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Lithuanian business representatives evaluate the benefits of representation in Taiwan differently.
Relationship review
In early March, the Lithuanian government announced its intention to open a business representation office in Taiwan this year to expand economic diplomacy in the Asian region.
Political scientist Konstantinas Andrijauskas says this decision reflects a determination to review relations with China.
“Lithuania is taking such a step, which is important, that it will receive a lot of attention from both Beijing and other countries in the region, and perhaps even outside of it we will hear a lot about this decision,” said BNS K. Andrijauskas from the Institute of Relations. International and Political Science from Vilnius University.
“The government is inclined to acknowledge that attempts to establish sufficiently resilient economic relations with China … have not yielded the expected results,” he added.
According to K. Andrijauskas, after the establishment of representation, fiercer diplomatic rhetoric from Beijing and possibly economic punishment measures can be expected, but relations between Lithuania and China are not so deep that economic sanctions will have a significant impact. , at least for the moment.
“Given the situation, bilateral or trilateral, if we put Taiwan in the single market, the relationships and the context of the pandemic, it would be very strange if our businessmen who work with China no longer feel the consequences of entering the Chinese market much.” harder than before. Now that the volume of trade has drastically decreased, Beijing may publish the facts and data of the existing bilateral trade as something that it planned to do to punish us, “said the political scientist.
“There are interests of our business, the food industry, the high-tech industry, but it is not something that is existentially important for Lithuanian companies in general, even for those interested sectors, that if China ended the cooperation, it would start a series of bankruptcies. “. . It definitely won’t be. “
Rimas Varkulevičius, president of the Association of the Lithuanian Chamber of Commerce, Industry and Crafts, says he supports the government’s plans. According to him, Lithuania is an exporting country, so any stable and solvent market is very important.
“Taiwan is not a very big market, but it is really important for some basic products, including agri-food and some other things. Taiwan is a very active exporter of technology and various business solutions, and is a kind of hab to the markets of the Asian region. (…) Taiwan could be a very important economic partner for Lithuania, ”R. Varkulevičius told BNS.
He says that he does not rule out the possibility that Lithuania will have to negotiate and explain with China, but the country must have its own export policy and follow it.
“I have known about the trends, actions, technologies, solutions, market and openness of Taiwan for many years, that would be very important and we need to feel like an independent state and an economy. No one can dictate to Lithuania which partners to choose. If politicians take such bold action, it will be welcome, ”said R. Varkulevičius.
Interruption of imports and development of traditional markets
After Lithuania’s statement on representation in Taiwan, the Chinese ambassador to Lithuania, Shen Zhifei, emphasized the different volumes of trade on Twitter and stated that Lithuanians would have a choice.
“According to official data from Lithuania, Lithuania’s exports to mainland China in 2020 amounted to EUR 315 million.: 14.1 percent. More (than in 2019 – BNS), and Lithuania’s exports to the Taiwan region amounted to only 19 million. EUR – 2.92 per cent. less. Lithuanians will have to choose, “he wrote on Twitter.
Alexander Izgorodin, an economist at SME Finance, says deteriorating relationships could threaten imports of raw components.
“As for the political risk, I would see it higher not through exports to China, because it is small enough, but through component imports from China, because imports may be temporarily interrupted, possibly due to political considerations, import prices may go up, “the economist told BNS.
“Our industry is already facing rising prices of imported raw materials and components anyway due to the situation in the financial markets, as oil prices rise, metal prices rise, so in this context, that additional political risk could bring negative things, “he added.
According to A. Izgorodin, if this risk were confirmed, Lithuania would have to think about alternative supply chains and find where to import the necessary components. This would mean higher costs for companies, which would reduce the profitability of companies or fall on the shoulders of consumers.
The economist says that it is difficult to imagine how developing trade relations with Taiwan could help Lithuanian companies. According to him, strengthening economic relations with traditional markets – Scandinavia and Central Europe – is now more relevant for Lithuanian companies.
“As this is a difficult time, it would be important for exporters for the state to help companies establish relationships with new partners in the most important and largest export markets. (…) Taiwan is quite a distant market, practically all Lithuanian exports to other non-European countries go through larger European producers, so the impact on exports will be very small, sometime in the future unless can increase tourist flows ”. said A. Izgorodin.
Tomas Fedaraviči, president of the Sino-Baltic Business and Industry Association, said that the issue of business representation is more political than economic.
“Certain political forces in Lithuania are announcing this to themselves and trying to get political dividends. From the point of view of Lithuanian companies, in general, I don’t think this topic is particularly relevant for our companies. Perhaps, for companies. individual, “T. Fedaravičius told BNS.
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According to preliminary data from the Statistics Department, Lithuanian exports to China last year amounted to 315.8 million. EUR: 14.1 percent. more than in 2019. Most corresponded to cereals (69.3 million euros), furniture and furniture accessories (38.7 million euros), wood and wooden articles (36.2 million euros), optics, photography, measurement, medical devices (33.8 million euros). .
At that time, exports to Taiwan amounted to 19 million. EUR: 2.9 percent. less than in 2019. Most corresponded to wood and its products (€ 4.2 million), various chemicals (€ 3.4 million), optics, photography, medical and measuring devices (€ 3.1 million) of euros).
Lithuanian imports from China grew 26.2 percent last year. up to 1,200 million euros. Electronic equipment and parts (€ 226 million), mechanical equipment and parts (€ 143.1 million) and textiles (€ 104.7 million) accounted for the largest share.
Taiwan’s imports fell 4.8 percent last year. up to 66.1 million euros. Electronic equipment and parts (€ 12.3 million), vehicle parts (€ 11.6 million), optics, measuring instruments, medical devices and parts (€ 11.2 million) accounted for most of it.
According to statistics, last year China ranked 20th in the structure of Lithuanian exports and 7th in imports. At the time, Taiwan was ranked 67th and 36th, respectively.
Author Erika Alonderytė
It is not allowed to publish, quote or reproduce the information of the BNS news agency in the media and on websites without the written consent of the UAB “BNS”.
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