Asian trade gives Russia's Far East new look

By Heather Clark

VLADIVOSTOK, Russia (AFP): Japanese cars with drivers on the right crowd the roadways, stir fry vegetables with rice is a staple in the hotels and Chinese lettering adorns goods in what locals dub the "Chinese" market.

Surrounding the Russian port of Vladivostok on three sides, Asia's influence on this city of 800,000 -- which lies seven time zones from Moscow, but only 400 kilometers (250 miles) from Japan -- is easy to spot.

"There has been massive investment from China and South Korea," said Vladimir Sozinov, number two in the region's economics and planning committee.

"And investors from Hong Kong, Taiwan and Thailand have expressed an interest in this region, mainly in food and consumer manufacturing and services," he said.

In central Vladivostok sits the modern Hyundai Hotel, an US$85-million investment by South Korea's Hyundai corporation, as well as Asian restaurants and casinos marked by red paper lanterns and signs in Chinese or Japanese.

China, Japan and South Korea rank among the Primorsky region's top trading partners, making up 55 percent of its 1999 trade volume of $1.22 billion, according to official statistics.

But critics say a corrupt government led by Primorsky Governor Yevgeny Nazdratenko and chronic energy shortages have kept away more lucrative Asian investment in the Soviet-era military- industrial enterprises which now stand silent.

Former Vladivostok mayor Viktor Cherepkov said Japanese investors have left the Far East in droves since Russia's August 1998 financial crisis and after Nazdratenko reportedly threatened last June to throw a British businessman in jail in a row over a shipping company.

"Everyone who invests money here is wondering when they'll be beheaded. They are worried about losing their lives," said Cherepkov, an outspoken opponent of the governor.

"As long as there is no stability in the laws, no one will come here and those who have invested already are now thinking about how to sell everything and leave," he added.

At least when it comes to consumer goods and services, Asians doing business in the Primorsky region say the proximity of China, Korea and Japan will keeps the trade ties intact.

Ho Hihao, a 29-year-old Chinese trader, works in an open-air "Chinese" market in central Vladivostok selling everything from dozens of brand-name tennis shoes to electronics to diapers.

Ho, who speaks fluent Russian and is known by the Russian name, Alyosha, traveled from Harbin, China, to work in Vladivostok.

He believes soured relations between the United States and China will result in a greater influx of Chinese trading with Russia.

"After the U.S. bombing of our embassy in Kosovo and its position on the island of Taiwan the relations were spoiled. Now many Chinese are coming to Russia," he said.

Still Primorsky officials do little to encourage small-time Asian traders, he said, explaining that Chinese are regularly hit up for bribes by local police officers and border guards and pay high 'taxes' to corrupt officials.

Nevertheless, an average trader from China, Vietnam or South Korea can pocket about $100 a month, more than they could earn at home, traders said.

For the most part, Vladivostok residents welcomed trade with Asia, saying their cars were better than Russian-built vehicles.

Asian businessmen also sell hard-to-find consumer goods and their investment could help the ailing military-industrial complex that was once the Soviet-era pride of the region.

But Alexander Troitsky, a local entrepreneur who recently worked on Russian President Vladimir Putin's campaign, said Russians should be re-starting the region's fishing, timber and manufacturing industries rather than trading with Asia.

"Why should we buy these things from South Korea when we ourselves can produce it? We have factories, people, why shouldn't we produce it here?" he said.

For now, Asian investment in the region remains limited, but many say it's only a matter of time before the proximity of Asia asserts itself on Vladivostok.

"There's not a new Chinatown here ... yet," Sozinov said.