Yank Businessmen Map Mission on Moscow: Gentrifying Soviet Capital

Washington businessman Larry Kauffer, finding the buildings of Central Moscow run down, has decided to team up with Soviet entrepreneurs and try out a down-home, Washington-style cure on them: gentrification.

Kauffer, visiting the Soviet capital last week as part of a major conference of the U.S.-Soviet trade and economic council, is part of the biggest show of force U.S. businessmen have made here in years.

Arriving from spots as far afield as New Jersey and Los Angeles, all seem to share Kauffer’s quest to take advantage of the largely untapped Soviet market.

Louis Piancone had a pizza van brought from Texas, for instance, and set straight out for Moscow’s Gorki Park, dough and mozzarella sizzling.

Five hours and 6,000 slices later, the New Jersey pizza czar had pocketed 3,500 rubles, or $4,500.

“Before too long,” he said here, “we’ll be running 20 pizza joints in this town.”

‘Window of Hope’ Opened

The U.S. businessmen seemed to provide an instant response to Mikhail S. Gorbachev’s appeal to them last week to take advantage of the “window of hope,” and broaden the scope of U.S.-Soviet business.

“We are prepared for active cooperation not only with large firms,” Gorbachev told 500 visiting U.S. businessman in a Kremlin speech, “but also with medium and small firms.”

Already, 33 joint ventures have been signed between Western firms and their Soviet counterparts, Gorbachev said in his speech. Just a few are with U.S. companies, however.

Last week Honeywell Inc. announced plans for a joint venture to modernize about 100 Soviet chemical-fertilizer plants, becoming the third officially registered U.S.-Soviet joint venture.

Dozens of large and small firms are sniffing around for an “in” to the Soviet Union’s largely untapped market, however.

Last Wednesday, for instance, Ford, Nabisco and five other major U.S. corporations formed a consortium to explore ways to expand their trade in the Soviet market.

The object, representatives of the firms said in a press conference here, is to introduce such items as U.S. breakfast cereals to Soviet tables and place durables such as Ford cars onto Soviet streets.

By far the biggest success so far is enjoyed by small U.S. businessmen adept at cutting through the red tape that Westerners often encounter when entering the Soviet market.

Piancone’s pizza truck, which employs three Soviet workers and two Americans, is one example.

‘Slap Some Dough Down’

“Rather than deal with forms, massive rules and regulations,” he said, “we just slap some dough down, put some sauce on top of it and try to keep the customer happy.”

Apparently, the plan works fine. In its first two days out, the Astro pizza truck stopped at Moscow University and the popular Gorki Park, quickly earning 6,000 Soviet rubles, or $9,000.

“People never tasted anything much like this,” Piancone said, “and the fans love it.”

Some U.S. businesses readily admit that Soviet consumers are in a sense buying U.S. know-how.

“We can give them the jump start in business that they need,” said Kauffer, who works for the Washington-based Delphi Corp.

Kauffer’s plan to gentrify some of the old brownstone-type structures in central Moscow, however, is a good example of how U.S. know-how conforms to Soviet need.

The quaint buildings in Moscow’s center have long been in need of major repairs, but Soviet construction workers appear to have little practical restoration experience.

During four visits to the Soviet Union in recent months, Kauffer has been carefully perusing the back streets in Moscow for buildings that need overhauls.

Office Space Perhaps

Eventually, he would like to see the newly decorated dwellings be used for office space for more Western-Soviet joint ventures.

Besides red tape, even small American businessmen are encountering a wide range of problems settling into the Soviet market, however.

One is what to do with earnings, which are usually amassed in rubles that cannot be traded for U.S. currency and must therefore be used to buy Matroksha dolls or other Soviet goods popular with Westerners.

The biggest problem for U.S. entrepreneurs, however, is negotiating a joint-venture deal that is acceptable to them.

With little experience in dealing with Westerners, Soviet businessmen tend to be too rigid behind a facade of flexibility, according to several U.S. businessmen here.

In a seminar held here last week in a U.S.-built Soviet hotel, for example, a Soviet trade official was explaining how accommodating Moscow authorities are in establishing U.S.-Soviet joint ventures.

Suddenly, a representative of Combustion Engineering, one of the few U.S. firms officially engaged in a joint-business effort with Soviet companies, rose to complain that his company had not yet been able to even find office space.

However, some other Americans are seeking to jump the hurdles. A week before the conference opened here, two businessmen from California made up colorful T-shirts with a Kremlin scene on the back and shot off a Telex message to Moscow asking for permission to start a joint venture to sell paraphernalia to Western tourists.

Last Tuesday the T-shirts went on sale for $20 each at select locations.