2 JUNE 1961, Page 30

Trade Fair


Faith in what? Have British businessmen sud- denly gone starry-eyed over the USSR as a market? Before trying to suggest an answer, a distinction must be made between manufacturers of capital goods and purveyors of consumer goods.

The nature of the Soviet economy is such that it chiefly buys capital goods from the West, and a number of British firms are already well in this particular market. Furthermore, although the Russians already sell us considerably more than they buy from us, they do not use their surplus sterling to increase their purchases of manufac- tured goods from the UK, but instead buy essen- tial raw materials from elsewhere in the sterling area, e.g., Malayan rubber. This policy is the natural consequence of the long-term aim of their economic planning, to make themselves an economically self-sufficient unit which, when a state of autarky has been achieved, will have no need to import anything. According to Khrush- chev himself, in a speech to a large audience of British businessmen in Moscow last week, the Soviet Union has completed the build-up of its essential sub-structure of heavy industry (for which Western capital goods have been and apparently still arc needed) and is now preparing to fill in the gaps by providing a vastly improved standard of material well-being for this huge nation, avid for goods.

This is where British exporters see their chance: in particular the makers of plant and equipment catering for the needs of a highly developed, sophisticated economy—scientific instruments, machinery for making textiles, foot- wear. toys, plastic goods, laundry plant, medical and dental equipment, food packaging and pro- cessing machinery, to mention only a few of the groups of exhibitors in Moscow. The selection of wares on show has not been haphazard. As the organisers have been at pains to point out, the Fair does not consist of a clutch of Micawbcrs: 90 per cent. of the exhibits are based on a detailed shopping list, provided by the Russians, of the goods in which Soviet buyers are inter- ested. This is not confined to machinery for making things: the suppliers of manufactured goods are also exhibiting, although prima facie their prospects of business are considerably less hopeful. The fashion industry in particular is gambling for high stakes. The dress merchants have not only greatly added to the panache of the Fair and temporarily raised the sadly low glamour-quotient of Muscovite life by putting on a fashion show twice daily, but they have thereby been able to do something virtually denied to any other consumer-goods exhibitor: direct, hard- sell advertising to the Soviet buying public.

The organisation of the fashion show is one of the best examples of the thought, ingcnuitY and sheer hard work which are an impressive feature of the whole Fair. The clothes shown have been chosen with a realistic sense of the needs of the market, and although the show was laced with enough chic and glitter to lift it above the level of the average local product, there was a firm emphasis on the sensible and wearable. Even the choice of models has deviated from the usual platoon of elegant bean-poles: some are so like well-set-up specimens of Soviet woman- hood that many of the 2,000-strong audience take them for Russian girls. A by-product of the show is that Elizabeth Arden has already landed a use- ful order for make-up; and another firm, although in the fashion parade, has collared the whole quota for nylon fur coats. This shows that trade can be done with the Russians even in the more marginal consumer goods; but the feeling among businessmen here is still that it is a chancy affair which depends on factors over which the traders themselves have no control.

Everyone knows that the Soviet Union has a totally planned economy and sets firm quotas on the importation of every type of commodity, but it is not perhaps generally realised that even if the seller has exactly the right product at the right price which the Russians clearly want and for which they have allocated a quota, there is never a definite assurance, as there would be in a parallel case when trading with a capitalist country, that the buyer will suit the action to the word and place an order. the planners, taken their place in the queue with other buying agencies, argued about the import- ance of their particular order and generally lobbied and pulled all the wires known to the Soviet bureaucrat. After that they may get their application approved, they may get it reduced, or they may get nothing at all—according to whether the overall plan is working well or whether there is a shortfall in sterling earnings at that moment.

Clearly these are conditions of business under which no trader would operate from choice. Indeed, one of the official Communist explana- tions for the increased British interest in trade with the Soviet Union is that as we lose our captive colonial markets, and as competition for markets between the capitalist countries grows more savage, we are being forced in desperation to turn to the Communist countries. Of course, this doctrine fails to take into account the fact that the political independence of former colonies, at least in Britain's case, does not mean that our economic links with them are broken and that often our trade with such countries actually in- creases as their purchasing power rises, thanks to past British capital investment in their economies. In any case, it is the very opposite of a sign of debility in a trading nation to be probing out- wards to enlarge existing markets and seek neW ones.

Even this urge, though, does not fully explain why a considerable section of the cream of British industry is putting its money on such a relatively dark horse as Anglo-Soviet trade. What are firms right across the board, from ICI to Cobble Brothers Machinery Co. Ltd. of Black- burn, hoping for? The variety of answers given to this question is almost as great as the number of stands at the Trade Fair. The Big Five banks and the groupings such as the Iron and Steel Federation may feel that it is a matter of prestige: the giant concerns and consortia such as AEI, Distillers, Hawker-Siddeley, Vickers or Rustyfa are in it because there is no market in the world in which they can afford to be absent: the large and medium engineering, electrical, chemical or electronic firms with a first-class specialised pro- duct may scent a thumping order which could give them the edge over their less adventurous competitors—and some may be just out for pot- luck.

It is also an undoubted fact that the very un- familiarity and difficulty in trading with the Soviet Union can give an enviable cachet to any firm which manages to land a Russian order. In all these reasons there seems to be a common factor at the back of the minds of all the partici- pants in what is an unusually vigorous and costly piece of British sales promotion. This common factor is a feeling that the Soviet giant, having spent forty-odd years forging the tools to make his own living, is on the point of becoming rich enough and hungry enough to be an extremely worthwhile customer for British goods. We know that those 200 million are going to need a lot of things that they don't make or that we can make better. So, they say, let's get a foot in the door even if it hurts, and be one of the first on the escalator for a change instead of puffing along behind the Germans, the Ameri- cans and the Japanese.

Whether bigger and better business with the Soviet Union will result depends partly on their efforts and partly on the trade talks which have just started between the two governments. Mr. Maudling, President of the Board of Trade, came to Moscow to open the Trade Fair, but he. came primarily to conduct preliminary negotiations for the annual revision of the five-year Anglo-Soviet Trade Treaty. At the time of writing it seems that the talks have started well and that the Russians are in earnest about expanding trade. Both sides have agreed at the preliminary meet- ings that restrictions to trade should be removed and the Soviets have made little more than a perfunctory reference to the strategic embargo list: it seems clear that this is little more than a Propaganda debating point, since they are now concerned with more pressing problems.