The Chinese are coming!

VILNIUS - Until the economic crisis, the Chinese were known as a cheap labor force in Lithuania. Also, Chinese cooks’ work was appreciated in numerous and popular Chinese restaurants serving their sweet-spicy food. However, when the crisis came, the Chinese shops started to mushroom in Lithuanian cities and towns. The Chinese took advantage of the opportunity of Lithuanian businesses’ crisis and occupy now easily available spaces in the market stores. Lithuanian businessmen, especially small and medium size entrepreneurs, make some negative anti-Chinese noise in the media.

There are more than 20 Chinese-owned shops in Lithuania now and it should be more than 30 of them in nine Lithuanian towns in several months time. In front of the Lithuanian government office in Vilnius, the Flagman market store stands, where the Chinese shop occupies a huge space. According to the shop’s director, Zheng Dong Yang, he employs 13 Lithuanians.
The Chinese especially like the northern Lithuanian town of Siauliai where five Chinese-owned shops are functioning. There are also Chinese shops in Klaipeda, Panevezys, Marijampole, Mazeikiai, Alytus, and other towns.

After several months, the Chinese will occupy the Kedainiai three-store shopping center. On Jan. 1, the Rimi supermarket will stop its activity in that center giving its 1,000 square meter space to various Chinese shops. The Chinese owners of shops in Kaunas and Panevezys plan to expand to Jonava, Ukmerge and other towns.

A big part of Chinese entrepreneurs are expanding their business to Lithuania from Spain and other European Union countries. Their Lithuanian employees can not pronounce the names of their bosses - so new European nicknames are invented for mutual understanding. The space of shopping malls in Lithuania costs less than in the old EU countries and it encourages such expansion. The other inspiration for the Chinese businessmen was as follows - they noticed that Lithuanian supermarkets are full of Chinese products and they decided that they can supply similar goods cheaper.
The Lithuanian media reports about the poor quality of many items in the Chinese-owned shops. Indeed, Lithuania’s State Non-food Products Inspection often gives out fines to Chinese-owned shops for not meeting the products’ safety standards and for the lack of Lithuanian-language labels on the items.

The daily Valstieciu Laikrastis paints a scary picture of the future for Lithuanian businessmen. “People say that during the first years, the Chinese are very polite and friendly, but when they get rooted in the market, suddenly they look at you with red eyes. Get out of their way - you are an obstacle,” wrote the daily which also quotes two Lithuanian business organizations’ leaders about the current Chinese business invasion.

“Small businessmen and traders want the same rules of competition to apply to all players on the market. The Chinese ignore those rules, in our opinion. The controlling institutions should apply the same requirements to the Chinese as they apply to Lithuanians,” said Zita Sorokiene, head of the Lithuanian Small Businessmen and Traders Association, pointing out to the poor quality of the products which are sold in the Chinese-owned shops.
“We can compete only in speed, when a customer needs some product quickly. The Chinese cannot produce products in several weeks’ time,” said Rimvydas Jasinevicius, president of the Business Employers Confederation of Vilnius City and County, pointing out that it is impossible to compete on price - a product made in China will always be cheaper than a product made in Lithuania because of cheap labor in China.

Until the economic crisis hit Lithuania, the Chinese were imported as a cheap labor force by Lithuanian construction companies. In the summer of 2008, it was a scandal when 60 Chinese, illegally working on chicken farms near the town of Kaisiadorys, were caught by the migration authorities because those Chinese had been given permission from the Labor Exchange Office to work in the shipyard of Klaipeda port.

A Lithuanian employer simply sold them to another Lithuanian employer. The Chinese were deported. The work permits that are given by the Labor Exchange Office to people from outside the EU allow them to work for one or two years for a single employer in a single position in the company. If an employee changes employer or position, they must inform the Labor Exchange Office and wait at least one month before making the move. Chinese restaurants often ask for such permits for cooks from China. These cooks often establish their own firms in Lithuania and subsequently employ themselves, and the same Chinese restaurants ask again for permits for new cooks.

During the 10 months of this year, 271 Chinese citizens received permits to live in Lithuania, and 108 of them plan to start their own business, while in 2008, only 87 Chinese wanted to be businessmen, according to Valstieciu Laikrastis.
On Nov. 3, Lithuanian public TV showed a one-hour talk show on the recent unexpected invasion of Chinese business.
“The shouts ‘the Chinese are occupying us’ in the press is nonsense. There are only 436 Chinese citizens living in Lithuania. All immigrants, the Chinese and other people, make up less than one percent of the total Lithuanian population,” said Tadas Leoncikas, researcher with the Ethnic Research Center at the Social Research Institute.
He urges people to withstand the current wave of xenophobia, which surprisingly is strongest among young Lithuanians, according to surveys by Leoncikas’ center.

Chinese business expansion is supported by official Beijing and is welcomed by official Vilnius. On Aug. 30, a big Chinese business delegation, led by Hui Liangyu, vice premier of China State Council and organized by the Trade Development Bureau of Chinese Ministry of Commerce and China International Contractors Association, arrived in Lithuania for a two-day business discussion and exchange. Over 120 entrepreneurs from 71 Lithuanian enterprises actively conducted matchmaking negotiations with nearly 50 entrepreneurs from 34 Chinese enterprises. In about a three-hour negotiation, businesspeople of both countries explored cooperation opportunities, and signed contracts and letters of intent in new and hi-tech areas such as light industry, minerals, foodstuffs, textiles, pharmaceuticals and medical appliances, and electronics.

Lithuania is China’s largest trading partner in the Baltics. According to the Lithuanian Foreign Ministry, the bilateral trade volume was 560.9 million euros in the economic-boom year of 2008. According to the Lithuanian Statistics Department, in January-September of 2009, Lithuanian exports to China were worth 49.9 million litas (14.6 million euros) while China’s exports to Lithuania were worth 830.6 million litas.

On Nov. 27, the presidents of Russia, Belarus and Kazakhstan reached agreement on the creation of a customs union among the three ex-Soviet states starting July 1, 2010. This is an opportunity for Lithuania because it means that cargo from China could be transported via railway, without customs issues at the Kazakh-Russian and the Russian-Belarusian borders on its way to Lithuania.
“The EU is the biggest trading partner for China. And Lithuania’s geographical situation is Lithuania’s unique advantage and an especially important factor in the development of Chinese-European economic and trade cooperation,” Tong Mingtao, China’s ambassador to Lithuania, told the magazine Valstybe.

Recently Chinese companies showed interest in construction work in the Klaipeda port - this potential competition scared Lithuanian companies because such works are well-financed from EU funds.
According to Chinese businessmen, their strength is their philosophy of life - a European businessman works dreaming about leisure time as a reward for hard work, while a Chinese businessman feels the biggest satisfaction from work itself.