Thriving border city

By Chen Qingqing in Heihe Source:Global Times Published: 2017/8/22 17:03:39

Heihe port, the gateway to strong Sino-Russian trade

The entrance to an import and export industrial park in Heihe, Northeast China's Heilongjiang Province Photo: Chen Qingqing/GT

Heihe, a border city in Northeast China's Heilongjiang Province, is considered the ''twin city'' of Russia's Far East Blagoveshchensk. The distance between the two cities is about 750 meters and Russians and Chinese can visit each city by crossing the Heilongjiang River, also known as the Amur River, by boat. The small proximity between the two has also enabled the local trading business to flourish. The Global Times recently visited the border city, which has been an important port to Russia for decades, to see how businesses have evolved and boomed there.

In a fruit and vegetable warehouse located in the suburbs of Heihe, Northeast China's Heilongjiang Province, mesh bags filled with onions were neatly placed on a board, which would soon be shipped to Russia.

After those products had been shipped from East China's Shandong and Jiangsu provinces to the border city, a local company called Shunxing was in charge of further steps such as packaging, customs clearances and transporting goods to Blagoveshchensk, a major city in Russia's Far East, also known as the ''twin city'' of Heihe.

Established in 2006, Shunxing, exemplifying how the trading business can evolve and boom in Heihe, exports about 80,000 tons of fruits and vegetables to Russia every year by taking advantage of the short distance to Blagoveshchensk. 

Back in 1987, local merchants exchanged 208 metric tons of watermelons for more than 300 metric tons of then much-needed fertilizers from the former Soviet Union, shortly after trade through Heihe port was resumed. The now booming business between the two cities is said to have originated from this event.

Heihe has recorded an overall trade volume of $29.2 billion with Russia over the past two decades and there are so far 1,055 local trading companies in the city, according to the local commerce bureau.

Shunxing is located in an import and export industrial park in the southern part of Heihe, which is also home to 22 other enterprises running businesses which range from electromechanical equipment, fruits and vegetables to new materials and e-commerce.

Russia trade experiences

Traders in Heihe share some common ground in that the majority of them do business with Russia. For example, when Russia's economy collapsed due to slumped oil prices and a sharp depreciation in the ruble a few years ago, the traders shifted their business plans from export to import, as the demand in the neighboring country was sluggish. Some of them were also vulnerable to the volatility of the Russian economy.

"One day, the business was good, the next day, it was bad," Song Xiaotao, chairman of a machinery equipment export company, told the Global Times, describing his experiences of doing business with Russia.

The veteran trader has been exporting automobiles, machinery components, and large-sized machines to Russia and countries in Central Asia where Russian is a widely spoken language.

"Before the [global] financial crisis in 2008, even an idiot could earn money [by doing business with Russia], and our peak revenues could reach 1 billion yuan [$150.2 million] per year," he said.

However, between 2013 and 2014, the company's revenues slumped by about 80 percent year-on-year due to sluggish economic growth in Russia, which was the reason why Song began cutting off his sales department and shifting his focus to e-commerce in order to save costs. 

Song came to invest in the industrial park in Heihe several years ago because it is the most convenient port to Russia along the 2,981-kilometer Sino-Russian borderline. "It faces Blagoveshchensk, the administrative center of Amur Oblast, where it's easier to process the exports," he said.

He explained that when the company exports cars through Manzhouli, a border city in North China's Inner Mongolia Autonomous Region that faces the Russian city of Zabaykalsky, "we have to spend days getting sales approvals in Chita, the administrative center of Zabaykalsky Krai, which poses a burden on logistics and stock costs for our products."

A key passageway

Heihe port has two channels, one for passengers and one for cargos. While the passenger channel is busy dealing with up to 4,000 people every day during the peak tourism season between June and September, the other channel for cargos was much more deserted on the morning of August 16.

Drivers of cargo trucks first pass an inspection zone at the port, then head to the bank of Heilongjiang River, also known as Amur River, to get boarded on or off ships.

"Now, it's usually a round-trip every day, it [the ship] sails in the morning and returns in the afternoon," a worker at the port surnamed Wang told the Global Times.

Due to the summer drought that caused low water levels at the port, the total volume of cargos handled by the port declined 11.6 percent on a year-on-year basis in the first half of 2017 to 175,000 tons. Despite the limitations regarding Heihe port's cargo handling capacity, local officials of Heihe expect the port to play a more important role in Sino-Russian trade. 

Under the "Belt and Road" initiative, the local government has urged to enhance connections with Russia while further opening up, Wu Bo, deputy director of the local department of commerce in Heihe, told the Global Times.

The city is mulling over co-building several cross-border economic cooperative zones with Amur Oblast. When the Heilongjiang-Blagoveshchensk connection zones are completed, it will reshape not only trade activities, but also industrial cooperation between China and Russia.

"Also, Russia's strategy of developing its Far Eastern region has also brought opportunities to Northeast China in regard to rejuvenating its economy, as more Chinese investment had been encouraged in the planning of the cross-border industrial zones," Wu said.

Limitations linger

The commerce official of Heihe noted that he is expecting the central government to provide more assistance to the border city in building those zones, like what Northwest China's Xinjiang Uyghur Autonomous Region had done to make a cross-border free trade zone a reality on the China and Kazakhstan border.

"The Horgos free trade zone [in Xinjiang] set a good example for other twin border towns, but things would be easier if there were incentives from the top planners," Wu said.

In an existing import and export industrial park in Heihe, most companies are small and medium-sized enterprises (SMEs) and reflect a common issue that numerous trading companies in Heilongjiang are facing today.

"To further cooperate with Russia, there needs to be more large-scale, sustainable projects. Many of our firms are private, and 80 percent of them have investment of less than $5 million," Yang Jiabin, deputy director of the Russia cooperation division at the Heilongjiang Provincial Department of Commerce, told the Global Times.

Wu, the official in Heihe, also admitted that local SMEs have generated limited profits in the local economy, as no cluster of industries have appeared yet.

"Enabling more Chinese and Russian industries to work together in the future could be one solution," he said.

Posted in: INSIGHT

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