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A well-developed market entry strategy is one of the most vital parts of entering a foreign market. There is a number of way to enter foreign markets, each determined by the specifics of each business and its products. Choosing a correct market entry strategy is essential, if a company wishes to minimize risks and establish itself abroad, as an incorrect choice will incur losses and withdrawal from the potential market. Naturally, Baltic Legal market entry services do their best to fully assess a business in all it aspects and develop the most cost-effective and profitable entry strategy for each of the represented markets.

Strategy types
Although each strategy is a unique combination of a company's needs and a foreign market's conditions, they can be roughly group in the following categories:

waterfall
wave
sprinkler
Other classification are also possible.

One should be cautious with aligning one's business with only one of these types, as they just are more or less established combinations of common market entry methods, not particular guidelines. It is especially true, considering that every market has different customers, economic traditions and needs. This is the reason why many companies rely on the help of specialists to develop a market entry strategy, rather than trying to do it themselves. Even more so, it is advantageous to delegate the job to the specialists from that particular market. Thus, for example, a company from Baltics is more knowledgeable about market entry in Latvia, Lithuania and Estonia than anyone else.

Market entry stages
Market entry is a multi-layered process, and a successful market entry strategy should take all of them into consideration.

First, there goes market research. Our team analyzes the business environment of a potential foreign market in order to detect possibilities, advantages and risks. It is supplemented with the business analysis, where the data about the company is being researched. These two processes combined, we gain a throughout understanding of what the company can expect in the market in question, and what would be the company's advantages in each particular case.

The market entry strategy development is then continued by the selection of location for the international expansion. The location can be narrowed down as far as it is needed, from region to a city district, depending on the circumstances. Sometimes it does not make much of a difference, if the company provides more or less widely-used services and/or products. If the business as a very specialised one, however, the correct choice of location becomes essential for the success of market entry.

The final stage of the market entry strategy development (but not the end of the market entry process!) is a market visit, which allows the representative of the business to visit the target market, establish contacts, scout the business environment and, with our help, to make changes to the initial market entry plan.

Acquisition of a residence permit based on the purchase of real estate (immovable property) is one of the most popular investment-based methods for obtaining a Latvian residence permit. According to statistics provided by the Office of Citizenship and Migration Affairs, during the year 2012 alone 2,435 foreigners requested a residence permit based on purchase of the real estate in Latvia and 3085 foreigners in 2013.

Of the types of investment which qualify for a residence permit, Real estate investment provides possibly the best liquidity and security while also (statistically) being the most effective way to get approval from the Office of Citizenship and Migration Affairs - having the highest approval rate.

In order to receive a residence permit in Latvia for 5 years, with an opportunity to extend this term later, there are several requirements that have to be met according to the law:

The property must be purchased after 01.09.2014 and at the moment of filing the request for a residence permit you must possess the certificate from the Land Register which confirms your title;
The total price of the purchase must not be less than EUR 250 000;
The purchase contract and the Land Register certificate must be completed in the name of the person requesting the residence permit;
The cadastral value (Like a property tax valuation in the US) of the property must be higher than EUR 80 000.
Immigration law states that real estate should have been purchased from a legal person or natural person registered in the republic of Latvia, who is citizen of Latvia, a non-citizen of Latvia, a citizen of the European Union or other foreigner, who is staying in the Republic of Latvia with a valid residence permit, if a foreigner has purchased the real estate from a person who is not in above mentioned list - Most probably the application for a residence permit will denied.
The purchaser has to pay from his/her personal funds - that is not to say that a loan or financial assistance cannot be obtained from another person or institution, but such funds would need to be in the purchaser's personal account prior to the purchase, such that payment for the property comes directly from with individual from funds available to him/her.
All applicable real estate taxes must be settled.
Payment must be made in non-cash form. (i.e. bank transfer of funds)
Our company provides full legal support throughout the whole process. We can help you find real estate that fits your requirements and arrange everything for the purchase. We can also then help you collect and prepare all the documents required in order to make sure that your residence permit application is successful. We can also assist you in making non-cash payments (Bank transfers). If you still have any doubts or questions – we provide legal consultations, so simply get in touch, and we can answer all your questions regarding the residence permit and purchase of real estate in Latvia.

Our lawyers have provided assistance to clients from all over the world, including Russia, Belarus, Ukraine, Uzbekistan, Syria, Iran , etc. Our vast experience will help you find the best solution!

The main business risks faced by entrepreneurs in Latvia are related to the centralization of resources, demographic problems and corruption. Neither is of great importance, but combined with other adverse circumstances can pose a significant risk, possibly even leading to bankruptcy. A for minor risks, there are some logistical crime and petty crime concerns in certain areas.

Big risks
In Latvia there are three major business risks that can affect companies in all parts of the country:

resource centralization
demographic issues
corruption
Individually, they don't pose much of a threat, especially to established foreign companies. These risks are minimal for foreign companies based in Riga (the capital of Latvia), apart from a few cases of corruption. However, the further away from the capital, the clearer the risks, which is somewhat offset when the geography of the business includes cities of regional importance.

Resource centralization
Almost a third of the companies registered in Latvia are headquartered and operate mainly in Riga. Although this somewhat reduces competition in more distant areas, it also means that most of the resources, finance, labor and customers are also concentrated in Riga. In addition, most of the universities are located in the capital, which means that the majority of students – qualified young specialists – are not available in other regions or have to be persuaded to move to these other regions through additional benefits.

Even if a foreign company itself is also registered, has its headquarters and operates mainly in Riga, centralization can pose challenges for expansion. Sometimes it is not possible to open branches in other regions of Latvia due to the above restrictions. In this case, the only way to expand is to provide services and products remotely/digitally, or to specialize in services that don't require physical interaction. Another option is to build a nationwide logistics network that delivers products and services. Thanks to Latvia's small size, this is not the most difficult task, but it still requires time, investment, manpower, planning and other resources, which can limit other aspects of business development.

Demographic issues
As of now (2016) Latvia's demographic problems are not so significant, but still noticeable. According to the Latvian Central Statistical Office (Latvijas Centrālā statisticas pārvalde), the Latvian population began to decline in 1991, and over the years the rate of decrease slowed until the 2008 financial crisis, when for a brief moment the rate picked up again. Now the rate is falling again: every year since 2010, when the country started to revive its economy, Latvia loses about 5% - 10% less than every year before.

Despite this, the decline is still there and most notably among young people, professionals with higher education prefer to look for a job abroad. At this rate, the decline will level out in about 10 years. Until then, the drain of potential labor and customers hinders the operations of any business, especially in the long term.

Corruption
Corruption in Latvia is mainly related to the need to maintain good personal contacts with business partners and to participate in extra-professional activities, without which reaching an agreement can be problematic in some cases. This is particularly important in the early stages of market entry. It is very important to build a good first contact relationship with the local business people and organize meetings with local suppliers. Otherwise, settling in Latvia can become problematic.

Logistics in Latvia has always been a priority area due to the country's geographical advantages as a gateway between Scandinavia, Central Europe and Eastern Europe. Ensuring good logistics and transport infrastructure is crucial for Latvia, as the country's roads are full of commercial vehicles from neighboring countries. This is also the reason why delivering goods to Latvia as part of market entry processes is an easy task.

Since 2004, when Latvia became a member state of the European Union, the country's borders with other member states are open and do not require mandatory customs controls for the transport of goods. An average of 30-35 million tons of cargo transits the country each year, including roads, railways, planes and waterways.

Streets
There are more than a thousand roads in Latvia's road network, including state main, state regional and state local roads. Total road length in Latvia is 13181.616 km. Of these, 10 570.151 km are hard surface roads - all major roads and the largest roads belong to this category. 2611.465 km of roads are gravel roads - these are mostly local and some regional roads.

The State Main Roads are the largest roads connecting major cities, e.g. the road Riga - Ventspils. There are 15 national highways in Latvia, all of which connect the country's main commercial centers. The main cities connected by the state main road network are Riga (port/airport), Daugavpils (railway junction), Ventspils (port/airport) and Liepāja (port). The roads also connect larger cities of regional importance - Rezekne, Jelgava, Jēkabpils and others. 9 of the main state roads lead to the borders with other countries: Russia (1 road), Lithuania (4 roads), Estonia (3 roads) and Belarus (1 road).

There are a number of state highways with ring roads designed for larger cities to allow transit vehicles to move faster without having to navigate cities. These streets are:

Daugavpils ring road connecting Kalkūni and Tilti
Rezekne ring road
Ring road of Riga connecting Baltezers and Saulkalne
Riga ring road connecting Salaspils and Babīte
The state regional roads are major roads that usually connect larger cities and/or cities of regional importance, but may also connect cities with important nearby facilities such as: B. the P133 road that connects Riga and Riga Airport. Many of them also lead to the borders with neighboring countries, but the roads themselves are narrower than the state main roads, so large commercial vehicles do not usually use them.

The State Local Roads are all other roads not included in the other two categories. These are the smallest, often gravel roads, connecting smaller towns and villages to larger ones, smaller towns to other smaller towns, or providing an alternative route to state main and regional roads.

Railways
Latvian Railways are under the supervision of Latvian Railways; (in Latvian: Latvijas dzelzceļš) - the state-owned company whose aim is to manage and control railway logistics in Latvia. The company has 6 subsidiaries:

AS 'LatRailNet'
SIA "LDZ Apsardze" (Security)
LDz infrastruktūra (Infrastructure)
LDz freight (transport)
LDz Ritošā sastāva serviss (maintenance)
Latvian railways are the main commercial transport infrastructure, especially for domestic traffic. Of all modes of transportation, railroads carry the largest amount of freight - about 50 million tons of it every year. The railway connects Latvia with neighboring countries and also offers connections to the rest of Europe and East Asia as far as Japan and China. Latvian railways also connect all major cities and commercial centers such as Riga, Ventspils, Liepāja and Daugavpils.

Seaports
Latvia has three major ports, all of which are ice-free (available for operation all year round) - the ports of Riga, Liepāja and Ventspils. There are also three smaller ports in Salacgriva, Lielupe, Engure, Mērsrags, Roja, Kolka and Pāvilosta.

Latvian ports are specially designed to attract business. All major ports are Special Economic Zones, which means they offer tax breaks on the most common taxes such as VAT or the excise duty on alcohol, tobacco, gas and oil, as well as other benefits and tax incentives.

Baltic Legal bank account opening service can save you efforts and time.
We will assist you with opening a bank account in the name of your company or yourselves in accordance with your instructions.

Banks in The Republic of Estonia

Before World War II, the economy was based on agriculture and a growing industrial sector similar to that of Finland. Butter, milk and cheese were well known in Western European markets. The main markets were Germany and the UK, and the USSR accounted for only 3% of total trade.

The annexation of Estonia by the USSR and subsequent destruction by the Nazis and the Soviets crippled the Estonian economy. The Sovietization of life after the war continued with the integration of Estonian economy and industry into the USSR. Before the war, Estonia and Finland had a similar standard of living. By 1987, capitalist Finland's GDP per capita was $14,370, while communist Estonia's GDP per capita was $2,000.

After Estonia's late departure from communism and becoming an independent capitalist economy in 1991, it became a pioneer of the world economy. In 1994, it was one of the first countries to introduce a non-income-related flat tax with a uniform tax rate of 26%. From 2005 and 2008 the income tax rate was reduced to 21%. Estonia received more foreign investment in the second half of the 1990s than any other country in Eastern Europe. The country caught up quickly. According to the World Bank, it is already classified as a high-income country. The country's GDP per capita was $23,631 in 2012 according to the World Bank. Due to its economic performance, Estonia is referred to as one of the Baltic Tigers.

Banking system
The Bank of Estonia is an independent central bank. Estonia is part of the euro zone and the core tasks of the bank are to help shape the monetary policy of the European Community and to implement the monetary policy of the central bank. Eesti Pank holds and manages Estonia's foreign exchange reserves and overall financial stability and maintains well-functioning payment systems. The Bank of Estonia is responsible for cash circulation in Estonia.

Developments in the banking sector have been rapid and inviting to foreign capital. After a relatively stable period in the 2000s, the banking sector was restructured as a result of privatization and bankruptcy. The banking sector is dominated by two commercial banks, Swedbank and SEB. These banks control about 62% of the financial market. There are no state commercial banks or other credit institutions in Estonia.

During the transition to a market economy, Estonia took a position on the development of private banking. Episodes of the banking crisis in the early 1990s led to tighter regulation to encourage oversight of the financial sector. This led to the establishment of the Financial Inspectorate, which exercises supervision over all Estonian financial institutions.

The financial system is largely bank-based and the local stock markets play a minor role. The small size of the economy, the monetary environment together with the full convertibility of currencies, the free movement of capital since the early years of the transition and the low level of public debt with prudent fiscal policies have all had their impact on the financial sector. The banking sector has been mostly foreign-owned since the 1990s when major Swedish banking groups took over two large Estonian banks. This has created a need for cooperation between home and reception authorities in the Nordic-Baltic region.

Investment institutions
Mutual funds offer a range of investment opportunities. A total of four types of investment funds are authorized in the country. Contract investments and mutual funds are the main types of funds used for investments. Most mutual funds are managed by commercial banks. The activities of the pension funds build on the pension reform implemented in 2003.

Contributions to the pension fund are compulsory for young people. Others can join the system, but cannot cancel the contract afterwards. The contribution to compulsory pension insurance is 2% of salary, to which the state adds 4%. Mandatory pension funds have become popular. Voluntary insurance companies offer classic insurance services such as life insurance. There are tax incentives where individuals can contribute up to 15% of their income exempt from income tax.

Venture capital institutions are becoming increasingly accessible. Access to finance from the EBRD and other programs has become easier. The amount of venture capital tied to Estonia is still small compared to developed countries. The capital is usually of foreign origin, although many local banking entities are also involved in investment activity by providing private equity financing.