The analysis of the main directions of the foreign trade cooperation of Krasnoyarsk region with China

The urgency of the given work is defined by variety of forms of the foreign trade cooperation and foreign trade activities between Russia and China, an imperative need of their deep analysis and working out of a new approaches to trade expansion in the system of market relations. The object of the work is a foreign trade of Krasnoyarsk region and China. The practical importance of the work is defined by the analysis of the already existing directions of the foreign trade cooperation of Krasnoyarsk region with China and the offer of new potential ways of foreign trade cooperation of Krasnoyarsk region with China with purpose to increase the efficiency of bilateral advantageous cooperation.

According to the indicators of goods turnover throughout a number of years China is included into the five of the basic trading partners of Krasnoyarsk region.

The favorable geographical position, the developed transporting network, an availability of the customs coordination caused by close frontier position of the given territories, is the reason for active business cooperation between Krasnoyarsk region and the Chinese provinces.

It is possible to express schematically the basic directions of the foreign trade relations of Krasnoyarsk region and the Peoples Republic of China (fig. 1):

Fig. 1. The main directions of the foreign trade cooperation of Krasnoyarsk region with China

Analyzing already existing tendencies of cooperation of Krasnoyarsk region with China it is possible to note the most successful and perspective directions of bilateral relations based on advantageous cooperation of Krasnoyarsk region with China in the sphere of the foreign trade (fig. 2).

Cooperation in innovative sphere. For last years there were an objective economic preconditions for successful development of science in Siberia which could become one of the most perspective spheres of cooperation with China. “The Siberian scientists carried out many research works which at corresponding investments could become an investment product” [1]. “Our technologies are cheaper then American and European, and, of course, Chinese are very interested in their purchase” (URL: .

So, in particular, in Krasnoyarsk, on the basis of SIFTI and scientific – technological centre “Magnitogidrodinamika”, on the base of recently created Siberian Federal University and other research centers, such as FSUO CBC “Geophysics”, nowadays exist many unique innovative research works. Experts of scientific – technological centre “Magnitogidrodinamika”, for example, have developed the innovative project on manufacturing of high-quality alloys from nonferrous metal, SIFTI has developed such innovative technology, as foam glass, being absolutely inert material is suffers no influence by time. Besides it, foam glass is remarkable by its manufacture recycling of beaten glass. And such unique projects are a lot.

“However our weak point is marketing. We do not know what and in what volume it is necessary for China” – said the president of Tehnoconsult group company Sergey Simaranov (URL: . While there is no legal and contractual base, it is too early to speak about any research cooperation with foreign countries. Besides, absence of coordination between the customer and the executor does not allow starting realization of this cooperation.

For realization of cooperation in the innovative sphere the administration of Krasnoyarsk region should decide what is possible to produce and what is not. Besides, it is necessary to separate innovative sphere from scientific cooperation. And create a network of partners in China which would help in realization of this project. Cooperation between partners from Krasnoyarsk region and China in the field of science, “…joint commercialization of innovative production and its advancement on the markets of China, creation of joint ventures for realization of concrete innovative projects would allow the domestic enterprises to realize the scientific and technical potential and to receive a real return from means, enclosed in creation of high technology production; to make use of experience of China in the sphere of commercialization of the high technological production and its resources for industrial introduction of the researches and master the specific market of China” (URL: vyp2004/.

Export of natural resources. The second important aspect of cooperation touches upon the export of natural

Cooperation in innovative sphere

Export of natural resources

Proposals on foreign trade cooperation of Krasnoyarsk region with China

Cooperation in the sphere of bilateral investments

Cooperation in the sphere of service

Export of mineral fertilizers

Carrying out export to southern regions of China

Fig. 2. Proposals on the foreign trade cooperation of Krasnoyarsk region with China resources. Vicinities of the Yenisey River are rich in natural resources. Among them – gold and platinum, coal, iron ore, nickel and bauxite are much presented here. A lot of new oil fields and gas are also opened. “A deposit of Krasnoyarsk region is five times more than deposits in Khanty-Mansiysk and Tyumen regions” (URL: 2007/03/12/15:12:14/aluminium).

Analyzing the abovementioned, it is possible to draw conclusions that, firstly, export of natural resources to China will bring considerable income to treasury, secondly, will allow to solve important for a national economy a problem of a diversification of export of natural resources. For maintenance of export delivery of natural resources a hi-tech infrastructure of oil- and gas pipelines, corresponding electric mains which could be in the long term built and constructed by means of the investments involved from China are necessary.

Cooperation in the sphere of bilateral investment. Investment appeal of domestic enterprises depends on the strategy chosen by each company. Today foreign investors are ready to divide risk with existing proprietors of the enterprises and to get shares of those companies which possess high potential of the growth, clear strategy of development and the management, capable to realize this strategy. A real obstacle in a way of investments into the domestic industry is not so much deficiency of the capital, but a lack of the investment attractive offers corresponding to requirements of professional investors. The objective and complex information on investment appeal of the enterprises is necessary for potential investors and other participants of investment process.

Activization of investments into the industrial activity, occurs by means of creation of joint ventures. So, in 2006 the delegation from Shanghai came to Krasnoyarsk to carry out negotiations with the Joint Stock Company “Krasnoyarsklesomaterialy” on a theme of creation of joint venture and both side investments for building of capacities for manufacturing of saw bar plates. Till now – the cooperation is at a project stage.

To sum up it necessary to repeat that the Chinese investments can be involved in building hi-tech infrastructure of oil and gas pipelines, electric mains, for maintenance of deliveries of export of natural resources on the territory of the Peoples Republic of China, and also used for creation of joint ventures in the field of deep processing of resources.

Considering the sphere of investment cooperation from outside China, it is also necessary to note deep interest in realization of the given kind of activity. Last years the financial market of China has had new active development. On March, 19th, 2007 the National bank of China has published «the report on the international financial market of 2007” in which “…the features characterizing financial development of the financial market of China during this period was marked:

• –    activization of the further building of an infrastructure of the financial market (in the country the interbank monetary market, a bond market, bill fair, share the market and the insurance market operations);

• –    increase the efficiency and safety of the Chinese financial market;

• –    reform deepening in financial branch of China, increase in quantity of financial products, diversifications of forms of transactions;

• –    continuous increase of level of openness of the financial market to an external world, strengthening of communications between the domestic and world financial market by expansion of a share of participation of foreign investors in the Chinese financial market, and is mutual-active participation of the Chinese investors in the world financial market;

• –    expansion of scales of the financial market (during the period January – September, 2007 in the interbank monetary market of China the volume of transactions has made 6 368,45 billion yuan, with a gain for 364,4 percent)” (URL: http:// www.chinadata.khv.ru/scit_ma.htm ).

As far as China is quickly integrated into economic and a financial system, stability in its own financial sector becomes extremely important for economic.

The management of China rigidly supervises outflow of the capital from the country, however now in the conditions of an abundance of the capital in the country and credit crisis in the markets which are the basic consumers of the Chinese export, the decision on plentiful foreign investments from outside China sees the most reasonable.

Cooperation in the sphere of services. Cooperation in the sphere of services could become another direction of bilateral cooperation.

• A.    The recreational potential of Krasnoyarsk region is great. Natural recreational resources (the seas, the lake and rivers, mineral waters, picturesque landscapes) are various. Many territories practically are not damaged by a civilization – demand for such territories all over the world constantly grows. Appeal of Krasnoyarsk region as an object of tourism is defined, first of all, by following factors: the historical and cultural development of region which inseparably linked with history and culture of all Russia; a geographical position, allowing making our territory a starting point of tourist routes across Siberia and the Far East. Besides, in our region many international events and competitions on various kinds of sports are regularly held.

The most perspective cities are: Krasnoyarsk, Divnogorsk, Minusinsk, Yeniseisk, Shushensky and Ermakovsky areas. The tourist program should include such projects, as: “Krasnoyarsk – the centre of tourism of Siberia”, “the Sayan ring”, “Yeniseysk – the spiritual capital of Siberia”. Creation of the mountainskiing centre in “Bobrovij log”, development of ecological tourism on the basis of reserve “Stolby” are planned. In the conditions of a frequent technogenic accidents in China, the given sort of cooperation sees logical, the offered tourist programs – unique. The given sort of cooperation will promote formation of the tourist industry and development of all infrastructure of Krasnoyarsk region.

• B.    Transport services. The favorable geographical position of Krasnoyarsk region and presence of three transport corridors give possibility of rationalization of world transport interrelations. In meridian direction the territory of Siberia is crossed by the navigable river Yenisey, in width – the Trans-Siberian railway. The big prospects are connected with use of the HUB and development of cross-polar aviation routes which can give high economic benefit.

• C.    Attraction of experts and manufacturers from the Peoples Republic of China, instead of dealers.

In connection with the high rates of increase of volumes of building projects, realization of grandiose projects, such as completion of Boguchansky Hydro-electric power station, building of aluminum factory, pulp-and-paper industrial complex, and development of the Vankorsky deposit a problem of a labor shortage has appeared. Insufficiency of labor defines by conditions and seasonal prevalence of carried out works. “Among the declared vacancies, 23 % are necessary on building branch. And from among the people registered in the Center of employment – 75 % the woman. A lack of labor of Krasnoyarsk region is possible to solve by attraction of citizens of Uzbekistan, Tajikistan, Kirghizia, Armenia, Korea, Turkey and China” (URL: .

Cooperation in the given sphere is favorable to both parties, because the territory of Krasnoyarsk region has a high requirement for attraction of foreign manpower, and for the China, overpopulated and possessing a problem of workplaces and low wages the given kind of cooperation also has attractive character.

However, involving Chinese citizens for realization of projects, it is considered of much importance not to admit compact settlements of the Chinese migrants, giving priorities to their disperse moving. In that case they are could integrate fast into our society, learn the language, norms of behavior and culture.

Export of mineral fertilizers. Insufficiency of China – our benefit. One of the basic consumers of nitric fertilizers is China, having a climate favorable for agriculture. All know that nitrogen – one of the pivotal components of all vegetation on globe. Therefore without application of nitric fertilizers the further progress and agriculture development – one of components of economy of the Peoples Republic of China is impossible. Manufacture of fertilizers in China is a well developed business though the quality of the Chinese fertilizers obviously concedes to the Russian.

“The requirement of China for nitric fertilizers (in recalculation on a carbamide) makes about 48 million tons a year – only for manufacture of a foodstuff of internal consumption, without export” [2].

“Having taken the advantage of insufficiency of China in the field of qualitative mineral fertilizers the Russian enterprise Akron, having two industrial bases in Great Novgorod and the Smolensk region constructed a retail network for sale of fertilizers in the Peoples Republic of China” (URL: .

But demand of the market of mineral fertilizers in China is so great that allows to use this niche as strategic for an exit on the Chinese market.

There is a number of the advantages connected with opening of manufacture of mineral fertilizers in Krasnoyarsk territory. Priority advantage is deposits of raw materials for manufacture of fertilizers, in China there is a lack of kalian and sulfurs – which they have to import from Russia and other countries. The second positive aspect which is standing up for an establishment of the external economic relations between Krasnoyarsk region and China in the field of mineral fertilizers is that in the Krasnoyarsk region, on the basis of Krasnoyarsk factory of nonferrous metals named after V. N. Gulidova catalysts grids are produced, which are necessary for manufacturing mineral fertilizers. There is no similar manufacture in Krasnoyarsk territory.

“Krasnoyarsk’s catalysts grids purchase such powerful enterprises, as Nizhniy Novgorod’s “Akron” making 25 percent of all nitric fertilizers” (URL: press/. Close position of two interconnected manufactures will also add a number of competitive advantages.

For this purpose one factory can be located in a suburb of the regional centre (for example, in capacities of “Krastjazhmasha” industrial zone), and another – in Nazarovo, on the basis of the Nazarovsky power station.

Realization of the given project can put forward Krasnoyarsk region to the world’s leader on export of nitric fertilizers.

Carrying out export to southern regions of China. In China there are special free economic zones operate. Their activity is directed on liberalization and activization of the foreign trade activities. Their economy has high degree of openness to an external world, and customs, tax and investment modes are favorable for realization of internal and external investments.

Many enterprises in search for concessionary terms consider these zones as a potential source of possibility to receive an extra profit.

In China “…the following administrative economic formations with preferential modes operate:

• –    5 special economic zones: Shenren, Chzhuhaj, Shantou, Sjamen, Hainan, and also new area Pudun (Shanghai);

• –    32 zones of economic and technological development in Beijing, Shanghai, Guangzhou, Tianjin, Dalian, Harbin, Urumchi, Wuhan, Chungking, Hangchow, Shenjan, Changchun, Yingkow and other big cities;

• –    15 zones of free trade in Shanghai, Tianjin, Dalian, Guangzhou, Ningbo, Chzhantszjagan, Haikou, Sjamen, Fuzhou, Tsingtao, Shantou, Chzhuhaj and Shenchzhen;

• –    14 zones of frontier economic cooperation in Dandun, Hejhe, Sujfenhe (Heilongjiang province), Manchzhouli, Erljan, Huejchun (Jilin province), Inin, Bole, Tachen, Pinsjan, Dunsin, Zhujli, Vantin, Hekou (Yunnan province) (URL: http:/ / www.nalogi.net/1997/199708_2.htm ).

As it was mentioned above, prospects of cooperation of China and Krasnoyarsk region are mutual, such as: innovations, investments, export of goods of deep processing, import of the qualitative goods and many other things. Speaking about one of components of bilateral cooperation – export – it is important to underline the possibility for export of goods of deep processing and, secondly, for export of goods from Krasnoyarsk region to the south of China, instead of the north, as it is now. It will allow Krasnoyarsk exporters to trade on equal terms and for competitive prices, receiving privileges from realization the trading activity on special economic territories, instead of dumping the goods on border for the low price established by Chinese.

For this purpose, Chamber of commerce of the Russian Federation has the representative for rendering assistance in search of business partners, in particular, in Shanghai where the representation of the Chamber of commerce of the Russian Federation is located.

In the conclusion it is important to notice once again that the important problem of Krasnoyarsk region is optimization of the foreign trade and economic relations with China with the advantage for economic development of Krasnoyarsk region, expansion of trade and economic relations not only in the sphere of raw materials, but also in the field of industry, tourism, formation, investment and innovative sphere.

Researches and conclusions of the given work are lead to the concrete recommendations about the increase of efficiency of the foreign trade activity, the analysis of new potential ways of the foreign trade cooperation between Krasnoyarsk region and China, and give possibility of application of its positions in activity of the Chinese and Russian foreign trade enterprises.