My first trip to Poland was in February of 1990. I arrived in Warsaw on a train from Berlin packed with Poles returning from the West. Most of them young, laden with all types of Western electronics including televisions, computers, and VCRs for sale on the black market. Emerging onto the platform, I was greeted by Tomasz Szewz, soon to become our company agent in Poland. Eyeing my considerably rumpled suit and demeanor, he must have wondered why on earth a Western businessman would choose such an arduous mode of travel.

For me, like many Westerners who closely monitored events in Eastern Europe, the collapse of the Berlin Wall, closely followed by the uprising in Prague, removed the final physical and psychological barrier to exploring opportunities for trade in the region.

My intention was to begin by testing the waters for small, commercially viable companies interested in producing consumer products for export while keeping an eye on the future domestic market. Having traveled many times to the Soviet Union, I was quite familiar with the hallmarks of a centrally planned economy: sagging infrastructure, intransigent bureaucracies, a demoralized labor force, etc. However, the fact that the winds of change suddenly became hurricanes, particularly in Poland, Hungary, and Czechoslovakia indicated a historical transformation was taking place - one that would bring with it, albeit gradually, opportunities previously undreamt of. Also, I reasoned, if comprehensive and lasting change were to occur, it required a new focus on smaller commercial relationships. By this I mean a willingness on the part of Western businesspeople to assume the risks and rewards of entering into small-scale ventures with enterprising East Europeans.

It was with these principles in mind and a pocketful of ideas that I came to Warsaw. My first impressions of the city were certainly in accord with the drab Soviet-style architecture I had come to know so well. Heavily damaged during World War II, the city has been largely rebuilt and, due in part to a lack of funds, bears the heavy stamp of Stalinism. The Palace of Culture and Science, a sprawling mass of concrete (a gift from the Soviet Union) does little to dispel these impressions. Past and present often manifest themselves in surprising anachronisms. Coming out of the Warsaw Marriott. the city's most modern hotel and one of its more successful joint ventures, I nearly collided with a horse-drawn cart piled high with coal, which the Poles still use to heat their homes and businesses with.

However, despite the fact that Poland continues to suffer the pains of transition, one finds a great deal of evidence of entrepreneurial activity from the small fruit kiosks on the street to private rental agencies in the cities. Touring several small privately-held factories in the Lodz region west of Warsaw, I was enormously impressed with the level of enthusiasm, dedication, and vision displayed by the management and workers alike. Some enterprises were indeed already quite successful. Finishing up a meeting with the owner of a decorative ironworks factory which employs 30 full-time laborers I was startled to find a Porsche parked in the driveway. " It belongs to the owner," I was casually informed. " Who's scouting whom?" I thought to myself.

Though I was to continue on to Hungary and Czechoslovakia and to be taken with opportunities in both countries, it was with in Poland that we ended up doing the greater share of our business. Several factors contributed to this. To begin with, while the former two ex-communist states are now virtually inundated with opportunity-seeking Westerners, mostly Germans, Poland is still largely unchartered territory. This is true in particular for the smaller investor who while encountering a fair degree of activity on the macro level (the Duponts and IBMs for example) will find himself a pioneer in a wilderness of small-scale opportunity.

Other factors include a well-educated and easily adaptable workforce; relatively low wages and overhead costs; and the country's advantageous geopolitical position, which makes it a back door to opportunities in both the European Community and the Soviet Union when the latter someday hence becomes a viable market. In the short term, Poland's expected " associate status" (along with Hungary and Czechoslovakia) in the European Community will give Polish companies and their foreign partners unrestricted access to West European markets. This is expected to be a special boon for small- and medium-sized companies that stand to gain from European development projects aimed at assisting them.

To a degree not seen in its neighbors, Poland has boldly undertaken to jettison the deadweight of a dysfunctional economic system. Since inheriting a country in economic crisis in August 1989, the o government of Lech Walesa and Prime Minister Jan Krzysztof Bielecki has implemented so-called " shock therapy" measures in an effort to get Poland on the road to reform. Sweeping reforms include wage and price controls, reduction of subsidies, and the closing of inefficient state-owned enterprises (SOEs). The effect of these measures on the Polish people has been brutal, and they underscore the government's commitment to real reform.

So, why are western businessmen, particularly Americans, so skittish about becoming more involved in Poland? Mark Raczynski, vice president of IPAC, a Washington D.C. consulting firm specializing in Poland, believes several factors are at work. " First," he says, " the political situation is very fluid in Poland. You cannot separate the politics from economics." Political infighting within Solidarity, combined with strikes and other social unrest stemming from the reforms have not helped create the impression of stability in Western eyes. " Also," Raczynski continues, " Poland suffers from an image problem, particularly in America, where it does not enjoy the reputation for engineering that, say, Czechoslovakia does." He also points to the nomenklatura. Communist holdovers from the old regime who, in accordance with the 1989 Roundtable negotiations, hold 35 percent of the seats in the Sejm's lower house. " The nomenklatura, by trying to appear as the champion of the workers, is attempting to sabotage reform legislation promoted by the Prime Minister."

These factors have cast doubt in the minds of large-scale Western investors, and have prevented them from sinking more money into Poland's growing private sector. But wariness on the part of the big operators should not necessarily inhibit the small ones from investigating potentially lucrative opportunities. Although criticized for its slower-than-expected pace, privatization, a major aspect of the reforms now in progress, has resulted in a large number of smaller enterprises, including many shops, being handed over to private interests. Contrast this with only 11 out of some 8,000 SOEs which have been fully privatized.

The new owners of these companies (in many cases they were de facto owners already) are highly motivated and eager to cooperate with Westerners. Americans are especially welcomed since the enjoy a special status due to the vast numbers of Poles who have emigrated here. I have also found them to be realistic about their circumstances and willingness to listen to advice and adapt their production methods to meet Western standards.

This, of course, is not to say that Westerners do not face a host of obstacles. Certainly we have confronted just about all of them: inadequate banking systems, lack of quality control, supply problems, and poor communications, to name a few. In addition, local officials have had a difficult time keeping up with the reforms emanating from Warsaw. This can make trying to tackle such issues as new tax laws a confusing and very frustrating experience on the local level.

The Polish government is, however, actively taking steps to make things easier for foreigners hoping to do business in Poland. Recent measures include a joint venture law permitting one hundred percent foreign ownership, full repatriation of profits after taxes, and tax laws which require foreigners to pay the same as Polish companies. In some cases where foreign participation exceeds $2 million, tax exemptions may be available.

For its part, the United States has agreed to forgive 75 percent of Poland's debt, and has promised $800 million in aid over the next three years, a portion of which is earn larked for private enterprise. Placing a strong emphasis on the need for small business development, the newly created Polish-American Enterprise Fund offers loans to joint ventures and American businesses operating in Poland. Government loans start out at $20,000.

Doing business in Poland is a challenge, just as it is any of the other former Soviet bloc countries. Flexibility is a prerequisite, especially in the early stages of a venture's development. However, America cannot afford to overlook Poland or any of the other newly democratized states - not with 1992's unified European market coming up. Opportunity knocks, and it's time Americans opened the door to it.

Rusty Barber is a general partner at Voyageur East Trading Company, a Boston-based firm specializing in import/export and business development.