BUILDING US-USSR TRADE

With over 50 joint ventures with the West, Hungary provides an excellent example for the Soviets to follow in building trade with the United States.

BASF, Siemens, and Volvo are among the better known interests in Hungary. Vaev-Bramac is an Austro-Hungarian firm that manufactures concrete tiles and has $6 million in equity capital. Polifoam uses Japanese technology to produce polyethylene foam from Hungarian base materials and special additives imported

from Japan.With the high cost of R&D in the United States and the Soviets' strength in basic research, joint ventures combining Soviet research with U.S. product development and marketing skills may become increasingly attractive to U.S. firms.

European drug companies such as Ciba-Geigy and the Wellcome Foundation have had successful joint clinical studies with Polish scientists for several years. One advantage of such co-ventures to the Soviets is that it decentralizes R&D and brings it closer to the market.

Soviet and Eastern European enterprises have shown a particular interest in an innovative approach to the management of complex, interdependent, research-based business used by IBM, Westinghouse, Dow Chemical, Squibb, Intel, and Burroughs Wellcome.

Known as the "strategy matrix," this approach has been used by Borsod Chemical Complex in Hungary to introduce a new product to the international market. It makes extensive use of management teams to overcome some of the frustrations traditional hierarchical organizations experience in coping with interdependent products. It is well suited to large Soviet enterprises as they evolve from highly centralized functional organizations to less centralized multi-product, multinational organizations.

Although the United States has the world's largest economy and the Soviet Union the second largest, in 1985 the Soviets were the 16th ranked trading partner of the United States while the United States was the 13th ranked trading partner of the Soviet Union.

As Mikhail S. Gorbachev, Soviet leader, pointed out to a group of American business leaders in Moscow last December, "American imports from the Soviet Union are roughly equal to what the U.S. imports from the Ivory Coast."

Since the days of Lenin, the Soviets have maintained a strong interest in U.S. trade. In the 1920s, nearly 40 percent of U.S. industrial exports went to the U.S.S.R., even though the United States did not even recognize it as a country.

Political ideology has never been a problem for Soviet officials in their trade relations with the United States. Today Marxist-Leninist ideology seems to be much more important to some American politicians than it is to Soviet officials.

The United States is paying a high price for its inability to compete internationally. Ironically, the Soviets have a similar problem. Disinterested observers in both countries are asking whether it isn't time to put aside ideological differences and begin relating to each other on the basis of economic self-interest rather than political rhetoric. Both countries, they say, stand to gain from the experience.

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