Removing the Bloc from Joint Ventures in Eastern Europe

Warren, Hugh A., Risk Management

The changes occurring in Eastern Europe during the past few months have augured a dramatic restructuring of the economic and political systems that have existed there since the end of World War II and the advent of the Cold War. These changes present an enticing challenge and opportunity to companies investing in joint ventures in that part of the world.

The preponderance of U.S. investment in Eastern bloc countries is situated in Hungary, with six companies-Digital Equipment Corp., General Electric Co., General Motors Corp., Rank Xerox, U.S. West and American International Group-set up to do business. Japan and West Germany are running neck and neck, each with three companies making a stake in Hungary: Suzuki, Sharp and Minolta; and AEG, Allianz and Colonia, respectively. Companies from France, Italy, Korea and the United Kingdom have invested there as well. The Soviet Union, Poland and East Germany also have attracted investment, with Bulgaria attracting one investor, Japan's Arai Electric. So far, only Czechoslovakia and Romania lack investors.

The Eastern bloc represents a market of approximately 420 million people, compared with 320 million in the European Economic Community and 250 million in the United States. It is an area undergoing change and uncertainty, but with each passing day these countries lurch toward becoming democratic, free-market societies. However, due to the history of the past 40 years the long-term prospects for stability and free markets remain unclear. …

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Publication information: Article title: Removing the Bloc from Joint Ventures in Eastern Europe. Contributors: Warren, Hugh A. - Author. Magazine title: Risk Management. Volume: 37. Issue: 6 Publication date: June 1990. Page number: 22+. © 1999 Risk Management Society Publishing, Inc. COPYRIGHT 1990 Gale Group.

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