When Elizabeth Braslow received a purchase order for an amount equal to her small company's annual sales, she was delighted. But she also was concerned about the buyers, and for good reason.
Braslow is majority owner and chief executive of Chase Industries Inc., a Rancho Dominguez company that has been making packaging equipment since 1970. With her husband, Jim, and a staff of 10, Braslow makes machines that wrap products in plastic ranging from picture frames to aircraft wing panels.
In 1994 and '95, representatives of a distributor that caters to the Russian dairy industry visited Chase Industries many times, always asking questions but never placing an order. Braslow eventually told the middlemen to stop visiting unless they came to buy.
The Russian dairies were seeking a company to make milk cartons and to wrap the cartons in six packs to facilitate their shipment to stores. At the time, many Russian dairies were selling milk in bottles, which consumers seldom returned. The missing bottles cost the nearly privatized Russian dairy industry dearly.
One day in late 1995, the distributors showed up with an order to purchase 27 of Braslow's machines for $800,000, although financing had not been secured. While Chase Industries had made several foreign sales, mostly to Canada, Mexico and Chile, all had been five-digit deals; this would be by far Chase's biggest foreign sale to date, to be delivered over two years.
But it also began Braslow's lesson in seller beware, Russian-style.
Despite having heard horror stories about rampant corruption, organized crime and scads of scams in Russia, Braslow felt the size of the order warranted action. She was eager to make the deal work and sought help from the World Trade Center Assn. of Los Angeles-Long Beach.
The center's director, Vance Baugham, could help: As a private consultant, for eight years he advised Russian authorities on steps they should take as they moved from a state economy to a market economy. And he had previously helped U.S. firms negotiate Russia's business minefields.
"The question Elizabeth and I discussed was, 'Is the business worth it to you and how can you resolve the issues so you can continue to maintain business,' " Baugham recalled. "It's learning to be a little tougher."
Toughing it out would indeed become the theme of Braslow's Russian adventure.
With Baugham's help, a Canadian company was found that agreed to make the milk cartons, and Chase Industries signed on to provide the machinery to plastic-wrap the cartons. Through the carton maker, the distributors were able to work with a Canadian bank that would guarantee the financing.
Chase Industries also agreed to train a Russian technician on how to install and maintain the packaging equipment, and it agreed to travel to Russia to install two of the 27 machines, which were destined for 26 cities.
In fact, Braslow had considered installing all of the machines, but narrowed it to two after Baugham urged against it.
"Vance advised us that that was impossible," she said. "He seriously warned us about doing installations in Russia, but we listened to our customers and we wanted to please them."
Braslow and her husband headed for Izevsk, a former military factory town at the foot of the Urals. It was one of the two cities at which Russian dairy officials had asked Chase Industries to install their product; the other was St. Petersburg.
It was the summer of 1997, and the couple had allowed three days in Izevsk for installation and sightseeing. But upon arrival in Moscow, they were told their flight to Izevsk had been canceled.
Eventually, the Braslows learned the runway there had been damaged by terrorists.
Joined by a former MIG mechanic assigned to them by the distributor who served as their translator and bodyguard, the Braslows decided to travel the 750 miles to Izevsk by train--a 25-hour ride.
"The windows were nailed shut to keep out robbers," she said. Though in the first-class section, their compartment was no bigger than a closet.
The dairy in Izevsk was a former munitions plant, a concrete monstrosity containing decades-old equipment and 750 workers, most of whom seemed to be doing nothing, Braslow said. Their packaging machine hadn't even been removed from its crate although by then it had been there for weeks.
Although they had wanted to use their own translator, the Braslows were supplied with a third-year engineering student who, they said, was debriefed daily about comments the Americans had made the previous 24 hours.
Installation took longer than expected because there were virtually no parts with which to add the packaging equipment to the assembly line. Although the Braslows were eager to install the equipment and leave, a man with a machine gun came around at 5 every evening and ordered them out, Braslow said.