Southeast Asia: Ivan the Terrible Salesman

When the gypsy music stopped, the host rose from the table and began to tell his guests of the virtues of squid with mayonnaise. “It exerts a favorable influence on metabolism,” he said, “and is prescribed for persons with heart problems.” The setting was Kuala Lumpur’s Hotel Mirama, and the host was a man from Prodintorg, the Soviet agency in charge of food exports. He was promoting Russian seafood, but the sales luncheon was neither a gastronomic nor a commercial success. Oily sardines were served with Georgian brandy so medicinal-tasting that it is sometimes known as “Stalin’s Revenge.” There was also dry shrimp with sweet champagne, sea kale and vegetables in tomato sauce and seven other tinned seafoods—but no bread or crackers to go with them. The Soviet sales luncheon has become increasingly familiar in Southeast Asia, where the Russians are pressing an economic offensive. This week they will wind up their most ambitious effort, a three-week trade fair in Kuala Lumpur. Elsewhere, the Russians have recently formed a joint shipping company with businessmen in Singapore, made trade overtures to the Philippines, welcomed a Thai trade delegation in Moscow and expanded Aeroflot plane service in many parts of Asia.

Price Yes, Quality No. Southeast Asia presents a target of opportunity to the Russians, a chance to increase their influence as the British and U.S. military presence recedes. The Soviet drive also stems from Leonid Brezhnev’s call last June for a new Asian security arrangement aimed against the Chinese, and from Russia’s pressing need to overcome a serious trade deficit with some Southeast Asian countries. Trouble is, the Southeast Asian market is highly competitive and tough to crack—and Moscow is accustomed to government-to-government deals. When forced to compete on the open market, Ivan can be a terrible salesman.

The Russians’ profit from their splashy fair at Kuala Lumpur came chiefly in the form of experience. They crammed 2,000 exhibits into one building: textiles, semiprecious stones, machine tools, and mammoth red “Padi Harvesting Combines”—which are wheat combines converted for use in rice paddies. They also stocked shelves of books by Marx, Lenin and Engels but removed them after a government reminder that most are banned in Malaysia. “We’re here to sell,” said Dimitri V. Bekleshov, the gray-suited vice president of Vneshtorgreklama, the export agency’s ad company. “Our tractors are better than the American Caterpillars.” The advertising was also hardsell, and rich in unintended humor. Sample Aeroflot slogan: “And you’ve heard of Russian hospitality (some people never quite recover from it).”

The Soviets sold none of their 80 h.p., four-passenger Moskvitch autos, which face stiff tariffs and quotas designed to protect local assembly plants for Fords, Volvos, Mercedes and Volkswagens. Boxy Soviet transistor radios, at $33, and 35-mm. cameras, at $59, were competitive with Japanese products in. price but not in style. Tractors brought in for demonstrations had the embarrassing habit of breaking down; the Soviets sold only about $80,000 worth of them, even though the salesmen quoted prices 20% to 25% lower than those of Japanese or U.S. models and offered two-year credits. Some items were a shade more successful. The men from Moscow found local agents for their machine tools and pumps and an agent for “Tibet Medicine,” a mix of deer-antler shavings used by the Chinese as an aphrodisiac. *

Basis for Deal. Moscow’s trade drive is also aimed at Singapore, the traditional economic middleman of the region and a potential entrepot for Soviet goods. There the Soviets have sold about $10 million worth of cotton fabrics, machine tools, paper and canned food, and are negotiating to set up a $3,000,000 watch factory. The Singapore-Soviet Shipping Agency Ltd., a joint venture with local Chinese, acts as agent for some 50 Russian ships that ply Far Eastern waters monthly and offers cargo rates 25% below those of many other nations. Consequently, Soviet ships carry coffee to Hong Kong and Japan and timber from Malaysia and Indonesia to Mediterranean ports.

In Indonesia, the Russians are anxious to recoup old losses. During Sukarno’s reign, they provided Indonesia with $523 million worth of aid to equip the armed forces. Since Sukarno was ousted in 1967, Indonesia has turned bitterly antiCommunist, but it still would like to trade with the Russians. The air force is virtually grounded for want of Soviet spare parts, and only 30% of the navy is operative. The Soviets have offered $25 million in aid to complete a steel mill, an atomic reactor and a fertilizer plant, plus fresh investment in fisheries and tin and bauxite mines. There is a major catch: Moscow insists that Djakarta first repay its debt with interest —a total of $799 million—which Indonesia patently cannot afford to do. Last week, despite the desire of both sides to reach an accord, a Soviet mission returned to Moscow after 37 days of hard bargaining, having achieved only an agreement to confer again.

* It does not work.