U.S. Agency Has Line on the East Bloc

Allen Kelly was looking for new markets for his telephone-switching maintenance equipment when the opening up of Eastern Europe rang a bell.

The entire former East Bloc was laden with old telephone systems that surely needed cleaning and upkeep, he reasoned. The only problem was, where would he start?

Then, the West Los Angeles businessman found out about the U.S. Commerce Department’s East European hot-line service and telephoned to see what he could learn.

Much to his surprise, he got more than he bargained for--a list of the proper contacts, the locations of many central telephone offices in each of several key metropolitan areas and technical advice.

After writing to representatives of telephone companies throughout the region--and later traveling throughout Eastern Europe--Kelly expects to sell his first batch of equipment this winter.

“Whatever information I have needed, they have been able to come up with,” he said.

Commerce Department officials say the service is aimed primarily at smaller exporters and would-be investors--American firms that are interested in buying into some of the hundreds of East European companies going on the market as a result of privatization efforts.

“There are good opportunities to invest in Eastern Europe,” said Jenik Radon, a New York lawyer who arranges U.S.-East European business ventures, “but there are no real bargains. You are going to have to plow a lot of money into them.”

While large corporations generally have the wherewithal to check out emerging opportunities in the region, small and medium-sized firms like Kelly’s typically are stymied by the enormity of the task.

“Eastern Europe is a region in which there has been scarce information in the past, and the information there got out of date quickly,” said Susan Blackman, director of the Eastern European Business Information Center, as the hot line is formally known.

A day watching the hot line in operation confirms the need for such a resource.

The hot-line staff responds to about 600 calls per week. Since it opened in late January, it has fielded more than 22,000 calls.

But as the four permanent staffers and two interns admit, not all callers are as successful as Kelly.

“A lot of callers don’t have a very good idea of what they want,” said James Robb, a hot-line staff member. Often, he added, he tries to focus their thinking and provide useful background information.

When the service began, information about business opportunities in Eastern Europe was not easy to come by. Existing data was meager, and was dispersed among a variety of government agencies. The staff scrambled to collect up-to-date economic and market information.

“We just plunged right in,” Blackman said. “If we got a question we couldn’t answer, we’d say, ‘Can I call you back on that?’ and go and find out.”

Some questions still can’t be answered, Robb said. “People want specific market research, but until last fall there were no markets--by definition--or they’ll want something like a list of Polish textile-makers. But these companies are all in transition.”

In many areas, the agency is moving to beef up its services. Beginning next January, for example, the department’s Foreign Commercial Service offices in Hungary will conduct preliminary market research for American firms for a $750 fee. More programs are on next year’s budget.

There also are wide disparities in the help that the agency can provide in individual countries. Information is scarce, for example, in Romania and Bulgaria. Facts about East Germany, Poland, Czechoslovakia and Hungary are more plentiful.

One of the biggest problems facing small businesses is finding enough financing to get their projects off the ground.

President Bush pledged last year that the United States would provide some grants and incentives to help defray the costs of starting business ventures in Poland and Hungary. The hot line directs callers to the government offices where they can apply for such funds.

Still, even under the best of circumstances, launching a business in Eastern Europe can be daunting. It takes time and money to develop contacts and work out complicated customs and currency arrangements. Kelly’s firm, for instance, has spent about $20,000 over the past year to explore its prospects in Eastern Europe.

As one Commerce Department staffer put it, “Eastern Europe is not for the faint of heart.”