Russia's Federal Migration Service apprehended about 150 Chinese businesspeople at Moscow's Cherkizovsky Market last Wednesday, on the ground that they had violated the country's residency regulation.
This was the third time that Chinese people were detained by the Russian authorities in two days. It is a continuation of the "Gray Customer Clearance" trade activities recently launched by Russia.
The detention of foreign businessmen happened two years and five months after the mayor of Moscow ordered the largest market in Eastern Europe to shut down. The market, established in the early 1990s, is the biggest daily wholesale market in Russia; and, a place of business for about 80,000 Chinese, many of them from Wenzhou in the eastern coastal province of Zhejiang. Since the Soviet era when the country had a huge demand for light industrial products, cheap but quality Chinese goods have been popular among the Russians.
Chinese businesspeople have long been exporting goods to Russia by chartered flights and paying farming taxes - a type of customs clearance that is at a 6 to 7 percent discount to the official levy. The reason for recourse to this, by the Russian authorities, is that official customs clearance formalities are hard to meet. Russia's customs, tempted by the huge benefit in this discounted channel, deliberately complicate official clearance procedures, thereby forcing foreign businessmen to skip the official route and turn to "Gray Customs Clearance".
The vitality of trade depends on people's demand for goods. Whatever the changes in the international situation, Russia people cannot dispense with shoes, clothes and other articles of daily life. This is the underlying reason why the sprawling Cherkizovsky Market has long flourished. Therefore, the latest closure of the market and seizure of huge quantities of Chinese goods on the charge of Chinese businessmen violating Russian laws and regulations, is unlikely to check their own people's demand for such consumer items.
Undoubtedly, the market needs to be run by rules. But how to standardize rules is a problem that deserves to be addressed soonest. Rules can be effective only when they meet the basic consumer demands of ordinary people.
According to Chinese businessmen long engaged in China-Russia trade, the latest dispute has its origins in the longstanding customs formality of chartering planes and farming taxes, which practice has had tacit acceptance in Russia. On the one hand, Russia enjoys the benefit of the commodities that freely flow under prevailing practices. On the other hand, Russia hits out at the practice while being reluctant to improve the procedure. The ambivalence indicates the Russian government's predicament in the matter of trade policies; and, its attempt to use such a controversial policy to conceal its difficulties in the process of its policy formulation.
In the latest raid, Chinese businessmen have doubtlessly become victims of Russia's flawed policy. In the past two and a half years - since the announcement in 2007 to shut Cherkizovsky Market - the practice of chartering planes and farming taxes was never stopped. Even the market's actual closure later has not stopped goods being smuggled into Russian territory.
All these indicate that the closure of the market will not change Russia's trade situation. There is huge demand in Russia for cheap foreign commodities. It is expected that more such markets may emerge in the wake of the closure of the Cherkizovsky Market.
Chinese businesspeople will not leave Russia because of this development, and Russian consumers are still attracted to low-priced Chinese goods. The Chinese business people have suffered huge losses in this campaign - an estimated $2 billion. However, such irresponsible behavior by the Russian authorities will eventually compromise the interests of Russians, too.
It is a matter of regret that the Chinese businesspeople have suffered losses, which they should not. It is our fervent hope that the Russian government will work out a viable policy and prevent the tragedy from being repeated in future.
(China Daily July 16, 2009)
