Business booms on Russian border
Fortunes have been made in northeastern city during 40 years of reform and opening-up
Many people quit their jobs to plunge into business and make money after China’s reform and openingup policy was launched in 1978.
The wave of small startups spread to Mudanjiang, in northeastern China’s Heilongjiang province, which shares a border of about 200 kilometers with Russia, and many have prospered on crossborder trade.
Yang Shixin, a 51-year-old from Suifenhe, a city that forms part of Mudanjiang, owes her fortune to the policy.
Suifenhe, just 190 km from Vladivostok, the largest harbor city in the Russian Far East, has become the bridgehead for Sino-Russian trade. Civil trade markets, where individuals from the two countries could barter goods, opened there in the 1980s, and Russians flooded in to exchange goods with Chinese in the 1990s, when the markets were flourishing.
“In 1991, for the first time, I gave a box of underwear in exchange for a piece of woolen cloth at the SinoRussia trade center,” Yang said.
“Then I sold the woolen cloth for 100 yuan to Chinese buyers, while the underwear cost me just 5 yuan. I earned my first profit and it was unimaginable because my salary as a saleswoman at the then Stateowned supply-marketing cooperative was 84 yuan a month.”
Yang visited the trade center nearly every day after that “incredible” experience.
“In the 1,000-square-meter outdoor barter trade center, Chinese stood behind counters that formed circles, from inside out, and Russians gathered inside the circles to exchange goods such as coats and Russian nesting dolls,” she said.
“To enter the center and use a counter, we needed to buy tickets, usually priced 5 to 10 yuan, from the industrial and commercial administration.”
The tickets went on sale at 3 am and demand was so high that Yang had to wait in line from 11 pm to make sure she got one. She also needed to find time to trade after work.
In 1993, despite opposition from her family, she quit her job, which they regarded as an “iron rice bowl” with guaranteed employment and good benefits, to start her own underwear business, which made her about 60,000 yuan a year.
By 2006, her annual profit had increased to about 1 million yuan, and she was able to buy a 90-squaremeter apartment in Beijing.
Complementary needs
Zhao Guodong, deputy director of Mudanjiang’s commerce bureau, said materials were scarce during the planned economy period and goods did not have prices. So when the market began to open up, traders could easily sell at a good price and make a fortune.
“China and Russia had complementary needs,” he said.
“We sold light industrial products to them while they supplied us with natural resources. Today, barter trade doesn’t exist; sizable companies prosper instead. Counterfeits have been effectively banned and the markets have become more regulated.”
Mudanjiang now has four major ports — an airport in the city, a highway and a railway port in Suifenhe and a highway port in Dongning. They have a combined cargo capacity of nearly 40 million metric tons a year and can transport 22 million people a year, according to the city government.
There are now 558 companies in Mudanjiang trading with Russia, and the city’s exports and imports totaled 19.25 billion yuan ($2.77 billion) last year, 16.97 billion yuan more than in 1993.
Crude oil and timber accounted for more than 70 percent of imports from Russia, while shoes and machines made up nearly 80 percent of exports.
However, international trade can be easily affected by changing policies and global conditions, something Chen Xiangzhou, the chairman of Suifenhe Friendship Wood Industry Co, who has traded with Russia for 18 years, is deeply aware of.
Pillar industry
Russia’s annexation of Crimea in 2014 saw the European Union and the United States impose sanctions on Russian banks and firms, including its state-owned oil companies and arms manufacturers. Russia responded by banning food imports from EU countries and the US.
While it was good news for grocers in China, it was not good news for Chen. “The sanctions resulted in the collapse of the rouble and the country’s financial crisis,” he said. “Russians reduced their consumption, and those who exported clothes and cars there all sustained losses.
“Now, we’re concentrating on our original business — importing timber from Russia and selling it at home and abroad. It turns out it has become a pillar industry in our city.”
Chen said the city’s timber imports had risen by an average of 1 million cubic meters a year over the past five years.
“This is the best time for the two countries,” he said. “Russia has resources and we have processing skills and facilities. Russians are all careful not to ‘drain the pond to catch the fish’, so they don’t worry about the depletion of natural resources.”
Yu Hang, deputy manager of Huasheng Guoyun Logistics, said the harbor in Vladivostok is a gateway for Mudanjiang to explore more commercial opportunities.
“The overland distance from Mudanjiang to Russia’s harbor is much shorter than to other harbor cities in China,” he said.
“Since marine transportation is far cheaper than inland routes, we would cut the costs substantially if we shipped goods via Vladivostok harbor to Chinese cities.
“In that case, products from not only Mudanjiang but also nearby areas such as Harbin, in Heilongjiang, and Jilin province could be sold in a more convenient way.
“Moreover, we could ship goods to Japan, South Korea and Western countries via Russia’s port. The transport pattern has been put into regular use since 2012. It is not yet large-scale, but it will be a trend.”