Why invest in Lithuania? Robotics opportunities

There are opportunities for robotics research and startups in Vilnius, Lithuania. Credit: Eugene Demaitre

Why should robotics businesses invest in Lithuania? The country may not yet be known as a robotics powerhouse, but the Lithuanian economy offers a unique combination of technical talent, openness to innovation, and connections to the rest of Europe.

I had the good fortune to visit Lithuania after attending RoboBusiness Europe 2016 in Odense, Denmark. The Lithuanians I met showed me their country’s industriousness, its modernity, and its potential to help not only robotics makers and users in nearby Scandinavia, Poland, and Germany, but also beyond Europe.

That’s not to say there are no challenges. The Baltic nation isn’t on the radar of many U.S. investors or robotics organizations looking for partners, and the Lithuanian economy needs help with the transition from academic research to commercialization.

Lithuania does have some success stories, and I’ll go into more depth soon about my visits to Kaunas University of Technology and companies such as electric vehicle maker Elinta Motors and autonomous guided vehicle maker Rubedo Sistemos. But first, let’s look at the overall environment for robotics in Lithuania.

Lithuania is business-friendly

Lithuania is No. 1 in the EU for the ease of starting a business, according to the World Bank’s “Doing Business Report” for 2016. Forbes named it as one of the top five entrepreneurial hubs in Europe.

The country was also named No. 1 in Central and Eastern Europe for technological readiness by the World Economic Forum’s “Global Competitiveness Report” for 2015-2016.

With a population of nearly 3 million people, there are relatively few barriers for those who invest in Lithuania. While it conforms to European Union regulations for safety and environmental protection, Lithuania doesn’t have a lot of extra red tape or corporate taxes, explained Rasa Cincyte, an investment advisor at Invest Lithuania.

“Unlike in many countries around the world, the economic developments in Lithuania have not disappointed at the beginning of this year,” said a Swedbank AB report on the effects of the global economic outlook on the Nordic-Baltic region. “Despite a very uncertain global environment and volatile financial markets, we have seen stable or improving consumer and business confidence, while retail trade and manufacturing growth has accelerated.”

The report also cited the Lithuanian economy’s competitiveness and growing exports, and Swedbank has been looking at expanding further into Lithuanian banking.

Lithuanian Robotics Association logo

An affordable talent pool

Another reason to invest in Lithuania is that it is No. 1 in the EU for per capita gross domestic product growth in 2016, found the Heritage Foundation. This talent is also affordable, as average gross monthly wages are one eighth those of, say, Denmark.

Lithuanians are justly proud of their independence since the dissolution of the Soviet Union. The country has converted Cold War research institutions and military infrastructure into a strong academic and startup environment concentrated in five “science valleys.”

In 2012, Lithuania was No. 1 in the EU for science, technology, and mathematics graduates per capita, and the World Economic Forum rated it No. 1 in 2014-2015 for university-industry collaboration, noted Gediminas Koryzna, team lead for manufacturing at Invest Lithuania.

Lithuania could be an ideal site for larger countries whose companies want to develop new robotics hardware and software affordably, said Egidijus Jurgelionis, public relations manager at Invest Lithuania.

In addition to manufacturing, Lithuania has parleyed its expertise in biopharmaceuticals and laser technologies into commercial success. Can robotics be far behind?

However, high spending on research and development is no guarantee of success, noted Swedbank. More innovation should occur on the corporate side in addition to within academia. The educational system needs more efficient oversight, said Laura Galdikiene, a Swedbank senior economist.

This also presents an opportunity for foreign investors. Relatively low wages, room for more innovation, and a lack of competition for IT services outside of financial companies could make the Lithuanian economy appealing to international robotics companies.

Ties to Europe

Lithuania already specializes in shared-service centers and business process outsourcing, serving companies that want to move operations from more expensive parts of Europe. In particular, it manufactures electronics and other products for Scandinavia, Poland, Russia, and the U.K.

In fact, many Lithuanians consider their homeland part of Central Europe rather than Eastern Europe, given its proximity and leanings to Western Europe, said Rasa Cincyte, an investment advisor for technology at Invest Lithuania.

For manufacturing, trucks can deliver goods to most of Europe within three days, and four airports provide flights to cities from London to Moscow within a few hours.

According to a 2011 census, 84 percent of young professionals speak English. Antanas Guoga, a member of the European Parliament, was even so bold as to suggest that U.K. businesses consider relocating to Vilnius in the wake of the so-called Brexit vote.

Although there is a need for more support from European and national governments and venture capital funds, there is a push to inform startups and small and midsize enterprises on how to invest in Lithuania, said Thomas Solupajev-Ronlev, chairman of the new Lithuanian Robotics Association.

Lithuania’s capital is also an up-and-coming “smart city.”

“One of Eastern Europe’s most upwardly mobile hubs benefits from one of the fastest Internet connections in the world, and [Vilnius] recently received an IBM grant as part of the ‘Smart Vilnius’ project,” said CNN.

Companies in Europe and the U.S. shouldn’t wait too long to take advantage of opportunities in the Lithuanian economy — during my visit, an official trade delegation from China was staying across the street.