Wealth Blog

Why Russians love Hong Kong and Asia

PUBLISHED : Thursday, 01 August, 2013, 1:32pm
UPDATED : Thursday, 01 August, 2013, 2:24pm

Many of us are fascinated by Russia. It’s vast but little is known of what goes on there beyond the high profile antics of loaded oligarchs. It’s mysterious, not exactly Europe yet not Asia. Their literature is dark, their music darker, their food heavy and their language impenetrable to most, but there’s an undeniable glamour about Russia. Now that Russian travellers have recently fallen in love with Hong Kong, there’s a chance to lift the veil.

They are flocking here – 105,000 already in the first five months of 2013 - partly because Hong Kong is a good place if you want to go further, says Hong Kong-based journalist and CEO of Russia-Hong Kong research and events company Asia To Go, Mark Zavadskiy. That remark could almost be Irish. “I mean it’s a great stopover for Thailand and Indonesia for holidays,” he explains. About 800 Russians live here at the moment.

Part of the push to put Hong Kong on Russians’ map comes from the pro-active two-way promotion by the new Russian airline S7, which brought Vladivostok rock band Mumiy Troll here in March. That’s followed by an Asian music festival in Vladivostok at the end of August. Local bands also go there from Hong Kong.

What do Russians do here?

Not much, it seems. “Hong Kong doesn’t offer a very extensive variety of things to do for newcomers who don’t speak Cantonese,” says Zavadskiy. Coming from second-tier Russian cities  they don’t speak much English, they see the usual sights, hike, look for Indie music and check the internet for concerts. In addition to the holidaying and culture-hunting Russians from Moscow and the new wave from further east, there’s another lot, the traders operating out of southern China. 

“The large community of Russian traders in Shenzhen and Guangzhou flock down here for concerts by well known artists like Sting, because, believe it or not, the tickets are cheaper here than in Moscow,” he explains. Russians are not short of cash. They may only have had capitalism for 20 years, but they have plenty of money, he says. But private bankers can hold off on openning the Siberia branch just yet.

Why pay cash?

So, why do Russians carry so much cash? “That’s changing now,” he says. “Before, it was because they didn’t have banks, now they don’t trust them. A lot of it is grey money. They don’t trust Russian banks but they can’t get an account in a foreign bank, so they carry cash.” Lots of Russians lost their shirts in the 1998 financial crisis and it will take a long time for people to trust banks again.

Switzerland of Asia preferred  

Actually there are three times more Russians living in Singapore than Hong Kong, due to the Lion city promoting itself as a wealth management centre, the Switzerland of Asia. Confusion is to blame. “First of all, no one understands what Hong Kong is – China? Not China?” And unlike Hong Kong, if you live and invest in Singapore, you can apply for a Singapore passport after 18 months, and should get it at worst inside five years. Russians happily surrender their Russian passport for a Singaporean one – they can’t have two. Surely no red-blooded Russian would do such a thing? We’ve all seen or read Dr Zhivago. Zavadskiy shakes his head. It seems many Russians abandon their passport, because travel is much easier with Singaporean documents, with many visa free countries beckoning.
But Russians don’t always glide into Singapore. “They go about mixing their melting pot very scientifically – it’s one Ukrainian, one African – American and so on, very strict. It’s done individually and all depends how Russia is viewed at the time they apply.”

Lee Kwan Yu a Russia fan 

But Singapore is obviously rather keen on Russia and hosts a big annual bilateral business forum. Hong Kong has never had an event on this scale. Lee Kwan Yu rarely speaks in public but he attends this event every year and answers questions. He even ventured to Moscow to speak to students at the Skolkovo business school two years ago.

Russians are increasingly fond of Asia. Goa, Bali, Koh Samui and Pattya have become like dachas – country retreats - for them, says Zavadskiy. They flee the biting Russian cold for three months in winter, financed by renting out their Moscow apartment. It’s affordable if they stay modestly somewhere cheap like Indonesia or Thailand. Many take it a step further, setting
up compounds in these sunny climes for programmers or IT specialists, so they can come and live and work, thanks to the magic of outsourcing. To earn money in paradise they need a computer, likeminded people, a good internet connection and away they go.

Visa situation crucial

Critical to this winter migration to south is the visa situation. Indonesia, Malaysia and Thailand give Russians one month. For Singapore and Vietnam they need a visa, for two weeks in the case of Vietnam. Cambodia has visas on arrival. And they can visit Hong Kong visa free. Asia is much more welcoming to Russians than Europe, where most countries require a visa.

Hainan is another story. It’s been taken over by Russians completely, Zavadskiy admits. Certainly the Sanya hotel menus were in Russian last time I visited. These are not Muscovites, but Russians from the Asian part. “Before they all wanted to head West to Moscow, but now they’ve realised its easier to head south, especially China. It’s much less expensive than Moscow,” he says.             

But for many Hong Kong remains the Holy Grail and gradually Russian facilities are creeping in. Russian restaurants come and go – if it’s authentic Chinese don’t like it and if it’s not, Russians won’t go. But there’s now an online store here selling Russian food. There are two Russian art galleries. Red Square and a new one, AB. And now there’s a Russian wine store in Sai Ying Pun, selling a sweet Ukraine wine called Massandra. A guy brought in a container of it, apparently.

For the Russian traders based in southern China, Hong Kong is seen as an upgrade, says Zavadskiy. “Basically, if you start somewhere like Guangzhou as a trader, if you can move to Hong Kong, you have succeeded in your life. Even if you start doing trading in northern China along the border, and progress to Shanghai, your ultimate goal is Hong Kong.”