstances, each of them went through different challenges, but today they are successfully working for the Lithuanian consumer...

PANORAMA THREE GENERATIONS OF BUSINESS

Long experienced business fears no challenges

High quality based on advanced technologies and functionality of products as orthopaedic remedies are selected by consulting the best specialists — this is the motto of SC “Ortopedijos technika” contributing to its acknowledgement.

Justė Kiburytė FOUNDATION DATES BACK TO PREWAR PERIOD

From three workshops to huge company with subsidiaries in the biggest cities of the country; from several hundreds of prosthetic orthopedic products and footwear up to 50% of country market, supplied with up-to-date prostheses serving the functions of limbs, and other production for more than 30 thousand of patients visiting the company and its subsidiaries per annum. Such a leap of SC “Ortopedijos technika” proves the endless capabilities of the talented and hardworking.

This “from-to” list could be expanded and illustrated

with remarkable numbers and facts, which date back to 1934: the year when SC “Ortopedijos technika” was established and three companies functioned in Kaunas. One of them, the wardisabled workshop in Kaunas, was famous abroad: with the aim to provide help for the disabled in the World War II and other citizens, a prosthetic orthopaedic union was founded on Donelaičio Str., Kaunas. It was the basis for the present SC “Ortopedijos technika” which grew and developed having inherited the experience of highly-skilled masters.

In 1972 the company moved to a new building on Partizanų Str. 17, which is currently the central headquarters.

GREW BY 100 TIMES

The year 1990 marks the “rebirth” of the company: a 40-bed hospital and health care centre accommodating 200 patients a day were established.

Since 2000, LTL 35.9 million was invested into the modernization of the company, renovation of buildings and improvement of medical services. Presently, the company produces and applies more than LTL 23.5 million worth prosthetic orthopaedic products a year. Over nine hundred patients are treated in the hospital annually. They are applied special treatment, prostheses after amputation of limbs, and rehabilitation.

The specialists of the health care centre, including orthopae-

ACHIEVEMENTS The sport prosthesis produced by the company in 2002 for the athlete Tomas Kairys has been awarded a diploma as the most favoured among the visitors in the contest “Lithuanian product of the year 2002”. The prosthesis distinguishes by its original construction and extraordinary functionality. Tomas Kairys has achieved impressive results in international championships. In the same year, a myoelectric prosthesis, controlled by the brain impulses and muscular tension, was suited to Vaclovas Vendelis. In 2004, together with Otto Bock (Germany), the company produced the first thigh prosthesis with computer-controlled leg joint, C-leg, in Lithuania for Vytautas Venckus. Such prosthesis provides absolute safety and freedom of movement. Presently, about 2-3 patients are provided with such prostheses annually.

dists-traumatologists, a neurologist, physical medicine and rehabilitation specialists, echoscopists, and an endocrinologist, provide consultations concerning spinal curvatures, joint, tendon, muscular and other orthopaedic diseases.

WELL AND QUICKLY

The company gives priority to the production of very complex individual prosthetic-orthopaedic products and footwear. It offers a flexible payment system as the base price of the product is compensated by 50, 80 or 100%.

The clients are offered the range of about 300 brands of technical orthopaedic appliances, imported of produced by the company, in the shops-trade centres of the largest Lithuanian cities.

The greatest share of the exported production consists of individual orthopaedic footwear, serial and individual milled foot splints. Currently, the production is exported to various clients from 18 foreign countries.

Business. Leaders 2012

29

PANORAMA THREE GENERATIONS OF BUSINESS

Lithuanian Post a long time ago became not only the place of the letter and parcel delivery or receipt, but also of many logistical, financial intermediation, as well as various other services.

And there will be more of them in the future.

Lithuanian post: keepi Stasys Gudavičius The objective – an effective businesS

General Director of the Lithuanian Post Lina Minderienė pointed out that “for many years the state-owned enterprises were operating under the supervision, but without any specific targets, and often unprofitably”.

But now the old and rigid order takes a little change. “Now the shareholders pose some clear and specific goals for the state enterprises. First of all, to be profitable and bring benefits to the state. The Lithuanian Post is not the exception”, – she said.

Due to the incompetent solutions of the former management of the Lithuanian Post, the company lost its market share as well as the most customers. Now we must work in a way that would help to restore the lost confidence and the position in markets. In addition, we have to be profitable,“ – said L. Minderienė.

THE EXPECTED PROFIT

In 2010, the state-owned enterprises were defined with the transparency ensuring guidelines. “The activities of the Lithuanian Post must be public and transparent, the company’s financial performance, activity reports must be available to every citizen. The Lithuanian Post is working in this direction for the last two years”, – said the General Director.

She is proud and pleased that the Lithuanian Post was able to reduce its minus in a few times and even to complete the last quarter of 2011 profitably after the long years of unprofitableness.

Even in 2009 the Lithuanian Post’s loss reached 67.8 million litas. “The structural

WHEN YOU COME TO THE LITHUANIAN POST, YOU CAN:

Change: The Head of the Lithuanian Post L. Minderienė is pleased that the company was able to reduce its minus in a few times and even to complete the last quarter of 2011 profitably after the long years of unprofitableness.

30

Business. Leaders 2012

• send a letter, parcel, postcard; • subscribe publications; • send and receive money orders; • pay municipal rates; • take a credit, insurance; • purchase Governmental saving notes; • purchase various goods.

changes were carried out, the reduced operating costs were the main reasons why we had only 10.2 million loss in 2010. We were operating in the same direction in 2011 too. We continued to reduce costs, improved the act of posts, activated the sales of goods and services. All this has led to good results”, - said L. Minderienė.

Currently, the Lithuanian postal financial results are being calculated, the independent audit report is being expected. It is hoped that over the past year, the company managed to eliminate its losses and even gain some profit. The management of the Lithuanian Post expects that this year its earnings will be even higher.

SOME EXAMPLES ARE SEEN ABROAD

“The examples of the foreign countries are the best evidence that even state enterprises can be competitive and the market leaders. For example, “DHL” or “TNT” formerly also were the state-owned enterprises.

After the adoption of appropriate decisions and gaining more opportunities, these companies became the global market leaders.

Why can’t the Lithuanian Post become the Eastern European market leader following these examples?” - L. Minderienė told the ambitious goals and objectives. According to her, the Lithuanian Post became a transparent, stable, reputable company that pro-

ing pace with the time

vides not only the modern and professional postal services but also logistics, financial, brokerage and electronic services.

All these goals must be implemented by the Lithuanian Post until 2013, after the postal market would have been liberalized. The company will have to respond to the market changes more operatively and offer its customers the best and highest quality services.

Post offices in shopping centers

The post is going to liberalize the market since now: it updates the customer service areas, invests in technology renovation, provides new and modern services. “We always try to offer our customers attractive, high quality and affordable services. We want to make Lithuanian postal service quickly and easily accessible. Therefore, only during the last years, Lithuanian Post has opened 13 new post offices in major shopping centers in Vilnius, Kaunas, Klaipėda, Panevėžys, Mažeikiai and Alytus“, – the director informed.

L. Minderienė said that the post offices, which are already operating in shopping centers, begin to show excellent results during the first few weeks of work – the cus-

tomer flows there are several times larger than in regular posts. “Such results show that the decision to move post offices to the more attractive places for people has been clearly proved”, – she said.

“In addition, we have prolonged the working hours of post offices so that people could use the postal services at the right time for them”.

We also managed to attract new customers by reducing the cost of fee and tax collection services. Now, the fee payment in the Lithuanian Post is among the lowest in the market. Many people have already noticed and appreciated that.

L. Minderienė told that one of the greatest innovations of the previous year was the self-service parcel terminal network “Siuntos24” installed collectively with the company “Kautra”: “It will be possible to send and receive shipments through these terminals at any time of the day, and the terminals are equipped in convenient for residents and quick-to-reach places - near the major shopping centers, filling-stations.

Shipments also can be sent to foreign countries through these terminals. Although we started to install the terminal network in the end of last year, we see that this service is really attractive to local residents and businesses”.

Will strengthen positions in electronic space

General Director said that last year the Lithuanian Post continued to reduce operating costs, focused on promoting the sale.

“Our goal is to serve customers professionally, so last year customer service trainings were held for postal workers for the first time. Nearly 2 thousand people were taught during these trainings. The success of the business depends on how you meet the client and how you see him off”, – she believes.

A FEW HISTORICAL FACTS • 11 July 1562, Sigismund Augustus, the King of Poland and the Grand Duke of Lithuania assigned to organize a regular postal transport route Vilnius-Krakow-Vienna-Venice. At that time, letters from Krakow reached Vilnius within 7 days.

• The post’s importance has increased more when in 1583 Stephen Bathory, the King of Poland, set the same postal and transport charges. Everyone had the possibility to use the post. At that time, the post began to be delivered regularly.

• 16 November 1918, Martynas Yčas, the Minister of Finance, Trade and Industry of the independent Lithuania, signed a decree, which established the Board of Lithuanian Post. The Lithuanian postal history is officially calculated from this day.

• During the Second World War, the Lithuanian communications were destroyed, the postal transport no longer existed, as well as communication by rail. During the whole Soviet period, Lithuanian communication activities were completely dependent on Moscow.

• 7 October 1990, the first stamp series “Angelas” appeared in the postal circulation of independent Lithuania.

• 17 December 1991, it was decided to reorganize the communication management structure of Lithuania: to separate the post from electrical communication and establish the state enterprise Lithuanian Post and the state enterprise Lithuanian Telecom.

In 2006, the company was reorganized into a stock company Lithuanian Post.

In the future, it is intended to strengthen the positions of the Lithuanian Post in the spheres of courier, financial and electronic services. It is planned to modernize the process of postal distribution, optimize the postal network.

The Lithuanian Post has already entered into the space of online service delivery.

“Last year we offered our clients to purchase various goods from the electronic store of the Lithuanian Post. In the future, we intend to offer customers some other new electronic services”, – said the Head of the Lithuanian Post when she was talking about the plans.

One of the greatest innovations of the previous year was the self-service parcel terminal network “Siuntos24” installed collectively with the company “Kautra”.

Business. Leaders 2012

31

PANORAMA THREE GENERATIONS OF BUSINESS

A.Šileika: it is important not only to survive but also to grow Lina Bieliauskaitė

A

lthough the Klaipėda port companies, as many other business entities, are going through hard times due to the economic crisis, today they are the main donors of the Lithuanian budget. Even stable working companies, which generate profits in millions, must constantly look for new markets, improve the quality of services, expand their range, invest in advanced technologies. One of them is the Western Shipyard (WSY) Group of Companies. The company, which has been operating for five decades, managed to maintain its nature of activities after the privatization, as well as to demonstrate its ability to be competitive in the European markets. Within about 5 years, this port company, which consists of 23 companies, invested more than 200 million litas in the software update, installation of the most modern technologies, staff training and improvement of their working conditions. However, as it was acknowledged by the General Director of the WSY Group Arnoldas Šileika, business intentions alone are not enough for the best results.

– The WSY Group of Companies sometimes has to compete not only with Klaipėda’s companies of such kind, but also with foreign ones. In your opinion, what makes you attractive to customers?

– One of our group’s strategic objectives is a competitive advantage. Under the today’s market conditions, we must constantly improve, invest in improvement of operational

efficiency, service quality and our own competence training. All these factors determine our attractiveness to customers.

In order to gain a competitive advantage, we work in almost all directions of activities demanded in the port. We are not only the shipbuilders, repairers, we also perform the works of cargo handling, metal processing, warehousing, ship agency, production of oversized structures. Due to investments, the Group of Companies has become the largest heavy engineering industries company in Lithuania and one of the country’s largest exporters and taxpayers. In addition, we are versatile, professional and focused on a common goal.

Also we are very proud of having a young, dynamic, competent and ambitious team.

Through our teamwork we can offer our clients a full range of services at competitive prices and attractive terms.

– How would you evaluate the company’s activity in the past year, in 2011?

– Last year was quite complex for our Group of Companies. Due to the global economic situation and trends in shipping, the number of orders was decreasing, the prices of ship repair and construction activities were falling.

However, we can rejoice that we managed to attract new clients in the area of ship repair and modernization, we implemented the technologically complex projects. During the past year, we repaired more than 100 ships of various purposes. Also I am pleased with the shipbuilding activity. We built the environmentally-friendly truck “GAIA” for the Danish company “SVITZER A/S”. The pro-

fessionals of our Group of Companies implemented this project until the very key. Also, last year, we built the world’s largest gas-powered ferry “Boknafjord” and ferry “Edøyfjord” for the Norwegian customer.

It remains to add that, under such difficult market conditions, we must adapt our activities to qualitative and efficient work, so that we could talk not only about the survival but also the growth. There are still enough of opportunities and challenges in all spheres of activity.

– The WSY is known as one of the country’s largest employers. How does your company manage to maintain a reputation of attractive employer?

– Last year, the Group of Companies had an average of 1 887 employees. If you add to this number about 1 500 workplaces provided to the companies’ employees by the outside contractors, we could say that every fifth family in Klaipėda is associated with the WSY Group of Companies. Employees are our main asset. We try to create the most favorable working conditions for them. In my opinion, we are attractive due to the fact that we purposefully seek to set goals, constantly invest in activities and working conditions, we are a stable and reliable Group of Companies.

Much attention is given to social guarantees. In addition, employees have the opportunity to not only work but also to earn money.

I think that one of the indicators determining the attractiveness is the salary paid officially

Under the today’s market conditions, we must constantly improve, invest in improvement of operational efficiency, service quality and our own competence training.

32

Business. Leaders 2012

and always on time. I also would like to rejoice that the average wage in the Group of Companies is one and a half or two times higher than the average Lithuanian wage.

We invest and take care of our employees.

Constantly we are improving our infrastructure and working environment. Also we pay much attention to trainings, competence development. In addition, we are interested in employees’ leisure time and their employment after work. Together we celebrate the great feasts, organize the traditional summer feast, hold the best employee’s contests, open days for the families of employees and others.

We do not forget that we are the largest employer in the Western Region. Therefore, we also focus on the growth and development of Klaipėda and the region. Klaipėda citizens are an integral part of our company’s activity unit.

I have to admit that with the increase of emigration there is a constant lack of highly skilled workers and professionals in the engineering field. However, in collaboration with the Labor Exchange of Klaipėda, Klaipėda University and other educational and scientific institutions, we seek mutual benefit and outcome.

– Maybe after establishing the nominal scholarships for the students of the Faculty of Marine Technology of Klaipėda University, you expect that the graduates will choose your company?

– The main goal of this project is to encourage young people to choose the ship engineering specialties. Smart and ambitious young people who have completed the practice in one company of the WSY Group of Companies have the opportunity to stay here and work. I think that this project is a great opportunity for a young

man to get additional income alongside with studies, to formulate his future goals and visions, as well as to model the career prospects.

– Lately, there is a considerable discussion that the part of the money earned by the port’s companies should be returned to Klaipėda as a compensation for the inconveniences which are experienced by the city residents due to these industrial activities. Can it be stated that your company has found more rapid and simpler ways to contribute to the welfare of the city?

– The WSY Group of Companies is a socially responsible company. We are a part of Klaipėda, so we feel the obligation and responsibility to care for the welfare of the city, its cultural and social life. We always support various events, participate in support projects, pay a lot of attention to the child care homes. We are the main sponsor of the Klaipėda’s basketball team “Neptūnas”. We share many years of experience in collaboration with the organizers of the Sea Festival and the Klaipėda Castle Jazz Festival.

In memoriam of tragic fate of ships and seafarers, we built the 12-meter part of the monument of “Albatrosas”, representing the powerful sea bird. That was as a gratitude to the city and its people who build the ships, live here or just visit. Through the contribution to this project we felt as the part of one big family. Such monuments strengthen not only the city’s image, but also the whole country’s image, enhance citizenship, promote social activity.

– What are the activity plans, ambitions of your Group of Companies for this year and the coming years?

– We have many ambitious plans in all major areas of activity of our Group of Companies, and this is reflected in the companies’ activity strategy which is currently being prepared for the next four years. It is understood that in the preparation of plans, we cannot ignore the today’s world economic situation and its future development, the processes taking place in our export markets, and in Lithuania. We must harmonize the ambitious shipbuilding, ship repair, cargo handling business plans with the Klaipėda State Sea Port Authority’s opportunities to invest and to create the appropriate port infrastructure to realize these plans.

Unfortunately, our desires do not always coincide with the Klaipėda State Sea Port Authority’s opportunities. As an example, I would like to mention our plans for this year to sign a contract with the company which would have to build us the dock for vessels of “Panamax” size. That would lead us to another level of the game in the ship repair market, but today we are in suspense, when the Port Authority would be able to prepare the infrastructure for this dock’s construction.

This impede the realization of our ambitions, and more than 70 million litas investment.

– In you estimation, will the common economic and political background in general be favorable this year for the implementation of these ideas?

– Assessing the external environment and the today’s debt crisis of the EU countries, as well as economic recession and that this year the elections to the Seimas of Lithuania will take place, – it will be not easy to implement the ideas.

Business. Leaders 2012

33

PANORAMA THREE GENERATIONS OF BUSINESS

“Kautra”: the company functioning for The company “Kautra” established in Kaunas will celebrate the 80th anniversary of its activity in two years. Longterm experience, highest-level management and new ideas turned it into the fastest growing long-distance transport company in Lithuania.

Beginning: On 8 February 1934, Kaunas City Council established a bus company to transport passengers in Kaunas city.

Aurelijus Barkauskas BUSES ASSEMBLED IN ŠANČIAI DISTRICT

The company was founded on 8 February 1934 after Kaunas City Council had taken the decision to “establish a bus company to transport passengers in Kaunas city”. In 1935 the municipality started to organize bus traffic to suburbs, whereas in 1939, already 454 employees worked in the company, it had 70 buses, most of them “Mercedes Benz”. There was no need to buy the buses abroad as they were assembled in Šančiai district.

In 1940 the authorities of the city placed an order for 10 new buses, but the production as well as bus traffic were terminated due to war. The activity was renewed in 1945 when several buses began to run the route Town Hall-Panemunė district. In 1947 the first two busses were set on the route Kaunas-Šiauliai for the 34

Business. Leaders 2012

first time. The amount of cars, employees and transported passengers grew every year; the area of routes expanded as well.

Later the company changed its name and the applied technical equipment several times.

In 1995 Kaunas City Board reorganized the company into JSC “Kautra”.

“In Lithuania, transportation by local buses began in Kaunas. Our company is unique in respect that it is still located at the same place, develops the same activity and the buses leave through the same gate as 78 years ago. Calling us a giant company would perhaps be over exaggerated. After all the bus and trolleybus depots of Vilnius city are far bigger. However, we, undoubtedly, are the largest company in the field of intercity transportation and have many subsidiaries; the company is noticed due to its strenuous activity. We have recently won sev-

eral competitions and the development, which is implemented mostly in our operation zone, i.e.

Kaunas region, was successful,” — said the Director General of “Kautra”, Linas Skardžiukas.

The company is gradually becoming the national transporter.

“We have subsidiaries and experience in the field, which makes us superior to younger companies. We are able to offer new buses to other cities. The work is noticeably facilitated due to the subsidiaries which also enable reducing the expenses since we do not require independent information technology departments and accountancies in other cities. All this work is done in our centre in Kaunas. Thus, the money we have saved may be used for the renovation of buses,” — said L. Skardžiukas.

In 1997 the company owned 203 buses, but most of them were timeworn: old “Ikarus” and “Laz” buses. Later new bus-

es, such as “Neoplan”, “Scania”, “Volkswagen”, “Setra” and “Temsa” were purchased. In 2003 the company owned only 93 buses because it discontinued using the old ones. Presently, “Kautra” bus depot owns 186 buses, most of them are “Neoplan”, “Setra” and “Temsa”. Their average age is around 8–9 years.

OTHER SERVICES ALSO PROVIDED

Regular transportation routes generate the greatest share of income: last year this business brought LTL 39.2 million in total. Each year the charter routes comprise more than 0.9 million of kilometers, which generated LTL 3.2 million last year.

In 2007 “Kautra” initiated the development and launched a passenger information and bus ticket purchase system autobusubilietai.lt. A monthly average of 160 thousand of passengers visits the website and buys tickets.

eight decades is building up its strength NEAR FUTURE OBJECTIVE — A NEW STATION

Present: Today “Kautra” is associated with constant development, new buses, attention given to the passengers and high-quality management.

For decades “Kautra” has been transporting parcels by minibuses and in 2008 this service was continued under the trade mark “Siuntos autobusais” (“Parcels by Buses”). At present, 13 “Parcels by Buses” terminals and 22 partner terminals function in different cities. This activity brings more than the annual average of LTL 2 million to the company.

Passengers are transported on international routes under the “EUROLINES” trade mark and the turnover of this activity comprises around LTL 5 million on average annually.

Last year a daughter-enterprise “Kautra Cargo” transporting cargo by trucks was established. 20 trucks were purchased and LTL 7 million was invested into them.

Moreover, the company “Baltic Post”, founded last year, is known under the trade mark “Siuntos 24” (“Parcels 24”). It has already

established 71 self-service parcel terminals in 44 Lithuanian towns. This business, which was invested LTL 8 million, works with “Lietuvos paštas” (“Lithuanian Post”) as a partner. This network provides the fastest service of package delivery in Lithuania as they are usually delivered on the same day.

Last year the company won the tender to service the Basketball Championship. Thus, 48 means of transport, 40 of them brand new, were allocated to transport the teams. The organizers of the Championship assessed the work of “Kautra” as highly professional.

CITIZENS OF DRUSKININKAI GOT ON NEW BUSES One of the developmental projects of “Kautra” was implemented in Druskininkai in 2010. The whole public transport was reorganized and renovated in several months. Special design was ap-

plied to the buses and the whole public transport infrastructure.

The company purchased new buses, an “Infotaškas” (“Infospot”) was built for passenger information, public transport pavilions of the town were replaced, electronic displays were mounted in the bus stops and a passenger information system was installed. Not only was an electronic ticket system developed, but Druskininkai also became the first town where scholar identity cards were integrated into the eTickets.

In addition, “Kautra” is known as cyclist-friendly company as it transports the bicycles of its clients on local and intercity routes for free.

For the convenience of passengers, the company is currently installing a new passenger information system in buses. New electronic route displays will soon be mounted in all buses of “Kautra”.

“Kautra” is going to build and equip a new bus station in Kaunas. Together with its partners, the company is going to invest LTL 20 million into its construction.

A great deal of attention is given to the safety of passengers. Every year bus drivers of “Kautra” give away thousands of reflections to the passengers getting off out of towns. The majority of busses are equipped with seat belts as well.

“Whatever we do, the most important aspect for us is the quality of service, which is achieved by new buses and drivers attentive to passengers”, — said L.Skardžiukas.

HISTORY In 1934 Kaunas passenger transport company was established; In 1990 “Kaunas Bus Depot” was reorganized into two companies: “Kaunas State Bus Depot” and “Kaunas Sate Suburb Bus Depot”; In 1995 the name of the company changed to JSC “KAUTRA”; In 2004 the company was privatized; In 2007 a subsidiary of “Kautra”, i.e. “Alytus Bus Depot”, was established; In 2009 a subsidiary of “Kautra”, i.e. “Prienai Bus Depot”, was established; In 2010 a subsidiary of “Kautra” was established in Druskininkai; In 2011 a daughter-enterprise JSC “Kautra Cargo” was established; In 2011 a daughter-enterprise JSC “Baltic Post” was established.

Business. Leaders 2012

35

PANORAMA THREE GENERATIONS OF BUSINESS

Inventive, responsible and seeking for the highest standards — such a description of the company “Tête-à-tête” casino was given by its head, Samoilas Kacas. He stressed that such business principles bring success: the results of the company are improving every year, while another ambitious stage of development is planned in the future.

“Tête-à-tête”: challenges “Although some people are still sceptical about gambling games, West European countries see this activity as an entertainment giving a possibility for people or even families to spend their free time better”, – says S. Kacas. The head of the company believes that the business has been successful because its activity has been transparent and socially responsible from the very first days.

Only in the first five years of company activity, the investments of “Tête-à-tête” casino amounted to LTL 26.3 million.

This contribution did not pass unnoticed: “Tête-à-tête” casino was elected the fasted growing company of the year in the contest “The Best Representative of Small and Medium Business” organized in 2007 by the Lithuanian Business Employers’ Confederation and the

Ministry of Economy of the Republic of Lithuania. Similarly, in the contest “Business Busy Bees” of 2008, the activity of the casino was acknowledged as the most up-to-date.

In 2009–2010 due to the financial crisis and increased taxes, the investment of the company was reduced a little, i.e. to LTL 1.5 million. However, even during more difficult period of time, the company duly paid the taxes and tried to ensure the workplaces.

“During the whole period of work, we have gathered mature and reliable staff whom I can trust completely. Although this may seem a paradox, the business succeeded the most when I was seriously ill in hospital. I am grateful for my team and want to preserve the people who contribute to the success of the business”, — said

Arūnas Dambrauskas IMPRESSIVE BEGINNING

It is not easy to establish in the market which intimidates many people without a reasonable cause. On the other hand, since the very moment of the legalization of gambling games market and the activity of B-category limited-stake slot-machines, the newly-founded “Têteà-tête” casino has been working towards responsible and consistent business development.

At first, the company, registered in 2003, opened 3 slotmachine casinos and employed only 18 people. Two years later the company already owned 33 casinos, whereas today it runs 58 casinos and employs 282 people.

36

Business. Leaders 2012

Attitude: West European countries see gambling as an entertainment providing for better free time.

the head of the company with pride.

AMBITIOUS PLANS

Idea-maker of “Tête-à-tête” speaks with spirit about ambitious plans which, he believes, would be beneficial not only to the city, but the whole country as well.

“Today we have a more global point of view: we want to enter production market and start manufacturing limited-stake slot machines in Lithuania”, — says Samoilas Kacas. He states that limited-stake slot machines intended for entertainment may become a promising Lithuanian product for export.

Limited-stake slot machines, also referred to as B-category slot-machines, distinguish by the fact that maximum bet is only LTL 1, while the stake is 200 times higher. Such machines are especially popular in Western

make us stronger countries: in Italy, Great Britain, Germany or Spain, such machines are allowed in petrol stations, pubs, bars and other places of entertainment.

“All our casinos offer such slot machines; thus, we have acquired a great deal of experience and would like to use it for the promotion of production innovations”, — says the strategist of the company.

“Tête-à-tête” is gradually approaching the mentioned goal: the company shareholders have already approved the action plan, which provides for LTL 8 million investment into production company and establishment of 65 new workplaces. Moreover, “Tête-à-tête” has a solid intellectual and material basis: the company owns premises suitable for production located not far away from Kaunas, in Ramučiai, but most importantly it has already

gathered a team of highly qualified radio-electronics and engineering technologies specialists.

If the plans are successfully implemented, about 70 % of production made in Lithuania will be exported to the Western and Central Europe, while the remaining 30 % will be sold in our country. All the more that Lithuania provides possibilities for development: the numbers show that the amount of legal slot-machines is 4 times less in Lithuania than the average of the other EU countries.

LACK OF STATE SUPPORT

S. Kacas believes that despite ambitious challenges, these days the business lacks state support the most. He states that even though the engine of the Lithuanian economy is, undoubtedly, export, the state sometimes “fills it with water rat-

Rules: the head of the company, S. Kacas, stresses that the company is aimed at transparent, socially responsible and consecutive business development from the very first days.

her than petrol”.

“We often face negligent and superficial attitude of public institutions towards business initiatives. Sometimes it seems that the talking about the necessity to develop production, generate value added and create workplaces in Lithuania is only empty rhetoric”, — says the director of “Tête-à-tête” casino.

The businessman had to make such generalizations after pre-

Resources: the central office of “Tête-à-tête” casino, located in Ramučiai, is big enough to establish a production department.

senting the plans of factory establishment in Kaunas Municipality. Only one representative of the majority of Seimas (the Parliament), Erikas Tamašauskas, and several representatives of the opposition arrived to the presentation, and only a single meeting regarding this issue was held in the Municipality.

After reviewing the business plans of the new factory planned by “Tête-à-tête” casino, the specialists advised not to hold the construction until the legislative bodies provide possibilities for selling slot-machines. Instead, the company was advised to initiate the construction of the factory, perhaps even abroad, and sell the production to Western and Central European countries.

“We would like have favourable conditions in Lithuania.

After all we are established in Kaunas and generate our capital in Lithuania, our roots, specialist and potential are here”, – says S.Kacas.

Asked whether the specificity of the activity causes such indifference of the state, S.Kacas explained that limited-stake slotmachine business does not differ from many other types of businesses. He hopes Business. Leaders 2012

37

PANORAMA THREE GENERATIONS OF BUSINESS cording to S.Kacas, the state has not received millions of tax revenue, a real damage to the budget was made, however, there were not remained responsible ones for the situation.

EVALUATED IN EUROPE

Results: the basis for stable development of the company is a mature and reliable team of specialists gathered in more than ten years.

to break the ice and that such promising ideas will receive support. After all, challenges make people stronger.

THE SITUATION HAS TO CHANGE

“We try to be optimistics, but sometimes it seems hard, when we see how bureaucratic barriers are setting up for viable business plans”, — as well recognizes Deputy Director of “Tête-à-tête” Casino Dalius Gimžauskas. He also worries because the market of lottery, casinos, slot-machines and betting in Lithuania is sometimes artificially restricted and monopolies are formatted.

The head of “Tête-à-tête” casino remembers warnings of Canadian entrepreneurs, who have decided to leave the market of Lithuania already in 2006.

“According to them, spontaneous activity of licensing and uncertainties of legal regulation has made gambling market of Lithuania unattractive for investors from the West. Uncertainties of legal regulation raise doubts for any investor about the safety of their investments”, — S.Kacas remembers the reasoning of Canadian entrepreneurs, closed perhaps the big38

Business. Leaders 2012

gest casino in Lithuania.

He notices that since 2006 nothing has not really changed - “Tête-à-tête” casino, operating in Lithuania, is still facing the same problems. The gambling market is artificially narrowed and restricted and allows development of illegal gambling.

Moreover, illegal gambling spreads into the Internet and mobile phones, where its control will be even more difficult.

“Chaotic alteration of legislative base, which we have to adapt hastily, requires enormous input of time and finances. We pay an additional fee of LTL 300 for each physically installed limited-stake slot-machine, while gambling operators on the Internet act freely, and almost without supervision”, — states S. Kacas.

One of the examples of the chaotic state regulation could be increased taxes for casinos and slot-machine casinos in 2008. Although the initiators of this proposal argued that the state will receive LTL 18 million more tax revenues annually, happened on the contrary: the market has reduced almost by 40%, more than 900 workplaces were lost, and four companies were forced to close. Ac-

S. Kacas believes that Lithuania should allow network development of legal slot-machines, which are safe and do not promote to gamble away.

“Several years ago, Catholic Italy chose this way without hesitation, where the citizens consider themselves as believers in the greater part than in Lithuania (Italy consider themselves Catholics by 87.5 % of population, in Lithuania - 79 %).

More than 400 thousand of slot-machines appeared over the past three years in Italy.

This is a huge source of revenue for the state. We also have opportunities to follow the example of Italy”, – assures the director of “Tête-à-tête” casino.

The group of Seimas members has prepared and registered the Bill of Limited-Stake Slot-Machines in the presence of the National Gambling and Gaming Business Association that received the positive assessment of European Federation of Gambling and Gaming.

The letter sent to the President Dalia Grybauskaitė by the European Federation of Gambling and Gaming says: “In our opinion, if the Limited-Stake Slot-Machine Law would be approved by the procedure described above, it would be a strong legal example for other EU Member States, showing a modern approach of the state to the gambling industry and in particular to the limited-stake slot-machine sector”.

“Unfortunately, the Bill greatly appreciated by the

competent European institution, and successfully passed the submission procedure in Seimas, for some time lays in drawers of Finance Committee of Seimas Budget, stagnation in gambling market continues to prevail, and due to this stagnation disappear huge amounts of funds, which, if handled cleverly, could be a solid complement to the state budget and give new impulsions to business”, — assures never yielding director of “Tête-à-tête” casino S. Kacas.

SOCIALLY RESPONSIBLE

“Our business is sometimes called controversial, but such an opinion is invoked by ignorance. The company operates according to international standards, over the years has received neither comment nor penalties, is disciplined and socially responsible company”, — emphasizes S. Kacas.

“Tête-à-tête” casino, member of National Gambling and Gaming Business Association transfers to charity regularly a significant part of casino revenue: since 2004 for various charity projects has been designed LTL 1 million and 81 thousand of revenue.

The charity is designed for children with cancer diseases, sport movement of people with disabilities, social and spiritual purposes, care and sport of large families and elderly people.

This year, the company has became an official sponsor of Kaunas “Žalgiris” basketball club.

“One of such an example could be the participation in implementation of Responsible Gambling Practice Code of BCategory Machines, which provides a balanced system of control and requirements”, — emphasizes the manager of “Têteà-tête” casino.

PANORAMA Orthopedic company “Pirmas žingsnis” is available all over Lithuania Vilija Žukaitytė 20 years in Kaunas

For almost 20 years the company “Pirmas žingsnis”, operating in Kaunas shows an example for all newly established companies how they should work giving preference to quality and professionalism. Therefore, the company is the second for several years in number of patients.

The company, established during the period of independence restoration of Lithuania, rallied a creative team of professionals, collaborates with many treatment and rehabilitation institutions of Kaunas continuously, organizes prevention programs.

THE QUALITY ABOVE ALL

For the company “Pirmas žingsnis” it is very important that patients would receive safe and high quality medical devices, so it keeps trying to gain an advantage over their competitors, meet all customer needs and expectations. Currently in Lithuania there are 11 companies providing orthopedic services.

During these years the company has rapidly expanded. The company is the largest in Lithuania according to number of branches. There are 15 branches already operating across the country, which are located in hospitals, health

centers, sanatoriums. The patient does not need to come out, he gets the service in place.

Here patients is not only advised, but supplied with orthopedic products as well, they can buy sticks, crutches, etc.: this is a big step forward due to patient care quality issues, believes the director of the company “Pirmas žingsnis” Algimantas Vilkas.

All company products are made from high quality, safe, non-toxic and eco-friendly materials, and meet the highest quality and safety requirements.

Every product is measured, corrected, improved and applied to the client. Orthopedists – technicians of the company select the equipment and provide the best product to patients according their wishes and physicians’ recommendations.

In opinion of the director of the company A. Astrauskas, a good microclimate in collective destines a good quality of the company’s products and services provided to the patient.

“We regularly organize training

We educate public society and patients on health issues.

THREE GENERATIONS OF BUSINESS

Opinion: in A.Astrauskas opinion, a good microclimate in collective destines a good quality of the company’s products and services provided to the patient.

courses for staff, based on quality and cultured patient servicing. All the employees must attend such courses. The results of our work depend on effort we put in”, – ­­ ­stated the director.

EDUCATIONAL ACTIVITIES

The activity of the company is not limited to producing the medical equipment only. By initiative of the director the Association “Šviesuva” was established, which unites lecturers, researchers, scientists, medics, teachers and professors of different areas.

“We educate public society and patients on health issues.

We are unique because under the production company we have institution for lectures.

Not everyone can afford it; in addition, not everyone wants to

do it. My wish was that as more as possible people hear about our products, the orthopedic diseases, how to avoid a variety of diseases, what steps to take to avoid impairment of life quality at old age”, – said the director A.Astrauskas.

In 2011 the President of the Republic of Lithuania Dalia Grybauskaitė granted to the company the diploma “Company of Knowledge Economy – 2011” and award for development of innovative technologies, the active co-operation in science and public education.

In addition, Orthopaedic Crafts Museum was established in the company’s premises, which is one of few in Europe and the only one in Baltic countries. It is constantly expanding.

Business. Leaders 2012

39

PANORAMA THREE GENERATIONS OF BUSINESS

Leading company in lottery business The lottery company “Olifėja”, celebrating its 20th anniversary this year, manages to retain balance and has a firm position on the top of the business.

Success: governing “Olifėja” from the very first days, Antanas Muraška has established it from nothing and the company continues to grow each year.

Matas Miknevičius – The beginning of lottery business coincides with regaining independence. Did you have to make the first steps without any experience?

– In 1990 there was no normative framework for organizing lotteries: only Russian lottery existed. National Olympic Committee was newly re-established.

I was working there at the time and suggested to the President Artūras Poviliūnas to establish a lottery, because Olympic sport required financing. The beginning was not very complicated since all efforts were met with appreciation. Then we founded “Olimpas” lottery which was the first Lithuanian lottery after regaining the independence.

However, at that time there was a lack of documents governing lottery. We began composing them ourselves on the basis of the Russian examples we had.

Thus, I could say that we were the initiators of the Lithuanian lottery from the very first steps.

Back then people were already very willing to buy the tickets.

They were already familiar with 40

Business. Leaders 2012

instant lottery, so it was not a new idea to them. In fact, they started trusting the Lithuanian lottery more and more.

– Real business began after separating from the National Olympic Committee. Did you manage to achieve the main goal: to support the Committee?

– We hold that the official “birth” of “Olifėja” is the year 1992. Then Seimas (the Parliament) passed a law forbidding economic activity for non-governmental organizations, which was the status of the Olympic Committee. This was the reason why “Olifėja” started an individual business and has been working as such for two decades.

Two years later we signed an agreement with the American high technology company “GTECH Corporation”, which enabled us to organize the first terminal lottery in 1995. We have been cooperating with this company ever since.

The lottery has become a real business, but has not been separated from LNOC: around 80% of the total income of the Committee still comes from the lottery. Thus,

the lottery is undoubtedly the major sponsor of the Olympic sport.

– You often compare lottery business to banks. How are they similar?

– I compare them because of the related risk, rather than the similarity of the activity itself. Similarly to banks, lottery business is very sensitive to rumors: if people do not trust the bank, they do not keep money there. The same holds for our business: the trust of people and success are inseparable.

– Does this risk pay off?

– Of course, if you have a good head on the shoulders and do not rest in one place, the business will bring success. Last year the company grew quite rapidly, but this was not due to the spontaneous market changes, such as the end of the crisis. A new lottery “Vikingų loto” was initiated in good time as its sales surpassed the expectations. I would like to stress that the implementation of this project was also crucially influenced by the maximum transparency and reliability.

“Vikingų loto” is organized under an agreement among 8 na-

tional lotteries of the Baltic countries. The wish to join the company is not enough: one needs to certify all the areas of company activity and comply the ISO standards as well as safety and control standards of the World Lottery Association. Apart from meeting this condition, considerable investment into licenses and software is required.

On 21 October 2010 “Olifėja” acquired all the necessary certificates (WLASCS:2006 and ISO/ IEC27001:2005). Multiple audit of our company activity was carried out and the certificates were issued by an independent Norwegian audit company “Det Norske Veritas”. It carries out planned and surprise audits of the company several times a year.

– The control is frequent, but is it strict?

– Participation in such international project means being prepared for any kind of unexpected inspections; it means that you have to be prepared for complete openness and ready to show every piece of information or most detailed procedure carried out in the company. Apart from the mentioned

Norwegian audit company “Det Norske Veritas”, inspectors of “Viking Loto Security Group” checks “Olifėja”, while its purchase system and financial accounts are inspected by a Danish protocol-procedure centre every week.

– Does the development of such business require more work, knowledge or money?

– If we did not constantly search for innovations, this business would not move forward. It is not a never-ending source of gold bringing fortune without effort. In general, lottery is not a cheap business. In order to open such a company one requires authorized capital amounting up to half a million LTL, the price of software reaches several million LTL and the advertisement to promote the business requires another three million LTL, not mentioning the communication system, terminals, data centre – all of which amounts to a huge amount of money.

The software suppliers do not offer any discounts to such a small country as Lithuania. Let us take Sweden as an example: there the lottery business turnover amounts up to around one billion euros. One or two hundred million is not a considerable amount to such businesses, while standard prices are a rather heavy burden for us. However, we do not have a choice as only a few lottery system supply companies operate worldwide. Thus, they do not lack clients and are unwilling to reduce the price due to the size or market of the country.

The money, though, is not enough. Extremely rich French, Italian, Swedish and Dutch companies tried to establish in Lithuania, but failed. They thought that bringing the acquired knowhow and automatically transferring it into our market will suffice, but it did not as in two years

all the companies withdrew from business in Lithuania. The employees who know the market well and are capable of adapting foreign products to it are necessary.

– While talking about business control, we did not discuss the major inspector, the state. Is it strict to you?

– Few people can imagine the strictness of the Lottery Law applied to the control of the use and distribution of income from lottery. No less than 50 % of the turnover goes to the prizes, 8 % is the support for the Olympic Committee and 5 % goes to the budget. These are only the percentage of the turnover, but the profits tax and all other taxes also need to be paid.

– The business is strengthened not only by creating new lotteries, but also investing into other fields.

– The need to acquire investment to update the system and install new products forced us to search for additional resources of income. For this reason, apart from “Olifėja”, which is forbidden by laws to engage into other activity except organization of lottery, two other companies were established. In 2003 we founded the company “Lotelita” for topping up mobile telephone accounts.

Later, in 2008 we established the company “Perlo paslaugos” where taxes, insurance and credit payments, payments for shopping online can be made. Starting with this year, all state and social insurance (“SODRA”) taxes can also be paid via this company.

Our clients appreciate this new service because our rates are several times less than in the banks.

We make full use of our central system, which is especially powerful and reliable. It can perform 10 thousand transactions in one

minute, whereas the data processing centre is capable of identifying the user, connecting to the client databases, checking and providing a permission to make a payment and recording information only in a split second.

– It seems that you do not face any serious competition in Lithuania. How did you manage to create a single-dominance in such a tempting market?

– It seems tempting until you try it yourself. In fact, currently the circle of competitors is not very big in Lithuania: about 20 companies have tried to develop such business. After trying, they understood that the money can not be earned without hard work, effort and investment; thus, they quit the market.

It is interesting to note that foreign lottery founders are allowed neither in Europe, nor the USA: only native companies and citizens can take up such business. The laws of Lithuania permit such activity to any foreign company, but they stopped trying due to the small size and, most importantly, poor market.

We worked with Swedish representatives who thought that we are not capable of managing the business. After comparing the rates per capita of Sweden and Lithuania, they decided that the sales in Lithuania may be boosted ten times. However, quickly they understood that the market specificity is different here and one needs to adapt to it.

The company faced the last serious competitor 15 years ago.

Then “Žalgiris loto” had taken more than one third of the market, but their share diminished in several years. We believe this was due to inadequate attitude towards the customers and a too large mismatch between the promotional promises and reality.

– What are the future perspectives of “Olifėja”?

– We are not going to stand still.

Further investment has already been planned. First of all, the time is right to update the sales system equipment and expand the field of service. The system will be changed to make our work more convenient as well; used tickets will not require sorting and the sellers will not need to collect them.

We have many examples of what the business can achieve.

For instance, I have already mentioned Sweden where the turnover of lottery business is exceeded only by that of energy sector, which is impressive, indeed.

Undoubtedly, the perspectives are promising. Neither the economic crisis nor other spontaneous market changes have improved our situation: the company developed only due to the responsible attitude to business.

The most important is not to rest on one’s laurels.

Not long ago we celebrated our tenth anniversary and did not even notice as ten more years have already passed.

„Olifėja“ Company founded in 1992 Authorized capital — LTL 1.95 million, 100 % private capital Number of employees — 20 Market share of the Lithuanian lottery market — 97 % Lottery tickets sold in 1 700 terminals Lithuanian citizens won 94 “Teleloto” jackpots worth one million each and 3 400 cars “Teleloto” brand name on the list of Top 10 most famous Lithuanian brands “Vikingų loto”: 2 people won LTL 5.5 million and LTL 1.5 million in 8 months from the beginning of the lottery Lottery terminal system served 1 billion payments a year.

Business. Leaders 2012

41

Golf courses – a sign of prosperity of the country Asta Dykovienė

t

he first golf resort “National Golf Resort”, in West Lithuania, began its activities in 2009, a period which was economically complicated for the country as the crisis was announced. However, the golf course attracted both local and incoming players right away.

A START WITH OBSTACLES

The course was being constructed in Klaipėda district, Kretingalė, for 4 years. “Crisis was announced that year; of course, we did not foresee it and it hit us just like it hit the whole economy of the country. It hit those who wanted to play, participate, organize their own tournaments as well as those who wanted to be sponsors and advertisers: their ranks thinned considerably. Were it not for the crisis, the number of players would have been different,” – said Arūnas Kuraitis, the manager of “National Golf Resort”, frankly.

GOLF TOURISM

According to A. Kuraitis, the golf course contributes to development of the region greatly. As a rule, the economy of the country reaches a higher economical level when they appear.

“The managers of business companies who invest in 42

Business. Leaders 2012

Lithuania sometimes ask if we have a golf course nearby. If not, they choose to invest in Bulgaria, Czechia, Poland or other East European countries where there are golf courses. Approximately 70 percent managers of business companies in Europe play golf,” – asserted A. Kuraitis.

It is argued that golf courses increase the value of the region; it is a place where international events, conferences, presentations of companies and family celebrations take place. Newlyweds also choose the golf resort for the most important feast of their life quite often.

Besides, courts attract golf tourists too. It was calculated that a golf tourist spends 4–6 times more than an ordinary tourist. “They use services of much higher quality as well as higher-level hotels and restaurants. An ordinary tourist spends a few nights in Klaipėda, whereas a golf tourist stays here from a week to two and chooses a hotel for 70–80 Euros, not for 30 Euros,” – stated the manager of the golf club A. Kuraitis.

GOLF TOURNAMENTS IN WEST LITHUANIA

The managers of “National Golf Resort” maintain that local players are not forgotten as well, clubs are organized and golf tournaments are held. One of them is the open Lithuanian championship. “This year this tournament is taking place for the second time here; the first time was in 2009. As soon as we opened our golf course, we were granted the right to organize the championship,” – rejoiced A. Kuraitis.

An event “Verslas, golfas, džiazas” (“Business, Golf, Jazz”) is being planned for the second season in Klaipėda; Klaipėda jazz festival and contact fairs for businessmen organized by Klaipėda Chamber of Commerce, Industry and Crafts as well as the golf tournament will take place at the same time; those fairs are attended by a huge number of representatives of the business world from abroad who are looking for new opportunities for their business and for new connections.

The third charity tournament “Golfas iš širdies” (“Golf from the Heart”) will take place this

As a rule, development of the country reaches quite a high economical level when golf courses appear.

year as well; the funds collected will be donated to the charity and support fund for children ill with severe diseases.

ENVIRONMENT-FRIENDLY

Golf courses are ecological; supposedly, 10 times less fertilizers are used here than in agricultural fields. “We do not seek harvest, we do not need to achieve 4 or 10 tons per hectare. If it rains sufficiently, it is absolutely enough for us. The grass is of a specific type; it roots up to 50 cm depth. How do we destroy weeds? We simply cut grass very often and weeds do not grow. We cut grass everyday, as the height of grass must be 3 mm in putting greens. The ecosystem is organized in such a way that cranes hatch on the outskirts of the course, three swan families live here, the ponds are swarming with crayfish, let alone the fish,” – related the manager of the golf club.

“If a golf course appeared in this region, it means that the country has reached quite high economical level. Hence, the people of this country have understood the benefit of communication and recreation. This shows that they not only work, but also have time for their hobbies and golf is not only a game or a pastime, but also communication. Imagine that you are playing together with your partner for 5 hours – will you keep silent all the time?”, – said the manager of the golf club A.Kuraitis.

A CLOSER LOOK ALL STEVEDORING COMPANIES IMPROVED THEIR PERFORMANCE INDICATORS

Port: the engine of business in Klaipėda and Lithuania We could hardly imagine Klaipėda without a port today. It would be an undistinguished average Lithuanian city with much less residents and a poorer industry. Approximately 20–30 thousand people of Klaipėda and their family members are directly related to sea industry activities.

Vidmantas Matutis

T

he sea, the port and the ships impart the image of Klaipėda as a city with an exceptional marine culture. We would count approximately 40 large industrial companies including city supply and energy companies in Klaipėda. The activities of roughly half of them cover navigation, stevedoring, ship building and repair and freight forwarding. The biggest employer in Klaipėda is metal processing company “Vakarų laivų gamykla” (“Western Shipyard”). It employs over 1300 people. This company also leads sales, which amount to over LTL 800 million, in Klaipėda region as well. “Last year was successful to us. We were able to increase the volumes of ship building, repair and production of metal constructions considerably,” – stated Arnoldas Šileika, the manager of “Vakarų laivų gamykla”.

The year 2011 was exceptional for the whole Klaipėda port. Not only 10 various performance indicators of the port of all times were improved but also it became the leader of the Eastern Baltic States for the first time in its history. The portion of 36.6 million tons of the freight transported via Klaipėda port last year which was intended to the Lithuanian market amounted to over 60 percent: almost 22 million tons.

“We were working in one direction: for the benefit of the econ-

36.6

million tons

of freight were transported via Klaipėda port last year. omy of Lithuania. Both the rates and the service quality satisfied the users; therefore, the result is good,” – emphasized Eugenijus Gentvilas, the manager of Klaipėda State Seaport Directorate.

Almost all 12 stevedoring companies improved their performance indicators in the port last year. The year was especially good for “Klaipėda Stevedoring Company” (“KLASCO”). “We managed to do what was seemingly impossible. We managed to transship over 13 million tons. It is a huge achievement when stevedoring soars up by 3 million tons within one year,” – emphasized Aundrius Pauža, the director of “KLASCO”.

Compared to other surrounding ports, Klaipėda is distinguished by very broad stevedoring specialization. The main freight of the port is oil products, fertilizers, containers and goods transported by sea ferries. Increasingly more metals are also transported via Klaipėda port.

State-managed company Klaipėda State Seaport Directorate collected LTL 147 million in port dues and received almost LTL 21 million in income from lease of the land of the port last year. That is its highest income of all times.

One ton loaded in the port fetches 4 LTL in income to Klaipėda State Seaport Directorate. This is nothing compared to the fact that one ton loaded in the port fetches approximately LTL 50 in income to Lithuanian business. Total income was impressive – approximately LTL 1.8 billion – due to the influence of the port in 2011.

The biggest portion of money is claimed by the carriers who transport freight to the port, stevedoring companies, freight forwarders, port-servicing truck companies, companies which provide agents’ services and supply companies.

In Klaipėda alone, approximately 250 companies “touch” the freight transported via Klaipėda port in one or another way. The port impels establishment of new businesses in Klaipėda and around it.

The port attracts investors and a lot of foreign guests; various conferences and seminars take place. The sea ferries routes are exceptionally significant for Klaipėda port. A few thousand foreign tourists are transported via them here from Germany and Sweden. By setting new requirements for the service quality, the port also impels the business of catering, trade and tourism services of the hotels of Klaipėda city.

Klaipėda port reached a new level. It became the leader of the Eastern Baltic States for the first time in its history.

Business. Leaders 2012

43

LOGISTICS CONTAINER TERMINAL

Chart curves rise annual turnover during 2005–2011 3500 3000 2500 2000 1500 1000 500 0

The times of crisis opened up a lot of new opportunities for the real leaders.

Focusing on as broad assortment of freight as possible not only helped the company “Klaipėda Container Terminal” survive the period of economic decline but also helped it enjoy the freight turnover which has been increasing during recent years.

44

Business. Leaders 2012

The company Klaipėda Container Terminal (“KCT”) celebrated its 18th birthday in the beginning of February. 18 years is a period of time long enough to assess the effectiveness of the strategy chosen by the company.

The first container terminal was established in 1994 and it was the first one in Klaipėda port to start loading containers; however, it did not reject other freight as well: ferries which transported ro-ro cargo as well as various general freight was loaded. A universal broad-profile stevedoring terminal, which successfully competes with other similar-profile companies of the port, was created within several years.

By purchasing a second terminal – a specialized container terminal in the southern part of the port – in 2005, the company expanded the range of its services even more and currently loads all types of freight excluding liquid ones.

Total freight turnover in 2005-2011

The main principles of the activities of “KCT”, which were set during the very first year of existence, basically have not changed today: flexibility, versatility and at-

2005 2006 2007 2008 2009 2010 2011

tention to clients’ individual needs. Focusing on as broad assortment of freight as possible helped the company survive the period of economic decline: when the flows of containers decreased almost twice, the company intensively looked for other kinds of freight which could compensate this loss and offered additional services to clients. It did not take long to see the results: the turnover of general freight increased twice the following year and grew by 1.5 times more in 2011.

The share of this segment in total freight turnover increased from 4 % (2008) to 17 % (2011). Flows of new kinds of freight were formed: “KCT” has been loading regular consignments of project equipment for the clients in Lithuania and Belarus for the third year already, a new type of ships – car transporters into which Belarusian auto machinery is loaded – was attracted to the port.

The line for transshipment and prepackaging of bulk cargo was developed. The level of professionality of “KCT” is evidenced by the fact that the container terminal of the company was chosen as a reliable partner for loading freight of NATO. Especially a lot of attention was given to analysis of internal processes, improvement of man-

agement mechanisms and optimization of technologies during the times of crisis. All that helped discover quite a lot of unused resources. Purification of processes and implementation of effective cost control measures significantly helped reduce the expenses of the company. “KCT” reached record profitability in 2011. Thus the lessons of the times of crisis were not it vain: they showed that improvement must be a constant and continuous process. The more so as former stability disappeared from the market during recent years and companies must adapt to constantly changing conditions. Flexibility and ability to react to the changes in the market quickly are becoming ones of the most important competitive advantages in today’s business environment.

Currently, the chart curves of “KCT” are rising again: the freight turnover has been increasing during the last 3 years; “KCT” was in the fifth place in Klaipėda port with regard to stevedoring volumes in 2011. It is expected to reach the pre-crisis level – 3.2 million tons freight – this year. The container terminal hopes to regain the position of the leader of the Baltic States in container stevedoring which it occupied a few years ago. Thus the year 2012 may become the breaking point for the company in transition to a higher level in all main fields of activities.

The company attributes social activities – support and sponsorship – to important fields of activities as well.

“KCT” sponsors Klaipėda Jazz Festival and the Sea Festival every year as well donates money for cultural author’s events and social projects.

Let’s join the shores together!

S

toc company “Smiltynės perkėla” is a modern state-of-the-art internal waters passenger transport company which engages in professional activities of transportation of passengers and vehicles across the curonian lagoon by ferries and which was registered in 1991. However, the history of the ferry terminal itself has been counted since 1945 when it was established as a branch of a military river fleet which had a strategic task to ensure communication between the two shores.

TWO FERRY TERMINALS

The company provides its services in two terminals: the 1st ferry terminal (the Old Ferry Terminal) and the 2nd ferry terminal (the New Ferry Terminal). 3 selfpropelled ferries, which transport passengers, cars and heavy-duty machinery, are operating in the latter ferry terminal.

2 passenger ferries are operating in the Old Ferry Terminal. These ferries transport only passengers across the Curonian lagoon.

Safety, reliability, observance of deadlines and satisfaction of clients’ needs when provid-

ing transportation services are the main values of the company “Smiltynės perkėla”.

PERFORMANCE INDICATORS

Performance indicators of the stock company have been constantly improving recently. The year 2001 was the most profitable one during all the years of operation of the company. LTL 1.6 million in profits was earned. LTL 1.1 million was paid to the budget of the country in the form of dividends.

The number of transported cars increased by 6 % in 2011 compared to the year 2010. A record number of transported vehicles – 615 418 – was reached. A total of 1 655 748 passengers used the ferry services during the year.

INVESTMENTS

After renovation of the ferry fleet, the duration of ferry trips was reduced by a few times; therefore, transportation of vehicles became much quicker and queues vanished. However, the company “Smiltynės perkėla” established the procedure for organization of additional ferry trips aiming to improve communication of local residents and incoming tourists with the Curonian Spit by reducing transportation time to the maximum extent. During

the summer season, ferries often operate without adhering to the established timetable. Three ferries run in the New Terminal at the same time if needed; they can perform approximately 12 trips and transport over 400 cars per hour.

The company transports approximately 2 million passengers and over 0.6 million vehicles per year.

MODERNIZATION OF INFRASTRUCTURE

A new pier was constructed in the North Cape in 2011; two ferries of the company can be moored at the pier at the same time.

Modern software is installed in the cash registers and installation of a system of video monitoring cameras is completed. Each visitor can observe direct view from the New Terminal transferred by the video cameras and to find out about the flows of people who are transported from

Klaipėda and Smiltynė in the website of the company www. keltas.lt. Besides, a display panel started operating in the New Terminal. Information relevant to clients is announced in it.

DEVELOPMENT AND FUTURE PERSPECTIVES

The company “Smiltynės perkėla” pays a lot of attention at the quality and development of the services provided. A new passenger terminal will be built in the North Cape in the end of 2012 already. A building of modern architecture with an open terrace on the roof accessible to passengers and residents of the city will arise here. A waiting hall, modern ticket offices and a cozy cafe will be constructed in the new building.

Another project, which is none the less important to the company and its clients, is the opening of the route KlaipėdaJuodkrantė-Nida and back after the purchase of a new highspeed passenger ship. The company will offer an excellent water communication alternative for foreign tourists, especially to those who travel to the Curonian Spit by cars as well as to the residents of Neringa and local people who like riding bikes.

Let’s join the shores together!

Business. Leaders 2012

45

A CLOSER LOOK LURING FOREIGN MONEY

Investors create thousands of new jobs Stasys Gudavičius

Milda Dargužaitė, General Manager of the Public Enterprise “Investuok Lietuvoje” (“Invest Lithuania”) operating under the Ministry of Economy, asserts that the foreign investors who have been coming to Lithuania recently are interested in development of new technologies and the sector of services most of all.

46

Business. Leaders 2012

– How much was totally invested in Lithuania during all the years of independence?

– Official statistics shows that accumulated direct foreign investments in Lithuania amount to LTL 37.2 billion today; 3700 foreign capital companies are operating in the country.

In retrospective, the first significant stage in attracting investments to the country during the last two decades was privatization of state companies: a locomotive of restructurization of planned economy which was undertaken by the most countries from the post-Soviet environment.

Investments to Lithuanian companies operating in energy, real estate and telecommunications sectors are noteworthy as the most significant privatization transactions. Such transactions, for example, the sale of Lithuanian Telecom to “Sonera” of Finland and the sale of the Savings and Agricultural Banks to Scandinavian and German strategic investors contributed solidly to modernization of telecommunications and financial services sectors. Now they are modern companies and banks belonging to influential North European business groups.

I would distinguish a few aspects which, in my opinion, describe the benefit of foreign investments to Lithuanian economy and people the best: new jobs are created, taxes are paid to the budget of the state, the scope and benefit of investments to local business.

Over 400 foreign companies have implemented investment projects in Lithuania during the last decade; they created almost 50 000 jobs, i.e. 71 % of full-time employees of the private sector of Lithuania. Thus we can see that foreign capital creates a signifi-

Number: Milda Dargužaitė, manager of the enterprise “Investuok Lietuvoje”, maintains that direct foreign investments which reach Lithuania amount to approximately 2% of all analogous projects attracted to East Europe.

cant share of new jobs and this share is likely to increase when implementing new investment projects.

Salaries paid to specialists by foreign companies, which invest in Lithuania, are at least twice higher than the statistical pre-tax average salary in the country which fluctuated around LTL 2 000 during the last three years.

This means that taxes paid to the budget are also twice as high. Foreign companies plan to invest approximately LTL 5 billion during implementation of direct foreign investment (DFI) projects announced within 2010-2011.

These investments should reach the economy of Lithuania before the end of 2013 bearing in mind that it takes from a half to three years to implement DFI projects.

These capital flows are directed at renovation of the technological fleet of our industry, invested in re-skilling of residents of the country with regard to the real

COMMENT

Vytas Petružis

Director of Kaunas free economic zone (FEZ)

O

BIGGEST FOREIGN INVESTORS IN LITHUANIA IN 2009–2011 Investor “TEVA” “Valeant” “PKN Orlen” “ThermoFisher Scientific” “Ryanair” “Philip Morris International” “Barklays Bank” “Telia Sonera” “Deutsche Post” “Mars” “Eego” “Huawei” “Siemens” “Western Union” “Kitron” “Coca-Cola” “IBM” “Intersurgical” “CSG” “MOOG” “Bentley” “IKEA”

Investments (millions EUR) Medicine 2,900 Medicine 365 Energy 244 Medicine 210 Engineering 196 Tobacco products 151 Cash transfers 69.4 Information and communication technologies 55.6 Transport and logistics 47.6 Production of food products 27.2 Insurance 24.3 Scientific research 22.1 Scientific research 20.5 Cash transfers 20 Electronics 18.1 Production of soft drinks 18 Scientific research 16.2 Production of medical equipment 11.7 Software and IT services 11.6 Scientific research 2.5 Software and IT services 1.5 Production of furniture 1.3

Country of origin Field of activities Israel USA Poland USA Ireland USA Great Britain Sweden Germany USA Germany China Germany USA Norway USA USA Great Britain USA USA USA Sweden

Source: Public Enterprise „In­ves­tuok Lie­tu­vo­je“

ne of the advantages of Kaunas “FEZ” is a wide selection of labour force as “FEZ” is near Kaunas. The geographical location of Kaunas “FEZ” is very good: it is almost in the centre of Lithuania, there are excellent highways for communication with Poland, Klaipėda, Riga and Vilnius, it is near Palemonas railway station and Karmėlava airport is situated nearby.

We lure investors by pre-prepared lots in the territory of “FEZ” . There is all necessary infrastructure in the lot to which an investor is coming, thus the investor may plant its foreseen investments very realistically. Besides, businessmen are lured to “FEZ” by tax exemptions: this is the outcome of the policy implemented by the whole country. Kaunas “FEZ” has planned a real estate tax exemption which will be applicable at least until 2045 as well as a profit tax exemption on condition that not less than a million euros is invested. We can undoubtedly call Kaunas “FEZ” a place of various concentrated exemptions, concessions and other constituents favourable to investors. We are a private company; therefore, we try to make it become like that in reality. The year 2011 was quite good for us. We concluded transactions valued at 4.3 million Euros related to lots designed for industrial and logistics activities last year alone, whereas, in accordance with the data of the Centre of Registers, analogous transactions valued at 3.9 million Euros were concluded in Kaunas City and district.

We have got operating metal processing, foam polystyrene, food industry, cosmetics production and energy companies. A total of 13 companies are already operating or being established (are constructing, designing, have concluded contracts) in Kaunas “FEZ” .

Investment transactions valued at a total of nearly LTL 300 million have been concluded so far. LTL 165 million has already been invested in operating companies. 401 jobs were created. It is planned to create 340 more in accordance with the signed investment transactions.

We are currently working hard to establish a so-called air park in Kaunas “FEZ” . What is that? It is a part of the territory of “FEZ” which directly accesses Kaunas airport.

We believe that various companies, which are established in that area and which could engage in transportation, servicing of aviation and even aviation industry, have very good perspectives. Well-known European airlines have expressed their interest: they are looking for the opportunities to invest in servicing of aviation here. We are making efforts to attract representatives of aviation industry. We hope to make a breakthrough in this field within this year; then we will be able to talk about individual business related to aviation, air communication and logistics which will appear in Kaunas “FEZ” .

Business. Leaders 2012

47

A CLOSER LOOK LURING FOREIGN MONEY market demand, stable and high salaries are paid. All that enables reaching higher competitiveness of the country and living standard of the people as well as – which is very important – suppressing further brain drain. If a foreign company is established in Lithuania and offers analogous living conditions, which a specialist could obtain by going abroad, economic motivation for emigration vanishes.

Foreign companies, which are being established in Lithuania, use outsourcing more often and more boldly than local ones, buy local raw materials and generate additional orders and income for local business in this way. Analysis of DFI projects shows that the companies, which intend to invest in Lithuania, plan that the salaries paid to our people as well as services and local raw materials bought from local suppliers will constitute 55% of the turnover of their branch in Lithuania. This money is successfully infused into the economy of Lithuania via increased consumption and investments of our business in development.

– Who are the biggest investors in Lithuania and in which fields do they invest?

– Ones of the biggest foreign investors are Sweden, Poland, Germany, the Netherlands and Russia. Other Nordic countries are also in the top ten: Norway, Denmark and Finland.

Manufacturing, trade, financial and insurance services as well as IT and communications services are the fields which received the most investments in the country.

We can mention such companies as Swedish banks “SEB”, “Swedbank”, communications group “TeliaSonera”, Norwegian bank “DNB”, UK bank “Barclays”, US corporations “IBM”, “Philip Morris”, “Coca-Cola”, “Western Union”, German “Deutsche Post” (a division of “DHL” in Lithuania) and insurance company “Ergo” as well as Swedish furniture manufacturer “IKEA” (its orders constitute approximately 70% of all export of Lithuanian furniture makers) as the biggest investors.

Some of these famous brands were attracted to the country by the current Government

The fields which are the most promising with regard to development of investments: IT, specialized services for business, production based on advanced technologies, scientific research and new product development centres. which is actively supported by “Investuok Lietuvoje”.

“Investuok Lietuvoje” attracted 29 foreign companies, which will invest LTL 825 million, last year alone. This is 30 % more than in 2010 when total value of new projects amounted to LTL 636 million. The companies, which decided to begin operating in Lithuania last year, plan to create almost 2 400 new jobs. A respective result was slightly over 2 200 new jobs in 2010.

– Which investors came here during the last three years?

– Lithuania managed to attract direct foreign investment projects of “Barclays” (2009) and “Western Union” (2010). These companies established IT and customer service centres and are currently developing intensively.

Investments of such companies as “Barclays” and “Western Union” are important since modern service centres are established and a lot of jobs are created. What concerns “Ryanair”, a new aircraft maintenance centre is being formed in Kaunas; it has some potential for expansion and becoming a regional centre. Comparatively small investments in scientific research and new product development centres offer jobs for highly-qualified specialists and create high added value.

– How are investors lured to come to Lithuania?

– Investments in a few strategic directions

are induced. Establishment of service centres such as IT, financial accounting, customer service and search of potential employees is supported. Investments in production characterized by high added value, for example, in production of medical equipment, biotechnologies, clean technologies and industrial equipment, are also induced.

We emphasize that we have got world-class information and communication technologies, we prepare a lot of high-level specialists of IT and other fields, we are highly valued in the world as a country from which it is advisable to buy services for business processes.

Besides, new free economic zones were established and simplified rules for spatial planning of these zones and industrial parks were approved. Finally, on the basis of the demand being formed, the investment climate will be improved by special programs inducing people to learn less popular foreign languages, for instance, Scandinavian ones.

– Can the free economic zones be called the most attractive to investors?

– Of course they can, especially when speaking about investments in production. Various tax exemptions and the infrastructure offered to investors by such zones are very important.

– Which of the big investors could come here in the nearest future?

– The year 2010 and 2011 were favourable to Lithuania while attracting investments and we expect the same from the year 2012. As I already mentioned, we expect new investment projects from our biggest investment partners from Scandinavian countries, Germany, the Netherlands and the USA. A research showed that the biggest number of DFI projects is planned to be initiated in the region this year by IT (every fifth planned project), financial services, business services, renewable energy, car industry and other production companies.

The most solid investor with regard to the amount of planned investments in 2011 is the Icelandic company “Felit” which will open the shopping centre “IKEA” in Vilnius, the

The most solid investor with regard to the amount of planned investments is the company “Felit” which will open the shopping centre “IKEA” in Vilnius.

48

Business. Leaders 2012

first one in the Baltic States, under a franchise agreement. The value of this project is LTL 261 million; 200 jobs are planned to be created.

The UK company “Call Credit” is distinguished by the amount of investments in the service sector; the company will allocate LTL 60.7 million to the service centre which is being established in Kaunas.

The Danish company “Danspin” plans the biggest investments in production (LTL 41.4 million); the company will open a spinnery in Raseiniai. The most solid production project with regard to the number of jobs planned to be created is the plan of the UK company “Homegroup” to expand a company producing furniture in Klaipėda where 350 more people will be employed. A few projects which were not very large but were special in their own way were announced last year. For example, the Swiss company “Bartholet Maschinenbau” wants to open a company assembling ecological minibuses running on solar energy in Alytus.

– What does global practice show: which fields are the most perspective ones with regard to investments? How much are they developed in Lithuania?

– These are the sectors which generate high

added value: information and communication technologies, specialized services for business, production based on advanced technologies, scientific research and new product development centres. All these fields in Lithuania have received solid foreign investments during recent years.

– What does Lithuania look like in the European context?

– Attracted direct foreign investments amount to approximately 2 % of all DFI projects attracted to East Europe or twice more than the gross domestic product generated by the region which falls to the country. We outpace Latvia and Estonia with regard to this indicator.

It is somewhat paradoxical but the recent crisis showed that foreign corporations entered Lithuania willingly and transferred their IT and customer service subdivisions here during the economic cooling off period. This took place due to the increased need to save and to optimize business processes. International corporations can provide services of the same quality only cheaper from Vilnius or Kaunas as from Stockholm, London or Denver.

We must understand that foreign companies are being established in Lithuania not because

of the comparatively small market but because of the convenience to service customers in Scandinavia, other European markets and markets of CIS from Lithuania, because of the comparably good infrastructure as well as bright, hard-working and affordable specialists.

I believe that we must seek to use this advantage of our market while competing for investments with other countries of the world.

DIRECT FOREIGN INVESTMENTS

BY INVESTING COUNTRIES Country Sweden Poland Germany Netherlands Russia Norway Denmark Finland Estonia Canada Latvia Cyprus Other countries in Total

(billion LTL) 5.318 4.824 3.656 3.176 2.328 1.989 1.976 1.931 1.699 1.497 1.189 1.115 6.366

37.064 TotalSource: Department of Statistics

COMMENT

Eimantas Kiudulas

Director of Klaipėda free economic zone

K

laipėda “FEZ” is the first industrial park with regard to the amount of attracted investments in the Baltic States. “Financial Times” acknowledged Klaipėda “FEZ” as one of the twenty best special economic zones and industrial parks in 2010.

17 companies are operating and 4 more are planning to initiate projects Klaipėda “FEZ” in the nearest future. LTL 14.4 billion was invested under the contracts signed; it is planned to invest additional LTL 508 billion; over 1.130 jobs were created.

Total turnover of the companies of Klaipėda “FEZ” currently exceeds LTL 2.4 billion (data of 2010). The companies operating in “FEZ” enjoy profit and real estate tax exemptions. The compa-

nies of “FEZ” represent ten countries and six branches of industry. The people employed in the companies of Klaipėda “FEZ” earn higher salaries that the average salary in Lithuania; most of our companies are based not on cheap labour force but on people’s qualification in implementation and management of new technologies.

We lure investors by, first of all, the advantages of Klaipėda as a seaport, the skills of the people employed here and the support by the authorities of the city for those who create new jobs. The company managing “FEZ” provides the service package to investors under the one-stop-shop principle.

We offer both lots with detailed plans and all necessary infrastructure as well as buildings for rent and turn-key management of the customer’s projects.

We have got a 10-year experience in the business already.

If a company is looking for a place where it could be established and its activities could be transferred or where its production capacities or warehousing areas could be expanded, it will choose “FEZ”.

Transport of all types, industrial traditions, the city’s position to induce creation of new jobs: all that enables us persuading investors to choose Klaipėda.

An investor will work not only with the company managing “FEZ” but also with a team of our long-term

partners here. We usually compete for new investments with the industrial parks and special economic zones not only of Lithuania but also of other countries (Poland, Latvia, Czechia, etc).

Although we are a successfully operating industrial park, pollution by the companies of Klaipėda “FEZ” amounts to merely 2.8% of the whole pollution of Klaipėda City. Obviously, the concept of “FEZ” – an industrial park – proved its success with regard to this aspect as well. Essential investments in odour-removing equipment were made in several companies of “FEZ” last year. Few Lithuanian companies could make such investments in times of crisis. Most of the companies operating in Klaipėda “FEZ” adapted to the changed circumstances and survived successfully in times of crisis. It is a joy that the people of Klaipėda retained their jobs.

Klaipėda is not only a convenient place to work at but, including Palanga and Neringa towns as well as the Nemunas Delta region, it is also one of the most attractive places for recreation and living.

The Government approved of the expansion area of Klaipėda “FEZ” in the end of last year. We are currently coordinating the detailed plan of the expansion area and, of course, we are looking for new investors who could be established in this area located in Klaipėda district.

Business. Leaders 2012

49

BREAKTHROUGH has chosen kaunas and feels no regret

“Callcredit Information Group” “Callcredit Information Group” is the expert in the fields of credit referencing, marketing services, consumer information, interactive solutions and consultative analytics.

Adrianas Mitri, Executive Director „Callcredit Information Group“.

Adrianas Mitri will promote IT development

In order to keep pace with our expansion and growth strategy and to help the business move forward “Callcredit” has taken the decision to establish an operation within Kaunas to help support its existing IT infrastructure.

The Lithuanian opperation will provide IT Development resources to create and support a set of services which will enable the businesses UK clients to make more informed decisions as well as ensuring that our data assets remain accurate and up to date.

Initially the Lithuanian office will consist of approximately 40 Lithuanian employees our plan will be to increase numbers to 80 by the end of this year, rising to 180-200 employees by 2013. The scale and pace of growth will depend on getting a 50

Business. Leaders 2012

core business up and running in Kaunas that can assimilate in to our company culture, from our experience to date we are confident this can be achieved.

Our decision to choose Lithuania has been motivated by a number of key factors.

Lithuania is a global leader in IT infrastructure with a highly educated, talented and multi lingual population. As such, the Lithuanian Government is keen to attract foreign investment and is currently offering attractive grants to support this activity. In addition, other UK companies already have offices situated here and who are great Lithuanian advocates.

Investment in future of our people

But why Kaunas you might ask?

- Kaunas has one of the largest technology universities in the Baltic region however we were aware that many of those lea-

Office of English company will establish in „Žalgiris“ arena.

ving the university looking for employment have done so with employers based in Vilnius requiring them to commute from Kaunas and the surrounding area to Vilnius. “Callcredit” wants to be one of the main international companies based in Kaunas and as such we reco-

gnised that there was an opportunity to tap into Kaunas’s rich employment resource and provide employment opportunities to highly skilled staff without the need for them to conduct lengthy daily commutes.

Our move to Kaunas is not one motivated by the need to

” will promote IT development tic states. JSC “Callcredit Operations” UAB will be the first commercial organisation to occupy the office suites situated within the state of the art sporting venue. We will be taking approximately 2000 square meters of office space on the fourth floor, which will be capable of providing office facilities for up 200 employees. “Žalgiris” arena is a truly prestigious venue which we are very proud to be associated with. I believe that the combination of securing both premium office space and a high caliber of staff will create the perfect blue print for a successful future for “Callcredit” in Lithuania.

will attract similarly thinking people

move roles from the UK to Lithuania in an attempt to reduce costs. The opening of our new office here isn’t about UK downsizing but is about investing in the future of our people and the wider Group. The Kaunas operation will be an additional office, run under the

same management structure, as our other offices. The Kaunas operation will play a key role in ensuring that “Callcredit” has the right infrastructure in place to facilitate continued growth across the entire group. It will enable the business to continue to invest in the UK, recruit

additional staff which will help meet the future needs of both new and existing customers.

I am also delighted that we have been able to find such an iconic location for our new Lithuanian Operation Offices the “Žalgiris” arena in Kaunas – the largest arena in the Bal-

Innovation is at the core of our business model and I am sure our new Lithuanian colleagues will be able to quickly support this. Our experience to date has confirmed that there is a real problem solving mentality within Lithuania which has already been demonstrated in the calibre of staff we have been able to recruit so far. I am confident that as we move forward with our development plans we will continue to attract like minded individuals who can help “Callcredit” deliver the scale and pace of growth we have planned.

“Callcredit” will be attending the KTU Career Day 2012 on the 21st March 2012 at Kaunas University of Technology. Anyone who is interested in joining our team can visit us there or contact recruitment@callcreditgroup.com.

Business. Leaders 2012

51

FACTS BUSINESS CHOOSES THE CAPITAL

The whole national government apparatus is situated in Vilnius. Approximately 20% of the whole labour force of the country is concentrated in the capital. GDP per one resident of Vilnius was 1.5 time higher than the average of the country. However, an exceptional peculiarity of Vilnius County is regional fragmentation.

Andrius Agafonovas

Analyst of the research institute “Social Dynamics International”

J

obs are concentrated in Vilnius City and District, Elektrėnai Municipality as well as in Trakai District (especially in Lentvaris) and Ukmergė District. A couple of companies with over 100 employees are operating in Šalčininkai District (UAB (Joint stock Company) “Eisiga”

• FOOD INDUSTRY

Food industry is not one of the strongest branches in Vilnius County; however, some large and wellknown companies are operating here: SC (Stock Company) “Pieno žvaigždės”, SC “Vilniaus paukštynas” and JSC “Vilniaus duona”.

52

Business. Leaders 2012

– clothes and small wares – and JSC “Polivektris” – plastic and rubber articles). Only institutions belonging to the government sector (education and health case institutions) can boast higher number of employees in the rest of the districts belonging to the County.

SC “Vievio paukštynas”, JSC “Kietaviškių gausa” (cultivation of vegetables) and JSC “Malsena” (processing of cereal crops) are operating in Elektrėnai Municipality.

Two large companies processing meat and its products – JSC “Biovela” and JSC “Cesta” – are established in Vilnius District.

• DIRECT FOREIGN INVESTMENTS

Although there is no free economic zone in Vilnius, differently from Kaunas or Klaipėda, it is Vilnius County which attracts over half of all direct foreign investments (DFI). Vilnius County received 21.8 billion LTL in DFI and Vilnius City – 20.9 billion LTL in 2010 (61.2% and 59% respectively, of all DFI received by Lithuania). Undoubtedly, the difference of DFI between the whole county and the centre of the county is one of the causes of the aforementioned regional fragmentation.

Such foreign companies as “Shell” (car oils, JSC “Shell Lietuva”), “CocaCola” (JSC “CocaCola HBC Lietuva”), “IBM” (IT solutions, JSC

• TRADE

The offices of the five largest retail trade networks of consumer goods are established in Vilnius: “Maximos grupė”, JSC “Palink” (which controls “Iki” shopping centres), JSC “Norfos mažmena”, JSC “Rimi Lietuva” and KB (Limited Partnership) “Lietuvos kooperatyvų sąjunga” (which controls the regional “KOOP” shops).

Other retail trade networks are controlled by SC “Apranga” (clothes), JSC “Elektromarktas” (domestic appliances) and JSC “Čili Holdings” (catering institutions) which are also established in Vilnius. The companies JSC “Lietuva Statoil”, JSC “Neste Lietuva”, SC “Ventus-Nafta” and JSC “Baltic Petroleum” which control the

“IBM Lietuva”), “ABB” (energy and automation technologies, JSC “ABB”), “DHL” (logistics, JSC “DHL Lietuva”), leaders in financial services “Barclays” (“Barclays Technology Centre Limited”, Lithuanian branch), “Skandinaviska Enskilda Banken” also known as the parent company of “SEB” bank (“Skandinaviska Enskilda Banken Ab”, Vilnius branch), “Western Union” (JSC “Western Union Processing Lithuania”) and others have invested in Vilnius County.

largest networks of petrol stations in Lithuania have also established their offices in Vilnius. The companies engaging in wholesale trade and established in Vilnius such as JSC “Rivona”, M. Gumbravičius’ IĮ (Individual Enterprise) “Gelsva”, “MG Baltic Trade” which belongs to JSC “Mineraliniai vandenys”, JSC “Bennet Distributors” as well as JSC “Dojus Agro”, JSC “Agrorodeo” and UAB “Konekesko Lietuva” are also noteworthy. The functions of supporting wholesale trade may be attributed to the companies producing tare, labels and other packaging materials such as JSC “RETAL Europe”, JSC “Lietpak” and JSC “Pakmarkas”.

• CONSTRUCTION, METAL PROCESSING

The biggest number (39.4 % of all Lithuania) of all companies engaging in construction the largest ones of which are “Tiltra Group” and “Alvora” is registered in Vilnius County.

Most of them are registered in Vilnius but a few larger ones, for example, JSC “Izo-

bara”, one of the largest employers in Ukmergė, are not registered in the centre of the county. Two quite significant companies of metal processing industry – JSC “Stansefabrikken” and JSC “Systemair Production” – are also registered in Ukmergė.

• MEDICINE AND PHARMACY

The biggest representatives of medicine and pharmacy industry in Vilnius County are JSC “SICOR Biotech” (biopharmaceutical products) operating in the periphery of Vilnius and JSC “Intersurgical” (medical respiratory systems) established in Švenčionys District. The

biggest wholesale traders of pharmaceutical products – JSC “Armila” and JSC “Berlin Chemie Menarini Baltic” – have got their headquarters in this county. JSC “Europotheca” controlling the network of pharmacies “Eurovaistinė” is also established in Vilnius.

• WOOD PROCESSING, FURNITURE, PAPER AND TEXTILE

JSC “BOEN Lietuva”, the largest company engaged in wood processing in Vilnius County, is established in Elektrėnai. The companies of Ukmergė JSC “Universalūs medžio produktai” and JSC “Užmojai su garantijomis”, the name of which is quite promising (“Scope with guarantees”), contribute to this branch of industry as well. One of the biggest groups uniting furniture makers – “SBA Furniture group” – and AB “Vilniaus baldai” are registered in Vilnius as well, whereas JSC “Padvaiskas ir KO” – in Vilnius district. Besides the

centre of the county, the companies established in Ukmergė (JSC “Paina ir Ko”, JSC “Aukmergės baldai”) and Lentvaris (JSC “Club & Company”, JSC “Inwood”) are also significant to the furniture industry.

SC “Grigiškės” is the biggest company of Vilnius County representing paper industry.

Besides paper and cardboard, this company produces fibreboards as well. JSC “Lelija”, the leader of textile of Lithuania, has registered its office in Vilnius. Other manufacturers of textile and clothes are not concentrated around Vilnius. SC “Vilkma” and JSC “Textelite” are operating in Ukmergė.

The specialists of small wares are JSC “Eisiga” operating in Šalčininkai district and JSC “Daturė” operating in Trakai district.

• FINANCE

Vilnius is the centre of finances of Lithuania as well; the offices of the main banks, credit unions, leasing companies, insurance companies and other financial institutions of the country are established here. The institutions administering the financial market – NASDAQ OMX Securities Exchange, the Central Bank of Lithuania, the Central Securities Depository of Lithuania – are established in

Vilnius as well. A reform of regulators of the financial sector has been implemented as of the beginning of this year; the Committees of Securities and Insurance Regulators were affiliated to the Central Bank of Lithuania and a Supervisory Commission was formed in the Bank of Lithuania under this reform.

It is one more step in promotion of a more transparent development of the financial sector.

• TELECOMMUNICATIONS AND IT The telecommunications and IT sector demonstrates impressive development in Lithuania and large investments in this field determine the fact that Lithuania is among leading countries in respect of the Internet speed and penetration of mobile communication. The offices of the main telecommunications companies established in Vilnius create jobs not only for specialists of management and economy but also for those of engineering. The biggest telecommunications and IT company of Lithuania is “Teo LT” which reached LTL 0.75 billion turnover last year. The three

• TOURISM

191 business entities provide accommodation services in Vilnius County, whereas the leaders of the county are Vilnius City (136 entities) and Trakai

• TRANSPORT

The offices and service centres of the biggest transport and logistics companies of the country such as “Lietuvos geležinkeliai”, “Lietuvos paštas” and the International Vilnius Airport as well as the companies servicing the airport – SC “Avia Solutions Group” and JSC “Small

big mobile communication operators, which are in the top four of telecommunications companies of Lithuania together with “Teo LT”, are also established in Vilnius; those companies are “Omnitel” (by the way, it belongs to the same “TeliaSonera” group just like “Teo LT”), “Bitė Lietuva” and “Tele2”.

District (25 entities). 630.861 tourists visited Vilnius and its county in 2010; this amounts to over 40 % of all tourists of Lithuania.

Planet Airlines” – are established in Vilnius. The number of the companies providing logistics services established in Vilnius County is probably not the biggest one but those companies are among the biggest ones, for instance, JSC “Girteka” and JSC “DSV Transport”.

Business. Leaders 2012

53

FACTS KAUNAS ENTICES WITH ATTRACTIVE CONDITIONS • FOREIGN INVESTMENTS AND KAUNAS FEZ

Over LTL 18 billion in GDP was generated in Kaunas County in 2010: this amounts to 19 % of the whole GDP of Lithuania. 91 companies operating in Kaunas County were among the 500 biggest companies of the country in 2010 (data of “Verslo žinios”), whereas 43 companies from 202 companies income of which exceed LTL 100 million are operating in Kaunas (data of the Department of Statistics of 2011).

Andrius Agafonovas

Analyst of the research institute “Social Dynamics International” 54

Business. Leaders 2012

Direct foreign investments (DFI) in Kaunas County amounted to LTL 3.9 billion (12 % of all DFI in Lithuania) and LTL 4.7 billion (13.2 % of all DFI in Lithuania) in 2009 and 2010 respectively. Foreign companies have invested in Kaunas County: “Kraft Jacobs Suchard” (food products, SC (Public Limited Liability Company) “Kraft Foods Lietuva”), “Marzotto Group” (textile, SC “Liteksas”) and “Carlo Gavazzi” (electronic parts, JSC (Private Limited Liability Company) “Carlo Gavazzi Industri Kaunas”).

One of the three free economic zones (“FEZ”) of Lithuania is established in Kaunas. Although Kaunas “FEZ” was not as successful as Klaipėda “FEZ”, it does not lack investors as well.

The greatest exceptionality of “FEZ” is the International Kaunas Airport operating nearby; this territory shares a 3 km border with Kaunas Airport. An air park, which lures airline bases and companies of aviation industry (assembly, tests and trade in aircrafts) since they can have access to the runway and use tax and customs fee exemptions provided by “FEZ” at the same time, is being constructed in the territory of “FEZ”.

Construction (JSC “YIT”), construction materials (JSC “Ryterna”, JSC “Finnfoam”), warehousing (JSC “FEZ terminal”) and other companies are currently operating in the territory of “FEZ”.

• TRANSPORT

The favourable geographic location of Kaunas, to be more precise, the neighbourhood of the highways A6 connecting Warsaw and Saint Petersburg, A1 connecting Klaipėda seaport and Vilnius and extending towards Minsk, Kiev and Moscow as well as “Via Baltica” enables excellent organization of cargo transportation via motor roads.

The well-developed railway infrastructure and the neighbouring International Kaunas Air-

• TRADE

Such suppliers of consumer goods as JSC “Sanitex” and JSC “Osama” as well as pharmacy whole trader JSC “Limedika” are established in this county because of the aforementioned transport-related circumstances. Retail traders also have their offices in Kaunas: JSC “Eiginta” controlling “Šilas” shopping centres, companies controlling the pharmacies “Camelia”, “Šeimos” and “Litfarma”, distributors of domestic appliances “Topo grupė”, distributors of household and construc-

• WOOD, FURNITURE, PAPER Food processing industry covers production from wooden tare (JSC “Fudo”) to particle and fibreboards, plywood, furniture cardboard and fittings (JSC “Trukmė”).

The biggest users of the latter products – furniture makers – in Kaunas County are SC “Freda”, JSC “Scapa Bal-

port open up even better opportunities for logistics. Such well-known companies as JSC “Arijus”, JSC “Aitura”, “Evekas” group and JSC “Hoptransa” are engaging in logistics in Kaunas County.

tion goods “Senukų prekybos centras” and other significant companies trading in agricultural goods and services (JSC “Dotnuvos projektai”), car parts (“Jutos grupė”), plumbing (JSC “Sanistal)”, electronic goods (JSC “Lemona”), polymer raw materials (R. Aglinskas’ IĮ (Individual Enterprise) “Vailendas”) and toys (JSC “Voira”).

SC “ITAB Novena” producing shelvings and other furniture for shops and warehouses may be attributed to servicing trade as well.

tic”, JSC “Medienos era” and SC “Kauno baldai”. Equipment for wood industry is produced by JSC “Lintera”, a company established in Jonava.

Printing, office, decorative and special paper, cardboard and envelopes are also produced in Kaunas (JSC “Papyrus Lietuva”).

• FOOD AND DRINKS INDUSTRY, SERVICING THEREOF Such meat processing companies as JSC “Samsonas”, JSC “Nematekas”, “Krekenava” companies group, Kaišiadorys, Girelė and Dovainionys poultry farms are operating in Kaunas County. “Vičiūnai” companies group and JSC “Norvelita” are engaging in processing of fish and its products. Frozen products (mostly dairy products) are produced by JSC “Premia KPC” and JSC “Vikeda”. The biggest companies processing crops and grain are SC “Kauno grūdai” and JSC “Galinta ir partneriai”.

Cereal crop products are further processed by such companies as JSC “Naujasis Nevėžis”, JSC “Leipurin”, JSC “Minordija”, JSC “Fazer kepyklos” and

JSC “Gudobelė”. Canned products and sauces are produced

by JSC “Suslavičius-Felix”, JSC “Vesiga” and JSC “Kėdainių konservų fabrikas”. SC “Nordic Sugar Kėdainiai”, a company processing sugar, is also operating in Kaunas County.

JSC “Birštono mineraliniai vandenys ir Ko” and JSC “Selita ir Ko” are the biggest producers of soft drinks in this county, whereas SC “Ragutis”, SC “Stumbras”, JSC “Itaina” and JSC “Lietuvi kas midus” produce alcoholic drinks.

The companies of food industry are serviced by producers of tare and labels such as JSC “Imlitex”, JSC “Achempak” or JSC “Fudo” and JSC “Aurika”.

• PHARMACY AND CHEMISTRY INDUSTRY

Companies not only trading in pharmaceuticals but also producing them, for example, “Sanitas” companies group, the biggest producer of medicines in Lithuania, or JSC “Aurantijus”

• TEXTILE

Probably the biggest producer of clothing in Lithuania – SC “Audimas” – is established in Kaunas. This company owns approximately 30 % of the sportswear market of Lithuania. The specialization of JSC “Liningas” is production of lining and other fabrics. It transports most of its production to foreign markets.

JSC “Omniteksas” offers cotton, linen, wool, bamboo and synthetic fabrics processed in various ways. Innovativeness of the com-

operating in Kaunas “FEZ”, are established in Kaunas County.

There is surely no need to introduce the two biggest operators in chemistry industry in Kaunas County: SC “Achema” (the biggest producer of nitrogen fertilizers in the Baltic States) of Jonava and SC “Lifosa” (a producer of phosphate fertilizers) of Kėdainiai. These companies are wellknown not only in Lithuania.

pany is also evidenced by the fabrics and clothes made of milk proteins and presented to the market.

JSC “Skinija” is the leader in production of socks and tights in Lithuania. Other noteworthy textile companies are TŪB (General Partnership) “Klasikinė tekstilė” specialization of which is linen and its products, SC “Šatrija”, a producer of workwear and active recreational wear, as well as the aforementioned SC “Liteksas”.

• ELECTRONICS

The brightest star of electronics industry is “Acme” companies group, which produces sources of light, electronic parts and small domestic appliances, established in Kaunas County. JSC “Selteka” of Kaunas has recently become popular because of introduction of digital televi-

sion in Lithuania. JSC “Accel elektronika” (electronic parts) and JSC “Elstila” (cables, distribution boxes, switches) are also operating in Kaunas County.

• CONSTRUCTION AND CONSTRUCTION MATERIALS

The biggest producer of wire, nails and metal mesh – JSC “Meshel Nemunas” – is established in Kaunas County. Presumably, the manufacturers of metal raw materials JSC “Baltical” and JSC “Schmolz+Bickenbach Baltic”, which are located in this region as well, have contributed to the success of the company “Meshel Nemunas”.

The rapidly developing company JSC “Betonika” offers prefabricated ferroconcrete engineering solutions and related services. JSC “Danplastas” engages in activities of a slightly different nature. Currently it is the only the only manufacturer

• TOURISM

One quarter (25 %) of all museums of Lithuania is operating in Kaunas County. Besides them, Lithuanian and foreign tourists are attracted by annual events: jazz festival “Kaunas Jazz”, Pažaislis Music Festival, celebration of Joninės (Midsummer) in Jonava, Šiluva Patronal Feast and Cucumber Festival in Kėdainiai.

108 companies providing accommodation services are registered in Kaunas County, 49 of

of glass-reinforced plastic body parts for wind power plants. JSC “Dextera” is one of the biggest producers of blinds in Lithuania.

Its competitor JSC “Ryterna” (gates, gate automatics) is established in Kaunas “FEZ”.

JSC “Rūdupis” of Prienai is proud of its 50-year construction experience and Europeanquality windows. The biggest companies providing construction services in Kaunas County are JSC “Mitnija”, JSC “KRS”, SC “Požeminiai darbai”, JSC “Kaminta”, JSC “Kauno keliai”, VĮ (State Enterprise) “Kauno regiono keliai” JSC “Kelprojektas”, SC “Axis Industries”, etc.

them are located in Kaunas City, 20 – in Kaunas District, 12 – in Kėdainiai District and 10 – in Birštonas. Almost 204 thousand tourists (13.1 % of all tourists of Lithuania) were accommodated in Kaunas County in 2010.

Not only the International Kaunas Airport but also such companies as “Novaturas” group, JSC “Kauno autobusai” and JSC “Kautra” contributed to this indicator.

Bustling life in “Žalgiris“ A Attraction: Arena distinguishes by its universality and variety of provided services.

“Žalgiris” Arena in Kaunas, opened on 18 August 2011, has already celebrated the half-year anniversary of its activity. It can undoubtedly be stated that the biggest Arena in the Baltic States is operating in its full capacity and the planned projects will attract an even greater stream of visitors.

Kaunas “Žalgiris” Arena — attraction centre of the Eastern Europe

During the first half of the year, over 100 events were organized in “Žalgiris” Arena that attracted even more visitors than expected: the number of spectators from Lithuania and abroad exceeded half a million. “One of the aims of “Žalgiris” Arena is to become one of the most significant centres of attraction in the Eastern Europe where sport and entertainment events would take place and stimulate active and interesting relaxation”, — said Angelė Dementavičiūtė, the director of JSC Kaunas Arena, about the aims of the Arena. — “It can certainly be stated that this aim is coming true, because world-famous celebrities choose “Žalgiris” Arena for their 56

Business. Leaders 2012

concert tours, for example: James Blunt playing romantic ballads, one of the most popular electronic music bands “Hurts”, the charismatic Lenny Kravitz, scandalous German band “Rammstein” and in summer the American “Red Hot Chilli Peppers”, attracting thousands of people to their concerts, are coming to Kaunas, and that is not all”. In the future, both the sports fans and music lovers are going to be offered many more remarkable moments.

Sports infrastructure object of the year

“Žalgiris” Arena was acknowledged as the best sports infrastructure object of 2011 in the Sport Management Awards “Penki olimpiniai žiedai” (“Five Olympic Rings”). Arena con-

sists of two separate spaces and distinguishes by its functionality and applicability for various events.

The first space is the grand hall of Arena which may be adjusted to all types of sport events because of the movable seats. Its floor was made of two layers with installed ground heating and ice freezing pipes. The former protects the floor constructions from possible deformations, while the latter ensures the highest-quality pitch for ice-hockey matches. More stable equipment for fastening the nets were mounted for basketball matches and special ring lighting was installed for boxing. “Žalgiris” Arena satisfies the requirements for various international sports events: not only European basketball, but also ice-hockey due to

the appropriate size of the pitch, ice quality, number of changingrooms, etc. Matches of other types of sports, such as football, tennis, handball, volleyball, will also be held in Arena.

In other premises of Arena, administrative premises, about 20 changing-rooms, 8 large locker-rooms for sportsmen, and special dressing-rooms for artists were set up. “Žalgiris” Arena can hold two basketball matches at a time as it has a fully equipped training hall which satisfies all necessary requirements.

Excellent visibility and acoustics “Žalgiris” Arena is equipped with unique up-to-date technological solutions that provide extraordinary-quality acoustics, lighting and good visibility during different types of events.

Due to the mobile constructions, Arena can hold from 2.5 up to 17.5 thousand of spectators and offer them a large range of events: starting from sport matches and performances on ice to chamber concerts and circus acts. “Žalgiris” Arena satisfies the highest-quality stand-

BREAKTHROUGH reality exceeded expectations

Arena ards: excellent sound of all types of music is achieved, starting from rock concerts to pieces performed by chamber orchestras; it is comfortable despite the type of event, a basketball match, concerts or a play, that is held. “The audience is satisfied or even surprised by excellent visibility from any seat in the hall. Even though Arena is huge and can hold over 17 thousand of people, it was designed to ensure great visibility even from the third-level seats,” — said A. Dementavičiūtė about the possibilities of Arena. It is characterised by an especially high-quality sound during concerts. In order to avoid sound reflections a two-layer suspended ceiling was mounted, the roof was covered in acoustic and glass-wool and acoustic curtains were also installed — these are unique solutions among similar arenas.

Up-to-date technological solutions for visitor information “Žalgiris” Arena is referred to as the most modern in the Baltic States. The whole grand hall of Arena is surrounded by a 262 m-long LED screen line, mount-

ed bellow the second floor of the boxes. The information line ensures a wide angle of vision and high resolution. The biggest information cube of all available in the Scandinavian and Baltic States was installed in Arena: the area of its plane equals to 21.5 m2. For the sake of comparison, the area of a single plane of the cube in Vilnius “Siemens” Arena is two times less, whereas the one in Šiauliai is three times less. Both LED line and information cube are used for high-quality images, photo-material and text representation: the visitors of Arena and television spectators are informed about the upcoming events, introduced to the partners and sponsors of Arena, and provided with information about matches.

Multifunctional spaces of Arena

Arena distinguishes by its universal application and variety of provided services. The locals and guests are attracted not only to the convenient and big hall of Arena, but also to its smaller spaces: International Kaunas Film Festival already took place in the amphitheatre where seminars and press conferences are also arranged, whereas in the other spaces, exhibitions and private corporate events are organized.

Amphitheatre, consisting of three spaces: restaurant, theatre-concert hall and showroom, is a great place for conferences, seminars and closed private events. Its area exceeds 1 000 square meters, which encompasses about 1 000 people and has 320 seats. Due to the especially good location of the Arena, amphitheatre is suitable for international conferences, seminars and meetings. “Kaunas Arena is in a strategically good location not only from the

Lithuanian, but also European perspective: via Vilnius-KaunasKlaipėda highway it is easy to reach Arena from any town of Lithuania, while “Via Baltica” highway and Kaunas Airport provides convenient transportation for guests from other countries,” — said A. Dementavičiūtė about the accessibility of Arena.

Due to the excellent geographical location of Arena, amphitheatre is suitable for neighbouring countries to organize business meeting of the Baltic States. “Žalgiris” Arena also offers boxes suitable for various events, presentations, concerts, sport matches or shows. Due to the movable walls, which enable adjusting the size of the boxes according to the specific requirements, the boxes can hold from 20 to 100 people. “People are offered to rent a box for the whole day for company parties and children or adults’ birthday parties. If you choose the day when a concert or sport match is taking place, you will have a great family of company party with an evening show, — says Gitana Kazakevičienė, the head of client service. — Most of the boxes are rented for a long-term period, i.e. 10 years”. By inviting guests, partners and employees into corporate events, the companies stimulate loyalty and create traditions. The boxes are used for everyday company activities: supervision of presentations, meetings and similar events. For better comfort, a mini-bar, cloakroom, WC, TV and individual food service are available in the boxes.

Occupation of Arena between the EVENTS

Life is bustling in Arena not only during big events: photographers select Arena for artistic photo sessions and invoke not only peo-

ple as models, but cars as well.

For some time already, excursion “Basketball history in Kaunas” is organized by professional guides in Arena and the internet users can visit Arena by watching a video presentation online. The fans of “Žalgiris” Arena group on social network “Facebook” can enjoy an online photo gallery of autographs given by the celebrities who have performed in Arena. The visitors are welcomed not only to snack bars, fast food and drink bars, open during the events, but also to have a good time in the restaurant “Keturiolika dešimt” which is open every day.

Future perspective

“Žalgiris” Arena is situated in a unique place, in the Nemunas island in the very centre of Kaunas. During different events, Arena undoubtedly becomes the centre of attraction of Kaunas: its Old Town and Laisvės Avenue come alive. According to A. Dementavičiūtė, the future objective of the Arena is to revive the Nemunas island: “It would be nice to have benches, footpaths and cycleways, basketball and volleyball pitches, ramps for roller-skaters. We are looking forward to constructing a quay next to Arena so that people could enjoy boat sailing.”

The aim is to make both Arena and its surroundings the centre of attraction of Kaunas City and central Lithuania. To implement such vision, the support from Kaunas City Municipality, business sector and the EU Structural Funds is expected.

The purpose of “Žalgiris” Arena is to develop a community and create tradition of entertainment. In order to make people feel at home in Arena, free events are often organized and social projects are provided support.

Business. Leaders 2012

57

BREAKTHROUGH game become a business

Every experienced businessperson can remember starting their activity. In most of the cases they have not begun very young, but only having tested their possibilities in several areas. However, boundless enthusiasm for creating something of their own and surprising the world fires early in life.

The young CAN do it Experience is necessary to start a business

For instance, the students at KTU Faculty of Informatics, Mantas Kavaliauskas and Jonas Abromaitis, urged by the successful start of their own interactive game “Skaičių miestelis” in “KTU Technorama”, have established a website mokinukai.lt, which has later become the start of their successful business.

KTU university graduate, Aidas Jarušaitis, who has established an electronic solution company JSC “ES4B” and employed a considerable number of students, was awarded in the annual event “Verslo diena” (“Business Day”), organized by KTU Regional Science Park. Aidas claims that it is not easy to establish and develop your own business even if you have a good idea. “Personally, I have decided to start a business after I finished my studies and worked in Kaunas University of Technology, where I noticed some perspective areas and met the like-minded,” — A. Jarušaitis shared his opinion. — “However, after 10 years of business development, I think that it is a rather stressful and exhausting activity.” To the question about the lacks of young people who want to take up business, Aidas replied that they require realistic under58

Business. Leaders 2012

The game “Skaičių miestelis” (“Town of numbers”) created by students of Informational Faculty Mantas Kavaliauskas, Mantas Radvila and Jonas Abromaitis has become the start of their new business.

standing about the activity in the first place. ”Universities provide a great amount of knowledge, especially to the motivated people, but that is not enough,” — says the head of JSC “ES4B”. — “Actual practical work is necessary as well as understanding of practical application of knowledge.”

Enthusiasm offers actual support

One more KTU university graduate, Justinas Katkus, has initiated the project on the socalled “start-ups” — a business set-up method which is becoming more and more popular worldwide.

On 2 March, the Young Business Development “StartupSpace”, a division of KTU Centre for Innovation and Entrepreneurship, is going to be opened in

student campus. It is expected to function as a space for gathering communities and the like-minded, developing ideas, exchanging knowledge and inspiration, creating high-quality products, and promoting education based on experimental problem solving.

According to Justinas Katkus, the main driving force in establishing a business is the wish to change even the smallest things as well as great persistence. “The first ideas came to me back in 2000, when a game I created attracted attention of many people,” — said J. Katkus about the beginning of the business.

Full of enthusiasm about engineering, his friend and J. Katkus started the first international projects in the field of mobile technologies already in 2005, which later became their first

business. They also gained experience in the giant international software company IBM. “Nonetheless, as every business enthusiast, I have understood that cooperative activity does not give as much freedom as I wish for fulfilling my own ideas,” — said the head of KTU Young Business Development Division. – “Thus, I went back to personal projects which, in few a years time, developed into the first company of mobile games, oriented towards smart phones.

By creating and developing projects together with the likeminded, they initiated the events “Barcamp” for the founders of innovative technology businesses, where they shared experience and perceptions. This is how the first annual weekend-camps “StartupWeekend“ for the realization of ideas emerged. Being asked about what the young require in order to start a business in Lithuania, Justinas jokes: “You have to get into a fight, and everything else will work out”. He also believes that the first step is the most difficult, but after you make it, the life changes and is never the same as it used to be.

Thus, let’s hope for a breakthrough in innovative businesses established by the young — after all the underpinning has already been laid.

BREAKTHROUGH “Vikonda”: the stimulus of success - reputation and optimism The concern Vikonda, operating for more than two decades, has grown as well during the economic crisis successfully. According to General Director of “Vikonda” Linas Grik as, a recipe for success is optimism, despite analyst forecasts, to adapt to current conditions, to develop and invest continuously, focusing on reputation, transparency and quality.

Saulius Tvirbutas – How has the concern survived the painful period for the national economy: the recent crisis?

– We have been looking at this hard period of time as a possibi-

adapted to changing business conditions

Travel: during 20 minutes long virtual excursion inside “Krekenavos agrofirma” it is possible to know how meat products are made.

Our farms were also doing well: we cultivate about 6 thousand hectares of land.

General Director of Vikonda Linas Grikšas.

lity to grow and improve. For this reason we have easily coped with the troubles caused by the crisis. It would be wrong to fear and think that saving is the only way to survive the difficult period. The concern “Vikonda” has not changed its investment plans. For example, we opened a new fresh meat processing workshop and invested LTL 20 million in it. We have paid the biggest attention to the efficiency of production, costs reduction, marketing and quality of the products. Thus, we have not experienced any decline in sales, but have even reached the record turnover of the company.

– Which companies have coped with the challenges of this hard time the most successfully?

– Krekenava group companies, such as JSC “Krekenavos agrofirma” and AC “Krekenavos mėsa” have worked very successfully.

“Vikeda” Ice Cream Factory and “Kėdainiai Canning Factory” – Ltd. have achieved good results.

– You took part in the International exhibition “Prodexpo 2012” in Moscow. Was it successful to your company?

– The exhibition was successful.

We established new business contacts that could help us to expand the market. We are happy that four products of our companies were prized in the nomination “The best product 2012“and awarded with gold medals. The products, such as hot smoked sausage “Bajorai” with cheese, cold smoked sausage “Skilandinė” produced by JSC “Krekenavos agrofirma”, cranberry-tomato sauce for meat and widely known pickles produced by “Kėdainiai Canning Factory” were awarded.

– Being leaders you are not resting on your laurels, but actively spreading information about real meat processing technology. Why? – Our aim is to be honest to our customers and at the same time we protect our reputation. For this reason, we organized open door days for the journalists. Our excursions were organized in the meat, ice-cream and canned food factories. We also created an Internet site where the visitors have a possibility to

take part in a virtual excursion inside the meat processing workshops and observe all production stages.

People easily believe in negative, sometimes sensational, but incredibly untruthful information. It is very difficult to deny myths like these.

However, we are actively educating society, because we want to be clear and honest to our customers. No matter what period of time we live in, we have to stay like this because it is one of the most important causes of our success in business.

– What are your prognosis looking at the future of the economy?

– Famous analysts have predicted a complicated period of time.

Our aim is to stay among prosperous companies all the time. Therefore, we do not follow the so-called pessimistic plan. Instead we are creating optimistic and realistic plans. In this respect, the team motivation is very important too.

We can enjoy good results when we think in a positive and realistic way, because we have a clear aim and are trying to achieve it by working towards the right direction. We have a possibility to improve the best practice of some companies and apply it in the other companies and vice versa.

This is an advantage of our concern which at the same time results in the positive synergy effect.

Business. Leaders 2012

59

“Garlita”: attention to school children uniforms Famous for its smart production and exporting almost all of it to the Western Europe, Kaunas district company “Garlita” is going to surprise the Lithuanian schools and design up-to-date stylish and practical uniforms.

60

Arūnas Dambrauskas EXCEPTIONAL EXPERIENCE

Cotton clothing produced in “Garlita” is ascribed to the category of smart production. Applying the most advanced technological achievements, the company produces innovative clothing. For example, sweaters saturated with vitamin E are recommended for people who spend little time in fresh air and sunlight, which is why they do not take in vitamin E naturally.

Positive effect to health is produced by microcells of the cotton fibres which gradually emit a large dose of vitamin E. These properties prevail even after washing the sweater for up to 20 times.

“Garlita” also produces sweaters protecting from ultraviolet and electromagnetic beams, bacteria and fungous, resistant to fire, smoke and hits as the majority of production is intended for force structures.

We asked the Director General of “Garlita”, Juozas Martikaitis, why the company got interested in schools. “We have been producing cotton uniforms for schools for more than a decade, but most of orders are made by the English, Irish and German schools. Lately the Lithuanian schools have made orders as well. We believe that soon the number of teachers and parents understanding the benefits of innovative uniforms will in-

proveržis REspected for quality and reliability

crease. Such tendencies prevail in all countries with advanced education systems”, — said J. Martikaitis.

UNIFORMS BRING HUGE ADVANTAGE

As an experience producer, J. Martikaitis stressed that cotton uniforms do not make everyone look alike. He claims that a professionally designed uniform style has many advantages: social-psychological as well as pedagogic and aesthetic.

“It is not a secret that due to different clothing which is decided by social status of the parents various issues traumatizing children may emerge at schools. Nevertheless, we do not suggest making everyone look alike. We receive many offers from English schools where different classes have uniforms of different colours, or only some details of clothing, such as collars, vary in colour. This is beneficial to the teachers as in certain situations colours can give information to them. As for the students, the uniforms make them behave and be more responsible”, — explained the head of the company.

STYLE AND EXCELLENT TASTE

According J. Martikaitis, cotton uniforms are characterised as classical style and great taste. “The uniform style may be designed by the school itself. For example, the Western schools prefer the uniforms not only with some colourful details and other decorations, but also with embroidered heraldry symbols of the school. We can easily carry out any kind of order. The producers know that the ones

who deal with military are capable of carrying out any civilian order”, — stresses the head of “Garlita”.

School uniforms may not necessarily consist of trousers, skirts and sweaters, but also vests, jackets, dresses, caps and scarves.

“We carry out an order in about two months. The schools receive the uniforms sorted out according to classes and, if necessary, by surnames. The clothing is not only good-looking, but also very practical: it does not rumple and does not loose its quality if often washed”, — said J. Martikaitis.

ACHIEVEMENTS ACKNOWLEDGED

“Garlita” was able to establish in the leading position due to consistent investment into up-to-date technologies and attention paid to the world fashion innovations.

“We show our production in about 14-16 international exhibitions in different foreign countries every year. Recently we have presented the newest spring-summer collection in Paris”, — said J. Martikaitis.

He also noticed that cotton has lately become especially fashionable: for example, more and more famous designer companies order cotton.

Although “Garlita” provides only 5 % of its production to the Lithuanian market, its achievements do not pass unnoticed here as well. Different products of “Garlita” have been awarded gold medals many times. Last year the President, Dalia Grybauskaitė, presented J. Martikaitis, the head of “Garlita”, with the Head of the Year award.

“Superturas” - socially responsible partner

J

oint stock company “Superturas” - the tourism agency has been successfully working since 2005. Five years ago “Superturas” became accredited travel agent of International Air Transport Association (“IATA”), and having professional and reliable partners abroad, now the agency can increase the amount of services, ensuring high quality services for business clients. We are talking to the Director Jolita Turovaite Kairiene of JSC “Superturas”.

– What is the main direction of activity of travel agency “Superturas”?

– The activity of tourism agency is directed to business clients, to whom we guarantee our services 24 hours a day. We work with companies which plan secondments of employees to foreign countries.

– What services could expect the clients of “Superturas”?

– They could expect booking of tickets, hotels and payment at any time of the day, search and coordination of travels, flights and routes.

The full travel pack consists of airline ticket, visa, travel insurance, carriage to and from hotel, and reservation of hotel room.

– You are young and manage a team of young people, is it easy to make everyone focus on the same purpose?

– The team of young, but professional “Superturas” employees believes that big changes begin with small initiatives, while the common goals and positive attitude ensure agreement between economic and public objectives, environmental protec-

tion, socially responsible business ethics, as well as true humanity. It is not easy, but we manage together.

– What successful results could you mention?

– We are the members of the Lithuanian Tourism Associations.

The exchange of information enables us to better orient in the market and aids in selecting suitable partners. In 2010 we were put as No. 28 on the TOP 40 list in respect of the booked flights, and in 2011 we moved upwards to No. 24. The segment of sold flights grew by 16% in a year, while in 2011 we shared 5-6th place with another agency in the TOP 10 list of Kaunas city.

The fact that we are financially reliable and keep to the liabilities was proved by a very pleasing activity acknowledgement certificate “Stipriausi Lietuvoje 2011” (“Strongest in Lithuania 2011”).

We hope that such evaluation will even more strengthen the trust in the activity of our company by our partners.

– What are your future plans, objectives and aims?

– First of all, the development and quality of the company activity.

More and more businesses select us as the partner and travel organizer. We are happy that “Žalgiris” basketball team and world-famous celebrities, performing in Lithuania, use our services. Thus, we are searching for new businesses that appreciate the possibility to contact travel agents at any time of the day.

We hope to continue providing highquality service, developing the market and, of course, setting new objectives, which should still remain in secret for them to come true.

Business. Leaders 2012

61

FACTS THE WORLD ACKNOWLEDGED KLAIPĖDA

It is the only county of Lithuania which accesses the Baltic Sea. This determines specific market data as well as such activities as sea transport and stevedoring, tourism and fishery. The geographic location determines the peculiarities of energy (the park of wind power plants) and extraction of minerals (oil and peat) as well.

Andrius Agafonovas

Analyst of the research institute “Social Dynamics International”

• THE PORT

Klaipėda port is the northernmost ice-free port on the Eastern coast of the Baltic Sea. It is the most important and biggest Lithuanian transport hub connecting sea, railway and land routes, whereas Palanga Airport located nearby expands its possibilities even more. Klaipėda port enables operation of over 800 companies employing 23 thousand people. Jointly, these companies generate over 4.5 % of GDP of Lithuania.

The biggest companies of the port engage in stevedoring (“KLASCO”, “Bega”, “Klaipėdos nafta”, “Klaipėdos Smeltė”, “Klaipėdos konteinerių terminalas”, “Birių krovinių terminalas”, “Vakarų krova”, ship repair and building (“Vakarų laivų gamykla” companies group, “Klaipėdos laivų remontas”, “Laivitė”) as well as provide other services related to marine business and freight. Over 36.59 million tons (the potential of the port amounts to 45 million tons) was transshipped in Klaipėda port in 2011. Fertilizers (31.7 %), oil products (26 %), ro-ro cargo: transporting railway wagons and auto 62

Business. Leaders 2012

• FOREIGN INVESTMENTS AND FEZ

trailers by ships without transshipping the cargo (13.4 %), and containers (11.7 %) constitute biggest share of freight.

The liquefied natural gas (LNG) terminal project, which will be strategically significant not only for development of the port but also for Lithuania, was approved in 2011; it is planned to complete it in 2014.

Direct foreign investments (DFI) in Klaipėda County amounted to LTL 3.2 billion (9.6% of all DFI in Lithuania) and LTL 3.4 billion (9.4 % of all DFI in Lithuania) in 2009 and 2010 respectively. Such companies as “Philip Morris International” (producer of tobacco products) and “Mars” (JSC (Private Limited Liability Company) “Mars Lietuva”, producer of pet food), “BLRT Group” (a joint owner of “Vakarų laivų gamykla”) and “DFDS Seaways” (“DFDS Lisco” group, a sea transport company) have invested in this region.

Investments are even more attracted by Klaipėda free economic zone (“FEZ”). The portal “Investuok Lietuvoje” declares that “the publication “FDI Magazine” belonging to “Financial Times” group assessed Klaipėda “FEZ” as one of the five best economic zones in the world in respect of the business conditions provided and the infrastructure created as well as the twentieth most

attractive economic zone globally in 2010.”

17 companies are operating in the territory of “FEZ”; they have invested a total of 1 419 million LTL and created 1 130 new jobs.

UAB “Espersen Lietuva” preparing fish products, UAB “Yazaki Wiring Technologies Lietuva” producing cable and wire sets for cars, tare manufacturers UAB “Neo Group”, JSC “Orion Global PET” and JSC “Pack Klaipėda”, JSC “Albright Lietuva”, a manufacturer of electrical equipment, JSC “Glassbel Baltic” producing architectural glass and UAB “Mestilla” producing biodiesel, rape oil cake, glycerin and ecological fertilizers create the biggest number of jobs in FEZ.

• CONSTRUCTION

24 companies engaging in production of construction materials or in construction, the number of employees of each of which exceeds 50, are operating in Klaipėda. A few exceptional ones are noteworthy. It is “Hidrostatyba” – the biggest construction company which is in the top twenty of the biggest companies in Klaipėda County. Also “MidaLT”, the only company in the Baltic States manufacturing polymer bitumen roofing (also known as bitumen or flexible tiles), has implemented the quality management system ISO 9001. “Šilutės polderiai” – a construction company main acti-

• FOOD INDUSTRY

vities of which is exploitation, repair, reconstruction and new construction works of polder systems (systems designed for irrigation of the territory of a water body). This company has got the ISO 9001 certificate as well. The biggest companies processing an important construction raw material – metal – in Klaipėda County are JSC “Kuusakoski” and “Litana” companies group.

• ENERGY AND PECULIARITIES THEREOF

Absolute majority of wind power plants constructed in Lithuania are located in Klaipėda County. The beginning of this branch of energy is the year 2002 when the first wind power plant in Lithuania was constructed in Skuodas.

A power plant was constructed in Vydmantai in 2004. The biggest park of wind power plants, in which approximately 64 million kWh power is generated per year, is operating in Kiauleikiai, Kviečiai and Rudaičiai villages. The six largest wind power plants are constructed near Bėnaičiai and Žinialiai villages.

68 wind power plants, which generate 156 GWh power per year, were registered in the end of 2009.

Approximately 80 million tons of oil (60 million tons in the land, 20 million tons – in the Baltic Sea) is believed to be in the territory of Lithuania. The companies “Geonafta”, “Genčių nafta”, “Minijos nafta”, “Geobaltic” and “Manifoldas” are exploiting the oilfields located in the land,

near Gargždai, Kretinga, Ablinga and Vėžaičiai.

The quality of and the amount of sulphur in Lithuanian oil determines high demand thereof. However, oil is not processed in our country: it is transported abroad. One more type of minerals is peat.

It is extracted by the company “Šilutės durpės”. The products of this company include peat and substrates used in agriculture and gardening as well as extraction of fuel peat.

The biggest companies representing food industry in Klaipėda County are processors of cereal crops and products thereof: “Javinė”, “Klaipėdos duona”, “Kretingos grūdai”, “Švyturys-Utenos alus”, the companies producing livestock farming products and meat products: “Klaipėdos mėsinė” and “Agrovet” and the producer of dairy products “Klaipėdos pienas”.

80 % of all fish caught industrially in Lithuania is caught in the waters belonging to Klaipėda County (the Curonian Lagoon and the Baltic Sea).

Most of the big companies processing fish and products thereof such as “Espersen Lietuva” (established in Klaipėda “FEZ” as was already mentioned), “Dauparų žuvis”, “Ostsee Fisch Kretinga”, “Baltijos delikatesai” or “Nokvėja” are established in Klaipėda County for the sake of efficiency.

• WOOD, PAPER, FURNITURE

Klaipėda port ensures favourable export conditions and distinguishes the wood processing companies of Klaipėda region from other manufacturers.

Eight wood processing companies (the biggest one of them – “Vakarų medienos grupė” (VMG)) and nine furniture makers (the biggest one – “Klaipėdos baldai”) employing over 50 people each are operating in the county.

• TOURISM

Over 336 thousand tourists (almost 22 % of all tourists of Lithuania) were accommodated in Klaipėda County in 2010.

There are 334 business entities providing accommodation services in Klaipėda County, the biggest number of which is in Palanga (including Šventoji): approximately 200. There are 66 such entities in Neringa, whereas in Klaipėda City – 44.

VMG controlling six companies is cooperating with the Swedish furniture concern “IKEA” which sells the products of the company in various countries of the world via its networks of shops. “Klaipėdos kartonas” is the biggest company operating in the region which produces cardboard products and semi-manufactured goods of secondary raw materials only.

Exceptional tourism activities typical to this region only is servicing of the tourists of cruise ships. Three tourism companies established in Klaipėda port are operating in this field: “Klaipėdos Mėja”, “Krantas Travel” and “Relita”. The main fields of their activities are reception, accommodation and catering for tourists and organization of excursions by cruise ships.

Business. Leaders 2012

63

ENERGY COGENERATION POWER PLANT OPERATING ON BIOFUEL AND WASTE

“Fortum Klaipėda”: a Scandinavian model of energy Juozas Doniela

Construction of the cogeneration power plant operating on biofuel and waste of “Fortum Klaipėda” is already in progress. One of the biggest Scandinavian energy concerns “Fortum” is currently constructing two almost identical cogeneration power plants: one in Klaipėda, the other one – in Stockholm. Will the Lithuanian production variant be different from the Swedish one in any way?

64

Business. Leaders 2012

TWIN POWER PLANTS Capacity of the future Klaipėda cogeneration power plant and “Brista” being constructed in Stockholm is similar. Capacity of Klaipėda power plant is 50 MW (thermal) and 20 MW (power), whereas that of “Brista” is 48 MW (thermal) and 21 MW (power).

Only the composition of the fuel used will differ slightly. Approximately 130 thousand tons of municipal waste, 50 thousand tons of industrial waste and approximately 70 thousand tons of biofuel, i.e. wood shavings, will be incinerated in Klaipėda per year. Total amount of fuel: approximately 250 thousand tons per year. It is planned to incinerate approximately 240 thousand tons of fuel in “Brista” per year. However, only waste will be incinerated there: approximately 70 thousand tons of municipal waste and 170 thousand tons of industrial waste. The future power plants are similar in the number of employees as well.

Approximately 33-35 people will be employed in each of them.

The Swedish power plant will accept municipal waste from the northern part of Stockholm and from Sollentuna City which is located 15 km away from Stockholm.

All municipal waste will be delivered for incinerating after sorting performed by the residents. There is no mechanical secondary sorting equipment in Stockholm and it is not planned to be build. Besides, municipal waste of the same

type after primary sorting is incinerated in Hogdalen power plant owned by the company “Fortum” in Sweden as well. Over 500 thousand tons of such waste is incinerated here per year. The waste transported directly from the residents’ waste containers contains 30–50 % of paper and cardboard, approximately 10 % of plastic and up to 30 % of food and various other waste: textile, glass, gardening waste and metals.

In order to prevent decomposition of harmful substances such as dioxins and furans formed while incinerating, incineration temperature not lower than 850°C is maintained in Hogdalen power plant. Such requirements are stipulated in Directive 2000/76/EC of the European Parliament and of the Council on the incineration of waste. It is planned that incineration temperature will be not lower than 850°C in the future Klaipėda and “Brista” power plants as well.

In fact, as long-year practice of Hogdalen power plant shows, incineration temperature reaches 1000°C or even more.

The same incineration technology as in the already operating Hogdalen power plant will be applied in Klaipėda power plant and “Brista” power plant being constructed. Natural gas is used for firing waste incineration boilers.

It is needed for achieving 850°C in the boiler furnace since incineration of waste may be started only

then and it burns by itself without injection of gas after that. Incineration temperature will always be higher than 850°C in Klaipėda power plant. Even if calorific capacity of waste is low, the incineration process and high temperature will be maintained by wood shavings incinerated together with waste and, if needed, gas burners will be activated automatically.

DIFFERENT PROCEDURES Comparing the procedures of implementation of the power plant construction projects in Sweden and Lithuania, it can be seen that obtaining a building permit is much simpler for Scandinavians than in Lithuania. A building permit is issued there after a permit from the Federal Environmental Protection Agency (it would correspond to the Ministry of Environment in Lithuania) is obtained and the municipality of the city makes changes in the detailed plan. The procedure is more complicated in Lithuania.

A coordinated technical design must be presented at submission of the application to issue a building permit. Implementation of the project of “Fortum Klaipėda” was also impeded by the fact that amendments of the Law on Construction came into force as of 1 October 2010; those amendments merely encumbered the obtaining of a building permit instead of simplifying the procedure. Quite a lot of institutions

and entities, which had to review the technical design and present their comments before issuing a building permit, appeared in accordance with the new procedure. There were 20 of them including 3 ministries and even an organization of handicapped people. It goes without saying that neither ministries nor other new entities were properly prepared for such procedures; therefore, issuance of the building permit was prolonged. Coordination of the procedures and issuance of the building permit could have been extended for an unpredictable period of time were it not for the personal efforts of the specialists of Klaipėda City Municipality and the Mayor of Klaipėda Rimantas Taraškevičius as well as the help of the managers of the company controlling Klaipėda free economic zone.

BENEFIT FOR THE CITY AND THE REGION Thermal power produced in the power plant of “Fortum Klaipėda” will be sold to the Stock Company “Klaipėdos energija” which will supply it to the users of centralized heating of the seaport city. As stipulated in the legal acts of Lithuania, the heat produced by the new power plant will be bought cheaper than the heat produced by the facilities of “Klaipėdos energija”.

It is planned that Klaipėda power plant will generate approximately 40 % of the heat needed by the city;

therefore, the price of heating will have to be reduced respectively because of reduced consumption of natural gas.

It is planned that Klaipėda power plant will generate approximately 40 % of the heat needed by the city.

One more positive aspect is that the future power plant will supply approximately 18 MW power to the common power network. There are not many facilities generating power in the western part of Lithuania: only wind power plants and a few small hydroelectric power plants. Thus we will contribute, although not much, to distribution of power and reduction of losses incurred because of that.

A very important thing both in the operating power plants and those which are being built is air pollution and its control. The aforementioned Directive of the EU on the incineration of waste requires implementation of continuous measurements of seven pollution components in emitted smoke. Taking into account the public concern regarding potential pollution from the future

power plant, it is planned in the project of “Fortum Klaipėda” to implement continuous measurements of twelve pollution components in emitted smoke. The public will be able to familiarize themselves with this data online. In order to avoid penetration of radioactive substances into the power plant, a constant radiation level measurement device will be installed through which all fuel getting into the power plant will pass.

Undoubtedly, the project of “Fortum Klaipėda” encounters more obstacles than the Swedish project. We must not forget that it is the only power plant of this type in Lithuania. And being the first one is always the hardest. Construction of Klaipėda power plant will take place until the spring of 2013. The national reform of waste disposal should be complete, the laws regulating the activities of the energy sector should be passed and legal practice should be formed in Lithuania until then. It is very important since not only the investor but also state institutions, municipalities and the public must prepare themselves for modern energy projects. What concerns the public opinion, which is not always favourable, this is not a novelty either: construction of the first power plant incinerating waste in Stockholm caused sensitive issues and discussions 40 years ago.

However, there are no more contradicting people when the sec-

ond cogeneration power plant “Brista” is being constructed now.

Currently construction of the power plant of “Fortum Klaipėda” has already gained pace: one of the most important buildings – the fuel reception bunker – has already been concreted, auxiliary cooling equipment has been installed and an intermediate rainwater basin has been constructed. The steam boiler, equipment of the smoke cleaning system and network water heaters are being installed as well as other buildings and structures are being constructed. Approximately 20 different contractors and a lot of suppliers are working on this project. All construction works of the buildings and structures are performed by Lithuanian companies. Lithuanian companies, being the subcontractors or the suppliers of equipment, are also working on installation of equipment. It is planned that Lithuanian companies will perform works for approximately LTL 100 million.

The newly gathered staff of “Fortum Klaipėda” is actively learning and drawing experience from the colleagues in Sweden and Finland. We hope that, in the state of contradictory situation in the energy sector of Lithuania, “Fortum Klaipėda” following the Scandinavian principles of activities and work will be the beginning of a new stage in the energy sector of Lithuania.

Business. Leaders 2012

65

BREAKTHROUGH AMBITIOUS GOALS WERE SET

“Minijos nafta”: a leader of new projects Jurgita Mačernytė

“Minijos nafta”, the oil extraction company which invests in advanced technologies the most rapidly and is constantly the first one to start implementing new projects in the country, does not intend to stop in the future either.

66

Business. Leaders 2012

WILL IMPLEMENT NEW PROJECTS

The company has especially ambitious plans to start implementing several projects, which are new not only in Lithuania or other Baltic States but also in the whole Europe, this year.

“Minijos nafta” will be the first company which will start looking for shale gas in Lithuania. Although scientists are certain that this natural resource lies in most of the countries of the world, huge amounts of it are being extracted only in the USA so far.

The representatives of oil business of this country became interested in shale gas over two decades ago and its extraction volumes have been increasing recently so rapidly that the USA, which was one of the biggest importers of natural gas in the world until then, became one of the biggest exporters thereof.

The Americans extract more and more shale gas every year; therefore, their works fields are expanding as well. Besides, this helps create thousands of new jobs every year, thus reces-

sion which took hold of the USA is not so severe because of this branch of business.

“MINIJOS NAFTA” WILL BEGIN WORKS THIS YEAR

Huge shale gas deposits are believed to lie in Europe just like in the USA. Geologists calculate that the biggest amounts of them lie in Poland and other Baltic States: Lithuania, Latvia and Estonia. However, the Europeans are merely making the first steps in looking for shale gas. The first ones to start looking for it were the Polish who are certain that they will be able to heat some of the blocks of flats of Poland using processed shale gas in a few years already.

Lithuanian businessmen are optimistic as well. Thomas M. Haselton, General Manager of the company “Minijos nafta”, assured that they will begin the search for these hydrocarbons this year already. “We have been implementing preparatory works and initial research for two years already. Specific works of search for shale gas will be started in one of our older wells soon,” – asserted T. M. Haselton.

The General Manager emphasized that the company plans to drill a new exploration well this year in the area licensed to it.

In accordance with the laws of Lithuania, “Minijos nafta” does not need any additional licenses to look for and extract shale gas since the right to extract all hydrocarbon resources available in the area was granted to the company by earlier licenses.

T. M. Haselton assured that the amount of these natural resources lying in the country is not known yet; however, he is certain that, if the amount anticipated by geologists is discovered, Lithuania will be able to feel better: it will be possible to generate some of the thermal power for heating of homes from shale which would make the country less dependent on the suppliers of natural gas from other foreign countries.

“Minijos nafta” intends to invest LTL 10 million in the search for shale gas this year.

WILL TACKLE CLIMATE CHANGE BY A NEW PROJECT

However, the search for shale is not the only goal set by the company. “Minijos nafta”, the first one in Lithuania again, intends to begin implementation of one more completely new project – geological storage of CO2 – this year already. The amount of this pollutant is increasing in Lithuania every year; therefore, increasingly more companies have been looking for the ways to reduce its amount effectively recently. Geological storage of CO2 is one of the most effective means of reducing air pollution as well as tackling climate change.

“We hope that this will help not only preserve cleaner air but also raise the deep-lying oil to the surface. We are currently negotiating with the factories which emit the highest amounts of carbon dioxide to the atmosphere and looking for new partners,” – explained T. M. Haselton.

BREAKTHROUGH RESPONSIBILITY ASSURED QUALITY

“Trevena”: a reliable fellow-traveler Juozas Urbonavičius

T

he owners of the company “Trevena” affected by the blockade started the business of trade in oil products after the restoration of independence. The company became one of the biggest Lithuanian capital companies engaging in retail trade of oil products within 17 years.

AVOIDED LOSSES

The company took the position with principle to supply fuel to the consumer directly from the factory by avoiding the services of intermediaries, additional transportation and delivery of fuel.

This principle enabled ensuring quality control of supply and supplying fuel complying with the industrial quality indicators in the simplest way.

“Rational risk assessment and responsible control of cash flows enabled the company to achieve the goals it had set. Higher losses were avoided even in times of economic decline although troubles with business clients’ payments were a serious challenge to the company and its employees.

This period even provided additional opportunities: favourable situation to expand its market share by purchasing one more gas station in Klaipėda was formed,” – rejoiced Algirdas Liaudanskis, Director of the company “Trevena”.

HAS GOT ITS NICHE

According to him, today’s situation is not the best one for networks of gas stations: constantly rising prices of fuel do not promote consumption and consumption habits are changing.

“This is not useful for us but we must adapt to the global trends and assess the situation adequately. We observe the changes in the Lithuanian market and are happy because our market share keeps increasing little by little.

In order to develop our business, we must have our own niche and not only keep it but also expand it consistently. We actively work with business clients who buy fuel under contracts. Big international companies dominate the Lithuanian market so we must maintain good relationships with the clients and satisfy their needs and merely the motive of nationality is not enough for that.

In order to attract and keep clients, we must be more flexible and apply a more favourable pricing which influences profitability and development of the company. We use the fact that our return may be slightly smaller as there is no necessity to allocate a share of profit for return of inves-

tments of international companies,” – related A. Liaudanskis.

ADAPTS TO THE CLIENTS

The shift from completion of primitive sheets to the card system, which was developed to self-service possibilities to administer current liabilities and purchases, was made during the seventeen years of activities. Perceiving the globalization processes, projects are being implemented by making it possible for the clients to use cards not only in the gas stations of the company “Trevena” but also all over Lithuania or even outside it.

“Some of the carriers affected by tax changes and market conditions decided to direct transport flows to Eastern countries aiming to reduce the fuel costs. Taking these changes into account, we develop relationships with our partners so that our clients could buy fuel in Belarus, Russia and other countries. As clients’ needs change, the solutions we offer change as well,” – related the director of the company.

SOCIALLY RESPONSIBLE

Good relationships among the employees of the company were

established as years went by.

Labour turnover in “Trevena” is much lower because of that compared to the turnover average in other companies of the country. The company “Trevena” has established its position as a reliable employer who cares about its employees and their wellbeing.

“We gladly contribute to various activities which needs support as far as we can. We constantly support Gargždai football team and are happy because football is an exceptionally liked sport in our town. We also contribute to support to other sports such as motorism and basketball as well as solving various educational and social issues. We often organize sports events for the employees of our company so that colleagues could socialize outside the work environment and would get to know each other better,” – said A.Liaudanskis.

“We want to be and we are a provider of the service who fulfills its mission in the society and serves the users. Our clients need us only if we do our job well,” – assured the director of the company.

Business. Leaders 2012

67

ENERGY A NEW POWER PLANT WILL ARISE NEAR THE OLD ONE

VNPP will claim to be a fu

Probably the biggest construction in Lithuania in the nearest future will take place when implementing the Visaginas Nuclear Power Plant (VNPP) project. It is planned to begin construction in 2014 and to complete it in 2020. VNPP will undoubtedly become one of the biggest power plants in Lithuania as of then.

Stasys Gudavičius POLITICAL DECISION

Discussions whether Lithuania should remain a country generating nuclear power have begun since the very obligation to close Ignalina Power Plant in 2009. Discussions of specialists, public figures and experts do not abate until now; however, the political decision to pass a law on construction of the new nuclear power plant and to begin designing and constructing it was made some time ago.

After closure of Ignalina Power Plant, Lithuania buys over 60 % power. International practice shows that a country is not considered energy- and economy-wise safe if it imports over 10-15 % power resources.

LTL 3-4 billion – this is the amount which leaves the country in exchange for import of energy resources every year.

The need of power of the Baltic States is calculated to amount to almost 30 TWh power in 2020. The current producers of power will be able to generate approximately 19 TWh then. Thus the difference of over 10 TWh will appear. VNPP is expected to help cover it.

WILL CONSTRUCT A “HITACHI” REACTOR

A strategic investor in VNPP was selected in July of last year.

Japanese “Hitachi Ltd.” with “Hitachi-GE Nuclear Energy”, the reactor of which will be constructed in Lithuania, became the investor. It is planned to construct the Advanced Boiling Water Reactor ABWR in VNPP. The stage of the technical 68

Business. Leaders 2012

View: VNPP, which is planned to be completed until 2020, may look like this.

works necessary for preparation of the concession agreement has begun. The specialists of Lithuania and “Hitachi” have completed almost 20 technological projects. An agreement for the material terms of the concession agreement was signed last year already.

Legal issues are still being worked on and the concession agreement is being prepared further. It is planned to present it to Seimas (the Parliament) during the spring session, most

probably, in June of this year.

It is being negotiated with regional partners of implementation of VNPP project at the same time. They are Latvian and Estonian energy companies. Poland was among them earlier as well; however, it announced suspension of its participation in the project of the new Lithuanian nuclear power plant in the end of last year.

Nevertheless, the Polish are expected to return to the project later.

uture giant of Lithuanian business SUPPORT DEVELOPMENT OF NUCLEAR ENERGY

58% of residents believe that nuclear energy is useful for the country.

68% of students maintain that a lot of qualified Lithuanian specialists will be employed in VNPP.

63% of businessmen and company managers see the benefit of VNPP to business.

60% The future shareholder’s agreement is being coordinated with the strategic investor and regional partners. It will distribute the shares of the power plant to each shareholder.

In accordance with the applicable law, Lithuania must own not less than 34% of all shares of VNPP.

HOW MUCH WILL A KILOWATT-HOUR COST?

The value of VNPP is planned not to exceed LTL 17 billion.

The share of Lithuania should be approximately LTL 5 billion. It is a large amount for Lithuania; therefore, it is looking for all possible financing sources for the project. It is

maintained that participation of international corporations in the project opens up the possibility to use financial instruments of the world, for example, import and export insurance of America and Japan. It is being looked for European financial instruments which could be used.

Implementation of VNPP project should cost LTL 17 billion.

of Lithuanian scientists believe that the fact that construction of VNPP will be managed by Japanese “Hitachi” will ensure its completion on time.

66% of residents of the region of VNPP – Ignalina, Zarasai and Visaginas Municipalities – support construction of the new power plant.

Source: “Sprinter” opinion poll (November 2011)

Business. Leaders 2012

69

ENERGY A NEW POWER PLANT WILL ARISE NEAR THE OLD ONE stantly that the project is competitive, i.e. VNPP will be able to sell its production in the liberal power market. It is emphasized that “the participants of the project simply would not participate if they saw that the price of power to be generated by VNPP is not competitive”.

It is expected that, after signing the concession and shareholders’ agreements, specific construction works will be started in 2014 and VNPP will be completed and start generating power in 2020.

The new power plant should operate for not less than 60 years.

The future constructors of VNPP assert that a significant share of the orders related to implementation of the project will be performed in Lithuania.

This means additional opportunities for Lithuanian construction, engineering, energy, infrastructure development, various services and other companies.

It is calculated that not less than LTL 6-7 billion from approximately LTL 17 billion may remain in Lithuania.

The price of one kilowatthour of power generated by VNPP is not declared so far. It is merely being repeated con-

Lithuanian business will receive orders worth billions

R

We would like to know all details clearly but it is impossible so far.

70

Business. Leaders 2012

imantas Vaitkus, General Manager of VNPP (photo), is certain that the project managed by him is competitive.

“The fact that two international corporations participated in the competition for preparation of tenders for VNPP project lead to conclusion that it will be competitive,” – emphasized he.

Negotiations regarding project financing are still taking place. “The share of Lithuania in the project is clearly defined by the law: not less than 34% of the value of the project. The contributions of other participants – the strategic investor and regional partners” are still being coordinated. It is everyday work of ours. We would like to know all details clearly but it is impossible so far,” – said R. Vaitkus.

The associations uniting construction and engineering companies as well as the Lithuanian Energy Instituted signed the letter of intent to cooperate in preparation for participation in VNPP project. The participants of the agreement intend to pre-

pare specialists, improve the activities and cooperation of the companies as well as to accumulate know-how necessary in order to contribute to a project of such scope together.

Companies of other business fields and associations uniting them are reportedly interested in cooperation as well: they will be invited to join the alreadystarted preparatory activities.

It is calculated that Lithuanian business could claim orders valued at LTL 4-5 billion in construction of VNPP. This would amount to approximately 30 % of the whole price of the project.

Lithuanian companies intend to be active participants of the future supply competitions.

Business associations will seek companies of Lithuania and not to those of other countries to receive as large share of the orders of the project as possible.

“Construction of nuclear power plants is a complex engineering project requiring highly qualified specialists. This business initiative to start preparing

for its implementation responsibly, thoroughly and jointly right now is a farsighted and rational step. I believe that properly and professionally prepared Lithuanian business will be able to participate successfully in implementation of this infrastructural project which is the largest one in the Baltic States during the last decades,” said R. Vaitkus.

According to the representatives of the associations, competition for the orders of VNPP will be harsh, they will have to compete with international suppliers which are already experienced in construction of nuclear power plants from all over the region; therefore, business experience of other countries and opportunities of international partnership are important to Lithuanian companies. The associations expect active participation and assistance of the state in the preparatory stage since if Lithuanian companies achieve the requirements set once, opportunities to participate in other similar projects will open up later.

MANAGEMENT CONSULTANTS HELP GETTING ON THEIR FEET

The managers of companies are already letting outsiders’ hands touch the wheel of their business after the especially economically difficult stage.

Nevertheless, specialists notice that companies without foreign capital often loose productivity because of the wish to solve all management issues by themselves.

A second pair of eyes observing business Lina Mrazauskaitė

CONSULTANTS MARKET IS EXPANDING

The economically difficult period of time made the business of the country pull itself together and look for ways to make activities more efficient. Paulius Lukauskas, General Manager of the Public Enterprise “Versli Lietuva” (“Enterprise Lithuania”), was certain that the outcomes of their early concern with their positions in the market will be only positive.

“Exaggerated consumption distorted competitiveness until 2008; however, the crisis put everything back to normal. The companies which were able to strengthen their business adequately today are very likely to withstand the coming disturbances of the EU and euro zone.

Quite a lot of European companies are still planning to do

Currently the greatest potential lies in the public sector. what our businessmen did last year,” – said he.

In order to discover gaps and to fill them, companies turned at the services offered by consultants and institutions promoting business. Justas Gavėnas, a consultant of the consulting company “EKT grupė”, said he noticed that the business of the country worried about decreasing profitability, surplus production capacities, slow penetration into new markets and absence of the priorities of the activities.

Paradoxically, finding clients became harder for consult-

ing companies after the demand for consulting services grew. According to the conversation partner, most of the companies of the country had the opportunity to use the assistance of the EU structural funds during recent years; therefore, the market of consulting services grew respectively. Allegedly, a lot of new, often one-day consulting companies, the main aim of which is to take the chance to use the money instead of providing value to the customer, appeared. “Some of the business companies abounding in easily obtained money became spoiled or tired from inexpedient use of the money; therefore, making companies interested in consulting services is much more difficult now,” – said J. Gavėnas.

DO NOT ACKNOWLEDGE THEIR TROUBLES

Consultants merely send the first impulse to change to companies. And such needs, as J. Gavėnas said, depend not on the size of the company but on the managers’ and owners’ attitude most of all. Nevertheless, the big companies understood that they need to focus on their main activities much quicker, whereas the smaller ones are still wasting resources while trying to cover everything by themselves. “It goes without saying that even such simple things as administration of financial assistance of EU may be done by oneself without hiring consultants; however, in such a case, the employees are engaBusiness. Leaders 2012

71

MANAGEMENT CONSULTANTS HELP GETTING ON THEIR FEET ging in ancillary activities and companies loose speed, flexibility and creativity,” – said he. According to the conversation partner, small and medium companies usually seek consultations on how to increase competitiveness. Therefore, they usually look for financing sources and try to work in a more profitable manner. According to him, large companies seek to optimize procurement or to reorganize their activities most often.

Tadas Žibūta, Senior Consultant of the consulting company “OVC Consulting”, emphasized that only those companies which are financially able, are not afraid of difficult periods of time and wish to implement brave, radical changes usually look for consultants’ help. On the other hand, he assured that small companies are not helpless as well. He compared management of big and small companies to control of ships of different sizes and emphasized that “one good head” is sometimes enough for directing small companies at the proper direction.

FOREIGN CAPITAL FORCES TO GROW

Although companies consulting business do not surprise anyone anymore, it is more difficult for some sectors to accept help from the outside. And vice versa: T. Žibūta said he has noticed business sectors which use consultants’ services in accordance with the established business traditions.

However, this allegedly does not mean that they are the ones who need help the most.

“The sectors which are ad-

vanced in management field more, for example, pharmacy, IT companies, banks or insurance companies, implement state-ofthe-art ideas, use consultants’ services actively and are superior to others,” – said T. Žibūta.

According to him, they are often more advanced than wholesale traders or production companies which focus on technical and engineering solutions more.

According to J. Gavėnas, the most superior companies are foreign capital companies which take over management experience from their parent companies as well as companies which are highly advanced in management field due to great competition: “Unfortunately, the rest have really a lot of potential to grow in management field. In my opinion, the hardest task for Lithuanian business companies is to acknowledge that their activities may be even more successful. In order to do that, one must climb one step up, get out of one’s sandbox and look at the consumers, the competitors and the market more carefully.”

Observing the private and the public sector, T. Žibūta maintained he is certain that currently the greatest potential lies in the public sector. In his opinion, what business sees as ordinary practice is far future for the organizations of this sector.

ENCOURAGE TO EXPORT

Business activation measures depend both on the product of the companies and on the sector itself; however, the most effective marketing method for some business sectors is exhibitions according to P. Lukauskas. They

While looking for new markets, “Versli Lietuva” offers analytical assistance which enables businessmen making themselves familiarized with sizes and trends of the markets. help companies expand to foreign markets. “Companies know that they must take part in three to four main exhibitions per year. It is difficult to find a suitable exhibition for other companies having a unique or a niche product. In such cases, we invoke individual assistance of our foreign representatives,” – said he.

The conversation partner emphasized that looking outside Lithuania is important because of the small market of our country. While looking for new markets, according to him, “Versli Lietuva” offers analytical assistance which enables businessmen making themselves familiarized with sizes and trends of the markets as well as gives them the opportunity to look for potential partners in data bases or even to compare their indicators with one’s own.

P. Lukauskas admitted that development of export is not cheap; therefore, human and financial resources must be allocated for doing homework in the company.

“Consumption was especially

Management of big and small companies is compared to control of ships of different sizes.

72

Business. Leaders 2012

active before; therefore, companies hardly managed to produce orders and employ new people.

However, previous consumption will not be reached again soon, while Asia has outrivaled our company by its production resources. Therefore, success depends on the ability to be competitive and effective,” – said he.

CRITICAL FIRST STEPS

Established companies, even those with gaps in their activities, need less help nevertheless than those which are making their first steps. Thus P. Lukauskas emphasized the importance of incentives for the companies which are being established and assured that much has been done in this field: “A company may be registered and a bank account may be opened online already. A template of the articles of the company is presented on our website of “Versli Lietuva” as well which means that one does not need to visit notaries any more.”

According to him, a lot of methodical material about drawing up a business plan and a questionnaire helping future businessmen find out what legal documents they need is presented on the website. According to the conversation partner, future businessmen may apply for permits or licenses electronically as well.

“Everyone who decides to establish a company gets the chance to come to consultations of ours or our partners, or to receive other services for LTL 6 thousand. We reduce the risk of the first, the most critical steps in this way. If they are successful, business gains momentum,” – said P. Lukauskas.

COMMENTS

Kęstutis Gardžiulis

General Manager of JSC (Joint Stock Company) “Etronika”

W

e had the opportunity to participate in the exhibition “CTIA Enterprise & Applications 2011” which took place in the USA, San Diego, last year.

We received a lot of attention of global mass media there; such giants of mass media as “Wired”, “PC World”, “Engadget”, “Popular Science”, etc wrote about us. Thus publicity itself compensated any costs of participation in the exhibition. Not to mention the opportunity to learn from ourselves and others.

We introduced our company in the exhibition nearby the national stand of Lithuania organized by “Versli Lietuva”.

Of course, we could have participated

Jonas Ignatonis

Owner of beer bar “Alaus kolonėlė”

I

have been interested in beer culture for over ten years and I always wanted to elevate this culture to a higher level. The thought to own a beer shop was born three years ago; however, the first steps took some time. I started making inquiries about the rent of premises and seeking credit only a year ago.

I was scared by not knowing what permits I need and what laws regulate trade in alcohol and public catering most of all. “Versli Lietuva” helped me in this respect; it presented briefly the necessary information. I was one

Vaidas Sliesoraitis Director of JSC “Litfarma”

W

e produced a line of vitamins and made the first steps towards export one and a half years ago. “Versli Lietuva” helped find the market by the product and the field of activities; it suggested 8-10 potential countries for exports. “Versli Lietuva” found five suitable companies in foreign markets, kept communicating with them, introduced our company and organized direct meetings with them then.

This process lasted for approximately four months and required quite a lot of work.

there by ourselves; however, doing that with several companies was cheaper; besides, some costs were covered by “Versli Lietuva”. The more so as the national stand creates better image and attracts more attention than single and little-known companies of the country. We received feedback both from abroad and Lithuania after this exhibition as well. Although quite a lot of time has passed, specific negotiations have been started now and we obtained more tangible results.

We do not intend to stop so we participated in another very famous event in London by ourselves where we were the only company from our region among Western companies.

We are planning to present ourselves nearby the national stand of Lithuania of “Versli Lietuva” in one of the biggest IT events in Barcelona as well. of the first pioneers who used the questionnaire offered. After I completed it, I received clear directions regarding where I should apply for all the necessary documents. And the business plan offered by “Versli Lietuva” was useful financially the most. Preparation of it in a consulting company would have cost LTL 2 thousand, whereas we did that online in accordance with the template by ourselves. Thoughts about expansion of our activities arise while working: perhaps we will open a second shop or will establish a bar; therefore, we are planning to use the assistance offered further. However, we need to grow and accumulate some capital first of all.

We chose Azerbaijan as the first country for export and we met all five suggested partners there. I think the fact that the meetings were organized in the Embassy of Lithuania and that state institutions participated in it is very important since that creates mutual trust.

Even three of the five potential partners got interested in our produce. The contracts are not signed yet; however, it turned out that the need exists and we have received a small order already. Thus we must do our homework now: adjust the product, its package and price and we will turn to “Versli Lietuva” and continue our expansion towards the East after that.

New products and Russia saved from the crisis Virginija Spurytė

C

reation of new products needed by the Russian market is the main formula of successful exiting from the times of crisis. It was discovered by “Moguntia Baltija”, a company trading in specialized spice mixes designed for food industry.

This company engages in wholesale trade of spice and food additive mixes in Estonia, Latvia, Lithuania and Kaliningrad.

The decision to supply one’s products to the food industry factories operating in Kaliningrad free economic zone (“FEZ”) helped the company “Moguntia Baltija” survive the times of crisis. “When everything receded here, in the Baltic States, everything surged in Russia. Russians started investing in Kaliningrad “FEZ” a lot, companies, which started constructing factories or expanding the existing ones, were established; therefore, production volumes and, at the same time, our sales kept boosting in food industry,” – maintained Artūras Šeimys, Director of the company “Moguntia Baltija”.

According to him, the market of Kaliningrad is very interesting and perspective. “There are 7 million residents in the Baltic States, whereas in Kaliningrad – only 1 million. It seems that the market should be seven times smaller than that of the Baltic States as well. However, the volume of meat industry equals that of the Baltic States since a lot of factories, which supply their produce to the whole Russian market, are operating in Kaliningrad FEZ,” – narrated A. Šeimys.

“Moguntia Baltija” adapted to

these circumstances as well; therefore, sales of the products of the company supplied to the market of Kaliningrad kept boosting.

“We started producing special products and preparing special formulas of spice mixes designed specially for the Russian market. These products of ours are distinguished by the fact that they help retaining a long expiration date of meat products without using preservatives which is what the Russian market needs since transporting food products from Kaliningrad to, for example, Siberia takes time,” – explained the director of the company “Moguntia Baltija”.

The formulas of spice mixes and food additives are created by the employees of the company. They travel to the training centre of the concern in Germany and create formulas there in accordance with which spice mixes and food additives are produced in Austria.

Currently the assortment of the company “Moguntia Baltija” amounts to approximately 400 products.

Sales of the company “Moguntia Baltija” did not decrease drastically during the crisis: its turnover plummeted by 15 %, whereas the market of meat industry shrunk by 25 % at the same time.

“We began this year with growth and we hope to keep it up until the end of the year. However, the Russian market, which pulls us forward, influences that the most.

Meat industry is recovering in Estonia as well, whereas we can’t see anything positive in Lithuania and Latvia,” – revealed the market trends the director of the company “Moguntia Baltija”.

Business. Leaders 2012

73

INNOVATIONS

E-health shortens

THE INTERNET BECOMES ESTABLISHED IN HEALTH CARE INSTITUTIONS

Increasingly more various services are transferred to the electronic media.

Health care institutions are quite active here. Reception offices, people’s case histories, results of laboratory tests and even prescriptions are transferred to the Internet.

74

Business. Leaders 2012

Stasys Gudavičius

NO NEED TO TROUBLE ONESELF

Šilainiai Polyclinic in Kaunas is one of the few primary health care institutions in Lithuania in which work is being absolutely computerized. “All residents work with computers, patient cards were transferred to the electronic media,” – narrated Vidmantas Obelienius, Director of Šilainiai Polyclinic.

When asked whether this health institution has already given up the traditional paper out-patient cards, the directors’ answer was negative. “Not yet.

They were being written for a lot of years and there is no possibility to transfer all the data they contain to the electronic media.”

According to V. Obelienius, paper cards are being completed together with electronic ones so far, i.e. patients’ test results are already being collected in electronic archives but the doctor fills in the data about the visit, the conversation and the patient’s examination by hand in the paper card. “However, we intend to switch to electronic out-

patient cards only as of April of this year: the record for the paper card will be printed by computer but its copy will be transferred to the archive of the electronic card.

The number of paper cards will decrease gradually,” – narrated the head of Šilainiai Polyclinic.

According to him, an autonomous information system POLIS is operating in this polyclinic. “We created and installed it by ourselves. We started working towards that direction with IT specialists seven years ago and the first electronic applications appeared six years ago,” – maintained V. Obelienius.

Not only cards are being completed in the electronic media but patients may also make appointments with all doctors online.

In accordance with the available data, the number of people making such appointments is increasing and currently approximately 15 % of all patients coming to the polyclinic have made their appointments online. It is very convenient: one simply needs to go to the website of the polyclinic online and insert their name: the page showing when and which doctor is working and available is opened.

No queues, no tiresome telephone calls.

Nevertheless, most of people are

making appointments via the call centre of the polyclinic so far. “It works with the same online reception office as well. Thus, we can say that people who are making appointments by telephone are doing that electronically,” – maintained V. Obelienius.

Of course, the significantly reduced reception office is operating in the polyclinic as well for those patients who come and make appointments there.

“However, both the size of the reception office and the volumes of its work were reduced,” – narrated the director.

“We have been computerizing work gradually for a number of years; therefore, although we incurred costs, they were not high.

Besides, we participated in some programs and obtained computers and software through them.

We can say that the costs of this system have already paid off since the installed computer system enables us saving approximately LTL 110 thousand every year,” – said V. Obelienius.

Approximately 500 people are employed in Šilainiai Polyclinic. It services approximately 68 thousand residents.

E-LABORATORY IS OPERATING 559 people are employed in Kaunas Dainava Polyclinic. The polyclinic services over 60 thousand residents of Kaunas. An online reception office has also been implemented in this polyclinic.

“Our aim is approximately 100 % of all patients making appointments online in advance. Approximately 30 % of our customers are using this opportunity so far. Case histories are not only paper ones but also electronic ones. Several certain

the queues in polyclinic forms are completed electronically in Dainava Polyclinic. Our objective is to transfer all documentation to the electronic media,” – narrated Giedrius Andziukevičius, Director of Dainava Polyclinic.

Tomas Martišius, Senior Specialist of information technologies of this polyclinic, maintained that the reception office of patients is operating online via the national system www.sergu.lt.

“A person opens up the website of our polyclinic online and may check when a doctor is available as well as to make an appointment. The person is reminded about the planned appointment by mobile telephone and e-mail one day before the visit to the doctor. One does not have to waste time while waiting in queues or trying to make a telephone call for all that,” – said T. Martišius.

A telephone reception office is operating in the polyclinic as well: it works with the same online system of registration of patients.

Besides, the so-called traditional reception office window is still operating. “When using the online reception office, the patient’s last name and the password, which is given after registration in the system, are needed. The password may be changed into one that is more acceptable to the person after that,” – spoke the specialist.

Besides, e-radiology has been implemented in Dainava Polyclinic three years ago. It enables accumulating and storing all radiological examinations electronically. Only mammograms performed under special programs are not kept as it is forbidden by the laws. “In one’s workplace, a doctor may review any radiological examination of the patient if only it was performed digitally and is stored in the system. The

patient may receive the examination recorded into a digital carrier instead of the examination printed out on a film and to review it on one’s home computer or to present it for another specialist’s assessment and not to loose the quality of the examination,” – said T. Martišius.

E-laboratory has been implemented in Dainava Polyclinic as of the beginning of this year: “Unique codes, which are printed on the labels and affixed to samples, are given to all samples of the substance to be analyzed. They are carried to laboratory apparatuses then, an analysis is performed there and its results are automatically transferred to the information system.

Doctors may review the results of the analysis right away in their workplace. The history of all analyses is stored; therefore, the doctor can see the results of the patient’s analyses and observe the change.”

STRENGTHENS THE SYSTEM Virginijus Jasaitis, Director of the company “Skaitos kompiuterių servisas” (SKS), remembered that creation of a common e-health system has begun in Lithuania eight years ago.

V. Jasaitis regrets that “e-health in our country became like a headless child, no healthily ambitious architect-builder appeared who would continue the work which was started well” because of the political draughts and organizational obstacles. “The manpower of IT specialists in charge is still scarce now as well, they are not given enough powers and there is no necessary political support for further designing, coordination and development of e-health. Information technologies industry of the country is not trusted although it demonstrates

impressive European- and worldclass achievements in other fields,” he named the problems.

In V. Jasaitis’ opinion, probably the biggest achievement in Lithuania is the portal www. sergu.lt intended for making appointments with doctors. Several tens of Lithuanian health institutions are already connected to this system.

A person opens up the website of our polyclinic online and may check when a doctor is available as well as to make an appointment.

While talking about the company SKS managed by him, V. Jasaitis emphasized that it has been providing information about medications online to the apothecaries of the country for the second decade: “Ordering the medicines they lack, automatically documenting the consignments received and registering prescriptions correctly

is more convenient and quicker for apothecaries in this way. Information about medications is publicly available to the citizens in the portal www.vaistai. lt. The maximum prices of medicines, user’s instructions and even the closest apothecary having the medicine in question may be found in it. The application “Vaistai” (“Medicines”) was created for smart phones; it recognizes the package of a medication by the barcode as well. People who do not use the Internet may obtain analogous information from the data bases of SKS by information telephone 118.

The contribution of SKS to e-health: more thorough information about medicines, terms of prescribing and reimbursing them as well as availability of medicines in apothecaries accessible to health institutions via internal systems. This information is being constantly updated; therefore, it is superior to the data in printed catalogues.

SKS tried the e-prescription system successfully in Šilainiai Polyclinic several years ago; however, the authorities failed to notice that.

As long as legal acts permitting drawing up e-prescriptions for reimbursed medicines and using them in apothecaries are not passed, SKS plans implementing a system of e-prescriptions for nonreimbursed medicines in individual health institutions and surrounding apothecaries this year.

“This will facilitate prescription of a medicine for the doctors working with electronic patients’ case histories in their offices, whereas people will be served quicker in apothecaries,” – said V. Jasaitis.

Business. Leaders 2012

75

MANAGEMENT AUDIT CONFIRMS THE INTERNATIONAL CERTIFICATE

The work quality system which was implemented in Šančiai Polyclinic a decade ago already enabled significant shortening of queues waiting for doctors, saving patients’ and employees’ of this institution time as well as using resources more effectively.

The polyclinic marked by the sign of work quality Stasys Gudavičius MEETS INTERNATIONAL REQUIREMENTS

Zita Česnavičienė, Director of Šančiai Polyclinic, told that a quality management system meeting the requirements of LSN EN ISO 9001:2008 standard was created, documented and implemented in this polyclinic of Kaunas in the beginning of last century already. “It stipulates a very detailed procedure of all employees’ work. All procedures are described in detail. A monitoring and control system for compliance with these procedures was implemented as well. Nonconformities are recorded and measures are assumed in order to eliminate them,” – explained the head of the health institution.

The goal of the system, according to Z. Česnavičienė, is “to provide qualified, high-quality personal health care services, to seek optimal results of diagnostics, treatment and prophylactics of diseases, to use the resources allotted to patients’ health care rationally, to develop mutual trust between patients and medical staff, to form new attitude towards the patient as a personality as well as to improve administration of provision of personal health care services.”

“Every employee knows one’s duties and liability for one’s actions after implementation of the system; all that is described in the procedures, job descrip76

Business. Leaders 2012

tion, methodologies and other internal documents. Besides, this protects employees from unreasonable claims of patients,” – emphasized the head of Šančiai Polyclinic.

REGULARLY PERFORMED AUDIT

The system operating in the polyclinic since 2003 is directed at improvement of the quality of the services. Speaking about the operation of the system, the director of Šančiai Polyclinic mentioned that polls of the employees and patients of the institution are carried out. It is aimed to find out the most serious problems encountered in everyday work in this way. “The problems discovered are tackled after that,” – maintained Z. Česnavičienė.

Internal auditors spot-check the quality of work of several di-

visions in Šančiai Polyclinic every year. “International audit takes place every three years; it is decided after that whether the polyclinic is worth the international quality certificate which was issued in 2003. Validity of this certificate used to be extended for Šančiai Polyclinic so far,” – emphasized Z. Česnavičienė.

The next international audit is planned in the late autumn of this year. The auditor will be selected by way of a competition.

WERE THE PIONEERS

“Implementation of the quality management system enabled shortening the queues in the polyclinic significantly during the last several years. For example, a specialist may be visited in a week or two at the latest now unless the patient wishes to set the appointment for

a later time,” – said the head of the polyclinic.

Besides, a lot less patients’ claims are received: only a few per year. “We were the first ones in Lithuania to implement this system, we were like pioneers.

There were quite a lot of unknown things and worries because of implementation of this system; however, we solved most of the problems which arose, obtained the international quality certificate and have maintained it so far. We can see a significant progress in the quality of our work; therefore, we reasonably expect validity of the certificate to be extended after the audit this year,” – said the director of Šančiai Polyclinic.

240 people are employed in Šančiai Polyclinic; it polyclinic approximately 27 thousand residents.

INSIGHTS THE WORLD SURVIVED THE FINANCIAL SHOCK

The financial system will not avoid changes Karolis Urbonas

Economic Research Group Manager of the research institute “Social Dynamics International”

T

he world was stricken by a crisis of values. The number of values grew too much and they became a commodity and commodities, as we know, depreciate. This crisis is merely a consequence of the reforms which were being performed and the economic theories which were being implemented for a number of years. However, we are witnesses to an extraordinary period of time: a re-

cession unseen ever before threatens the economy of the country, half of the youths of Europe are unemployed – they are being called “the lost generation” already, and the financial sector is urged to change fundamentally.

The question arises: who brought us here? Excessive consumption, bankers’ greed, complicated macroeconomic climate or simply the wrong attitude? Buckminster Fuller, one of the most prominent thinkers of the 20th c., suggested the ephemeralization theory and maintained that people will be able to do more and more with less and less because of the technologies. However, he emphasized fearfully that catastrophes may be caused if the creators and the users of technologies do not act jointly.

We can also see the prevalence of short-term attitudes, a deplorable pursuit for profit and benefit at any cost as well as total indifference to the whole

picture today. The financial system was unstable like never before during the last four years: the collapse of the investment bank “Lehman Brothers”, which started the financial crisis, overbalanced the constantly growing financial sector, loads of financial machinations and pyramids were discovered, whereas speculative derivative instruments grew so much that they exceeded GDP of the global economy by over 50 times.

The leaders of Europe failed to demonstrate political will and make drastic decisions in time; therefore, each missed opportunity to improve the crumbling economy caused additional protests and problems. Nevertheless, A few important decisions were made in Europe: a new Lisbon Treaty highly resisted by the United Kingdom and the activated European Central Bank was suggested. Although most decisions were made too late, we may rejoice at the fact that the problems of

the big southern countries were suppressed at least temporarily. Banks, which were blamed for risking depositors’ money too much and destabilizing global economy by seeking higher profit margins, were criticized the most last year. Radical decisions committing banks to increase their capital indicators significantly were made in Europe last year. The USA passed a separate Dodd-Frank Act for this purpose; the directive of Basel III restricting the financial sector was ratified in addition.

This year will be one of the most interesting ones in the history since essential issues will have to be solved, Europe will strengthen or collapse, the marathons of presidential elections will begin in the USA and Russia, China will have to prove that it may grow further, Iran will keep defending the nuclear programme, whereas the Near East will remain under close observation because of the uncertain fate of the big countries.

PLANET IDEAS WHICH TURNED INTO FINANCIAL EMPIRES

Steve Jobs, Bill Gates, Lawrence Page, Sergey Brin or Mark Zuckenberg – the whole world knows them. They are the leaders in innovations and business aiming to change the world. Will their dream come true?

Technology gurus rule the “THINK DIFFERENT!”

The aim of technology creators is not money.

As B. Gates, the founder of “Microsoft”, said once and again: “We are changing the world with technology.” S. Jobs, a long-year competitor of his and the soul of “Apple” spoke in a similar manner: “Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful... that’s what matters to me.”

How did a tiny enterprise established by a few likeminded people in a garage in 1976 turn into one of the highest valued companies in the world revenue of which amounted to an impressive USD 108.2 billion in 2011?

The philosophy of “Apple” is simple: believe in the idea, work consistently and, most importantly, don’t be afraid to risk.

S. Jobs as well as Steve Wozniak, Ronald Wayne and other colleagues of their created the company “Apple” at the time when no one in the world even dreamed about compact personal computers.

Computers were either of such size that they hardly fitted in a room or were carefully safeguarded in laboratories at that time. The belief that people do not need the computer prevailed. However, the founders of “Apple” broke the stereotypes and, of course, risked. “Apple” introduced increasingly more sophisticated and smaller computers: “Apple I”, “Apple II”, “Apple IIe”, “Apple III”, one after another.

“Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” that’s how S. Jobs enticed John Sculley, the then CEO of “Pepsi”, to “Apple”.

Because of the efforts of the founders of 78

Business. Leaders 2012

“Apple”, computers became not only technology enthusiasts’ of that time toys in order to work with which one needed special know-how but were controlled using pictograms, menu and the mouse.

Probably one of the most significant creations of “Apple” – a personal computer “Macintosh” – “was born” on 24 January 1984. Actually, the company “Apple” faced a number of challenges; however, “Macintosh” became a revolution in the world of technologies, a stepping stone for “Apple” from which it rocketed to the top of technologies.

“Apple” presented its first music player “iPod” in 2001, the first “Apple” mobile telephone “iPhone” in 2007 and the tablet computer “iPad” in 2010. There is hardly anyone in the world who has not heard about the inventions of “Apple” now. “Apple” became not only the symbol of high technologies industry but also a think tank for other representatives of this industry.

GOOGLE AND FIND OUT!

Conquest of the web was another significant step towards technological revolution for the mankind. The “Google” empire created by L. Page and S. Brin valued at least USD 150 billion now is, it seems, one of the brightest stars of the online space.

Everything started in 1996 when L. Page and S. Brin, students of Stanford University, started creating an online search system.

Being the richest man in the cemetery doesn’t matter to me.

The first creation of both young men was a search system named “BackRub”; by the way, this system operated in Stanford University for a while. The guys decided to rename “BackRub” to “Google” after a while.

This name originated from “googol” – a mathematical number which is expressed in digits as a one and a hundred zeros. According to the authors, the name “Google” had to reflect the mission of their creation: to systemize the enormous amount of information presented online.

The creators of “Google” received the first investment in 1998: Andy Bechtolsheim, one of the founders of “Sun Microsystems”, drew a cheque for USD 100 thousand. The investor envisaged that the young men’s creation may change the virtual media.

“Google” became one of the most successful search systems in the world as of 2000.

How? An algorithm, which was able not only to search for keywords but also to perform analysis of a website, invented by the creators of “Google” contributed to its success.

Moreover, the creators of “Google” didn’t even bother to advertise their product and didn’t waste money for that. Information about the uniqueness of the search website “Google” was spread by word of mouth.

It was started to produce “Google” in different languages as of 2000. One more successful creation of “Google” – e-mail, capacity of which overwhelmed all others at that time, – appeared in 2004. “Google” launched “Google Scholar” at the same year; “Google Maps” was born and bibliography of “Google” books was expanded in 2005. “Google” can offer a variety of services – from e-mail, capacity of which may

business of the world Success: technological revolution made the most famous people not only millionaires but also real celebrities.

be even 7.5 gigabytes, to photo hosting – to users of the Internet now. One of the most well-known pieces of work of “Google” is “Youtube”, a website for video clips. Although “Youtube” made losses in the beginning and “Google” corporation was mockingly criticized that the USD 1.6 billion investment will not pay off, “Youtube” started earning as much as it cost for the company to upkeep it after three years.

LIVES OFF ADVERTISING

All creations of “Google” are free of charge; therefore, the most important source of income of this website is advertising. “Google” does not lack it since profit of the company amounts to even USD 23 billion per year. According to the creators of “Google”, the company will undertake more innovations. Its most important current goal is to invade the market of web browsers with its new creation “Google Chrome” as well as to create an operating system which could challenge the dominating “Windows”, “Linux” and “Mac OS” operating systems.

“Time” magazine interviewed the creators of “Google” in 2006. When asked about the strategy of the company, L. Page answered: “We don’t talk about strategies… that’s our strategy. It’s better when people rack their brains about what we intend to do than when our competitors know what we’ll do.”

When asked by journalists what it means to be so rich at such an age, S. Brin laughed: “Well, you need time to get used to that. You always hear the phrase, money doesn’t buy you happiness. But I always in the back of my mind figured a lot of money will buy you a little bit of happiness. But it’s not really true.

I got a new car because the old one’s lease expired. But you can drive the same car, can’t you?” “If we were motivated by money, we would have sold the company a long time ago and ended up on a beach,” – added L. Page.

“FACEBOOK” MANIA

Social networks have conquered the virtual space during recent years. Some of them, for example, “Facebook”, did that within merely a few years. The nineteen-year old M. Zuckenberg with his course mates in Harvard University created a website which they called thefacebook.com in 2004. The social network intended for Harvard University and other higher schools of the USA became the largest one in the world within several years; the number of its users amounts to impressive 800 million.

The number of the users of “Facebook” increased twice during last year alone. Prof-

it of the company “Facebook” is none the less impressive. It amounted to USD 2 billion in 2010 and USD 4.27 billion in 2011.

Just like “Google”, the source of revenue of “Facebook” is advertising. Currently this social network is available in 75 languages; over 50 % of users access their page every day, whereas approximately 70 % of users of “Facebook” reside outside the USA. What is the value of the company “Facebook”? This question may be answered when it enters the stock market. The company has been postponing the trip to the market so far and its founder M. Zuckerberg was even mockingly called a paper billionaire. However, “Facebook” made its mind this year: the company will enter the exchange. Some experts are already calculating that its value may amount to impressive USD 75 or even 100 billion in the exchange.

Prepared by Valentinas Beržiūnas

“FACEBOOK” – A FINANCIAL BUBBLE? Financial experts of Europe warned that the increasing popularity of the so-called social networks may be dangerous.

Swiss scientists believe that inflated value of “Facebook” may harm the whole IT market severely.

In their opinion, the real value of “Facebook” may amount to not more than 20 billion USD although it is valued at even 100 billion USD in the market.

According to scientists, other social networks such as “Twitter” or “LinkedIn” are overrated too. Although the number of the users of these social networks is growing, their value is rising too quickly.

Television “Bloomberg” performed a poll of the investors of the world. Even 69 % of the interviewed believe that “Facebook” is overrated, whereas 10 % answered that the social website is valued properly. 17 % of the investors emphasized that they have no opinion regarding this issue.

Those investing in “Facebook” believe that it will be the second “Google”. Market value of “Facebook” has been based on the fact that it is the first one in the marked and thus – the winner so far. However, appearance of a quicker and stronger company may reduce the value of “Facebook”, the investor John J. Lee warned.

The investor Luigi La Ferla added: “It is more than a bubble. There is too little financial data and company history in order to be able to assess its value.”

Business. Leaders 2012

79

PLANET BIG SUCCESS OF A SMALL COUNTRY

Estonian pride What is the secret of success of “Skype”? Sten Tamkivi (photo), CEO of the Estonian division of “Skype”, admitted that the most important thing is not only to generate ideas but also to implement them.

80

Business. Leaders 2012

Valentinas Beržiūnas – How was the idea of “Skype” born? What is the road of “Skype”?

– It often seems that this creation was an unexpected and sudden success. A few guys arrived, came up with something and that something became unique in two months.

Actually, although “Skype” was created in 2003, that group of people with Nikl Zennström and Janus Friis among them began working together in 1999.

The first thing they did was launching the portal everyday. com, software for which was created by Estonian specialists.

They created the website KaZaA in 2001. By the way, this file share program became very popular in the world. Then they created the company “Joltid” which produced software and improved the so-called peer-to-peer technology which is used by “Skype” as well. “Skype” appeared only then.

I want to say that the key to success is purposeful work and effort. I believe that merely luck is seldom enough. Things happen. One may be very lucky or just lucky; however, mistakes and falls happen as well.

Speaking about the idea of “Skype”, it was a significant technological solution. An intriguing question arose after creation of KaZaA: could we create communication in real time?

If you are sending a file, it is not

too important whether it will be sent a minute earlier or later; however, direct connection is a different issue. It was a really complicated technological issue.

Besides, we had to think about return as well. Talking with a person who lives far away from you may cost a lot. To put it in other words, we needed to solve the issue of how to turn technology into business.

Finally, an important thing was the design of “Skype”.

Advantage of “Skype” is not only that it gives the chance to talk with other people free of charge but also that it is easily managed. Let’s say that “Skype” enables its users finding other people’s contact data very easily. I would say that it is design which was one of the most important things.

– What is the success of “Skype”? Not every company reached that much.

– “Skype” was created merely nine years ago and it was sold to “Microsoft” USD for 8.5 billion last year. Is that success? Apparently, yes. We grew from six people to over one thousand of people: that’s the number currently employed in the company. Finally, the number of our users grew from zero to millions. If you see these numbers, yes, “Skype” is a huge success, probably, the biggest in the IT sector of Estonia.

The secret? As I already mentioned, “Skype” was created after

three issues were solved: we created the technology, solved the business issue and created the design.

Of course, we continued our work following these benchmarks.

– What conditions are necessary for ideas like “Skype” to become the reality? Must the policy of the government be favourable or is that related to business climate?

– Speaking about conditions, the most important thing for creating technologies is clever and educated people. How can the state help? By investing in science and education. What concerns support for business and creation of a favourable climate for it, I think that the most important thing is that the state should simply allow one to act. Let’s say, in my opinion, such taxes which do not encourage employers to create well-paid jobs should be abolished. Laws restricting young creators’ freedom to travel from one country to another should not be passed. The government must not suppress initiatives.

– Can the conditions for business in Estonia be called favourable?

– Yes, the climate is favourable for business in Estonia. Everything is transparent and simple in our country. I have read some time ago that even 90 % of new companies in Estonia were established via the Internet recently. Great!

SOME FACTS ABOUT “SKYPE” • “Skype” is an Internet telephony network using which it is possible to call to all countries of the world.

• According to the statistics of “Skype”, over 6 million users are constantly connected online.

Creating business in Estonia is very easy and it can be done very quickly. On the other hand, there are some things which the government could improve. For example, the immigration issue.

Bringing extremely talented engineers to Estonia is very hard if they are not from EU countries.

One more thing is taxes. Let’s say, if you pay a salary of 50 or 200 thousand euros per year to a very talented engineer, his taxes will amount to even 33%. That’s just trifles but they could be improved. On the other hand, business climate is really good in Estonia.

– What’s your advice for those who want to create something like “Skype”?

– One must be oneself in general and not to try to copy others.

What is the biggest problem I can see? People are afraid to start doing something. For instance, to quit a well-paid stable job and start establishing one’s business. From zero. Yes, establishing a business is difficult; however, a person must not only think but also act.

Let’s just look at us some five years ago, not only at Estonia but also at all the Baltic States.

We are experiencing renaissance now. So many new companies trying to conquer the world were established in these tiny countries! Therefore, my essential piece of advice is: if you have an idea and want to present it to the world, realize it!

• Calls via “Skype” amounted to over 26 billion minutes and the program was downloaded 277 million times in 2006. The number of the users of “Skype” reached 100 million at the same year.

• There were approximately 54 million registered users of “Skype” in September of 2005, whereas in autumn of 2011 – over 663 million registered users.

• It was bought by “Microsoft” company for USD 8.5 billion on 11 May 2011.

• The office of “Skype” is located in Luxembourg; however, most of the founders of the company (44%) are working in Tallinn and Tartu.

S. TAMKIVI’S DOSSIER S. Tamkivi began his career as a programmer and website designer. He is the CEO of the Estonian division of “Skype” now.

S. Tamkivi is also called the representative of “Skype” in the world since his duties include making connections with the most talented engineers of the world, mass media, governments of the countries and academic society.

S. Tamkivi joined the company “Skype” in 2005. He has occupied various positions since then.

Before coming to “Skype”, S. Tamkivi worked in the company “Helmes” engaging in production of software and consulting on IT issues in Tallinn.

S. Tamkivi graduated from Tartu University.

Business. Leaders 2012

PLANET THE CHANGING ACCENTS

Ambitions: The leaders of BRICS countries do not conceal ambitions: their goal is to increase their influence in the world.

The leading countries of the future Estonia was made famous by “Skype”, Finland – by the telecommunications company “Nokia”, Japan – by physics, chemistry, medicine, electronics, cars, mechanics and other industrial sectors of the country. What else do they do to survive the times of crisis and advance to the future bravely?

82

Business. Leaders 2012

“CLEVER” ECONOMY

The governments of the developed countries spare plenty of money for scientific research although investments do not always pay off. That is to say, the number of research performed in the Land of the Rising Sun is the highest in the world.

700 thousand researchers of the country share USD 130 billion allotted by the state for the technological progress of the country. Scientists’ inventions are used successfully in large branches of industry which are also supported by the country.

As a matter of fact, the production sector of Japan has not been undergoing the best of times; however, this country remains one of the most significant centres of technologies in the world.

The growth of the economy of China is inseparable from the technological leap, which began in the end of last century already, as well. Investments of the country in technologies are increasing every year.

China, which allots almost USD 140 billion for scientific projects every year, recently overtook Ja-

pan by the funds allotted although is still behind the USA. Finally, the Chinese have overtaken the Americans in the socalled green energy sector. Investments of the Chinese in renewable energy sources amounted to USD 34.6 billion in 2009, whereas the investors of the USA allotted approximately USD 18.6 billion for development of the energy resources of the future that year.

EXPAND INFLUENCE BY TECHNOLOGIES

Not only China but also Brazil, India and the South African Republic are advancing on the road of technological revolution. All these countries together with Russia belong to the block of BRICS countries. Almost 3 billion people of the world – approximately 42 % of the mankind – live in BRICS countries, whereas the economy of these countries did not stop growing despite the global financial crisis.

According to experts, BRICS countries are likely to be in the top ten of the most developed countries of the world and development of all their economies will

exceed that of the USA in 2020.

Nevertheless, the development scenarios are not the same of all these countries. Experts promise the status of the global producer for China, the positions of the leader of the service sector for India and those of the suppliers of resources for Brazil and Russia.

THE SHIFT OF POWERS?

Although all BRICS countries may be considered competitors not allies, they are united by a common goal: to change the rules of the political and economic game in the world.

“The economies of BRICS countries amount to approximately 18 % of GDP of the world; however, these countries are often isolated from making decisions in the global arena,” – said Jin Canrong, a Professor of International Relations in Renmin University of Bejing, . “These countries are like athletes, whereas Western countries are the rule-makers and umpires.

BRICS countries want to become the members of the umpire committee now.”

Prepared by Valentinas Beržiūnas