Risks, rewards await traders in Moscow

PUBLISHED : Wednesday, 23 August, 2006, 12:00am
UPDATED : Wednesday, 23 August, 2006, 12:00am

Working in the Russian capital can be lucrative, but yesterday's tragedy highlights the dangers that people face

Despite the threat of kidnappings, robberies and murders, adventurous Chinese continue flocking to Moscow in search of quick and easy money.

One of those leading the way is Fujian entrepreneur Wang Guangyuan , who makes most of his money from producing plastic wrapping, adhesive paper and renting out market space.

While the plastics and paper part of his business turns over US$12 million a year, his rental business is so good that he is now planning to take on another contract.

'Besides oil and natural gas, everything here in Russia has to be imported from overseas. This means there are so many opportunities here,' said Mr Wang, sitting in his office near the Moscow Centre, one of the most prosperous wholesale markets in the city.

But Mr Wang, 44, chairman of the Moscow-based, 1,000-member South China Chamber of Commerce, warns that the road to riches can be dangerous, costly and subject to the winds of political change.

His Russian adventure began in May 1994 and in the 12 years since his business fortunes have fluctuated with the ebb and flow of the political tide.

'I once lost more than US$1 million in one day when police confiscated raw materials I had imported,' Mr Wang said.

He was running the main rental agency at Emila Market, the most prosperous wholesale market in Moscow, until the infamous Emila incident of 2004. Police swooped in, seized goods worth more than US$300 million and instantly bankrupted hundreds of Chinese merchants.

'All my subleasing clients' products were confiscated,' said Mr Wang, who stopped managing the centre as a result.

The problem was 'grey customs clearance' - Chinese businessmen entrusting local companies to clear their import taxes, many of whom failed to do so.

Mr Wang said it was an ongoing problem because there was no mechanism to handle tariff collection in Russia, resulting in a slump in business for Emila Market.

But the risk of confiscation has not stopped others from chasing their financial dreams in Russia. More than 10,000 Chinese businessmen - most of whom have been in Moscow since the late 1990s - run wholesale shops in the ACT Market in the Russian capital.

But rents at the market have increased more than tenfold in six years, driving some merchants to the Moscow Centre market, where Mr Wang took over the management in 2002.

Lin Minhua , a thirtysomething trader from Taizhou , Zhejiang , is one of them. With his wife, he runs a 30-square-metre electronics shop that costs US$2,000 a month to rent - a quarter of the cost for a similar shop in the ACT Market.

The couple started their venture in 1999, importing electronic products from their home town every month. They said profits were high but unpredictable. 'I lost 3 million yuan last September. But I get used to it because it [confiscation of goods] happens all the time,' said Mr Lin.

Mr Lin has never considered giving up. 'I might lose everything one day, but I can recover all the losses another day. If I give up, I also lose my chances to get back my losses,' he said.

While losing money may dampen dreams, the Chinese face the added threat of violence. Some are beaten or murdered by skinhead gangs in Russia every April - Hitler's birthday.

Last April a Chinese couple was murdered and their bodies dumped in a forest in Moscow.

What worries Mr Wang and Mr Lin most is the threat of kidnapping. 'More than 90 per cent of the kidnappings are carried out by Chinese gangsters and illegal migrants,' Mr Wang said. 'They ask for up to US$100,000 for each hostage.'

But hardy souls like 24-year-old Choi Sum-chi , who migrated from Fujian to Hong Kong 10 years ago, shrug off the risks. Shuttling between the ACT Market, Moscow Centre and his nearby residence with his translator, he watches over the mobile phone and accessories wholesale business he launched in March this year.

'I visited Moscow two years ago with my Fujianese cousin who later launched a mobile phone business,' said Mr Choi, who decided to follow suit after seeing his relative doing well.

Mr Choi, who started collecting second-hand mobile phones as a schoolboy in Hong Kong, has the luxury of strong backup in Hong Kong and Shishi , Fujian, where old phones are collected for delivery to Beijing and on-shipment to Moscow.

'My relatives in Hong Kong and Fujian are all my good partners,' he said, adding he had been determined to be a successful entrepreneur since he was very young.

Mr Choi is now planning to venture into new fields, like stationery and sports products. 'The current situation in Russia is similar to the open-door era in China in the 1980s, in that the government so far hasn't set up an efficient system. The leaky mechanism provides us with so many chances to make our dreams come true,' he said.

'If I don't take action now, it will be too late for me to join the game.'

Wearing his South China Chamber of Commerce hat, Mr Wang is encouraging Chinese entrepreneurs to set up join venture retail shops in Moscow.

'Wal-Mart, Ikea and other international enterprises all expand their businesses in Moscow with double-digit growth. How come we Chinese cannot do that?' Mr Wang asked.

But Mr Lin and his wife are not so sure. They are hesitant to commit fully to Moscow because of what they have seen happen to many of their countrymen - bankruptcy, suicide, murder and kidnapping.