crunch@well.UUCP (John Draper) (11/16/88)
After recieving no initial objections about my intention to post this
long comprehensive article on the Soviet Union, HERE IT IS. It's LONG
so you might want to dump it into a file for reading later, or capture
it, or whatever....
Join Ventures with the Soviets
(c) by John T. Draper
Programmers Network
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* Permission to redistribute this *
* article is granted as long as *
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I had heard about Joint Ventures between Americans and Soviets before I left
for vacation, but I didn't know the level of interest was as great as it
currently exists in the Soviet Union (SU). It was the sincere eagerness on the
part of the Soviets that inspired me to learn more about joint ventures because
that's ALL they ever talked about. Not Really!! but Almost!! at least I get
a pretty good ear bending.
The economy of the USSR is currently very bad, as prices for goods are
about 20% higher than in the USA, and citizens are paid very low in comparison
with Western countries. In an attempt to boost their economy, Mikhail
Gorbachev is allowing citizens to engage in private enterprise. In my opinion,
this is good, but there are serious problems that still exist. Partly,
because while the SU has been stuck in an economic rut for a long time before
Perestroika was instigated, the Western countries have been pushing ahead in
high technology. The Soviets are very much behind in this department, and our
Government is not interested in allowing the Soviets to "Catch up", and has
enacted trade restrictions since 1979.
As we all know, by the news reports, tremendous changes are now taking
place in the USSR that can be VERY LUCRATIVE for American Businesses. There
are, of course, tremendous hurdles that have to be taken. The main problem
is their money. As far as the world market is concerned, the Ruble is not a
HARD currency, and cannot be taken out of the USSR. So, any business
relationship with the Soviets would have to result in Americans getting paid in
other Soviet goods, or services. You can actually take currency OUT of the
USSR if you pay their government 30 percent in taxes. So it's important to
keep the currency in the US. Relations like having Soviet programmers develop
software for the US market might not be so bad, and they would really LOVE to
get their hands on some recent equipment.
One might think that the Soviet goods aren't worth anything, this is
partially true, but the Soviets have more things to offer than Hard Currency.
I'll outline these things below, which have been suggested by some of the
Soviets I came in contact with.
The Office space for Computers offer
====================================
I talked with one person in Leningrad who uses PC's for the Hotel and
booking business. His current idea is to offer any American company free
office and hotel space for visiting executives in return for old IBM PC's. This
person uses the PC's connected to LANS for organizing and managing all the hotel
bookings, opera tickets, and other booking services, and is going in a very
big way to computerizing their business. They are writing their OWN software,
and almost ALL Soviets who have PC's can program them on just about ANY level.
This offers some rather interesting benefits, especially to those companies
that would want to establish offices in Leningrad.
When I asked how many PC's they were interested in, they said thousands.
I'm not sure what the US Laws are regarding exporting IBM-PC's to the Soviets,
but if someone who has an import license wants to pursue this, the
opportunities are amazing.
Leningrad has some very tight hotel and office space, and if any company
who has old IBM PC's, and wants to replace them with more modern systems,
one might benefit from such an arrangement.
I have the name of the Soviet attorney who is an expert on Soviet Law in
respect to arrangements like this, and if anyone is really interested in
following through on this, then contact me at the address mentioned below.
This arrangement gets around the Ruble soft currency problem, but involves
getting PC's over to the USSR. That's for the Attorneys to investigate. I'm
just taking these ideas down from my journal as I talked to the Soviets.
One thing really amazing about the Soviets is their discipline and lack of
"flakiness". I have heard reports on the contrary, but MY dealings with them
have been VERY POSITIVE.
Why the Soviets always pirate American software
===============================================
I had often thought that the Soviets always liked to pirate American
commercial software, but while talking to a group of Soviets at a dinner, one
person came up to me and said: "I would GLADLY pay for a legal copy of
FrameWork so I can get technical support", "we Soviet people are not allowed
to pay for our software in Rubles". He went on to mention; "It is illegal for
us to possess". If American software companies want to discourage Soviet
pirating, it would be in their best interests to set up joint ventures, and
field offices in the Soviet Union. An increasingly large number of reputable
software companies are doing this with great success.
Because the Soviets cannot pay in hard currency, one must examine what the
Soviets can offer us instead of money. Naturally, the SU manufacturers other
goods not obtainable in the USA, such as Vodka, Furs, and other non-tech
goods. A lot of the earlier joint ventures usually result in the Americans
getting paid in Soviet goods, who can turn around and sell them in the USA for
a mark-up.
Other than Soviet goods, the SU has a very rich supply of Programming
talent, much more disciplined than the American programmer. The average
Soviet programmer get paid anywhere between 250 - 500 rubles a month, but they
also have much less day-to-day expenses, as their average monthly rent for
government provided housing is around 3 - 6 rubles/month, and phone service is
essentially free or very in-expensive, except of course calling into the USA,
which is approximately 30 rubles for 5 minutes, which is prohibitive for 90% of
anyone.
When a Soviet person obtains a PC, they will learn EVERY aspect of the
computer, especially how to write Assembly Language programs for it. This is
necessary, because equipment is VERY HARD to come by, and the PC Owner will
have to write their OWN driver code to interface it with some printer obtained
in Bulgaria or anywhere else they find them. Almost EVERYTHING they do on a PC
is "Home Brew", but I did see a lot of commercial Software in use. Especially
the Norton Utilities.
The Academy of Sciences in Moscow had released (Free of charge) to all PC
users, a video driver providing the Cyrillic (Russian alphabet font). Usually
this means that if Shift lock is pressed, then typing will be in Cyrillic. The
Academy also offers key covers with Cyrillic characters.
Most of the languages used are Turbo Pascal, FORTH, C, and LISP in about
that order of importance. I was very surprised to find such a high interest
in FORTH. The FORTH system most often used in the Soviet Union is
"Astro-forth" from Project Learner in Leningrad. It's widely used in the SU,
and is very inexpensive. Igor Agamirzyan is the author, and works for the
Institute of Information and Automation of the Academy of Sciences of the USSR.
This system is used widely for factory automation and robot control. I also
met Sergei Baranoff, the author of the first book on FORTH written in Russian.
The most preferred C language is Turbo and Microsoft C, and Common LISP is
used among the University Crowd, and at the Academy of Sciences in Moscow. A
LOT of work is being done on natural languages, textual databases, and AI.
I was invited to the Academy of Sciences in a very uncommon move, I was
shown some fairly modern work stations of some unknown type. The monitors
were in Russian, and appeared to have 1200 X 768 Pixel resolution, and were the
very best systems available. No details were given on their operating system,
as they were used by the Scientific community, some of which were using them in
conjunction with the military. Just the fact that I was even allowed inside a
facility like that really gives me the impression of their openness.
The people at the Academy of Sciences in Moscow are VERY interested in
computer security, and the proliferation of computer viruses. They get BYTE
magazine, and a host of other American magazine, usually about 2-3 months
late. Most are brought in by foreigners, as there is a large network of
foreigners constantly bringing in consumables like diskettes, printer paper,
and other commodities. Mailing these things into the Soviet union,
especially diskettes, will usually get lost in the ozone. Either the
American officials will snatch it, or the Soviet officials. This explains
why the Soviets cannot "Mail order" any supplies from the West. Diskettes are
NOT OBTAINABLE for the private personal computer user. You CAN get them if
your Official status allows you to do so.
The social status of the typical Soviet programmer is that of a clerk or
secretary. Probably because children and EVERY citizen is exposed to a 2 hour
TV show aired in the morning. It's VERY educational, and features computers
and technology. When I watched it, someone was writing a flow chart for a
velocity and orbit program, then he was typing it in Basic, showing the
listing IN ENGLISH, then running the program. A bouncing ball appeared on
the screen, and something orbiting. He meticulously worked out the math and
was explaining what he was doing. About a half hour later, the person was
explaining how to patch a driver to work with some strange printer. All this
is on NATIONAL TV, and almost EVERYONE UNDER 16 had knowledge of Pascal and C.
Some teenagers I met through the Peace Committee were Obviously well educated.
The Soviets citizen is into peace in a very big way. Huge red signs
saying "Peace to the Earth" are posted everywhere, and Soviets have every
reason for wanting peace, as all throughout history, they've been bombed,
invaded, and harassed by outsiders.
In January of 1987, new laws were enacted by the Supreme Soviet allowing
its citizens to engage in setting up private and joint ventures. I explain
some of this later.
I had many discussions with Soviet programmers eager to gain experiences
setting up businesses. One such idea was proposed by Eduardo, the son of a
Soviet Diplomat I met on the train between Helsinki and Leningrad. Richard was
the diplomats name, and he's from Vienus, Lithuania USSR. He asked me when
I was going to be in Moscow, and sent his son to meet me in Moscow. We talked
for 2 days, hopping from coffee shop to coffee shop along the Arbot, a popular
hangout for artists and musicians. Eduardo made the following proposal idea:
Eduardo suggests having American Software firms invite Soviet programmers to
participate in a "Work Experience" program of about 6 months. USA companies
would pay the Soviet Programmer Competitive rates, and work on Software
products that are of interest to the American companies. After the 6 month
"Internship", the Soviet programmer would return to the USSR to finish his
share of the work. The Soviet programmer would take a PC back to the USSR,
provided by the American company as partial payment for the Software he/she is
to write. Keeping in mind that Soviet winters are hard, the work habits of
Soviet programmers (Who often work at home), are nothing short of amazing. This
offers some very good opportunities for American companies in a tight bind, that
could benefit from such an arrangement.
Soviet Programmers are allowed to travel to the USA, but they must be
invited, and the Americans must pay for their stay while in the USA, because
Soviets have no HARD currency. Soviets CAN however make it to either Wash DC
or New York on Aeroflot (Which takes Rubles). It costs the Soviet person
about 800 rubles for a "round trip" to NYC or Wash DC if the trip were planned
in advance, as they usually are. It also can take up to 5 - 6 weeks for all
the bureaucratic processes to grind to completion. Not only do we have to
deal with the local Soviet Consulate, but I suspect the State Dept might also
have to be involved. I've never had the experience of inviting a Soviet to
the States, so I don't know ALL the ropes, but it goes something like this:
Getting Soviets to USA involves first sending a letter to the Soviet
Programmer inviting them to the USA. There are 2 ways to do this.
A) A personal invitation, and
B) a Corporate or Institution invitation.
I'll explain the advantages and disadvantages of each. If we send a
Corporate invite, we cannot pick the Programmer we want to visit us, as when
working through the Official Organs, the institution usually will decide who
goes, by picking a person least likely to defect. If we send a PRIVATE
invitation, we CANNOT use company letterhead, as the officials empowered to
grant permission will usually deny it. Getting Lithuanians to the USA is
considerably easier than getting Russians from Leningrad or Moscow.
Lithuania, is almost considered another country, somewhat separated from
the Soviet Union, in fact, the Lithuanians are now in an Identity Crisis,
and are asking for more independence from the USSR.
The USSR is now relaxing their rules on foreign travel for their citizens,
so inviting good programmers to visit USA institutions is much easier, and will
become even more so in the next few months.
I met a fan of Ted Nelson while visiting the Academy of Sciences in Moscow.
who has been following the Xanadu movement since day 1, and has written an
IBM-PC program I managed to smuggle out of the USSR (I'll explain that part
later). This program is a HyperText style Dictionary program for aiding in
translating English to Russian. It has a rather unique look-up facility, and
was written in Turbo Pascal. The person's name is Arcady Borkowsky, and has
written several specialized word processors, full-text databases, and Natural
Languages understanding HyperText. Arcady was the person who taught Vadim how
to write programs. Vadim is one of the authors of TETRIS, a popular Mac
program now being marketed by Spectra Halobyte. Vadim is currently 17 years
old and is in his Third year at the University. When I visited him, he had
his nose in a copy of Goodman's HYPERCARD book. He knows C, Pascal, and
just about every Microprocessor Assembly Language.
An interview with the ORIGINAL author of TETRIS
================================================
Alexey Pazhithov, who currently works for the Academy of Sciences in Moscow
is the original author of TETRIS. I got the opportunity to meet with him and
learn a little about the origin of the game. Alexey first developed on an
LSI-11, and implemented TETRIS as a TEXT version. Everyone liked it at the
Academy of Sciences. This apparently happened a long time ago. Eventually,
IBM-PC's became available, and Vadim Gerasimov, a 16 year old Hacker who knows
a little English did the IBM implementation. The IBM version wasn't marketed,
but was distributed throughout the Soviet Union, and a few other Eastern Bloc
countries. It was written in Turbo Pascal. The TETRIS program was also used
widely in Hungary. Later on, Alexey met Robert Stein of Andromeda Software,
who worked the deal with Spectra Halobyte. Alexey told me he didn't like the
American version, because they changed it from the original idea. American
Mac programmers implemented it on the Mac to Alexeys specifications (Almost!!
anyway). Although not in the Mac "About box", Arcady Borkowsky also taught
Vadim. I met him 2 days later, and he was very knowledgeable about Object
oriented programming, and gets the latest copy of BYTE magazine. We talked
SERIOUS PROGRAMMING stuff, getting into all the gory details of linked list
data structures, and user-interfaces. Yow!! this guy knows a LOT. Arcady
also is into word processing, full text databases, natural language
understanding, and HyperText. He is a very big fan of Ted Nelson.
When I told Arcady that I was working for the same Company as Ted Nelson,
he opened up and got really excited. I made a note to see what I could do to
get Ted and Arcady together. In fact, Arcady was responsible for me getting
a visit to the Academy of Sciences. He asked me if I wanted to address the
Academy of Sciences people in a lecture at Moscow University. I agreed to
lecture as long as we could agree on the subject matter in advance. So we spent
the rest of the afternoon working on the topics of discussion, which were:
a) Early history of Apple
b) Telecommunication services, Packet Switching services, BIX, Well,
and Compuserve.
c) Viruses and their prevention.
d) The Next computer (What I knew of it).
e) SF/Moscow teleport.
Yes!! They have heard of John Draper, and have read about my past and
history. They get a LOT of books and magazines from the US.
I talked about private bulletin boards and public data systems like
Compuserve, BIX, etc. They didn't appear to know about any of this. All were
VERY interested, and nothing I could contribute regarding my Object Oriented
expertise would impress them, and in fact, they gave me a lot of useful tips
on some problems I've recently ran into before my trip. They get Byte
magazine (2 months late), and pointed out the article about Object oriented
techniques. I also addressed the virus problems, and gave them the same
advice I give to anyone else. I was really surprised at the openness and
their interest in telecommunications. I also talked about the private Bulletin
boards in the USA, and how easy it is to access information. I also turned
them onto the SF/Moscow teleport (Explained later) which they didn't appear to
know about.
The Soviets told me that some people have access to Dialog, an American
data service, and Telenet, and the Source, but the access is highly
restricted to Academic use. The Soviets have to go through a LOT of paperwork
and scrutiny to obtain access to these networks.
Apparently, information is still restricted, for example, the SF/Moscow
teleport was only advertised in the Intourist hotel on Gorkey St. Normal
Soviet citizens are NOT ALLOWED to enter that part of the hotel. SF/Moscow
teleport's offices are about a block from the Arbot. No signs, or anything
visible from the outside can be seen to give a clue as to what's inside.
Inside are Modems, and even a Xerox machine (Another Soviet Taboo). In
fact, a Soviet Policeman was in there inspecting the locks on the door to the
Xerox machine, because ALL Xerox machines must be under lock and key. Ooops I
mean (Soviet Police Approved Locks) and keys.
When I wanted to bring my Soviet friends to meet the SF/Moscow teleport, at
the Intourist Hotel, I had to go through a lot of paperwork to get them access
to the hotel. ALL soviets I brought to meet the Teleport setup were VERY
surprised to find it there. I couldn't believe the look on his eyes when he
saw that little Hitachi lap-top computer brought in from the States.
The Teleport people were VERY EAGER to help my Soviet friends, and promised
to help them get on the service.
Very few Soviets have and use Modems. Contrary to popular belief, they are
NOT ILLEGAL, and you Don't have to have permission from the Organs to use them,
you just have to have a LOT of patience to use them on their phone system.
Some precautions to take while dealing with Soviets
====================================================
If you plan on visiting the Soviet Union, do NOT plan on taking diskettes
containing software OUT OF the Soviet Union. Diskettes are what they call
"Non-Controllable" items, and are subject to confiscation. I managed to slip
ONE IBM disk out of the USSR, by stuffing it inside my dirty underwear. But
a Mac diskette of Cyrillic fonts I obtained from Leningrad didn't make it
through.
And now, more do's and Don'ts:
Do learn Russian, at least learn enough of the Alphabet to read road signs
and street names. Also learn how to pronounce numbers, so that when prices
are quoted, you can understand them. Russian isn't as hard of a language to
learn as Finnish, or the other Scandinavian languages, and really goes a long
ways to developing friends. It takes about 4 days to learn enough sayings to
go to stores and ask for things, such as prices, etc. Other good ways to
learn the language is by watching TV, Listening to the radio, and having
someone help you. Russians like getting questions about the language, as
that gives them the opportunity to be helpful, and shows them that you are
seriously interested in them, and their language.
If you meet ONE group of people, NEVER EVER try and introduce someone from
ONE group to one from ANOTHER group. The Soviet citizen is very sensitive and
has a very deep paranoid feeling about spontaneous meetings with other Soviets.
Soviets think Collectively, and don't really understand individualistic ideas.
So when speaking to them, always think "Collectively" or in those terms.
Because the Soviet citizen doesn't have the concept of Individualism, this
sometimes makes it harder for them to understand private enterprise, and
often leads to communication difficulties.
REMEMBER!! Nothing will ever work out as planned, so if you have a
prescribed plan, agenda, or meeting, more than likely, it will be
invalidated fairly quickly. Always make contingency plans. Things tend to
happen spontaneously, and the very best contacts are met that way.
Especially in trains and subways.
If you plan on staying in the Soviet Union more than 2 weeks, plan on
getting used to the food. It is VERY BAD, starchy, and often very hard to
chew. The food at even the BEST HOTELS can be almost indigestible. If you're
a vegetarian, you can survive, but fresh vegetables are VERY RARE.
Soviet people are incredibly easy to meet, and will usually go out of
their way to make American friends. They are very disciplined, and will
ALWAYS be on time for meetings, and will expect their American friends to show
the same reliability. They like ANYTHING American, so if you plan on
visiting the Soviet union, bring LOTS of "T" shirts, trinkets, pins, and
Frisbees, and Bruce Springstein records. They mostly have cassette tape
players and record players. I saw NO Compact disk players in the USSR, and
learned that VHS tapes use the SECAM video standard which is DIFFERENT than
ours, and don't expect ANY Soviet citizen to have one, they cost around
20,000 rubles. They also use 220 volts 50 Hz power, and that should be a
consideration if you plan to bring your computer. It's OK to bring in a
computer, just remember to Declare it, and take it with you when you leave.
If you plan on leaving it, don't declare it. If it don't show up on
your declaration card when you leave, none's the wiser. When you enter the
Soviet Union, you will be given a Customs Declaration card. In this card,
you Declare ALL your cash in negotiable travelers checks, jewelry, etc. Then,
when you change dollars to rubles at the hotel, or beriosky (Dollar store),
the customs declaration form is marked with that transaction. You must have
this form at all times, as it is your "Documents" and must be surrendered to
the authorities when asked for it. I have NEVER, nor has anyone else EVER
been asked for these papers.
When you LEAVE the Soviet Union, all the money you have is counted again,
and all the rubles you have left is then converted back to dollars (Again at the
.63 rubles/dollar rate). You will also be asked for the receipts you got when
you bought rubles. If you purchase anything on the Black Market, it usually
shows up in excess and unreasonable amounts of rubles. I spent rather lightly
there, despite the fact that I ran out of gifts, and had to go the Dollar
stores to get more. Soviets cannot buy goods at the dollar stores, as they
are not allowed to have dollars or any hard currency. In fact, the WORST
thing you could do to a Soviet cab driver or private car driver is to offer them
Dollars or American money. It makes them feel VERY uncomfortable and uneasy.
REMEMBER!! Dollars are Illegal for them to possess. That's like trying to
offer a joint to a politician in public. You would be surprised to find out
how many naive American tourists there are in Moscow. A lot of Americans
would try and hang out with me, but I would slip down an alley and lose them.
There is a very large "Black market" in the USSR, especially to change
Rubles into dollars. Be very careful about meeting "Traders" or people on the
street willing to change Dollars to Rubles. The price for dollars is about 5
- 7 rubles per dollar, and the "Official" rate is .63 rubles per dollar.
Exchanging dollars to Rubles is Illegal, but it's done all the time, and
usually the authorities will look the other way. NEVER make the exchange on
the street, instead enter a coffee shop and sit down at a table and do the
transaction that way. While I was there, I never had the need for Rubles,
as the Berioski's or Dollar stores had the best goods and much better prices.
However, if I ever wanted to make a phone call or purchase Services, or
Non tangible things, then the Black Market would be a good way to save money.
Phone calls to USA costs 25 rubles for 3 minute call. On black market,
that would be about 3 dollars. Almost worth it.
There are traders EVERYWHERE, all very eager to do Business with
Foreigners. Sometimes they can be a bother. One person in our group became
completely agitated by ONE persistent trader in Tbilisi, Georgia. I have to
admit, he WAS very persistent.
Getting around in Moscow and other Trivia
=========================================
Moscow has a RUSH HOUR and a traffic problem just like every OTHER city I've
been in, but at least the cars can MOVE. Often slowly, as old funky
trucks often break down and block traffic. Pedestrians are NOT allowed to
cross the street. Instead, there are underground passages that cross the
angled streets. Sometimes these go for thousands of feet, and all along the
sides are little stands selling ice cream, and hot dogs. There are LOTS of
little nooks and crannies and little alley ways one can explore, and contrary
to popular belief, escorts are NOT necessary, but it's always nice to have a
local person with you.
Moscow has streets radiating out of the Kremlin and Red Square like spokes
of a wheel. Most outbound and inbound streets are wide and one can go almost
from the Kremlin to the outskirts without stopping as long as it isn't RUSH
HOUR. Rush hour is between 5:30 and 6:30, and between 8:00 and 9:00 in the
morning.
The subway system is nothing short of amazing. For a measly 5 kopeks, one
can go ANYWHERE in Moscow. The only bummer is that the subway system closes
down at midnight. The system also looks like a museum. Huge marble
archways, and golden decorations. It's actually gold leaf. It's very
clean, and VERY VERY CROWDED.
If surface transportation is desired, then stand by the street in a
designated spot, and raise out your arm. Have a map handy to show your
desired destination to the driver. If the driver says "Da" you've got your
ride, if "Nyet" then hail another driver. Usually, all passenger car owners
will stop for people. Cabs will also stop, but often he will deny you a ride
if you're not going HIS way. Costs usually range from 2 to 5 rubles from
either cabs or private cars.
Another interesting thing I remember, is that at night, the cars use ONLY
their parking lights. It's ILLEGAL to use full headlights at night in the
city. Hmmm, and I remembered that Finnish drivers must use their headlights
in the DAY while in the country.
Soviet cars (The Lada) are pretty remarkable. I was in ones that were
only a year old. They ran pretty good, a little poor on the acceleration, and
their mileage is about 35 MPG. One thing amazing is that they started up
IMMEDIATELY in 15 below zero weather, and they didn't even warm them up before
pulling out into the traffic.
About the WORST thing you could do in Moscow as far as a traffic violation
is to block traffic. This means you MUST pull off the street in designated
areas. This often leads to driving 10 miles to go 200 feet. Your best bet
while visiting Moscow is to "Hitch a ride", use Subway, or cabs. Cabs cost
from 1.50 rubles to 5 rubles depending on time.
Gas costs about $1.65 to $2.40 depending on the grade of the stuff, and I
noticed there were long lines at some of the gas stations. Usually, Soviets
will purchase gas from black market dealers who make "House calls" and fill up
your tank for you at half the official gas rates. This is sort of GRAY MARKET
stuff.
Most of the time, while in the streets of Moscow, I was either with
Russians, or alone. I was amazed at the freedom I had. There were no
restrictions to where I could go.
Late at might, there are people EVERYWHERE despite the nasty cold weather.
Hoovering around -5 to -15C, and 3 inches of snow on the ground. I have
absolutely NO idea where they are going, but they are just walking around,
talking to each other in small groups of 3 - 4 people.
Doing Business with the Soviets
===============================
Caution!! The Soviets are very shrewd business men. It's important to be
very firm with them, and to make NO promises or commitments with them, as they
will hold you to your word. They have very little experience in business
ventures, and are thus extremely cautious. When negotiating with them always
impress the fact that YOU are the expert in business, and explain that "That's
NOT the way we do business" if something seems out of kilter.
Currently, the laws state that the Soviets must own 51% of the Joint
Venture, but pressure and the reluctance of American Businessmen to deal with
those terms has forced their government to reconsider the 51% - 49%
relationship, and new laws are being considered to allow the Americans up to
80% of Joint Venture ownerships. Try and work out the relationship in such a
way, as that MOST of the technology, and original ideas belongs on the US
side.
Naturally, the Ruble not being a hard currency is the MAIN stumbling block
for Joint Ventures, and will remain so, until the Soviet Union becomes a
financial force in the Common Market, the Soviets have only their goods, and
services to offer us. This is going to change, as news reports are
indicating that the Soviet Union is considering setting up a Stock Exchange. I
remember reading about this in a British Newspaper while flying back.
Excerpts from a pamphlet provided by the Soviet Government
=========================================================
Following are excerpts of a pamphlet I found on the train between Helsinki
and Leningrad. It was provided by the Soviet Government, and directed towards
American businessmen traveling to the USSR. It's titled:
"Joint ventures: Benefit for all".
I'll summarize it here, and mention the key points.
The Legal Basis of the New Type of Business
-------------------------------------------
Under Soviet Legislation, Joint Ventures are considered "juridical
persons", which means they acquire legal rights and responsibilities, and can
be plaintiffs and defendants in court. The participants in a joint venture are
NOT responsible under its obligations, nor is the Soviet state.
An essential feature of a joint venture is the fact that its property is NOT
divided into shares. The law making instruments concerning joint ventures were
adapted in Jan 1987. Usually, the Soviet Government will take out 30 percent
of the profits in taxes, and leave the rest to be divided up in a way that
benefits the Soviet side. Usually they get 51 percent of the profits, but
according to news reports, this is going to eventually change.
The Decree of the USSR Supreme Soviet provided the necessary legal basis for
the setting up of joint ventures. It establishes the procedure for taxation
of joint ventures and their foreign participants and for supplying joint
ventures with natural resources and specifies who is to settle disputes in which
a joint enterprise is involved. Alongside the legislative measures are the
departmental regulations and guidelines, regulated and controlled by the USSR
Ministry of Finance and Ministry of Foreign trade. Also, the USSR Bank for
Foreign Economic Affairs. These organs usually specify and determine
Instructions on Taxation.
The organ responsible for regulation of Material resources and technical
supplies are the USSR State Committee for Material and Technical Supplies.
The Pamphlet tends to "Beat around the bush" as it tries to explain the
complexities of these so called Joint Ventures. It goes on to talk about all
the organs one must know about to set them up. Usually, the Soviet side has
to deal with all of these "Organs". It goes on to say what one CAN and CANNOT
do. One such rule stipulates that if a joint venture has NOT met its
liability, only the people designated as the "Arbitrators" can decide what to
do about it, and NOT the organs responsible for making the initial rules.
Also, the pamphlet points out that the first 2 years of a Joint Venture is
exempt from the 30 percent tax. A revision of the law now provides that the 2
year tax deferral starts when the Joint venture actually starts to make a
profit, and NOT when the Joint venture is initially set up.
Another guaranteed and privilege is the provision that the equipment,
materials and other property a foreign participant brings into the USSR as his
investments in the joint venture are exempt from customs duties. This actually
means that an American Software company and a Soviet Programmer can work on a
joint venture software product on CURRENT technology equipment. It might be
prudent to make sure the contract covered the use of the computer AFTER the
project.
Foreign participants in a joint venture are guaranteed the transfer abroad
in foreign currency of their share of the profits. And if the joint venture
is liquidated, only after the Soviet Participants get their share, then the
foreign portion is guaranteed the return in foreign currency. There is a 20
percent transfer tax when profits are transferred FROM the USSR to the American
side. This is NOT applied in cases where there is an agreement on the
elimination of double taxation between the USSR and the foreign participants
country of origin.
The Process of Setting up Joint Ventures
========================================
The law makes NO exception for any individual industry. The process of
setting up joint ventures comprises of 3 stages from the Soviet side.
1. Those parties agree on a draft charter, such as objective, goals,
location, and its participants, and the size of the funds available, as well
as the structure, composition, and competence of the management bodies, and
the procedure of decision making, etc.
2. This stage involves securing permission from the competent body, and
making sure the joint venture charter conform to the legislation currently in
force in the USSR.
3. The third and last stage involves the registration of joint ventures.
This is handled by the Ministry of Finance of the USSR. It keeps registers of
various types of joint business ventures. No subjects of civil law are
permitted to enter into contractual relations with a joint venture before it's
entered into the Register.
One must remember, the reason why the Soviet Government is allowing its
people to set up Joint ventures, is because the Soviet Union is really hurting
economically. The government basically wants Americans to bring in convertible
hard currency at .63 rubles/dollar. ALL assets in the joint venture is based
in rubles only, and ONLY at the official .63 rubles/dollar exchange rate. This
is naturally a bad ripoff for the Americans, but the Soviet brochure states
that "This procedure is quite fair", so don't believe EVERYTHING you read from
the Soviet Government.
When setting up programming projects with the Soviets, we also must provide
a provision that the Source code be available on the American side to allow for
modifications and changes, and other contingency. And, as a benefit to the
Soviet programmers, they should be given the latest piece of equipment and
development tools to perform the programming work, if some relationship were to
be set up. ALWAYS staying within the guidelines of the 1979 Technology act,
forbidding certain American Technology from the Soviets. I have inquired about
those restrictions, but no responses yet. I was hoping they would get here
before publishing this, but I can always publish another article including
more details on the rules. One would think that the government would make a
better effort towards educating it's people about the rules, but getting them
has been very frustrating. I encourage other people who know the rules to
write up a short summary in "non-legal" terms. I'm sure American Businesses
would eventually want to know them.
If just ONE Soviet programmer is needed for a project, it might be less
expensive to bring him to the USA for the initial portion of the software
project, to allow him to become familiar with the operations of your project,
purpose, etc.
In either case, communication is vitally necessary, and should be included
in the costs of the venture. There exists only ONE system of Email and
electronic communication with the USSR. And as far as I know, there exists no
other data services that provide Email communications such as UUCP. There are
UNIX machines used at the Academy of Sciences and the University, but not many
people use UNIX in the USSR.
Data Communication to and from the Soviet Union
===============================================
There IS a service that recently became available that provides
communication between SF and Moscow by direct satellite link. This link
connects San Francisco callers DIRECTLY to a computer center in Moscow. Special
accounts have been set up to store and retrieve Electronic Mail and computer
data.
I suspect that this joint venture formed as a result of the relationships
that developed between the people working on the Space Bridges that have been so
popular in the past. The name of this joint venture is SF/Moscow Teleport.
On the Moscow side
==================
There are 2 basic offices. One on the Arbot which is very discreet and has
all the Modem equipment. And another one at the Intourist hotel on Gorkey
Street, a very short distance from the Kremlin. The Intourist location is for
American travelers to send Email by TWX, FAX, or special "Overnight delivery"
for fees ranging from $6 to $25 a page, depending on how fast it has to get
there. They are doing a "brisk business" and are serving the American
tourists communication needs.
Both of these places have only Modems and connect to a Moscow research and
data exchange facility that links computers to their OWN internal network and
provide data store and forward services.
Moscow side pays for the use of the National Center for Automated Data
Exchange of the USSR (VNIIPAS), which has satellite facilities to the States.
While in Moscow, I was told that the Soviets pay in Rubles. Costs were
undergoing revision, but this was what they were when I visited Moscow.
100 Rubles setup
5 rubles/month plus 1.33 rubles/minute connect charge for NON COMMERCIAL
100 rubles/month plus 1.33 rubles/minute connect charge for COMMERCIAL
Also a "Per 1000 characters" charge but nobody knew what it was.
ACCESS:
Through the Soviet institution in Moscow, The Soviet person dials in either
2400 baud or 1200 baud modems. A local number in Moscow is used (In Pulse Dial
mode only).
The Moscow phone system is mostly old step by step switches. It's
incredibly primitive and no-doubt massive, with just about Everybody having a
phone, and 2 - 5 public phones per block. Even individual rooms in MOST of
the Intourist hotels have separate lines to the Phone station. Their phone
system is a hodge podge system of old funky in-band equipment mixed with new
modern digital service, usually between the major cities. An elaborate system
of accounting is sitting between your hotel phone and the rest of Moscow to make
sure you get your phone bill when you leave your favorite Intourist hotel.
Apparently all the lines are run through ducts under the streets, and a lot of
moisture gets in there. It's especially bad when it rains, but while I was
there, everything was frozen.
Lines are incredibly noisy, and in MANY cases, I've had to call the party
back because of bad and noisy connections. Phone calls from the hotels into
Moscow are free, but calls to distant cities are charged to your room, and
are VERY inexpensive. Public phone calls are only 2 kopecks, and 15 kopeks
will get you a 1 - 3 minute call ANYWHERE within the Soviet Union, depending on
distance. When I tried to Access BIX from Moscow, it took us an HOUR to get a
line good enough to use for 1200 baud. Once we got in, the quality was
pretty good using a Robotics Modem. Not knowing if BIX was on telenet, I
tried in vain to access BIX, even if they HAVE telenet access, or even getting
the address. Soviets will have LOTS of problems getting modems. And worst yet,
they will have to get "Error correcting" modems to even GET to the Teleport
system. I suspect that the SF/Moscow teleport people will eventually get data
quality lines for their users through the Ministry of Telecommunications who
maintains and controls the phone system.
On the American side
====================
On the American side, I suspect a local number is set up to connect to
modems and data processing equipment eventually being sent over the satellite to
the Moscow computer.
$100 setup
$200/month for COMMERCIAL use + $15/hr
$75/month for NON-COMMERCIAL Enhanced services + $15/hr
$25/month for NON-COMMERCIAL Basic service + $15/hr
Enhanced service: Includes having the Moscow side making hard copies of
your messages, and getting it to Moscow Clients. Follow up phone calls to
Soviet clients, and other "Cattle prodding" services designed to aid the Soviet
side in getting connected to the Teleport. For instance, you can send a note
to the Moscow side of the teleport asking them to call your client so you can
get a vital piece of information. Same going the other way, Soviet clients
can send short messages to the States.
ACCESS:
A local number in SF will probably connect you to the Soviet computer.
SF/Moscow teleport now has DIRECT satellite service to the Moscow computer.
There is ALSO direct-data services provided by the Teleport, and prices
vary depending on circumstances.
A few comments on Intourist, and the Intourist hotels
=====================================================
Always bring your OWN toilet paper. In combination with the bad food,
and making a lot more appointments with "nature", one doesn't want to use what
the Soviets call Toilet paper. I would rather use the Pravda for my
"Important paper work", instead of using that sandpaper.
Don't expect to find a clock in your room, or the fancy conveniences found
in Western hotel rooms. For instance in Soviet Georgia in Tbilisi, the hotels are
NOT heated until the END OF OCTOBER. The weather in Tbilisi was in the mid
50's, dropping down to 45 F at night.
All the plates, dishes, and table ornaments all look the same, and very
often, the plumbing doesn't work. The rooms have color TV, which I use for
a clock, because the stations display a test pattern which also displays the
time.
If you go to Leningrad, DON'T drink the water. There are a lot of little
nasty bacteria that can cause serious problems. Moscow water is FINE to drink,
and it's better than in Oakland or in NYC.
The Intourist guide WE had was very helpful, informative, and offered us
total freedom. I often neglected to tell my guide where I was going, nor did
she care. One VERY IMPORTANT thing to remember about Intourist, is that it's
a STATE RUN organization, or often referred to as an "Organ". It's not
advisable or required that you volunteer any information such as who you have
met, visited, or what you have seen, to your local Intourist guide.
Intourist guides are NOT required to accompany you EVERYWHERE you go. They are
at your disposal, should you prefer to use them. Costs of their services
vary, depending on what you want to do, and the size of your group.
On ones FIRST visit to the USSR
===============================
GO WITH A TRADE GROUP!!! It's the BEST way to visit the USSR, because the
group leader has been to the USSR many times, knows the procedures, and
spends LOTS of time haggling and begging the Intourist agencies for nice hotel
space, dealing with the visas and arranging the contacts on the Soviet side.
Go with groups of 5 to 15 people, but try and avoid groups catering to more
than 15 people.
The Projects for Planetary peace in Monterey, California. was the group I
went with. They promote citizen diplomacy, and provide very informative
Plenary sessions and classes dedicated towards making one more informative about
the Language, customs, and philosophies of the average Soviet person. If you
plan on going, you will be given an opportunity to fill out a questionnaire so
a Soviet counterpart can be located and contacted. Usually, you will meet
with the Soviet peace committee, who makes the arrangements for you to meet
your counterparts. It's an incredibly efficient system.
The trip starts off with a flight to Helsinki, for a 4 day stay in a plush
country manor (Heikko Manor). During this phase, you will meet your leader,
and the rest of the group. There are 3 meetings a day, intensive training in
learning the NECESSARY Russian, and customs. At the end of the training, a
city tour of Helsinki is planned.
After the 4 day sessions, the group busses to the train station, to board
a Soviet train for the trek across the border into the USSR. Soviet customs
will usually NOT inspect your luggage upon entry, but DON'T depend on it.
Once within the Soviet union, you will meet your Intourist agent who will
escort your group to your hotel. Each trip is different, and usually 3 cities
are visited. All expenses while within the USSR is taken care of. The
average costs are $2500 to $3500 per person, and includes EVERYTHING except
gifts, phone calls, and laundry.
During the process of meeting my counterparts, I was given the opportunity
to visit them again at THEIR expense. All I have to do, is to get to an
Aeroflot city (NYC or Wash DC), and the rest of the expenses are covered. I
will probably not take them up on the offer, because I suspect they would
expect to get something substantial from me, which I could NOT deliver. Before
I would accept an offer like this, I would be very careful and clearly explain
to my Soviet contact what I CAN and CANNOT do.
Please plan on spending a lot of time prior the trip to:
a) Learn Russian, or enough words to count, buy things, and get around.
ESPECIALLY, learn to read and pronounce Russian like "Excuse me", "Thank you",
"Good morning" etc.
b) Study and read about the Soviet Union before visiting, check out
special PBS TV programs, or meet a Soviet American group.
c) Never call them "Russians", as there are MANY "Nations" within the USSR
like Lithuania, Georgia, Ukraine, etc Each one has their own language, and
ALL can speak the National Language of Russian.
I hope this information will be useful for those who are interested in
developing some type of Business relationship with the Soviets.
If there are any points I have left out, Please feel free to Email me, and
I'll be glad to give you the answers.
John D
======
Programmers Network
Email: WELL: crunch
BIX: crunch
UUCP: uunet!acad!well!crunch
Please post this onto other systems like the Arpa Net, BITNET, and
the other networks. And I hope this dissolves a few Myths about
the Soviet Union.