Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Distribution & Sales Channels
Latvia has three major ports (Riga, Ventspils, and Liepaja) as well as a major airport in the capital city of Riga, which has become a transportation hub. Latvia is well connected via railway, which runs largely east-west to former countries of the Soviet Union. Rail Baltica, a north-south rail corridor that would link Estonia, Latvia, and Lithuania to the rest of Europe is under construction with an expected completion date of 2026. Riga is the major distribution center for the country.
Latvia has similar distribution and sales channels as other EU countries, and Latvia has very few specific laws that regulate this area. The Latvian Traders Association is the official national representational organization for retailers operating in Latvia.
Using an Agent or Distributor
There are no laws in Latvia that regulate the relationship between a foreign company and its distributors or agents in Latvia. A distributor relationship can be terminated according to the provisions stipulated in each specific distributor agreement. EU legislative acts regarding this subject have been incorporated into local law.
A common practice is to appoint one distributor/agent to cover the entire country, or the entire Baltic region (Estonia, Latvia, and Lithuania). Due to the small size of the Latvian market, one importer may carry products from several industry sectors.
U.S. companies looking for agents or distributors in Latvia should contact the nearest U.S. Department of Commerce local U.S. field office.
Establishing an Office
It is a simple process to establish an office in Latvia. However, considering the required documentation as well as the advantages of understanding local legislation, using legal counsel to establish an office in Latvia is highly recommended. A list of English-speaking lawyers can be obtained from the U.S. Embassy: https://lv.usembassy.gov/u-s-citizen-services/attorneys/. Additional details on establishing an office in Latvia are available on the website of the Latvian Investment and Development Agency here: https://investinlatvia.org
The European Commission manages the Your Europe website where investors can find useful information on various topics ranging from taxation and customs to employment contracts.
For additional information, please consult the State Department’s Investment Climate Statements, which include information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees: https://www.state.gov/investment-climate-statements/
Franchising is growing in popularity and export opportunities exist in many sectors, especially in public catering. Although Latvia does not have specific franchising legislation, franchise arrangements are regulated under the Law on Competition and the Commercial Law.
More information on specific legislation can be found on the website of the European Franchise Federation. More information on franchising opportunities in Latvia can be also found at https://www.franchising.lv/en/.
Franchising is growing in popularity in Latvia with such brands as Subway, KFC, and Burger King recently expanding to Latvia.
Direct marketing is popular in some industries, and it is relatively easy to attract sales consultants for such marketing strategies due to the affordable salary levels on the local job market.
To find out more about direct marketing in Latvia, visit the website of the Latvian Direct Marketing Association.
There is a wide-range of EU legislation that impacts the direct marketing sector. Compliance requirements are stiffest for marketing and sales to private consumers. Companies need to focus, in particular, on the clarity and completeness of the information they provide to consumers prior to purchase and on their approaches to collecting and using customer data. Learn more about the EU legislation covering direct marketing here: European Commission - Your Rights in Consumer Contracts; European Commission – Boosting e-commerce in the EU.
A joint venture with a local partner can be a significant help for a U.S. company with little or no experience in the Baltics. A good choice could be a company that is already registered with the Latvian Chamber of Commerce and Industry (LCCI). However, it is advisable to find out as much as possible about potential partners. Basic information on a local company, as well as its credit rating, can be obtained from Latvian business information companies as well as LCCI. Find more information here: The Latvian Chamber of Commerce and Industry.
The U.S. Commercial Service offers several services for the purpose of due diligence. Please consult the nearest U.S. Export Assistance Center: Export.gov - Offices in the U.S.
Express Delivery is well established in Latvia, and the majority of global express delivery companies service the Latvian market. Express delivery from New York City to Riga, Latvia, for example, takes approximately four days. All imports are subject to VAT. Detailed information on de minimis reform is available on the https://www.ups.com/assets/resources/media/en_CA/EU_VAT_Reform_Business.pdf More information on express delivery to Latvia from the United States.
Appropriate due diligence on business partners and agents is recommended. Many companies offer due diligence services, and the quality of their services has increased in recent years. In addition, the U.S. Commercial Service’s International Company Profile program provides U.S. businesses with background reports on potential agents, distributors, and other companies. Specialists can investigate the financial strength of a company and provide useful information gleaned from local credit sources, press, industry contacts, and other sources. For more information, please contact the nearest U.S. Commercial Service local office for more information.