The fish processing and canning plant Karavela's shift to other export markets started around 10 years ago. Last February, when Russia launched a full-scale war in Ukraine, the company stopped exports to Russia altogether.
“Actually, it was a decision in one day. We accepted we were no longer working with Russia and Belarus. It was not an easy decision, not only from a business point of view, because we had worked there for 30 years. There were both friends and companions and all but we made the decision despite it. We do not want to associate ourselves with a country that attacks its neighbors, and we all sent letters that we are finishing: everything, thank you, and come back when the country has become a normal country,” said Andris Bite, a member of the board of Karavela.
When Russia seized Crimea in 2014, 1,284 companies from Latvia exported to Russia and 576 to Belarus. This year 169 companies are exporting to Russia, 89 to Belarus. The reduction is very significant, by 86% and 84%.
The Latvian Investment and Development Agency (LIAA) acknowledged that not all companies know about the possibility of receiving support. “It is also foreseen in the new strategy of the LIAA that we are looking proactively for those customers who should be supported but who do not use the opportunity, and addressing them to come and use it,” said LIAA Director Kaspars Rožkalns.
Those who continue to export to Russia and Belarus have mentioned various reasons. The candy producer “Aizkraukles Saldumi” said that there was no intention of refocusing. Puratos Latvia food producer is working on new export markets but needs time and additional support from the country. Riga Electrical Construction Factory (RER) wants to refocus, but the process is not fast.
What the country has so far offered to find new business markets is to pay for participation in exhibitions, trade missions, international marketing, advertising, and certification. One entrepreneur can get a total of €60,000 in aid per year.
Direct assistance with participation in exhibitions is most appreciated in Karavela. “It's the number one that lets us find new customers, show ourselves, learn a lot of new things.“And we can say that this is one of the key factors, at least in the food sector, how a new market can be developed,” Bite said.
Entrepreneurs say that there is too much time spent between the Ministry of Economics and the Ministry of Finance – the new aid program has not yet begun. And delays can be costly.
“We had to book in advance for the next year. Without knowing all this, we are at risk of losing the exhibition plots we have reserved. It is virtually impossible to get back to the highly demanded exhibitions,” said Ivars Eniņš of the Association of Mechanical and Metalworking Industry.
“I would call for the CFLA's [Central Finance and Contracting Agency] relationship with LIAA to be sorted out as quickly as possible so that these programs can be launched. The second is to extend to the new program the costs that entrepreneurs continue to invest in new markets this summer and this spring. Extending those costs to the new programmes so that there are no breaks,” Bite said.
“Essential details on what exactly the conditions will be, we will be able to disclose only after the agreement with the CFLA has been signed and all the rules are clear. We will report it aloud and publicly. At the moment, we are expecting that we will be able to launch an application to enter into contracts in about October,” said LIAA Director Rožkalns.
The LIAA recalled that in 20 countries there are also permanent agency offices where entrepreneurs can be assisted.
"It's one of the tools that entrepreneurs can use to quickly understand whether the market they have little knowledge of is suitable for them or not, [..] discard those that will be difficult, very expensive, or impossible at all, to avoid wasting time there and focusing only on what matters," Rožkalnssaid.
LIAA calls on entrepreneurs not to wait for the new aid program to start, but to call the agency now, come to consultations or apply on the online platform business.gov.lv.