Changing Lifestyles : Austrians Find Bargains Over Hungarian Border : With lower prices, Sopron and other towns lure shoppers. In the long run, they stand to gain more than just profits.

The champagne bar in one corner of Istvan Kosa’s jewelry and crystal shop is a big hit with Austrian men dragged along by their wives on cross-border bargain hunts.

“You see, it’s good for my business if the women feel they can spend as long as they want trying on different necklaces and rings. But the husbands usually get very bored,” explains the private businessman, who opened his dual-purpose boutique along Sopron’s main shopping street in late May.

“So,” continues Kosa, bursting with pride over his entrepreneurial cleverness, “I give the men different champagnes to taste, and sell those while the women linger.”

The odd coupling of luxury goods and liquor would never fly a few miles down the road in staunchly regulated Austria, where shops are shops and bars are bars and a licensing labyrinth ensures the twain never meet.

But in this anything-goes frontier town on the cutting edge of Eastern Europe, there are fewer constraints on a merchant’s imagination.

Sopron is one of a number of border towns and cities benefiting from the geographical advantage of being able to serve a Western market on Eastern Europe’s easier terms. While economic differences on either side of what used to be the Iron Curtain blur as time passes, they remain significant. And over the long haul, these border towns stand to gain in ways less tangible--but perhaps even more significant--than near-term profits and jobs.

There’s no question but that living standards are visibly higher in Hungary’s border region due to a steady influx of Western tourists, attracted by bargain prices on a wide range of goods and services. Officials say Sopron’s 60,000 population is swelled by at least 40,000 foreign shoppers each day--a key reason that per capita income here is at least 20% above that of the poorer eastern areas of Hungary.

Most merchants in Sopron speak at least passable German. Shop signs are in both languages--Magyar and German--and the local restaurants dispense more beer and sausage than Hungarian wine or paprika chicken.

Hungarian wages are also a fraction of those in Austria, which is drawing the lion’s share of Austrian investment in Eastern Europe to cities like Sopron that are easily accessible to the Western partner. Unemployment here remains virtually unknown because of the booming private sector and flurry of investment.

Many residents of border towns like Sopron and Szombathely in Hungary and Bratislava in Czechoslovakia also boost their local economies with Western wages earned by moonlighting across the border.

“Officially, it’s illegal now under Austrian law for Hungarians to be hired there. But I’m sure at least 30% to 40% of people in Sopron have second jobs in Austria,” said Janos Kocsi, head of the city’s newly founded Chamber of Commerce.

While Sopron gains substantially from its proximity to Austria, Kocsi points out that the open border also entices many Hungarians to travel to Austria for those few items still unavailable in their own country, or which are so heavily taxed that smuggling them in from Austria is financially attractive.

Coffee, for instance, is still controlled by state monopoly and taxed so prohibitively that at least a third of Hungary’s annual consumption of 30,000 tons is smuggled in and sold on the black market.

Austrian merchants in the border province of Burgenland distribute leaflets in Sopron and Szombathely to inform Hungarian customers of special sales. Austrian television--which is widely received here--often carries advertising targeted to the Hungarian consumer.

More than 4 billion Austrian schillings (about $350 million) was spent by Hungarians in Austria in the 18 months after the Iron Curtain fell in mid-1989.

Also, rising prices in Hungary, fed by an annual inflation rate nearing 34%, are changing border economics for everyone.

Hungarians have less money for shopping in the West after paying for increasingly expensive essentials at home. Many of the shops that sprang up in Austrian border towns two years ago to feed Hungarians’ hunger for stereo equipment, appliances and other goods then in short supply here have since gone out of business.

Steady price rises in Hungary have also cut into the Austrian shopping, as goods that were once heavily subsidized are now sold according to the cost of their production. Gasoline prices have doubled over the past year, for example, bringing the Hungarian price equal to the $3-a-gallon cost of fuel in Austria.

“Compared to last summer, we probably have only half as many Austrian customers,” said Maria Gladovatz as she sliced cold cuts for a Vienna visitor at a state-owned delicatessen she hopes to buy with colleagues and make private.

Still, the delicatessen sells Soviet “champagne”--most of which is produced in Hungary--for about $4 a bottle, compared to $8 to $10 for a bottle of sparkling wine of equivalent quality in Austria. Cigarettes sell for about half their Western price, and Hungary’s surplus of pork and dairy products keeps those prices low. Cheese is so much less expensive than in Austria that Sopron’s sales account for nearly half of Hungary’s consumption.

Most attractive to Austrian shoppers are services like hairdressing and dentistry. Sopron has more private dentists than the entire rest of the country, and Austrians flock to take advantage of relatively high-quality service and prices that are a fraction of those at home. At the Vitadent dental clinic in the border town of Mosonmagyarovar, fillings cost less than $10 and extractions are even cheaper.

And while the price differences that have kept commerce thriving in Eastern Europe’s border towns may well shrink even more, cities like Sopron will continue to benefit from the popularity they currently enjoy, many analysts contend.

Exposure to the more exacting demands of hard-currency shoppers has helped business owners in western Hungary and Czechoslovakia make the psychological adjustment to a market economy and the previously unfamiliar concept that the customer comes first, for example.

Further, according to Erzsebet Konozsy of the National Chamber of the Economy in Budapest, the Western money now flowing into Hungarian industry will create new jobs and a more stable economic climate, more than making up for any slackened sales revenues.

“Austrian investors have shown keen interest in the border region, where there are a number of old mills that can easily be converted to manufacturing, as well as good opportunities for joint ventures in catering,” said Konozsy.

About two-thirds of Austria’s 5 billion schillings ($435 million) in investments in Hungary have been in the Western border region, according to Josef Schwarz, commercial attache at the Austrian Embassy in Budapest.

“The exposure to Western standards has been very useful in the border area. This region is growing up first,” said Konozsy. “The equalization of living standards can already be felt there, while the rest of us still have far to go.”