One needn't travel to the Soviet Union to see Mikhail S. Gorbachev's perestroika at work. The effect of the Soviet leader's economic reforms can be found in Camarillo, where entrepreneur Ed Malik says his tiny Americomp USA is building personal computers under a $28-million contract from the Soviets.
Malik claimed that Americomp, which is less than 2 months old, beat out heavyweights such as International Business Machines, Hewlett-Packard and Compaq Computer for the contract. He said the agreement calls for Americomp to also supply the Soviets with televisions, videocassette recorders, small refrigerators and other items that it purchases elsewhere.
Moreover, Americomp last week received a second contract--valued at $17 million--to provide similar products, he said. To fulfill the two contracts, Americomp will be assembling 16,500 personal computers at its Camarillo plant, Malik said. The contracts were awarded by a Soviet entity that serves as a supplier of equipment to industry and education in the Soviet Union, he said.
Although Americomp's plant was filled with computers being prepared for shipment, Malik's claims were not immediately verifiable. Representatives at IBM's and Hewlett-Packard's U.S. offices, for instance, said they were unaware of Americomp or the Soviet deal, and that any bids for Soviet contracts would have been handled by their European offices. Malik provided the name of a bank as a financial reference, but it declined comment as a matter of policy.
Americomp is a unit of Perestroika USA, a Moscow-based company that Malik and partner Atiq Zamman started five years ago to exploit Gorbachev's effort to infuse some free-market principles into the ailing Soviet economy. To hear Malik tell it, Perestroika USA will darn near buy any products--computers, clothes, shoes, blenders, wood--and resell them to Soviets hungry for the items.
Perestroika USA, which also has offices in Taiwan, Hong Kong and Singapore, has about 270 employees including 12 in Camarillo, Malik said. He said he expects to hire another dozen shortly to handle the increased assembly of the personal computers.
"We're negotiating right now to ship 70,000 more" computers not only to the Soviets but to other Eastern Bloc nations, such as Hungary, Yugoslavia and Czechoslovakia, he said.
Malik, 40, isn't the first American to sell personal computers to the Soviets. A year ago, the Bush Administration relaxed controls on exports of popular desktop computers to the Soviet Union and other communist countries. Previously, sales of the machines had been restricted for security reasons, and America's most sophisticated computers still are.
U.S. companies had argued that the technology found in most personal computers already was available to the Soviets from suppliers in Asia and elsewhere, and that American manufacturers were at a competitive disadvantage with the trade restrictions.
Now, with the restrictions relaxed and U.S.-Soviet relations improving, companies have been stepping up their Soviet marketing. U.S. Census Bureau figures show that in the first five months of 1990, U.S. companies shipped $25.2 million worth of computers to the Soviet Union, compared with only $1.41 million in all of 1988.
In June, IBM announced the sale of 13,000 personal computers for use in Soviet schools. Atari Corp. last month announced a bid to swap its personal computers with the Soviets for computer memory chips, and RHA Group, a small Irvine trading company, said it planned a joint venture with the Soviet government to assemble personal computers in the Soviet Union.
Malik said his Soviet ties go back several years. He said he was born in India and earned a doctorate in physics from the University of Bombay in India in 1974, but that in between he grew up mostly in the Los Angeles area. In the late 1970s, he was a U.S. Defense Department consultant to aerospace companies in Southern California. On the side, he said he was an entertainer who sang country-Western and rock oldies under the stage name "Ed McCoy." (His company's logo, in fact, still carries the phrase "Ed McCoy's Perestroika USA.)
Malik first went to the Soviet Union in 1984. He had uncles, cousins and other family members already in Moscow, where they had lived and done business for three decades, he said. After he arrived, he and Zamman, a friend who already was dabbling in Soviet trade, started Perestroika USA but "we had no specific direction, to be very honest," Malik said.
They began by reselling Asian-made computers to the Soviets, then expanded to trade in TVs, VCRs and the other household goods. Perestroika USA got an added boost when an Indian ambassador to Moscow, who was a family friend, began introducing Malik and Zamman to "all the high-level ministers" in the Soviet Union, Malik said.
"That gave us a bona fide entry" to the Soviet marketplace, he said. Malik, as Ed McCoy, also did a concert tour throughout the Soviet Union that "opened a lot of doors" for his business, he said.
By last year, however, Malik said he was unhappy with the quality of the Asian-made personal computers he was getting, and decided "to go back home and set up a factory with an American company." So he returned to the United States two months ago, found an empty warehouse in Camarillo that formerly was used for computer manufacturing and began assembling his own machines.
So far, more than 1,000 personal computers have been shipped under the first Soviet contract, he said. Malik claimed his machines are state-of-the-art and use Intel Corp.'s 80286 and 80386 microprocessing chips, which are well-known engines for powering personal computers.
Under the Soviet contracts, Malik claimed he is selling his computers for a relatively low price--$1,400 each. A comparable IBM model would sell, in the United States anyway, for around $2,000 retail, although some personal computers that Taiwan and Singapore sell to the Soviets would be priced closer to Malik's machine.
Soviet currency is not negotiable in the world market, but Malik said the Soviets pay him mostly in U.S. dollars and mostly in advance.
Malik conceded that "we make very little money" on each computer sold to the Soviets, but said "we're doing a volume business."
And he claimed the volume will be going up. Currently, his Camarillo plant is equipped to build about 5,000 computers a month, but he wants to increase that to 10,000 a month, confident that the trickle of Soviet purchases of U.S. computer technology will swell to a torrent.
"We're not gearing up for business that will be there," Malik said. "Business is there."