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Vendors fight to stay afloat after market closure

(China Daily)
Updated: 2009-07-22 07:10

Gao Tian has been very worried about his future recently.

The home textile trader, who has done business in Moscow's Cherkizovsky Market for 10 years, was among thousands of traders who suffered huge losses after the market's closure.

"About 2 million yuan's worth of goods are now in the market. It's the biggest loss I've ever experienced," said Gao, who used a false name to protect his identity.

Vendors fight to stay afloat after market closure

A woman checks out shoes at Yabaolu marketplace in Beijing on Saturday, July 18, 2009. Some vendors at the market, which serves many Russian customers, also export goods to Moscow and are among traders whose stock was seized after Russian authorities closed Russia's largest wholesale market, Cherkizovsky Market, on June 25. [China Daily/Jia Ting]

Established in the early 1990s, Cherkizovsky Market, which is the biggest daily wholesale market in Eastern Europe, became a favorite trading spot for businessmen from China, Vietnam and throughout central Asia.

It was shut down on June 29 by the local authorities after inspectors found sanitary and storage violations.

The closure followed a call from Russian Prime Minister Vladimir Putin for a crackdown on smuggling at the market. That followed the seizure of $2 billion of "smuggled goods" during a raid in September.

Russia's state television has also claimed that the market's multimillionaire owner, Telman Ismailov, laundered billions of dollars through the facility.

The boarded-up market now sits in mothballs with around 16,000 containers loaded with unsold stock inside, according to Yu Hengcan, vice-chairman of the Moscow Association of Overseas Chinese.

The Russian Federation of Chamber of Commerce and Industry says 60,000 Chinese businessmen are involved in the market, according to Xinhua News Agency.

"Goods in the market are worth at least $5 billion," said Yu, who has been living in Moscow for 16 years.

In addition to the impact that the closure of the market has had on Chinese traders in Moscow, the shutting of the facility is hitting traders in China who had supplied stock to Cherkizovsky vendors.

Lin Chuhua, a clothes trader who has worked out of Yabaolu marketplace in Beijing for 17 years, said he too has suffered big losses.

"There's no business at all," Lin said.

Gao said Chinese traders in Moscow now want to know how long the closure will last.

"I didn't know it would be shut down, so I left a considerable amount of cash in the market," he said. "As a result, my life has been uneasy."

Gao has managed to do some business from his office but he will ship no more stock to Russia from his textile factory in Shandong until he knows there is a future.

"I have to weigh risks here," Gao said.

He added that he could make 200,000 yuan a month from his market stall before the closure. Now, he is struggling to make ends meet.

"I used to have a 130-ruble ($4.2) take-away at the market, now we buy potatoes, cabbages and bread and cook them ourselves," he said.

While Gao is toughing it out, a fellow trader surnamed Jiang has had enough and may return to China.

After having two containers seized that were full of goods worth $1 million, the seven-year veteran market trader is unsure of his next move.

"Behind each businessman in the market, there's at least one supply factory in China. The impact is huge," Jiang said.

"As an alternative, some people have moved to do business at a market 20 km away from Cherkizovsky. As a result, booth rents there have increased. It's become more and more difficult to do business in Moscow."

Gao, Jiang, and thousands of other Chinese traders are waiting for the results of negotiations between China and Russia about the future of the market and the seized stock.

A Chinese delegation, led by Vice-Minister of Commerce Gao Hucheng, is expected to leave today for Moscow.

The delegation also hopes to talk about ways to deal with so-called "gray customs clearance", the long-term practice of paying Russian officials for the safe transit of goods across the border that has become the problem for Chinese vendors in Russia.

Sun Zhuangzhi, a scholar with the Chinese Academy of Social Sciences, said "gray customs clearance", which has existed for many years, is a special phenomenon in Russia's recent history. Many Chinese traders have found it hard to get goods across the border, despite filling out the requisite forms, without participating.

"It's right for Moscow to fight against corruption. But Moscow needs to handle the market properly, as it's also important to Russia's investment environment as well as Russian people's needs for daily goods," Sun said.

Gao Hucheng told Morgulov Igor, the Charge D'affaires at the Russian embassy in Beijing, on Monday that China will step up scrutiny of the quality of exported products to Russia and prevent counterfeit items entering Russian markets.

Igor said the closure of the market was aimed at cracking down on crime and was not about targeting Chinese businessmen.