From Yahoo Finance, January 21:
Lithuania is under pressure from German companies to back down in a dispute with China to end a blockade of the Baltic state, as European trade officials struggle to defuse the row, people familiar with the matter said.
China has pressed multinationals to sever ties with Lithuania or face exclusion from its market, an unusually harsh move that has dragged companies into a political dispute and placed Beijing on a collision course with the European Union. [L1N2SU0G7]
The row erupted after the Baltic state allowed the opening of a de facto embassy by Taiwan, a self-ruled island that China views as part of its territory.
Some of the companies affected have asked Lithuania's political leaders to de-escalate the dispute or risk a corporate exodus, according to people involved and correspondence seen by Reuters.
Many multinationals are affected, but one of the most significant hits is to the German car sector.
In a letter to Lithuania's foreign and economy ministers, the German-Baltic Chamber of Commerce said imports of Chinese machinery and parts and the sale of Lithuanian products to China had ground to a halt and that some firms may have to leave.
Urging the ministers to seek a "constructive solution" to restore relations with China, the chamber said "the basic business model of the companies is in question and some ... will have no other choice than to shut down production in Lithuania".
Last month, Lithuania's Prime Minister Ingrida Simonyte met with business leaders, including executives from German car-parts giant Continental, to listen to their concerns, said one person who attended.
The overall damage to industry runs to hundreds of millions of euros, and she was told this would escalate if the dispute continues to interrupt global production, the person said....
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