Cherkizovsky Market (Photo: Huanqiu.com)

A Chinese delegation arrived in Moscow yesterday for negotiations in the case of 150 Chinese traders detained in a crackdown at Cherkizovsky Market.

Led by Gao Hucheng, Vice Minister of the Ministry of Commerce (MOFCOM), the delegation is composed of officials from MOFCOM, the Ministry of Foreign Affairs, ChinaCustoms and trade officials from Zhejiang and Fujian provinces.

Russia is now helping the traders, many of whom are from China, to transport their goods out of the market, Russian Foreign Ministry Spokesman Andrei Nesterenko said on Tuesday.

Established in the early 1990s, Cherkizovsky Market is the biggest daily wholesale market in Russia, and a place of business for about 80,000 Chinese.

On June 29, Russian police ordered the market to close after inspectors found a series of hygiene and storage violations. The sudden shutdown of the market has left tens of thousands of Chinese businesspeople jobless and in financial difficulty because they are unable to sell their goods.

Earlier on June 18, the Russian government announced it would destroy $2 billion worth of what it claimed were Chinese smuggledgoods and demanded the closure of Cherkizovsky Market. It claimed these goods illegally entered Russia through the practice of  "gray customs clearance".

"Gray customs clearance"  first emerged in the 1990s when Russia was desperate for consumer goods. This led some government-connected "clearance" companies in Russia to start pushing imported goods into the Russian market at a tax rate much lower than the official level. They looked after the processing of customs and duty in Russia after the goods departed from Chinese ports.

The system helped Chinese traders save on customs clearance fees, but they were liable to huge losses if they were spot checked by Russian authorities.

As investments in its own domestic light industries increased in recent years, Russia relies less on imports. This is why the government began intensifying its crackdown on smuggling and rectifying market order.

Jiang Li, an associate research fellow at the China Institute of Contemporary International Relations Russia Research Institute in Beijing, believes the shutdown of Cherkizovsky Market is not directed against China.

She says Russia has a large amount of capital flowing overseas in recent years causing a significant loss of tax revenue. The action is more likely to be directed against domestic tycoons like Telman Ismailov, the owner of Cherkizovsky Market, who recently invested $1.65 billion to build the luxurious Mardan Palace Hotel in Turkey, explains Jiang.

Russia has always been opinionated towards foreign citizens, she says, which might be another reason for the shutdown.

But Russia should not sacrifice the interests of Chinese businessmen in order to settle the problem of the "gray customs clearance", Jiang says. 

At the same time, Chinese traders working in Russia should strictly abide by the country's law and regulations if they want a stable, prosperous business environment. It's time for them to bid farewell to the "gray customs clearance" system, Jiang concluded.