Chinese fall victim to falling ruble Market: Chinese merchants in Russia's Far East fill an important niche selling low-priced goods to ordinary people. But the collapse of the ruble may end the practice.

Sun Journal

September 14, 1998|By Russell Working | Russell Working,SPECIAL TO THE SUN

USSURISK, Russia -- During a trip home to China this summer, Jin Lian Sun invested $1,129 in leather coats of a style she thought she could sell in Russia as autumn approached.

The coats are bulky, zippered and sheepskin-lined, the sort of thing men wear in the Primorye region of Russia's Far East, where the Sea of Japan freezes three months a year.

But Jin, 40, who runs a clothing booth in the sprawling outdoor Chinese market called Ussuri Center, had not counted on the collapse of the ruble. A dollar was worth 6.5 rubles when she bought her stock; now it is twice that.

That means she must either raise her prices to levels unaffordable to most Russians or sell at a loss. She expects to recover only a third of her investment.

"I have been selling at a loss just because I want to go back home," says Jin, who has been trading here for three years. "If things go better, I might come back in the future. But not now."

About 2,000 Chinese who live and trade in Ussuri Center face a similar problem in this town of 120,000, 45 miles from the Chinese border.

In cities from Omsk in central Siberia to Petropavlosk-Kamchatski on the Pacific, Chinese traders, legal and illegal, have dominated many markets since the border opened with the breakup of the Soviet Union in 1991.

Nearly 100,000 Chinese live illegally in Russia as traders and laborers, federal officials estimate, and thousands more are here on tourist or temporary worker visas.

Their numbers have been growing so rapidly, in fact, that the head of the Federal Migration Service warned in May that they could become the dominant population in much of the Russian Far East in the next century.

The Chinese come from a land where small manufacturers crank out watches, electric teakettles, fake Nike shoes that fall apart in a month and T-shirts labeled "Washington Rednecks." They have found a lucrative niche: selling goods to Russians, whose domestic industry has largely collapsed but who can't afford expensive imports from the United States or Europe.

For many Chinese merchants the fall of the ruble is devastating. Throughout Ussuri Center, stalls have sprouted pieces of cardboard hand-lettered with a simple message: "$."

"The Chinese sell their stuff here for rubles and buy dollars before going back to China," says Nikolai Nazarenko, chief administrator for Ussuri Center. "In China they change the dollars into yuan."

But now they can't exchange their rubles because banks don't want them, and there is nothing else for the traders to take back to China to sell there.

Nain Ti Nan and his wife, Ti Yue Tsun, live with their newborn daughter, Taria, in a Hyundai cargo container in the city's Chinese market. The container is paneled in plywood and floored in linoleum, and a poster of a waterfall is tacked over the sleeping platform. On the floor sits a television and a 200-pound bag of rice.

Nan sells leather coats and T-shirts and whatever else he can get a good deal on in China. Tsun is a shy woman with eyebrows that have been plucked off and tattooed back on, in the Chinese fashion. Taria is not yet registered, and her parents have no desire to raise her as a Russian.

Until recently, Nan has always gone home once a month to renew his visa; his wife, who is undocumented, simply lies low. But now that the drop in the ruble is threatening their profits, they are unsure what to do.

"Of course, she wants to go home, because she has a mother and father in China," Nan says in Russian as he and his wife kneel on velvet cushions on the floor. "Sometimes she gets so homesick she cries."

The Chinese traders aren't the only ones hurt by the fall of the ruble. Hundreds of Russians also trade in the market, and some, such as Aleksandr Kim, 28, have an expensive stake in offering higher-quality products.

Kim bought $50,000 in women's fur coats in Turkey last year and expects to lose most of his investment.

"I have plenty of rubles right now, but they are 'wooden,' " he says. "I can't do anything with them."

Despite the problems for Chinese vendors, the market bustles with Russian customers hoping to unload their rubles before their value falls still further.

Viktor Romashenko, a 44-year-old company driver who lives in Ussurisk, is looking to spend his life savings on clothes.

"Inflation has already taught us a lesson once before," he says. Inflation wiped out most Russians' savings in the early 1990s.

The market is a maze of stalls and wholesale warehouses offering Chinese-made goods. The shops sell wallpaper, fabric bouquets, calculators, sweaters, saucepans, TVs, pastel golf caps emblazoned with the Chicago Bulls emblem and bath towels decorated with naked women.

The market bustles 16 or more hours a day -- from 8 a.m. to 6 p.m., and again from midnight until dawn. Traders drop their prices to wholesale levels during the night session. During the day, exhausted merchants often nod off at their trading booths. But with the ruble's fall, half the night market shops have closed, Nazarenko says.

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