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$2b in stock stuck in Moscow's grey limbo

By Ding Qingfen (China Daily)
Updated: 2009-07-21 06:59

Chinese officials will leave for Russia Wednesday to discuss the detention earlier this month of more than 240 Chinese traders and the seizure of their goods after Moscow's largest wholesale market was raided and closed.

Vice-Minister of Commerce Gao Hucheng will head the delegation that will include officials from the provinces of Zhejiang, Fujian and Heilongjiang, according to a notice on the Ministry of Commerce website.

Moscow closed the Cherkizovsky market on June 29, citing health concerns and storage violations.

Russian authorities also confiscated $2 billion of alleged "smuggled" goods from the Chinese sellers, media reports said.

The 240 Chinese vendors who were detained during the raid were reportedly held for violations including overstaying their visas and for no longer having employment.

The Chinese officials are understood to want to reunite the vendors with their seized merchandise.

The closure of the market "has hurt thousands of Chinese businessmen who are doing legal business in Russia, leading to huge losses", the ministry said.

Ling Ji, deputy director of the department of European affairs under the ministry, said yesterday: "The priority is to recover the goods that were legally exported to the market after being held for more than 20 days."

"We support Russia in the fight against smuggling", but the closure of the market affected "more than 10,000 vending stands owned by 60,000 Chinese," Ling said.

The closure will hurt Chinese people's confidence and hit exports to Russia, Ling predicted.

The market, which was established in the early 1990s, was the biggest daily wholesale market in Russia, and a place of business for about 80,000 Chinese. Most of them were from Zhejiang, Fujian and Heilongjiang provinces.

The delegation plans to discuss ways to deal with "gray customs clearance", a long-term practice that is believed to now be the problem for Chinese vendors in Russia.

Some Chinese traders have said they turned to well-connected Russian sources to process goods because they had failed to make it through customs, even when all documents were prepared correctly. Russian authorities deemed the practice illegal.

"Chinese don't want to do business in this way, but sometimes they have to. Chinese are actually the victims of the practice," Ling said. "We hope to work with the Russian side to eradicate 'gray clearance', and set up a transparent customs system."

The Cherkizovsky market attracted traders from as far as Vietnam and Central Asia.

Russian authorities have raided the market several times in recent years, seizing goods shipped under the "gray customs clearance".

In June, China and Russia set up a joint customs cooperative committee to standardize bilateral trade.