[l1]Is in it stable since 2002

Lithuania strengths and weaknesses

Strengths

• Lithuania, with its excellent telecommunication infrastructure and a well-educated, multilingual workforce, offers high quality business services. These services vary from financial to accounting and reporting services, and contribute more than 13% to the GDP.  A large portion of FDI during recent years have been attracted into shared services centers in IT.
• Lithuania has more than 50% of the world's market for high-energy picosecond lasers, and is a global leader in manufacturing ultra-fast parametric light generators.
• Lithuania has a favourable legislative basis for business. The country is ranked third in Eastern Europe and Central Asia, and 26th in the world on the Ease of Doing Business Index prepared by the World Bank Group.
• Information Communication Technology (ICT) is one of the priority sectors for the Lithuanian government. As such, it has been actively participating in this sector's development over the last years. The government has been making efforts to attract international technological companies to Lithuania, develop science and technology parks, and encourage international trade within the companies operating in the sector.
• Lithuania has strong and well diversified export industries in furniture manufacturing, chemicals and food industries.
• Lithuanian government has responded to the budget deficit issues with a very radical program of fiscal tighteninng in 2009, resulting in improved fiscal position in 2010 and continuous improvement foreseen in 2011-12. Lithuania is on track to cut its budget deficit to 5.8% of GDP in 2011 and 3% in 2012 in order to qualify for euro adoption in 2014.

Weaknesses

• An inflow of FDI into IT services has increased competition for qualified labour in the IT sector, driving up wages.
• The unemployment rate stands at 15.6 percent as of June 2011. Structural unemployment in low-qualified labour is persistently high, while emigration of highly qualified labour force to other countries in the EU is developing into qualified labour shortages.
• Decline in domestic demand: due to the rising unemployment and increasing inflation the domestic market growth rate has declined.
• Lithuania's economy is very much dependent on small and medium-sized enterprises. Improvement of the regulatory environment, by reducing the administrative burden and simplifying the licensing and permit system, would be key to their growth. Trying to lessen this burden of excessive regulations Government issued a declaration in September 2011 specifying that nine main business inspectorates are not allowed to punish business newcomers for violating the rules in their first year of operation, but only to advice.
• Corruption acts a hurdle for its economic growth

Lithuania business culture

Lithuania is the largest of the Baltic republics. It relies on its strategic position, which has allowed for a cultural and commercial relationship with the Scandinavian countries. Lithuania, which became a member of the European Union in 2004, has actively partnered with key countries in this region for commercial activities.

Work culture

Lithuanians work on average for 40 hours in a week, and are known to be productive and hard working. Most Lithuanians are very modest. At the same time, they are impressed by titles of authority and advanced university degrees. As such, it is a good idea to let them know one's status within the company.

Business structure

In Lithuania, a fairly large difference in management style may be observed, depending on whether the management comes with education before or after the Soviet period. Entrepreneurs of older generation who received their education and started careers during Soviet times are more attached to a hierarchical culture. However, the younger generation is pretty fast in taking over western practices and has started adopting a flatter structure.

Business meetings and negotiations

Lithuanian businesspeople adopt a formal approach towards business. There are differences in style between government officials and older workers who maintain formality and entrepreneurs who willingly dispense with formality. It is best to determine and reciprocate accordingly to the level of formality used while conducting business in Lithuania. Typically, Lithuanians prefer to establish a personal rapport with individuals prior to moving to business discussions as it is considered as an important element for success while conducting business.

Meetings are arranged in advance and confirmed by a letter, e-mail or fax. Usually, people of similar status or seniority attend the meetings. Hence, it is advisable to send a list of attendees and a brief biographical account of each person before the meeting. Since the business place is fairly hierarchical, the meeting is likely to be chaired by the ranking executive present.

Lithuanians are oriented to trade issues. They start a business meeting without engaging in any casual conversations. One should expect to discuss each point thoroughly before moving on to the next. During negotiations, Lithuanians try to avoid direct answers, and show expressiveness, fellowship and honesty. Eye contact is considered important. Lithuanians do not rush into making a deal. They take time to think if it is in their best interest before agreeing. Business moves slowly due to the bureaucratic nature of the society.

Negotiation tips

• In business deals, one must formally commit and maintain good manners. Patience, cordiality and a good professional image are fundamental in order to maintain stable relations in the long term.
• Business approaches adopted by young executives and elders are different. The young executives are the most direct, the least bureaucratic and wish to carry out everything necessary in order to close the deal.
• Lithuanians often use time as a tactic, especially if they know that one has a deadline. Hence, one should be cautious about letting business colleagues know he/she is under pressure to meet deadlines or else, they would delay even more.
• Lithuanians prefer face‐to‐face contact and professional relations derived from friendships. Once the friendship is established, they discuss business.

Communication

In Lithuania, a handshake is the common form of greeting. It is customary before and after a meeting, even for business-women. Lithuanians appreciate lengthy handshakes and it is important that you make eye contact and smile during the process. Eye contact is extremely important as this infers trustworthiness and sincerity.

English is widely spoken by young people but interpretation may be required for business meetings, particularly outside major cities. Lithuanians are typically modest at the work place. They usually speak in a calm and non-emotive way without the use of unnecessary hand gestures. They are also extremely polite during any interactions, and it is considered rude to interrupt someone who is already speaking.

Although majority of Lithuanians do not smile too early on, they appreciate good humour and like smiling people.

Gifts

Lithuanians prefer to turn business relationships into friendships. Giving or sending business gifts is almost a standard practice in Lithuanian business culture. An office gift could be a bottle of white wine, a box of high quality chocolates or a basket with tea and biscuits. Offering a personal gift to a Lithuanian on the occasion of his/her birthday is recommended. Hence, gifting them a wine basket or a chocolate gourmet gift is advisable. One can always personalise the gift with ribbons or a card with the name of your friend.

Always give an odd number of flowers. Presenting an even number of flowers, such as chrysanthemums, is considered a sign of mourning and is reserved for funerals.

Sources: UKTI, Kwintessential, Communicaid, ExecutivePlanet, GlobalNegotiator, WorldTravelGuide