What investors want: from lively city to proactive citizens
Photo: A. Aleksandravičius
When analyzing the factors that determine the decision of multinational companies to invest in one region or another, experts agree unanimously that companies seeking efficiency and high added-value have a wide variety of criteria, among which the lower costs of setting up or manpower are no longer essential. The investors who came to Kaunas city in the last few years or have announced their decision to come also prove these expert opinions.
Urban growth and prospects
The British institute „Centre for Cities“, which analyzes the attractiveness of cities to foreign investors, in their list of city traits the investors most highly value, first of all, mentions a strong city economy with growth potential. A highly-skilled workforce, resilience to economic downturns and external shocks are signs that show the investors that the city is ready to welcome new market players.
A lot of investors who have chosen Kaunas for the investment confirm the fact that the city’s potential and growth prospects determined their choice of location. Representatives of the company “GeoPhy” claim that they have noticed the great possibilities of Kaunas and appreciate the fact that it is rapidly developing and becoming a busy city. A major investor “Continental”, who also have chosen Kaunas region, endorses these words. According to Shayan Ali, the Head of the German automotive plant in Lithuania, Kaunas has attracted the attention of the company as a modern industrial region with excellent infrastructure and highly qualified specialists.
The second most important trait in the report of “Centre for Cities” institute is excellent transport connections, both within and beyond the city (nationally and internationally).In the meanwhile, the organization “Competitive Industries and Innovation” in their analysis of investor criteria emphasizes not only transport connections but also the location – proximity to major markets, distributors and partners.
When opening the new factory and starting operations in Kaunas, a German manufacturer of electronics components “Hella” has also mentioned the location endowments, highlighting good infrastructure, convenient transportation and a favorable investment environment.
After the decision to establish a modern factory in Kaunas, US medical equipment manufacturer “Hollister” also claimed that, while choosing an investment location, they focused on a comfortable geographical location and an attractive investment climate.
When establishing an engineering services center in Kaunas, “TGW Limited” (the unit of the Austrian logistics automation systems development company “TGW Logistics Group” in Northern Europe) also emphasized that Lithuania was chosen for highly qualified English-speaking engineers, who were willing to travel, and a strategically good geographical location that would help to serve projects in northern Europe and Scandinavia in particular.
Pro-investment city leadership
City authority, which prioritizes investment, has consistent policies and attitudes, high profile and bargaining power with central government is another important trait indicated by the experts at the “Centre for Cities”.
As the heads of the Dutch company “Centric” said in one interview, they were impressed not only by the long-standing tradition of developing new technologies and the abundance of talented specialists, but also by the support of the city municipality, higher education institutions and public enterprise “Invest in Lithuania” which facilitated and accelerated the establishment of a company in a new country.
V.George Maliekel, President and CEO of Hollister Incorporated (US manufacturer of medical equipment which is building a factory in Kaunas), has also named the investment climate and the attitude of the specialists on the labor market as obvious advantages of the Kaunas city.
Relationship with the city
One of the reasons why the international cable manufacturing pioneer “NKT” chose Kaunas for their first service center was a youthful, modern and open city. The company believes in young employees in Kaunas, their eagerness, willingness and ability to improve their projects.
The Head of Kaunas office of the Dutch company “GeoPhy” A. Hoogduijn also states that he was surprised how open Kaunas residents were and how they were willing to get to know other cultures.
This is another trait mentioned in the expert reports: the personal connections between the company and the city, and the city image. Innovative, proactive and responsivecitizens tend to attract investors and give the city a big advantage.
As the institute’s analysts point out, it is very important for cities to spread the message to investors about themselves and about opportunities. The city’s reputation among investors also increases the likelihood that the city will be chosen for the development of foreign enterprises.
The concentration of different sectors and emerging clusters
The key trait for investors mentioned in the expert reports are the distributors, the network of partners around the city and the region, similar profile companies operating in the city and direct/indirect competitors. The “Tonbo Imaging”, an Indian company that develops a research and development center in Kaunas, focuses on the high level of local photonic and optician expertise and the reputation of a country as an optical research and technology center.
The development of engineering competencies in Kaunas has attracted US medical equipment manufacturers “Hollister”, as well as the US software and cloud computing giant “Oracle”.
In recent years, we have seen the tendentious emergence and strengthening of clusters in Kaunas: from the companies that produce logistics solutions (“Festo”, “TGW Limited”), the growth of the aviation sector (MRO aviation maintenance and service center, “FLTechnics”, “KAMS Ryanair”) to automotive components manufacturing industry (“Hella”, “Continental”, “AL-KO Vehicle Technology”). This demonstrates that Kaunas has a great potential to become one of the centers of the future automotive industry and the Lithuanian aviation engineering center. Such news also attracts new investors in these sectors.
Success stories create city’s image
The attraction of new investors is very important for every city; however, experts emphasize that it is necessary to keep in mind the relationship with existing investors. Helping them to expand and diversify their businesses brings significant benefits to the city and contributes effectively to the growth of the city’s economic power. The examples of Kaunas prove the fact that existing investors are spreading the good news about Kaunas region and creating their own success stories here. In this way, they improve international image of Kaunas and help to make an impression when an international company is considering further expansion in Europe.