China Merchants unit creates logistics JV with Lithuania

China Merchants Logistics Holding Co Ltd is setting up a joint venture in Lithuania to tap into the regional opportunities being offered by the Belt and Road Initiative.

The company is joining forces with Lithuanian Railways to create an international logistics channel linking the two countries with neighboring Belarus and the rest of Europe.

The railway company already has a broad logistics network across the Baltic region.

Officials from the two sides signed the agreement on Monday during the Lithuania-China Forum held in Beijing, with China Merchants Logistics taking 51 percent in the new venture.

The two countries also signed other agreements during the event, including cooperation between China Merchants Group and Lithuania's Port of Klaipeda and Klaipeda free economic zone, telecom giant Huawei Technologies Co Ltd and Lithuania's Vilnius University, and China's BGLink Global and Lithuania's real estate investment company RAZ.

Mantas Katinas, general manager at Invest Lithuania, the country's inward investment agency, said Lithuania is both politically and logistically important to the Belt and Road Initiative, a strategy to link countries along the ancient Silk Road and the 21st Century Maritime Silk Road, proposed by China in 2013.

Despite relatively low levels of trade and investment between China and Lithuania, Katinas said there is strong interest in his country to do business with China, and in turn officials at Invest Lithuania have seen rising levels of contact from Chinese investors, especially in the manufacturing, science and technology, and IT sectors.

Chinese firms including Huawei and ZTE Corp have already invested in Lithuania, drawn by the country's strong infrastructure, business-friendly environment and Internet connections considered among the fastest in Europe.

Osvaldas Ciuksys, chairman of Lithuania-China Business Council－established in 2014 to promote exports and investment－also said it had seen an increasing frequency in Chinese business delegations to Lithuania, especially by companies participating in recent specialist trade and service fairs.

Russia remains Lithuania's major trading partner, but is becoming less attractive, said Ciuksys, as more Lithuanian businesses look for alternative markets.

According to figures from the Chinese embassy in Lithuania, the Baltic country's exports to Russia fell by nearly 39 percent from January to July this year, with food and agricultural exports being hit hardest, with a 62.4 percent fall.