Tuesday, 4 January 2011

"Retail of two cities"

Another amazing China story, this one reflecting the difference made by the culture of growth and entrepreneurialism, vs the culture of bureaucracy and planning.  Again, China being on the side of building vs, destroying...
Also strengthens my new year's resolution to spend more time in China this year.  It's always worthwhile, always provides an adventure and there's no excuse for me not to, living in Hong Kong, on the doorstep of the motherland.
(posted in full as it's available only on subscription.  Thanks to SCMP of 4th January).  BTW: "Heihe" means "black river", as in the name of the province, Heilongjiang, which means "black dragon river" ("jiang" just being a bigger river than "he").  For other amazing China stories, click on "China" in Labels, below right.

Neighbouring Russian and Chinese cities face vastly different economic fortunes

It couldn't be easier for the Russians from Blagoveshchensk who make the five-minute journey across the Heilongjiang River to shop in Heihe. As soon as they're through customs and passport control, it's a short walk to the main market of the booming border city in Heilongjiang province. There, two hangar-sized buildings await them, selling everything from alcohol and cosmetics to furs, household appliances, shoes and skiing gear.
Blagoveshchensk residents, who refer to their hometown as "Blago", don't even need a visitor's visa as long as they stay in Heihe, which is the closest Chinese city to Russia. A generous customs allowance means they can take back 50kg of goods without paying any duty. But by far the biggest incentive for doing their shopping in Heihe is that prices are a third of those at home.

"Everything is more expensive in Blago," says Anastasia Arkharova, who is wearing a long, black fur coat bought in Heihe and perusing coffee machines in the market. "The only thing I buy there is underwear."
At weekends, Russians stream into Heihe, either by boat in the summer or on buses and dinky little hovercraft when the Heilongjiang River freezes in the winter. Their presence has transformed the city of 200,000 people from a backwater into a multicultural trading hub. Almost every shop has a Russian name written in Cyrillic and any foreigner is greeted in Russian. Bars, restaurants, clubs and massage parlours have proliferated to occupy the visitors when they're not shopping. New apartment blocks and expensive foreign cars on the streets testify to the money flowing into the city
But if Heihe is prospering, it is a different story a few hundred metres across the river in Blagoveshchensk. Roughly the same size as Heihe, Blagoveshchensk remains a city of old-fashioned wooden houses and Soviet-era apartment blocks. The contrast between the two is most visible at night, when Heihe is lit up like a Christmas tree while the riverfront in Blagoveshchensk stays dark.
The Russian Far East has been in perpetual decline since the collapse of the Soviet Union. The region's shrinking population and high unemployment means that, in stark contrast to the welcome Russians receive in Heihe, the increasing numbers of Chinese who work in Blagoveshchensk and elsewhere in the Russian Far East are seen as a threat.
"Last year, we were afraid to go out at night because the young Russian guys get drunk and beat the Chinese up," says Zhang Lina, who has run a company making clocks in Blagoveshchensk with her husband since 2006. "I don't think the Russians like us living here, but they also can't live without the Chinese. The only real Russian industry is heavy industry. They can't make clothes or household items or anything like that cheaply."
With 10,000 Chinese now living in Blagoveshchensk, the city's markets are dominated by traders from Heilongjiang, while the most popular restaurants are Chinese ones. Chinese immigrants can also be found working on construction sites, farms and in the local timber industry. But there are no Chinese signs in Blagoveshchensk and, unlike the Russians who go to Heihe, Chinese citizens need visas to cross the river.
That requirement is a source of anger among the Chinese residents of Blagoveshchensk. "The Russians are racist towards the Chinese. The police will regularly come and check our passports to see if we have work visas, which cost almost 20,000 yuan (HK$23,500) for a year, and they'll confiscate your passport if you don't have one. But the police won't really help us if we're in trouble. They don't care so much if a Chinese person gets beaten up," says Zhang.
Heihe's government, however, has done everything it can to make life simple for the Russians who visit. The main market, which is called the International Market City and opened in 2004 when Heihe was designated a free trade zone, has been designed entirely for Russians.
"Everything I sell is Chinese-made, mostly in Guangzhou and Yiwu in Zhejiang province, but it's all designed specifically for the Russian market, so they have Russian plugs," says Yang Chao, who has sold home appliances such as hairdryers and irons in the market for three years.
So Russia-centric is the market that some Heihe residents complain that many of the shops won't sell to Chinese people; a curtain hanging in front of the entrance to a shop is code that locals aren't welcome.
Most market traders say they prefer dealing with Russians. "It's much easier than doing business with Chinese people. Russians buy things quickly. They pick up an item, decide if they like it and then buy it. Chinese people spend ages deciding if they want something and then want to bargain forever," says Yang.
Across the river in Blagoveshchensk, relations between the Chinese and Russians are far more tense. It has always been this way: in 1900, 5,000 Chinese living in the city were slaughtered by Cossacks after the local government decided to deport them. Now, they are still seen as interlopers.
"A lot of Russians resent the fact that the Chinese will work for lower salaries and so they think they are taking all the jobs. But the fact is it's easier for Russian politicians to say the Chinese immigrants are taking work away from locals than to create jobs," says Nikolay Kukharenko, the head of the Confucius Institute in Blagoveshchensk.
Chinese and Russians live separate existences in Blagoveshchensk, to the extent that Zhang won't employ Russian workers. "The Russians are lazy and inefficient. They drink too much and they're no good at working hard," she says. Even some locals agree with her views. "I know Russian businessmen who say `I'll pay 30,000 roubles [HK$7,700] a month to a Russian', and they hire them and they work hard for a month and then they start drinking. Chinese don't drink and they'll work for 20,000 roubles a month," says Kukharenko.
At the heart of the opposition towards Chinese immigration is the fear that Beijing will one day take over the Russian Far East, some of which was part of the Manchu empire as recently as the mid-19th century. With just 6.7 million people living in the Far East, a vast area that is two-thirds the size of China, compared to the 40 million who live in Heilongjiang province alone, many Russians believe that the Chinese will end up migrating north.
"There are lots of rumours about China taking over the Far East. It's not in the newspapers or anything, but people form their own opinions. Here in the Far East, a lot of people feel neglected by Moscow and we feel detached from the rest of Russia. You can't be sure it won't happen in the future, because the population here is declining and the Chinese need room because there are so many of them," says Eugenya Vivdich, a 21-year-old student at the Confucius Institute.
That suspicion of China is the reason there is no bridge linking Blagoveshchensk and Heihe, despite offers from the Chinese side to build one. But an increasing amount of natural resources such as timber and coal still head to energy-hungry China from the Russian Far East. At the same time, Heilongjiang's trade with Russia amounted to almost 4.6 billion yuan in the first eight months of 2010, a 32.5 per cent increase on 2009's figures, according to the provincial government.
Faced with that economic reality, a growing number of young Russians in the Far East have decided that their future lies in China. More and more are now learning Chinese. "I used to want to go to America or England and that's why I studied so hard at my English," says Vivdich. "But then I started to study Chinese and now I want to get a job as a translator in Harbin or Beijing. It's much easier to get to China than to America; it's easier to get a visa and it's much closer to home."