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F A X

To: Sergei I. Petrov

From: John Simpson

Meeting between Russian delegation and German team.

The attached report states some of the difficulties as we see them, regarding our common project in Russia. We realise, of course, that this is an extremely sensitive area, and would welcome your comments before we meet. We look forward to seeing you again, and to resolving the problems in order to get production off the ground.

INTERNAL REPORT

To: John Simpson From: Jurgen Simpson

The production schedule is up to one year behind. Provisions, parts and equipment from Germany are arriving on time. The German workers are trying to work to schedule. The problem seems to be a difference in working ethics. We have a very rigid time planning system, which does not fit into the Russian way of working. There is growing unrest between the two labour forces. The weather is a great handicap to our workers, who are not used to the extreme cold. There is a certain resignation among all the labourers, Germans and Russians alike. The local workers have no concept of working to a fixed time plan, which seems to us as if they do not care whether they finish a job one day or the next, or even the next week. I think we are trying to impose our German style of working on to the Russians too much.

Alcohol is drunk while working, and we have not been able to stop that, even though it is, of course, against company rules. There seems to be a discrepancy between our idea of motivating workers with money and promotion and the Russian idea of working for perks.

I would like to add some statistics which I read in an American publication. It gives the Russian opinion about how people became wealthy. I believe we need to take this seriously. There is a cross-cultural problem here which needs resolving.

Russians believe wealth results from:

Recommendation

A meeting should be held between a delegation from Tipper AG and the Russian team. Herr Waclow and I suggest the Russian team be invited to Schwarzenau to look around the plant, and then given a short presentation on scheduling and planning. The presentation should not be too dry, and should include some company history. Russians regard visiting Germany as a privilege and like to hear things described in detail. Then members of the board, the project managers and the Russian people responsible for coordination should go to Russia, examine the problem in situ, and finally meet to discuss possible solutions.

We have to compromise. It is important to develop a personal connection with the visitors, and to leave more time for this meeting – more than we would normally allow.

Internal report. Task 2

Split into two groups, representing the German and Russian interests. The Russian group write a fax in reply, commenting on the report and suggesting a time, place and date for the meeting. The German group write an agenda for the meeting.

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2.Employees formerly based in the Middle East are now without permanent work and go from one job to another around the world. This project could be the start of permanent employment for them, thus solving an internal problem. Many are currently learning Russian in order to take over key positions in production at the end of next year. Organisation is complicated, as some are taking their families with them. Much depends on the production schedule, which is tight. Meeting this schedule is crucial to the German team; time is money.

3.As you know, Tipper has not produced a tractor for three years. We are, therefore, keen to increase production of the All-Round truck. In Germany the overhead costs have risen due to last year's tax and pay increases. The recession caused the price of high-quality vehicles to increase when demand was already falling. Moving production of the All-Round to Russia and exporting from there will be more cost-effective. This information is highly confidential.

John

Cross-cultural chart 1

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Appendix 4

TESTS AND READING COMPREHENSION

TEST 1

I. Read the interview and decide which statements below it are true.

INTERVIEWER Professor Singh, economists are almost unanimously in favour of free trade, but these days it seems that a great many people in industrialised countries are opposed to it.

PROF. SINGH This is a strange situation, because in the past it was the developing countries who used to worry about free trade leading to disadvantage for them because they didn’t have a developed manufacturing industry, they didn’t have firms which could compete with large firms from Western countries, but now many countries like Korea, Malaysia and others feel they can compete with advanced countries on a range of products because they’ve learned the lessons, they’ve been able to import technology from the rich countries, they’ve been able to educate their labour forces, set up an infrastructure, and since their wages are lower, they think they can compete. So now the complaints about unfairness of free trade come from people in the rich countries.

INTERVIEWER And what do you think about these complaints?

PROF. SINGH I think the answer really lies in whether or not the world is moving or operating at a level of full employment, or it is not. When the world economy’s growing fast and jobs are being created, then people are able to put up with the disruptions which free trade causes. What free trade means is that you may have trained for a job, then someone in Osaka learns to produce cars a bit cheaper, and then you in Detroit immediately lose your jobs. Free trade can be very disruptive. But of course it has the advantage that it leads to more efficiency, more output, but people can’t put up with that disruption if they just lose their jobs, but if there are other jobs to go to, then they’re usually able to bear the pain of being made unemployed for a while, while they can go and look for another job. So, it depends upon the level of world economic activity, whether free trade is good for you or not.

INTERVIEWER What about the effect of free trade on countries that are less industrialised?

PROF. SINGH Well, the point is that they may never industrialise because the thing is that they start with an enormous disadvantage. Suppose you want to produce cars in Africa. Well, how are you going to do that, unless they were heavily subsidised, because you can’t compete with the existing car producers, so, obviously, countries which have not industrialised at all need a period of protection for their industry in order for them to make it strong enough to compete in international markets.

INTERVIEWER How are economists or governments in the rich countries going to convince people of the benefits of free trade?

PROF. SINGH If you are talking about free trade, then the best way to promote free trade is to ensure that other measures are taken at the international economic level – cooperation between leading countries to ensure that there is more or less full employment in the rich countries.

But what is also clear is that if the unemployment problem – mass unemployment in the rich countries, 10 % unemployment in Germany, in France and near 10 % in the UK — if these problems are not solved, then people will walk away from free trade, and the world will be poorer as a result, so in order to sustain free trade, it is essential that governments tackle the unemployment problem. The other point is that no country on its own in an interdependent world economy can deal with the unemployment problem just on its own in a single country, it can only be dealt with by cooperation between countries, that the big countries have to coordinate their economic policies, but there is no prospect, unfortunately, at the moment, that they are willing to do so.

1.Professor Singh believes that opposition to free trade in developed countries is a normal course of events.

2.No products from developing countries can compete with those from industrialised countries.

3.Currently, there are more complaints about free trade in advanced countries than in less developed ones.

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III. Mark the only correct answer.

31. The advantage that one country or part of a country possesses over others because it has natural supplies of raw materials, power, labour, etc. which enable it to make a certain product more cheaply is the

32. A different way to say ‘a deficit balance’ is a (an)

33. The tariff which promotes the development of trade between two countries with the duties being lower than those on the goods coming from other countries is called

34. A clause in international agreements in which tariff privileges accorded by a country to any other are extended to all other countries is the

35. A complete ban on the import or export of certain goods is a (an)

37. An exchange of goods to an equal value is a (an)

38. Intermediaries who only sell goods for the principal’s account and in their name are a) exclusive distributors b) consignment agents c) commission agents

IV. Read the text and decide which questions given below the text can be answered according to the information available.

International trade takes place within the framework of agreements worked out by countries in the World Trade Organisation (WTO), formerly known as the General Agreement on Tariffs and Trade (GATT). Over the last 50 years trade barriers have been coming down and free trade, open borders and deregulation now form the ideal for almost all nations, even if the situation is far from one of complete laissez-faire, with no government intervention. Protectionism is no longer the order of the day in most places; even if some developing countries argue that protectionist measures are the way to get their economies going, they avoid using the term.

Trade negotiations are well-known for their epic eleventh-hour negotiating sessions, where individual nations argue for what they see as their specific interests. Countries argue for protection of their strategic industries, the ones they consider vital to future prosperity such as the electronics industry in the developed world. A less developed country beginning car assembly might want to protect it as an infant industry. European farmers argue for their subsidies, where governments guarantee farmers a higher price than they would normally get, making it hard for developing nations to compete in agricultural products. The French argue for cultural protection, pointing out the uniqueness of their film industry and winning restrictions, or quotas, on the number of Hollywood products that Europe imports.

Countries accuse each other of dumping, where exported goods are sold at less than in the home market, or for less than they cost to produce, usually in order to gain market share in the export market. The offending country may reply that it has a comparative advantage in producing these goods (the ability to produce them cheaper than anyone else) and that they are not selling at below cost.

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guarantee payment to the exporter. As soon as the exporting company has dispatched the goods, they must present all the documents to their bank to prove that the goods are on their way and that everything has been done according to the sales agreement. Then the exporter’s bank passes the documents on to the importer’s bank. This bank makes the payment by letter of credit – so the exporter can receive their money and the importer can receive the goods. This method is particularly low risk for the exporter, although you must make sure that you present the correct documents and that you comply with all the terms and conditions of the agreement. If there is any kind of mistake, you could lose the protection of the letter of credit. So this method has fewer risks than the open account or bills for collection, but is not as risk-free as advance payment, from your point of view.

1.The speaker is talking to business people who do not have a lot of experience of exporting.

2.He covers such topics as delivery problems, insurance and banking procedures.

3.Advance payment is risk-free for the importer.

4.If advance payment is agreed upon, the exporter does not dispatch the goods until payment has been received.

5.Documentary credit has fewer risks for exporters than bills for collection and the open

account.

6.When the letter of credit is used, the exporter sends all the documents direct to the importer.

7.A letter of credit means that the importer’s bank guarantees payment.

8.The letter of credit method may involve some risks for the exporter if the documents are not

correct.

II. Choose the answer you consider correct.

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