HONG KONG - Tens of thousands of Chinese traders evicted last month from the
vast Moscow bazaar known as Cherkizovsky Market lost any chance of a reprieve
this week after officials flown in from Beijing threw their weight behind the
Russian shutdown.
More than 240 of an estimated 60,000 Chinese traders using the market were
detained and goods worth US$5 billion were seized in the crackdown on the
20-year-old, 300-hectare market (for further details, see
Moscow market closure strains Turkish ties , Asia Times Online, July
30, 2009).
Many Chinese who work at the market come from eastern China's Zhejiang and
Fujian provinces and the northern-most province of Heilongiang, helping to make
it the biggest daily wholesale
market in Eastern Europe. Other markets abound in the city, but smaller and of
less value.
China's Vice Minister of Commerce, Gao Hucheng, arrived in Moscow early last
week with officials from the ministries of Commerce and Foreign Affairs, the
General Administration of Customs and trade officials from Zhejiang and Fujian,
for talks with Russian officials, including what help could be extended to
Chinese traders caught up in the closure.
The next day, about 40 Chinese vendors were able to remove impounded stock.
Gao said on the ministry's website last Thursday that Russia was determined to
crack down on "grey customs clearance" - where traders get around the taxes and
delays incurred by going through official customs channels - and that China and
Russia had a consensus on standardizing trade.
"We hope Chinese traders abide by Russian laws and change their way of doing
business," Gao said.
The view would also be supported by domestic Russian manufacturers of clothes
and other goods, which comprise a big part of the imports sold at Cherkizovsky.
They have argued for several years that contraband is illegal competition
undermining their attempts to revive this sector in Russia.
The argument also applies to gold jewelry that comes in from India through
Dubai, and Turkish goods. Diversification of small business is difficult in
Russia without halting the huge contraband flows, and those can't be shut off
unless Cherkizovsky is reined in. That in turn is not possible without
attacking the Russian officials who take bribes to let everything through,
which again in turn requires the go-ahead from the highest levels of
government.
Sun Zhuangzhi, an expert on Central Asia at the Chinese Academy of Social
Sciences in Beijing, said the closure of the market was in part a reaction to
concern at the degree of corruption among Russia's customs officers amid a
slowdown in official trade between Russia and China since the global financial
crisis. Sino-Russian trade plunged 39.2% year-on-year to US$13.5 billion in the
first five months, the first drop in the past decade, a spokesman of the
Ministry of Commerce said. China's exports to Russia dived 48% to $6.06 billion
in the period.
"Russia authorities want to rein in the customs, which have become too
corrupt," Sun said.
Russian authorities closed the market on June 29, citing health concerns and
storage violations. Numerous traders were caught on visa irregularities. The
boarded-up market now has around 16,000 containers loaded with unsold stock
inside, China Daily reported, citing Yu Hengcan, vice chairman of the Moscow
Association of Overseas Chinese.
Gao said the Moscow city government had set up an emergency headquarters to
help Chinese traders transfer their goods out of the market, China Daily
reported on Monday. The city will provide the traders necessary assistance and
legal aid concerning the placement of their goods and the setting up of a
standardized market, the report said.
Among those hit by the crackdown, "Lily", a clothes trader from Zhejiang who
asked that her real name not be used, has been doing business in the market for
15 years, along with traders from Vietnam and throughout Central Asia.
"I have some cash and goods worth about $200,000 in the market now, but I don't
know if I can get it back," Lily said on the phone.
This is the second time Lily's goods have been seized. In September, a raid was
launched following a call from Russian Prime Minister Vladimir Putin for a
crackdown on smuggling at the market.
During the last raid, $2 billion of allegedly smuggled commodities was
confiscated, media reports said.
"In September, I lost goods worth more than $1 million," said Lily. "I have
already chalked up a huge debt and cannot get money to pay off a supplier."
Many of her compatriots are now caught in the same trap. "Most of the Chinese
businessmen here have nothing to do now and a few of them seem suffering some
kind of phobia. They do not answer any calls from China, frightened they are
for collecting debt," said Lily.
Sun at the Chinese Academy of Social Sciences in Beijing said traders between
Russia and China had a long history of customs avoidance.
"For a long time, Chinese businessmen found it difficult to get goods across
the border through Russian customs and so they resorted to other channels," Sun
said. "It's right for Moscow to fight against illegal trading practices. But it
needs time for Chinese traders and Moscow to work together. Besides, the market
is also important to Russia's investment environment and their people's need
for daily goods," he said.
David Chiu, chairman of the Hong Kong Small and Medium Enterprise Progress and
Investment Association, put the blame on overly bureaucratic Russian customs.
"Your goods would be stuck for at least a few months if you followed the rules
of Russian customs," said Chiu. "That's why Chinese traders have been forced to
go through the grey customs clearance."
Lily said paying money to agents to get goods through customs was cheaper, with
as much as a 30% discount to the official levy.
"Grey clearance is in fact welcomed by Russia's customs officials, who get a
huge benefit from this discounted channel. That's why they deliberately
complicate official clearance procedures, forcing us to turn to grey
clearance," she said.
Due to complicated clearance procedures, Russia's customs services allow
"clearance companies" to help import goods, China Daily reported. These firms
often do not provide clearance paperwork, resulting in imports being labeled as
smuggled goods, the report said.
Olivia Chung is a senior Asia Times Online reporter.
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