Thousands of Chinese retailers are experiencing their coldest
winter in Russia as they are forced to leave the market and sell
their products at below cost.
Their withdrawal from the market was prompted by a new Russian
regulation on immigrant labor to prevent foreigners from operating
retail businesses in the country.
From this month, foreigners will no longer be allowed to sell
alcohol and medicine in Russia. They will also be subject to a
limit of 40 percent on the number of vendors operating in a
market.
And from April 1 foreigners will be banned from any type of
retail activity in Russian markets.
The aim of the new rule is to encourage Russians to take up jobs
in the sector and help rid markets of criminal groups. But Chinese
retailers will be one of the biggest victims of the campaign.
Weeks before the New Year is normally mid-season for Chinese
businesspeople. But there are far fewer Chinese retailers in the
markets of some Russian cities.
A large market in Moscow, previously dominated by Chinese
merchants, is now almost closed.
"Some Chinese dumped their goods before the New Year and went
back home," said Wang, a Chinese student.
And those who decided to stay in Russia are trying to quickly
shift goods to lower the risk of high stock.
The regulation will also hurt Russian market owners a stall that
once fetched $20,000 cannot even be sold for US$2,000 now.
Since the regulation was approved at the end of last year,
Chinese retailers, stallholders and government agencies have been
seeking a way out.
Some plan to find a local partner to continue the business,
while others intend to register a local company. Chinese embassies
in Russia have asked for regular contact with Russian officials to
try to find an alternative.
The local government of border city Blagoveschensk has applied
for 740 certificates for Chinese retailers from the immigration
administration, but it is far from enough.
Nine out of 10 foreign retailers at Sino-Russian borders come
from China, according to local media. And some 10 percent of these
Chinese businesspeople, who were not granted formal business visas,
will be the rule's first victims.
Chinese retailers need to adjust their business to minimize
loss, according to Wang Lijiu, an expert with the China Institute
of Contemporary International Relations.
"I think some of them should move to sectors such as wholesale,
because Chinese products are so popular in Russia and other
business activities are still open to Chinese players," he
said.
(China Daily January 19, 2007)