Vienna can serve as a gateway to Eastern Europe for U.S. firms

Business America, August 13, 1990

Vienna Can Serve as a Gateway To Eastern Europe For U.S. Firms

Austria has traditionally played an important role in East-West trade. Its strong trade ties with the countries to the East have resulted from a number of factors: geographical proximity to Eastern Europe, historical links with the region, traditional trade ties, Austria's stability and internationally recognized neutrality, and a certain rapport of Austrians with neighboring peoples to the East. This combination of factors has made the Austrian market economy a natural bridge for trade between East and West.

The Commercial Counselor at the American Embassy in Vienna recommends that U.S. companies interested in initiating trade with Austria's neighbors in Eastern Europe take a hard look at Vienna as a base of operations. Many U.S. firms have already established offices in Vienna to evaluate East European markets for their products and to initiate trade contacts there.

As East European countries gain in political stability and continuously move towards market economies and the potential for sales increases, some U.S. firms will then consider either direct investment in the East or opening sales/service offices there to be managed from a Vienna-based operation. In the interim, a location in Vienna offers a certain insurance. Leading U.S. firms, such as IBM and Hewlett-Packard, are already placing staffs in Vienna to penetrate East European and Soviet markets.

The following facts illustrate the key role of Austria in East-West trade.

* During the 1980s, more than 700 foreign companies covered East European markets from Vienna.

* Of the some 300 U.S. firms now operating in Austria, 200 are doing business in Eastern Europe.

* In the past few month, more than 200 foreign or multinational firms have either set up or announced intentions to center their East European activities in Vienna.

Vienna offers numerous advantages to U.S. firms interested in a marketing or production base to service Eastern Europe, but intent on maintaining the security of a politically and economically stable Western environment. Among the more important advantages are the following.

Geographic Location--Austria is centrally located in Europe with proximity to most East European markets. Active political and economic links have been maintained with these countries, and cultural and historic ties to the East have influenced the Australian business environment. East European business people have traditionally had few visa problems visiting Vienna, and travel to the East is largely free for Austrian business people. More than 60 East European enterprises and institutions currently maintain operations in Vienna.

Strong Support Organizations--Austria's banking and other financial services organizations are especially strong in the area of East-West trade. Local institutions know how to do business in Eastern Europe, and many maintain trading houses which have expertise in countertrade and buy-back techniques. Austrian as well as U.S. and foreign Vienna-based companies have expertise in dealing with East European countries on such matters as personnel management, advertising, taxation, market research, tourism development, insurance, real estate, and legal services.

Low Corporate Tax Rates--Corporate tax rates in Austria are among the lowest in Europe. Special tax considerations are in place for holding companies.

Excellent Transportation System--Air and rail connections from Vienna to principal capital cities in Eastern Europe are excellent, and the handling of visa requirements is facilitated, as all East European countries have diplomatic and consular representation in Vienna. Road and rail links between Vienna and capitals of Eastern Europe have been designated for upgrading and expansion.

Multi-Language Personnel--Persons fluent in English and languages of both Western and Eastern Europe are available at moderate wage levels. Austria's excellent school system also provides a continual supply of well-qualified and technically trained personnel.

Doing business in Eastern Europe requires patience, persistence, and imagination combined with a special understanding of the cultural and political aspects, and the legal and business practices of the region. Austrians have developed all of these characteristics over the centuries as East European emigrants to Vienna brought with them their native languages and cultures which were integrated into Austrian society. Finally, the city of Vienna is hospitable and offers a wide spectrum of cultural and leisure activities and a number of international schools. All of this makes Vienna an excellent location for developing business in Eastern Europe.

The June 18, 1990, edition of Business America is largely devoted to the subject of trade and investment in Eastern Europe. Additional information is also available from the Commerce Department's Austria Desk, tel. (202) 377-2920; and the Eastern Europe Business Information Center, tel. (202) 377-4473; fax (202) 377-4473.