Accepting Soviet Goods in Countertrade: Products with Product Quality

Since the collapse of world oil prices in January 1985, and Mr. Gorbachev's subsequent call on Soviet enterprises to increase exports of "high value-added manufactured goods" to decrease the country's dependence on oil for export earnings, pressures on Western trading partners to engage in countertrade have multiplied. Countertrade is one or more transactions involving the payment for materials purchased with other goods. Payment can be made either completely with products or commodities, or partially with products/commodities and partially with cash. A key consideration for Western companies countertrading with the Soviets is the usability or the salability of the goods they receive in exchange. This article examines various considerations in the evaluation of Soviet product quality. The impacts on product quality generated by the Soviet Union's centrally planned economy, its foreign trade system, and its quality control system are explored and evaluated. The emerging importance of countertrade in Soviet foreign trade is also discussed. Finally, some predictions regarding the future of Soviet product quality and the implications for Western firms accepting Soviet goods in countertrade are discussed.