Hong Kong – a Platform for the Russian Far East

Hong Kong as a Trading Platform

Hong Kong can play an active role in trading light consumer goods between Asian countries and the Russian Far East market as a large number of traders in Hong Kong, who are engaged in light industries, can provide the quality products and services in demand. Currently, there is some small-scale trade and smuggling of cheap merchandise on the Russian-Chinese border, which is basically meeting the needs of the low-end market in the Russian Far East. For quality and branded consumer products, Japan and South Korea are now the two main suppliers to the region due to geographical proximity. However, as the region opens up further, importers increasingly look for quality products at lower cost from other Asian countries, including China. They can make use of Hong Kong as a trading platform as Hong Kong companies are particularly good in product design, marketing, quality control, supply chain management, etc. Indeed, DNS, a fast growing electronic goods retailer in the Russian Far East region, has set up a Hong Kong office to coordinate and manage its sourcing work from different countries in Asia, including China.

Higher demand for merchandise trade is going to stimulate more demand for trade-related services. According to a banker from the Primorye Bank, Vladivostok, trading companies in the Russian Far East region are increasingly sourcing from Asian countries other than Japan and South Korea, but settlement is a real problem. Hong Kong companies and banks have considerable expertise in providing these trade-related services and are more trustworthy partners. Besides, companies in the Russian Far East also recognise that Hong Kong is the ideal location for their Asian headquarters. A major logistics provider in the Russian Far East region called FESCO Transportation Group has set up its headquarters in Hong Kong to oversee its business for the region. In reverse, some Hong Kong companies have invested in residential developments, shopping centres and processing of natural resources in the Russian Far East region.

Close Links between Hong Kong and Russia

The governments of Hong Kong and Russia have developed close economic and trade links in recent years. For example, both sides have agreed on mutual visa-free travel arrangements and have a draft agreement on protection of investment and prevention of double taxation. The negotiation of an agreement for mutual legal assistance in criminal matters is approaching conclusion. Both sides have further agreed to strengthen collaboration in science, culture and education, including collaborations among universities of the two places.

The Russian Far East region, being part of Russia, can surely benefit from the close links with Hong Kong. In fact, Hong Kong is one of the very few economies in Asia whose citizens can travel to Russia visa-free.

In terms of logistics, the Russian Far East region is connected with Asian countries by rail, ship or air. There are international trains running between the Far East region of Russia and China, and ferries connecting Vladivostok with Japan and Korea. There are also international flights between Vladivostok and several Asian cities including Hong Kong. Vladivostok Air has recently launched direct flights between Vladivostok and Hong Kong twice a week, on Tuesdays and Fridays. S7 Airlines also operates its new regular flights between Vladivostok and Hong Kong once a week on Wednesdays.

The recent introduction of direct flights between Vladivostok and Hong Kong is a significant development. It signifies the close links between the two places and will create a virtuous circle – when the commuting cost and time is reduced, it will encourage more communications between the people of the two places. As far as air connectivity is concerned, Hong Kong is considered the best city in the region. Located strategically, Hong Kong is connected with most urban centres in Asia, including the Chinese mainland, within five hours flying time. The recent introduction of direct flights will therefore intensify not only the communications between Hong Kong and Vladivostok but also strengthen Hong Kong’s role as a hub for the Russian Far East region.