European, Asian Firms Try To Hurdle Barriers to Trade

APPEARING serene and assured, Lo Hee Hock, managing director of the Malaysia-based Boston Chair System Co., stood among the office furniture in his company's trade fair booth here.

But as he glanced out at the people strolling the aisles at Hamburg's Asia Expo '94, his reserved exterior belied a nervousness within. The event in this German port city on the Elbe River marked the first time that Boston Chair had exhibited at a trade fair outside Asia, and Mr. Lo wondered aloud about the high cost of participation.

``It cost about $15,000 for us to come here, including the cost of freight shipment from Kuala Lumpur,'' he said. ``For us that is big money.''

There is no guarantee that Boston Chair will recoup its outlay, but participation was worth the risk because the potential is so great, Lo explained. ``We have big expectations,'' he said.

Boston Chair was among many small and medium-sized Asia-based companies who were first-time exhibitors in Hamburg with hopes of breaking into the European market. The fair hall was full of Chinese, Malaysian, and Taiwanese merchants looking to make contacts.

Given the high level of mutual interest, many merchants and experts are optimistic about a dramatic rise in European-Asian trade in coming years. ``Interest among Europeans and Asians is growing more and more,'' says Olivia Angelini, a trade representative for the Asian Sources Media Group, an Amsterdam-based publisher of trade journals aimed at matching European and Asian businesses.

Asia's large potential market

``In the eyes of Europeans, the price of Asian products is right and the quality is improving,'' Ms. Angelini adds. ``Also, Asia represents a large potential market.''

In recent months, European leaders have publicly expressed concern that the United States is refocusing its political and economic attention away from Europe and toward Asia. But at the same time, several European governments - particularly France and Germany - have been making their own efforts to boost trade ties with Asia, particularly China.

Last week, French Prime Minister Edouard Balladur made a fence-mending visit to Beijing. Trade relations have suffered between the two nations since 1992, when France sold $2.6 billion in arms to Taiwan. The sale prompted retaliation by Beijing, which discriminated against French companies competing for Chinese government contracts.

In 1993, France's share of China's imports stood at 1.6 percent; in 1980 its share was 3 percent. The outcome of Mr. Balladur's visit was not a total success, mainly due to a diplomatic flap involving the Chinese government's detention of dissidents.

Germany, with its economy heavily reliant on exports, has been more successful in boosting trade with China. During a trip to China last November, a high-powered German trade delegation led by Chancellor Helmut Kohl signed deals worth about $1.8 billion.

Bonn has intensified efforts this year to find new Asian trade opportunities. The German Foreign Ministry, for example, formulated an Asian development plan in January, saying greater trade could help create up to 400,000 jobs for the struggling German economy.

German government officials say they will not link human rights issues with trade, something that should facilitate contacts with China. German Foreign Minister Klaus Kinkel says he prefers ``quiet diplomacy'' to resolve human rights issues.

China's mixed record on human rights has been a frequent source of tension in US-Chinese relations, prompting debates in Washington over the renewal of China's most-favored-nation trading status.

Barriers to trade

Despite the growing interest in European-Asian trade, if the two regions are to come close to fulfilling the potential, several barriers must still be overcome, observers say.

Asian exhibitors at the Hamburg fair, which concluded Tuesday, complained about protectionist policies of the European Union. Many Europeans, on their side, complain about the unwieldy decisionmaking process prevalent in many Asian companies, especially in China.

There are also the problems of distance between the two markets, and of language. ``We can speak English, but German is a very difficult language,'' says Cao Hai Dong, manager of the China-based Jiangsu Nantong Silk Import-Export Co.

Geographically, Europe may not be as well-positioned as the US to trade with Asia, Angelini and other experts say. But those European companies that have managed to forge close ties to Asia seem satisfied.

``The Chinese are very loyal,'' Jose Ignacio Lopez de Arriortua, a board member of the German automaker Volkswagen AG, said recently. VW's plant in Shanghai is a leading producer of foreign autos in China.

Some Asian businessmen, meanwhile, quietly say their European business is more lucrative than US trade.

``We do four times more business with America than with Europe. But we like doing business with Europe because the price for our silk is a little higher,'' says Mr. Cao of Nantong Silk, which had European sales of about $100,000 last year.