Sales to changing Russia take patience, Maryland firms warned

June 10, 1994|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

Visions of trade with a market of nearly 150 million people who need virtually everything drew executives from 83 Maryland companies to the Inner Harbor yesterday for a state-sponsored seminar on exporting to Russia.

But they spent much of the day swapping horror stories and trying to figure out how to keep employees sane and avoid big losses amid Russia's chaotic transition from central planning to a market economy.

"How does a businessman manage these days to go off to Russia and come back with a small fortune? The answer is to go in with a large fortune," quipped James Radner of Hogan and Hartson, the trade consultant firm.

"That's the conventional wisdom, and there's truth in it, though it is becoming possible, with a lot of patience and effort, to make a sale, keep the deal together, get paid and get your money out some of the time," he said.

The seminar was organized by the World Trade Center Institute as part of the state's campaign to make exports contribute more to Maryland's economy.

L It aimed to help Maryland businesses find ways in Russia to:

* Sell when inflation is so rampant that prices are out of date literally by the time negotiators get back to their offices.

* Get goods delivered where organized and unorganized crime make pilferage common in the transport industry.

* Get paid when banking and currency rules are, in the words of one participant, "a moving target."

Despite all that, a few dozen Maryland companies have already started selling to Russia.

The state's exports to Russia nearly tripled last year, to $32.6 million, compared with 1992. Most of the increase was in machinery, chemicals and industrial goods needed to get the country's factories, refineries and mines back to work.

While that accounted for nearly 4 percent of the state's $532.5 million in export growth last year, shipments to Russia still represent only 0.6 percent of Maryland's $5.46 billion in total exports.

"It's unlike anything we've ever done before -- you quote prices in dollars, and your customer is thinking in rubles, and in the days or weeks it takes him to get back to Moscow the cost to him may have doubled," said Charles A. Sinunu, international sales manager of Ellicott Machine Corp. of Baltimore.

Ellicott delivered a $250,000 dredge last month, for use in cleaning up an oil lake that has formed around a leaky refinery near Symara in central Russia.

"I'll tell you how we made it work: We had Maryland Overpack break down the entire dredge and pack it in a 40-foot metal container and seal it, so that the whole thing would get all the way there, and pack in a lot of cartons of cigarettes and other goodies to keep customs and freight handlers happy," he said.

The dredge was then flown to Germany, where it was put on a German truck for the trip to Russia.

Some of the advice executives got from the seminar's speakers:

* "The telephones are still on mechanical switching, with lots of clanking and lots of people answering your calls at places you didn't call -- if you don't have your own direct satellite connection, good luck," said Bill Washington, director for Russia of Westinghouse Electric's air traffic management program.

* "The first thing is to find a strong and reliable legal adviser that has experience in the business you're in, experience in the region where you're working and experience in the kind of joint venture or stock arrangement you want," said John Holmblad, general director of Sprint Network Moscow.

* "The regulations are not carved in stone but change all the time. Whatever is not specifically prohibited is permitted," said Pierre Murtin, a vice president of Citibank.

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