ABSTRACT
Germany does more business with Eastern Europe and the USSR than any other Western country. The long-standing German predilection for Osthandel, or trade with the East, is driven by geography. Ethnic Germans, including many merchants, settled throughout Eastern Europe beginning in the thirteenth century. Up until the full impact in 1988 of Soviet president Mikhail Gorbachev's perestroika in the Soviet Union, the East was a market that seemed not worth the trouble to most Western firms. One of the keys to German success in penetrating Eastern bloc markets was its careful research in identifying shortfalls in each country's plan and then meeting them with German production. The Germans have been in the forefront of joint venture activity in the Eastern bloc. By far the single biggest problem German firms have had with joint ventures in the East are deliveries of all kinds: materials and subassemblies come too late or not at all, and quality is poor.
