The traders of Manchuria are teaching their one-time Russian masters a thing or two about capitalism, writes Fintan O'Toole in Suifenhe
On the wood-panelled walls of Sun Laijun's office, there is a large reproduction of a romantic sylvan scene, with dappled light falling through old majestic trees. Opposite the painting is the door to the balcony that overlooks a vast yard stretching towards a thickly forested hill. In the yard there are a further tens of thousands of trees, but their heavy trunks are shorn and stacked like dead bodies after a catastrophe.
Sun Laijun's business is cutting down the romantic forests in the painting. A railway line from Siberia bisects his yard and big blue trucks with heavy-lifting equipment on their backs move busily between the wood piles. Here, on the once-fraught border between China and Russia, Sun is the wood king, and the richest man in Suifenhe. Like the city itself, which did not exist 30 years ago, he has come from nothing to build a life on the changing balance of power between two Asian giants.
Unlike most self-made men, Sun has no trace of pomposity and his demeanour is that of a man who knows that his intelligence and energy would have been to no avail had it not been for the large geopolitical forces that gave him an opportunity. He is dressed casually in a white shirt, light-grey zip-up jacket, blue jeans and trainers, and his wiry vigour makes him seem younger than his 47 years.
Born in the provincial capital of Harbin, he came to Suifenhe in 1991. It was a paradoxically auspicious time. The collapse of the Soviet Union in that year meant that the country whose border is a mile from his office was in a state of economic and political anarchy. For the Chinese state, the collapse of the other great communist power may have been a fearful warning, but for Sun, and for thousands of other people in Suifenhe, it presented a sudden chance to improve their own lives.
Suifenhe owed its very existence to another seismic geopolitical shift: the death in 1976 of Mao Zedong. Before that point, there was nothing in this valley between rolling hills except a small, remote village. Even now, the two-hour drive to the nearest big city, Mudanjiang, is remarkable in Chinese terms for the sparsely populated nature of the lush, undulating landscape.
Ox-carts can still be seen on the roads and the frantic development evident almost everywhere in China is largely absent. This remoteness and relative backwardness owe much more to history than to geography. Having Russia as a close but much-feared neighbour meant that this whole region was regarded as a buffer zone rather than as a place in its own right.
Relations with Russia have long determined the lives of the people of Heilongjiang, the most northerly of the three Manchurian provinces. Russian expansionism in the late 19th century cut Heilongjiang off from the sea. Tsarist Russia built the Chinese Eastern Railway, and Russian troops occupied the railheads.
The Soviets invaded Manchuria to evict its Japanese occupiers in 1945, and used their control to give a decisive boost to their Chinese communist allies. The region remained a Russian "sphere of influence" well into the 1950s. With the widening splits between Mao and the Soviets, however, the Sino-Soviet border became a zone of hot and cold wars, with clashes in 1969 leaving around 800 Chinese soldiers dead.
Suifenhe, which is a mere 136 kilometres north of the Russian port of Vladivostok, was founded just after Mao's death, as Sino-Soviet tensions slackened. But it was still something of a one-horse town when Sun Laijun arrived in 1991. Xu Xin, vice-director of the Suifenhe Commercial Bureau, told me that even in the early 1990s, the city had one department store, one state-owned hotel with 58 beds, and a single restaurant, also state-owned, with room for 30 diners. (It now has more than half a million square metres of retail space, 6,000 hotel beds and room for the same number of restaurant diners.) With border disputes still unsettled, Suifenhe's natural economic base - trade with Russia - was still artificially stunted.
Then, with the collapse of the Soviet Union, ordinary Chinese people began to show that, even if they were still officially communist, they could teach the Russians a thing or two about capitalism. Like thousands of other people, Sun Laijun discovered that all sorts of Russians were getting their hands on surplus goods as state-owned factories passed into private hands.
"It was a great life," he says. "I started by buying a bag of dresses in Suifenhe and driving to the border. I exchanged it for Russian goods and sold them back here for a good profit. I could then buy more dresses, shoes or shirts and bring them back to the border. In just one day, with two trips, I could make 20,000 yuan (€2,000). The Russians had no cash, so it was all done by barter.
"At one time, I was stopped by a Russian soldier and I thought I was in trouble. He opened the boot of my car and told me to show him what was in the bag - a load of dresses. He took the bag and I thought that was it, but he came back a few minutes later with a load of tyres in exchange. From my point of view, it was a great deal."
MANY PEOPLE IN Suifenhe still make a living out of this kind of personal trade. Jiang Li Na, a woman in her mid-30s, runs (with her husband, Wang Zhichao) a kiosk about 300 metres from the border. Their stall sells babushka dolls, watches and binoculars (some of them old Soviet army stock) exchanged across the border for clothes, radios and televisions which they took over in the boot of their car. She told me that to keep within personal customs limits, some traders hire people just to drive across, buy up Russian goods and bring them back. But she also pointed out the one problem with the trade: there is not enough to buy in Russia. While Chinese traders bring over clothes, shoes, mobile phones, washing machines, televisions and computers, there are only so many babushka dolls that the Chinese market can take.
And Jiang Li Na's problem is mirrored on the larger scale. Russia used to be the colonial master, exploiting Manchuria's raw materials and exporting manufactured goods. Now, the relationship is reversed. Suifenhe's trade with Russia has increased 75-fold since 1987. Its shops and hotels, including a huge new Holiday Inn overlooking the borderline, have signs and menus in Russian. But the Chinese, like Sun Laijun, buy raw materials and sell increasingly sophisticated manufactured goods. Most of the imports coming across the border from Russia are raw timber and fertiliser.
Suifenhe's rise in 30 years from a village to a city of half a million people is due almost entirely to trade.
"The city government," says Xu Xin, "realised that Suifenhe couldn't become a traditional industrial city because that would destroy a precious and sensitive environment. The alternative was to develop high-tech industry, but it was impossible to attract high-level intellectual capital to a remote place like this. So what was left? To become a trading city."
The old instinct of buying and selling was not hard to revive in China and Suifenhe's main problem is that it is far better at doing it than its natural partner across the Russian border.
You can see the imbalance most tangibly in the free-trade zone that, according to elaborate bilateral agreements, is supposed to link Suifenhe with the Russian city of Pogranichny, 15 kilometres away. On the Chinese side, the Holiday Inn and a big trade exhibition centre have been built and a brand-new indoor shopping complex opened last month, selling everything from pottery to motorbikes. Russian day-trippers are already buzzing around the place, eyeing bargains and negotiating prices with the help of Russian-speaking Chinese shop assistants. But when you look across to the Russian side, all you can see against the low hills are a very big national flag, a new mock-traditional Orthodox church and a customs post.
Very little of the promised development has happened and Chinese confidence has been dented by rumours that the Russian side of the zone, when it is eventually constructed, will include a red-light district and a casino complex.
"Russia hasn't honoured its agreements," sighs Sun Laijun, "and this suggests that it is not yet as well geared up for free trade as China is."
SUN'S OWN BUSINESS is a striking example of the shifting balance of economic power. From the days when he was bartering dresses for tyres, he gradually developed a substantial cross-border trading operation, and he still sells televisions, rice and electronic equipment to the Russians. But in 1998, he put two circumstances together. One was that China, fearful of the consequences of desertification, was beginning to protect its forests from commercial logging.
The other was that Siberia, just across the border, had vast virgin forests. Sun moved into the logging business and it has made his company the third-largest in Heilongjiang. He employs 3,000 people in the province and 150 in Russia, and his company is one of only three private enterprises among the top 200 Chinese exporters.
The operation is, in economic terms, classically colonial. The wood - 650,000 cubic metres of it this year - is cut from the Siberian forests, loaded on to railway trucks and brought, literally, to Sun's back yard.
Initially, he merely sold it on, but over the last four years he has developed a major manufacturing industry, turning raw timber into flooring and decorative wood. About half of his product is sold in China, but the rest is exported to Japan, Korea, Germany and even back to Russia itself.
The business is expanding rapidly. Sun is building a huge new factory near Mudanjiang, and his own port in Tongjiang on the Songhua River, to which he will ship timber from the Russian city of Khabarovsk, giving him access to immense new regions of Siberia. Within a few years, he will be producing two million cubic feet of wooden flooring.
It is noticeable that Sun Laijun talks of doing business in Russia the way western business people used to talk of doing business in China.
"Russia developed only slowly as a money economy," he says. "Before 1994, Russians didn't want cash, just to exchange goods. By 1995, you could use cash but not a cheque. By 1996, you could send money through the banking system. But you still couldn't use credit agreements. Russians didn't trust documents - the money had to be upfront. It's only since 2000 or so that there's sufficient trust on both sides to do business the normal way. But it's still not easy. I lose money every year through fraud in the ordinary course of events. You have to establish relationships with people you can trust because the system still isn't trustworthy.
"I hope Russia joins the WTO [World Trade Organisation] soon. That way, there'd be some guarantees for business."
Sun Laijun isn't a member of the Communist Party, but there is a party branch office at his headquarters and he is proud to show off the wall loaded with plaques awarded to him by the state. But it is an ironic mark of the shift in power between China and Russia that the still communist state can give lessons in capitalism to the country from which it once learned communism.