Chapter 208 Don't Look at New Situations with Old Eyes (Bug Fix): None of It is Trustworthy
Collecting 10 train cars of garlic is a trivial matter; Wang Xiao and Ivanov wouldn't stay behind and wait for it.
The assistant will arrange everything, and the boss should naturally take the distinguished guests away first.
As soon as they stepped out of the train station, they were surrounded by a crowd, waving their rubles and shouting, "Chacha!"
These are all people who want to exchange for Huaxia currency.
Newspapers are now publishing editorials by government supporters, praising the July move to abolish the old ruble. The commentators' strongest evidence is that since the old ruble was banned from circulation, its exchange rate has stabilized; it didn't fall in August, and now, in late September, the ruble remains strong.
It is foreseeable that from now on, the Russian economy will gradually emerge from its disordered state and move towards prosperity.
Despite the optimistic visions of the government-supporting economists, the reality was that ticket scalpers on the streets were never lacking. Moscow businessmen, upon earning rubles, immediately converted them into dollars.
Even when they couldn't exchange for US dollars, they preferred to exchange them for Chinese yuan from Chinese people.
This shows that even the Russians themselves were not very confident in the strength of the ruble.
Manager Hu, being relatively older and an outgoing person, remained optimistic upon seeing the situation: "Devaluation has its advantages. Look at Japan; the devaluation of the yen boosted exports, and so did South Korea. As long as things stabilize, Russia has a solid foundation—the foundation of the Soviet Union—it can definitely weather the storm."
Others chimed in, "That's right, even a starved camel is bigger than a horse, and a wrecked ship still has three thousand nails. The elder brother is still the elder brother."
See, the leaders of state-owned enterprises really know how to talk. Regardless of what everyone is really thinking, at least verbally, in front of the Russian boss, they'll definitely praise him to the skies.
They praised Ivanov so much that his mouth almost turned into a pout.
Reason is one thing, emotion is another. Who doesn't like others praising their country?
Since there were still a few days until the trade fair, and the exhibition hall was not currently for Wang Xiao and his group's use, the car first took everyone to the hotel.
This hotel was run by an elderly overseas Chinese.
At the beginning of last year, before Moscow's housing prices skyrocketed, the boss decisively bought a five-story building and converted it into a hotel.
The conditions are definitely better than those in wholesale markets; at least the rooms have private bathrooms, TVs, and telephones. But compared to star-rated hotels, they certainly can't compare; they're roughly equivalent to a guesthouse in China that's only slightly better.
Wang Xiao explained, “The lowest room rate was originally $15, but we negotiated with the owner and booked the whole building for $10 a day, excluding meals. Prices in Moscow are very high right now. Hotels of similar quality would charge at least $20 a night for foreigners like us.”
The reason they were able to negotiate this price was because Wang Xiao told the hotel owner that after this trade fair, at least half of the state-owned enterprise cadres would likely stay in Moscow to do direct sales. They would then inevitably need to rent accommodation in Moscow long-term, making the hotel their most suitable option.
The boss, with the intention of playing the long game, agreed to offer the discount.
As they got out of the car, an old man wearing a woolen hat was downstairs, cursing and swearing as he forcefully tore off an advertisement pasted on the wall.
Wang Xiao greeted someone with a smile: "Uncle Cao, is someone putting up psoriasis ads again?"
The hotel owner turned his head, still angry: "These swindlers, not one of them is good."
The exhibitors naturally brought translators with them, and one translator who understood Russian exclaimed in surprise: "Russian banks have such high interest rates? 2000% interest, and you can withdraw the interest after three months?"
The hotel owner spat angrily, "Only a fool would believe this! It's all a scam to steal your principal."
He was so angry because, unfortunately, he had also made a foolish mistake and deposited a large sum of money in the bank. At the time, he could earn the equivalent of $100 in interest every day.
Before he could even enjoy his good fortune for two days, the bank went out of business, and countless depositors like him went to the police station demanding the banker be arrested. Not only did no one care, but the police also ridiculed them, saying they deserved it because they were too stupid and greedy.
Then the unfortunate policeman got caught.
Because among this group of "too stupid and too greedy" unlucky people, there are also high-ranking government officials.
It is clear that when Russian banks abscond with money, they attack indiscriminately.
The state-owned enterprise cadres who had just arrived from China were collectively astonished: "Wow, that's amazing!"
Wang Xiao nodded in agreement: "In Russia, remember one thing: banks and the government are just as untrustworthy as the law. Never have any superstitious beliefs about any organization or group."
The hotel owner already knew their identities and kindly advised them: "Russia is not the Soviet Union. Don't apply the old ideas you had when dealing with the Soviets to Russia."
Everyone put down their luggage, and the samples were delivered as well, and they were taken to their rooms.
Wang Xiao led his men to the National Economic Exhibition Hall, now a recognized international trade fair, where the card exhibition starting this Saturday was being held.
The exhibitors were all smiles at first, watching the excitement with great curiosity, but once they entered the exhibition hall, they all fell silent.
Goodness gracious! Here you'll find beautiful French fashion, perfumes, and cosmetics; Italian designer shoes, bags, and handbags; luxury cars from the US and Germany; and high-end Japanese home appliances. In addition, there are fresh and frozen foods from Australia, beverages and toys from South Korea and Taiwan, and textiles from Turkey and India. It's simply dazzling!
It's no exaggeration to say that even the most luxurious department stores in China don't have the wide variety, complete range, and trendy styles of goods here.
The expressions on everyone's faces froze; they simply couldn't believe their eyes.
Although the embassy emphasized when contacting them that Moscow today is not the same as Moscow before 1992.
But it's been less than two years since the collapse of the Soviet Union. How much can things change? You can't just conjure up a shortage of goods.
Seeing the astonished looks on everyone's faces, Wang Xiao wanted to facepalm and sigh.
To put it bluntly, you can't blame the state-owned enterprise cadres for not having a keen sense of smell.
It was autumn of 1993, and going abroad was strictly restricted. Those in China had very limited access to information about foreign countries, primarily through news media.
As is well known, media propaganda in any country has a specific direction, which tends to exaggerate certain facts while downplaying or even ignoring the truth of other aspects.
For example, if you were to describe the CIS countries after their dissolution, it would inevitably be a time of great chaos, widespread suffering, and misery, with ordinary people feeling as if they were back to square one.
Is this true? You could say so.
But on the other hand, you've overlooked another thing: the red flag was lowered, and the Soviet Union's import restrictions were lifted. If Chinese goods could enter the Russian market, why couldn't other countries?
Don't forget that the Soviet Union had one of the world's most extensive railway systems. Its transportation was highly developed, with airplanes, trains, and ships, and most households owned cars.
With such convenient transportation, how can you compare the development speed of the domestic open market to the changes in the Moscow market?
As long as someone has money, the whole world will be eager to sell them non-classified products.
Manager Hu looked at it for a long time, then suddenly smiled bitterly: "Before I left, I took a month-long course at the Party School. Now I truly understand what the teacher was saying. We were bound by rigid planned economy thinking. There was also the old idea that the seller's market was greater than the buyer's market, and that people were begging us to buy things. Now I see, that's not the case at all."
Look at those French fashions, they're so expensive, but those ladies don't even blink, they just buy them all.
Wang Xiao laughed and said, "Isn't this just like the song says? It's not that I don't understand, it's just that the world is changing too fast. Every few days I go to the market, and it feels like I'm in a new place. There's one thing that's particularly taboo when doing business here, which is to think that everything is a mess after the collapse of the Soviet Union, and that you can fool them with anything. If you don't treat both parties as equals, it's very difficult to do business."
Among the participating organizations, some people awkwardly looked away.
Clearly, this kind of thinking is not uncommon among Chinese people who want to engage in foreign trade with Russia.
Perhaps it was because the Soviet Union was too powerful back then, becoming an obsession for the Chinese people for an entire era; so when it collapsed, some people couldn't wait to denigrate and ridicule it in every way.
Those who made money in Russia in the early days by taking advantage of information asymmetry were particularly ignorant and arrogant, thinking that the Russians were stupid and that they deserved to make money off them.
If this kind of thinking spreads to the foreign trade community and becomes mainstream, the boomerang will eventually backfire on them.
A nation that once ranked among the world's top two, are they really idiots? What kind of dream is that? Ah Q should wake up.
If they continue to dream, then renting the container market to them is useless, because they simply can't compete with direct sellers from other countries.
Manager Hu sighed, "Oh dear, it's true, you only realize how deep things are once you step outside the country. This is something I really didn't expect. Moscow has changed so fast, faster than I could have imagined."
He is now in a state of confusion and even somewhat at a loss.
He had long known that speculators were making a fortune in Moscow, and he thought that regular employees like his unit would surely earn even more. But it turned out that this was not the case at all.
"I originally thought that since there was a shortage in the market here, and our products were of good quality, it wouldn't be a big problem if the price was a little higher than that of the middlemen."
"But look at it now, other companies have good quality and new styles of goods. If we raise our prices higher than those of middlemen, we can't even compete with individual vendors."
After the words were out of his mouth, Manager Hu realized he might have misspoke. Because according to domestic standards, even a large private business like Wang Xiao's would still be considered a sole proprietorship by public institutions.
Fortunately, Boss Wang didn't seem to care about such trivial matters at all. Instead, he laughed and said, "Times have changed. A couple of years ago, Russian wages were low. At this time last year, the average wage was only twenty or thirty US dollars. But this year, prices have risen, and wages have risen too. There are quite a few people earning fifty or sixty US dollars a month. In the past, prices in Russia were lower than in China, so the regular army had to pay taxes on exported goods, which was a huge loss. They could only make up for the price difference and generate profits by buying Russian steel and other goods at low prices and exporting them back to China."
Manager Hu frowned: "Then how did their wages increase? Before I went abroad, I heard from a teacher at the Party School that Russia's economy, especially its industrial production, was severely damaged. That's why they lack a lot of industrial products in their market. Their agriculture is also not doing well, and they have to import grains, vegetables, and fruits. I just don't understand, if their industry and agriculture are not doing well, how do they make money? If they don't make money, how do they raise wages?"
“Exporting raw materials,” Wang Xiao explained. “Starting in January of this year, the Russian government began restricting barter trade between China and Russia, in order to exchange Russian raw materials for foreign exchange. Russia is actually following the Soviet Union in this respect, relying on exporting these things to make money.”
"It's also because exports have been effective in generating foreign exchange that prices in Russia have risen again. Moscow is now known as the fifth most expensive city in the world. With prices rising, there is room for profit in exporting through legitimate channels. Look, an American sells a cotton trench coat for $70. If you sell the same quality coat for $50, people will still buy it."
"Therefore, the key now is to improve the style and quality of the products. Thanks to our guerrilla team, even though it was hard work, they managed to maintain the basic reputation of Chinese goods before you entered the market. So, they created the conditions for you to enter the market."
Secretary Sun couldn't help but blurt out, "What will happen to the partisans when all of us have entered Moscow? Won't they hate us to death?"
Wang Xiao laughed and said, "Cats have their ways, mice have their ways, and every product has its own way of surviving. Some of them may follow your example and produce newer and higher-quality products than you. Don't underestimate township enterprises, especially those from overseas Chinese hometowns. Their bosses travel all over the world. Whatever is popular in Europe, they can produce the same product in the same month and ship it to Moscow to sell."
The crowd gasped in surprise once again.
Nowadays, large state-owned enterprises are like small societies. They have very little contact with foreign countries, let alone local private enterprises and township enterprises.
Unexpectedly, without their knowledge, the other party had already gone from picking up their leftovers to this point.
Wang Xiao also found it a bit difficult, feeling like she was communicating with people from another world.
Honestly, she understood the massive layoffs of 1998.
It's already 1993, and these state-owned enterprise leaders are still stuck in the old ways of thinking. How can they possibly compete with others?
"Yes, I'll take you to the wholesale market in a bit. Before, the high-end leather jackets in Moscow were from Italy, the mid-range from Turkey, and the low-end from China. Now, the mid-range and low-end goods are basically all from China."
Manager Hu asked in surprise, "Since these bosses can fly to Europe to learn from others, why are they still selling low-end goods?"
“Because there is market demand.” Wang Xiao explained as he walked out, “The gap between the rich and the poor in Russia is widening. About 30% of people earn between $15 and $30, and another 30% earn less than $15. These people can only live on cheap, low-end goods.”
Secretary Sun sighed: "They're losing out by buying these low-end goods. They'd rather spend more money on better quality ones, which can at least last two years. You get what you pay for; cheap goods might not even last a year."
The others nodded in agreement.
Counterfeit and substandard products aren't specifically made to scam the Russians; there are tons of them in China too. They're all just for show; you can't expect them to last long.
Wang Xiao gave a wry smile: "But the worse the economy is, the less money you can save. The poorer you are, the more things you need to spend money on. Poor people are like being chased by a tiger; they can only run for their lives and use whatever they can afford. Only when the economy is relatively comfortable can people better plan for the future and improve their quality of life."
They walked to a corner of the exhibition hall, where Russian products were also displayed, at much lower prices. However, due to their outdated designs and rough workmanship, even though the quality wasn't actually that bad, the hall was also deserted.
Secretary Sun shook his head: "If you ask me, they might as well buy products made in their own country. At least the quality is passable, and they can wear them more often."
Wang Xiao's smile became even more helpless: "But it's precisely because they're poorer that they need nice clothes to save face. When they stand outside wearing these cheap clothes made in their own country, people can tell that they're poor and old-fashioned. They also care about their image. So, Russians with poor economic conditions are more willing to buy cheap, low-end Chinese goods, as long as the colors are bright and the styles are novel. Even if the quality isn't that good, they can accept it."
Her efforts to build the container market were also aimed at creating a plan so that Chinese goods of all grades would stay where they belong.
Thus, people who buy clothes at small commodity markets often find the quality of the clothes they receive to be inferior to those in department stores, and they take this for granted. This is because they went to the small commodity market specifically to save money.
Manager Hu took a deep breath and cupped his hands in greeting to Wang Xiao: "President Wang, I've long heard that you're good at business. Seeing is believing."
Wang Xiao waved his hand with a smile: "I'm nothing. Let's go to the wholesale market. Um, if you need to contact people back home, you can make international calls and send faxes from there."
Everyone was overjoyed.
After seeing all the foreign goods at the exhibition center, they no longer dared to be arrogant and were all eager to have their families send over new samples.
After they finished looking at the wholesale market, they felt even more ashamed.
It turns out that the guerrilla forces and ragtag groups they had seen, the small-time operators they couldn't even mention, had grown into this size without them noticing.
Look at them, shipping out goods in huge bags, while the passing vendors barely even glance at these officials.
Inside the wholesale building, the sounds of telephones, fax machines, and people shouting filled the air.
The man holding the telephone was angrily cursing, "Who told you to send this green down jacket? Russian women don't like this color at all. You think I'm going to sell it to a ghost now?!"
The visiting group stared wide-eyed in surprise at the down jacket in his hand, and exclaimed in alarm, "Oh no, the clothes in our factory are the same color!"
The man had finished venting, hung up the phone, glanced back briefly, and concluded: "Prepare to be stuck with this color; there's no way it'll go away."
Upon seeing Wang Xiao, he immediately greeted him, "By the way, Mr. Wang, I heard you guys set up some kind of container market near the subway station on the east side, right? How does that work?"
“Yes!” Wang Xiao nodded. “Currently, a container market is under construction. There are too many people, and the wholesale buildings can’t accommodate them all. When people come to me, I can’t just turn them away, can I? With the current security situation in Moscow, I’m afraid that if I turn people away, I might cause them to die.”
The wholesaler, Lao Feng, asked anxiously, "So how exactly does it work?"
"It's nothing much, we just got a piece of land, with a rain shelter and a glass room that's almost finished. Right now, if you want to do business there, we'll rent you the space in the shipping container. During the day, you can open the container and it becomes a stall. At night, you can lock the container and it becomes a small warehouse. Later, we'll build another warehouse, so we can ship several boxes at a time, store them in the warehouse first, and then take them out one by one to sell."
Secretary Sun couldn't believe his ears: "Several boxes of goods shipped out at the market at once?"
Good heavens, how many items are in a container of goods!
Old Feng waved his hand dismissively: "What's the big deal? That's how it is in Moscow. If the goods are to your liking, they're out in a flash; if they're not, they'll crush you. Um, Mr. Wang, how much does it cost to rent a spot? My younger brother is coming over. I don't have room for him here, so I'll arrange for him to go to the container market."
After saying that, he remembered something else, "Are the police over there ruthless? I don't think they're the kind who come to check three times a day."
Wang Xiao laughed: "The military patrols over there; the police don't go there unless there's nothing wrong. The rent depends on the location and size; some are as cheap as $100, while others are as expensive as $400 or $500."
Old Feng beamed with joy: "That's good, peace is a blessing."
In Moscow, being able to keep your personal safety and business safe with less than half the profit is considered extremely lucky.
Manager Hu and Secretary Sun were secretly astonished.
To them, it sounded like they were just given a random piece of land with no houses, yet they were still charged hundreds of dollars a month.
Goodness, it's true that money from goods is hard to earn, but money from people is easy to earn.
They had just exchanged a glance when a young man of about seventeen or eighteen walked by.
When Secretary Sun's secretary saw the face, he was startled: "Oh dear, comrade, what happened to you? Your face looks terrible!"
Old Feng frowned as well: "Damn it, you got into a fight? Hey, I told you, if you're setting up a stall at the free market, run if things get bad. Those Russians are tall and strong, whether it's the police or the Mafia, who do you think you can beat?"
The young man had tears welling up in his eyes, feeling extremely aggrieved: "They tried to steal my coat! I sold 15 coats today, earning $5 per coat, which was enough to pay the rent, but they stole all the money."
The others comforted him, saying, "It's alright, it's good that you're okay. Go find Old Ge and get some medicated wine to rub on it."
Old Ge is also a wholesaler, but he's not good at business and can't sell the same goods as others.
But he used to be a barefoot doctor, so he knew acupuncture, massage, and even how to cut men's hair, making him an indispensable talent for the wholesale market. In the end, he earned just as much as the wholesalers.
The wholesaler who shared a room with him felt sorry for him: "Alright, alright, you're sleeping on the floor in our room tonight. We're not in a hurry, so don't panic, your life is the most important thing."
There are more and more merchants buying wholesale goods now, and two people sharing a room can't even fit them all.
So some newcomers sleep on the floor of the wholesale building at night, or share half a bed with others, and during the day they drag their carts to the free market to set up stalls.
Secretary Sun couldn't bear to look at him and said, "It's true, everything is good at home, but going out is full of difficulties."
This young man is about the same age as his son. His son's daily schooling is like a living hell for him. Let him try making a living in Moscow, and he'll know what it means to have money hard to earn and food to eat.
Ah, no wonder these people are happy to charge $100 for a piece of vacant land.
As expected, with no one to protect you, you might earn money here but not live to spend it.
Wang Xiao bluntly stated, "Don't think I'm charging too much rent. Taxes in Moscow are heavy, and bribing officials at all levels is a bottomless pit. Every now and then, the Mafia comes to collect protection money."
It's impossible for them not to take a single penny from the gang.
More than half of Moscow's industries are in the hands of gangsters, and even high-ranking government officials have to give them face, let alone businessmen.
It can only be said that they give relatively less, just enough to guarantee their own share of the profits.
Old Feng, the wholesaler who had asked for container space, quickly waved his hand: "No, Mr. Wang, you're a kind person, we all know what's going on."
He plans to rent two more spaces. Just look at the wholesale market; nobody took it seriously back then, but now so many people are begging for rooms and can't get in.
Once the container market picks up, he can sublet the space, and he might just make a small fortune from the rental difference.
Wang Xiao smiled and said, "If any relatives or friends need container space, go to the market and check. Hurry up, people from Vietnam and Central Asia are already renting spaces there. I can't keep it for everyone indefinitely; my partner will have objections."
Because he was worried that it would be inconvenient for Wang Xiao and the Chinese manufacturers to speak in his presence, Ivanov, after dropping them off at the hotel, completed his role as a background figure and went home first.
One of the wholesalers chuckled, "I think the Russians listen to you quite a bit!"
Wang Xiao smiled enigmatically: "His affability is contingent on him being able to make money. If making money is delayed, do you think he'll still be easy to talk to? Even if he wanted to be easy to talk to, those lords wouldn't give him a pleasant look."
She waved her hand, "Alright, everyone be careful when you go out. If something happens outside, there's nothing I can do."
She turned around and led the group outside: "The wholesale buildings here are all categorized. This one mainly makes down jackets and cotton-padded coats. The one we're going to downstairs makes shoes."
They visited five or six wholesale markets in one go, selling leather goods, hardware, jewelry, clothing, shoes and hats. Towards the end, it was a very cursory visit, with no time to examine things in detail.
When it was completely dark and everyone was starving, Wang Xiao finally stopped and led them downstairs to the cafeteria: "Let's go, let's eat here. I dare say, there aren't many Chinese restaurants in Moscow as authentic as the one in the wholesale market."
Manager Hu and others quickly chimed in, "Yes, yes, we'll eat here. I don't want to leave."
Someone joked, "Mr. Wang, you've been so busy collecting rent this month that you can't keep up with the demand. I bet you've made all the money in Moscow."
Wang Xiao shook his head and denied it: "What am I? It's not that I'm belittling myself, but all of us together are not even worth as much as one of their little fingers."
She pointed to the currency exchange counter next to her, "What was the price of the ruble when I first arrived in Moscow in 1991, and what is it now? Let's assume the ruble wasn't at its normal value back then; at most, 1 US dollar would be worth 10 rubles. In reality, the US dollar wasn't worth that much either. But even at that rate, now 1 US dollar can be exchanged for 1000 rubles. Where did the 990 rubles of wealth go?"
"The Soviet Union was not poor. Could poor areas guarantee that every household could own a house and a car, that children could go to school for free, and that all citizens could receive free medical care?"
"Where has all that wealth gone? As the ruble fell from 1:10 to 1:1000, it was plundered by truly shrewd people using these financial tricks."
"We're busy all day, and even if we work ourselves to the bone, all we can earn is this last 10 rubles."
"Compared to them, we don't even have the right to sit at the table for a meal."
Just as the waiter brought the dishes to the table, he blinked and said, "Who said that, Mr. Wang? If one of you doesn't sit at the table, you definitely will."
Everyone burst into laughter and quickly began preparing dinner.
Goodness gracious! Look at Moscow's communist cuisine—beef stew with potatoes! Sure enough, there are far more beef than potatoes, and it smells amazing. Just that rich broth alone is enough to make you devour a whole bowl of rice.
The restaurant's television was on; it was a large color TV.
However, almost no one in the delegation wanted to watch it, because it was a Russian program, and it seemed to be news, so what was there for them to watch?
The wholesalers who came down for a meal and a rest mostly stared at the TV, trying to take the opportunity to practice their Russian listening skills.
If you want to grow and expand your business here, knowing Russian is always a good idea.
Suddenly, the translator in the group exclaimed softly, "Isn't that the Russian president? What does he mean?"
Wang Xiao looked up at the color TV and recognized a familiar yet unfamiliar face, who was giving a speech to the audience in front of the television: "Citizens of Russia!"
For some reason, she suddenly had a bad feeling, as if something big was about to happen.
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Note: At that time, state-owned enterprises' understanding of the Russian business situation was indeed lagging behind development, resulting in a significant information gap. An article titled "Profound Changes in the Russian Market and Our Countermeasures" (by Song Xiaolu, Deputy Manager of the Second Barter Trade Department of Jilin Grain, Oil and Food Import and Export Corporation, Master of Economics), published in the May 1995 issue of *Friends of Supply and Marketing Cooperatives*, mentioned that in September 1994, a trade fair for Chinese export commodities was held in Moscow. This was the highest-level and largest-scale trade fair since the resumption of trade relations between the two countries in the mid-1980s. Despite huge investments, the results were meager. Very few companies came to visit and negotiate. Why did this happen? Because, apart from a few border trade companies and companies that had long been engaged in foreign trade with Russia, most people's understanding was still stuck before 1992. They believed that the Russian market had nothing, that Chinese goods sold well everywhere, and that the quality, variety, and style of the exhibited goods simply couldn't compare with the large influx of foreign goods into the Russian market; consumers weren't interested.
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