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Estonian and Latvian business environment surveyAire TrummalTNS Emor

Estonian-Latvian cross-border small and medium enterprise cooperation for expansion to neighboring markets

01.10.2012, Tartu

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Study objective and methodology

Ordered by the Estonian Business Chamber in Latvia and Valga Town Government in the framework of the DELBI project.

Objective: To map the need for support network and partnerhip search, interest in cross border cooperation and hindering factors.

Target group: companies with 1-99 employees, 6 regions in South Estonia and 11 regions in North Latvia.

Sample: 150 Estonian and 154 Latvian companies. Random sampling, distribution of the sample the same as in the study universe (according to sector, region, number of employees).

Data collection: Computer Assisted Telephone Interviewing, in August 2012. Majority of the respondents were managers of the company.

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ESTONIA: Pärnu-, Tartu-, Põlva-, Valga-, Viljandi- and Võrumaa.

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LATVIA: Alūksnes, Cēsu, Gulbenes, Limbažu, Madonas, Ogres, Saulkrastu, Siguldas, Valkas, Jūrmala, Valmiera.

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Profile of the companies (1)

73%

15%

6%6%

ESTONIA, number of employees

1-4 5-9

10-19 20-9945%

24%

16%

15%

LATVIA, number of employees

1-4 5-9

10-19 20-99

37%

28%

15%

20%

ESTONIA, year of foundation

During last 5 years (2007-2011)6-10 years ago (2002-2006)11-15 years ago (1997-2001)More than 15 years ago

16%

19%

23%

42%

LATVIA, year of foundation

During last 5 years (2007-2011)6-10 years ago (2002-2006)11-15 years ago (1997-2001)More than 15 years ago

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Profile of the companies (2)

15%

7%4%

74%

ESTONIA, having a development plan

For the next 1-3 yearsFor the next 4-5 yearsFor more than 5 yearsNO

38%

6%4%

52%

LATVIA, having a development plan

For the next 1-3 yearsFor the next 4-5 yearsFor more than 5 yearsNO

26% of Estonian and 48% of Latvian companies have a development plan.

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Level of cooperation

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Countries where products/services are marketed

ESTONIA

Estonia

Latvia

Lithuania

Other European states

Russia

other

97%

11%

5%

23%

2%

1%

LATVIA

Latvia

Estonia

Lithuania

Other European states

Russia

other

98%

19%

15%

16%

9%

3%

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Cooperation with companies in the neighbouring country

20%

6%

74%

ESTONIA

Currently co-operatingHave coop-eratedHave not co-operated

22%

11%

67%

LATVIA

Currently co-operatingHave coop-eratedHave not co-operated

Main areas of cooperation: Estonia: import of goods from Latvia, export of goods to Latvia. Latvia: import of goods from Estonia, export of goods to Estonia, exchange of

information and knowhow.

Main reason for stopping the cooperation: was not profitable.

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Reaons for not operating in the market of the neighbouring country

ESTONIA LATVIA

Not enough initiative

The market is not attractive enough

Our goods/services are not suitable

Not enough information

Latvian or Estonian regulations are hindering

Language barriers

Not enough resources or work force

Enough work in the home country/ no need

Have not thought about this possibility

other

5%

11%

17%

1%

5%

19%

41%

13%

13%

6%

28%

27%

4%

23%

1%

8%

19%

9%

From those who have never cooperated.

„Other“: distance, we work for a bigger company, locals provide enough service themselves.

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Interest in doing business on the neighbouring market

9%

10%

77%

4% Within the next 1-2 years

Within the next 3-5 years

NO

Don't know

22%

17%54%

7% Within the next 1-2 years

Within the next 3-5 years

NO

Don't know

19% of Estonian and 39% of Latvian companies would be interested.

ESTONIA LATVIA

From those who have never cooperated or do not do it anymore.

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Need for information

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The level of knowledge on marketing oportunities in the neighbouring country

3%

20%

24%

53%

ESTONIA

Very good

Rather good

Rather bad

Very bad

8%

27%

41%

24%

LATVIA

Very good

Rather good

Rather bad

Very bad

23% of Estonian and 35% of Latvian companies consider their current knowledge to be good.

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Looking for or obtaining information on the marketing opportunities in the neighbouring country

ESTONIA LATVIA

Through business partners or acquaintances

On the Internet

By visiting companies in the neighbouring country

At a seminar or conference

Media

other

Have not obtained any information

15%

14%

7%

2%

1%

2%

77%

34%

23%

9%

4%

5%

2%

49%

Obtaining information during last 12 months.

„Other“: communication with consumers, professional association.

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Need for information on the economy and market of the neighbouring country

ESTONIA LATVIA

Economy in general

Legislation and tax system in general

Establishing a branch-office

Establishing a company

Market situation of a spesific field

Different marketing oportunities

Cooperation possibilities with companies

Thematic seminars/trade fares/events

otherDo not need any information

10%

12%

6%

3%

24%

19%

27%

12%

3%

59%

26%

42%

39%

27%

49%

33%

49%

42%

3%

21%

„Other“: price level in the market, economic situation of the companies.

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Suitable information channels for finding partners for cross-border cooperation

ESTONIA LATVIA

Internet based database for looking for partners

Information point with face to face service

Information hotline

Trainings or seminars

otherDo not need information for finding

cooperation partners

86%

26%

19%

18%

7%

5%

84%

27%

35%

28%

10%

4%

From those who cooperate in the neighbouring country or have the interest to begin.

„Other“: trade fairs, internet, through partners, personal consultations.

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Conclusions

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Cooperates or has cooperated in the neighbouring country

Has the interest to begin cooperation

Has good knowledge

Has obtained information during last year

Needs information

Has a strategic plan

Has 5 or more employees

Was founded more than 10 years ago

26%

19%

23%

23%

41%

26%

27%

35%

33%

39%

35%

51%

79%

48%

55%

65%

LATVIAESTONIA

The interest and the level of activeness of the Latvian companies is higher. They also plan their activities more – companies with strategic plans cooperate more.

The more passive state of Estonian companies is also related to their smaller size – companies with 1-4 employees are less informed and do less strategic planning.

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