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Monday, June 1, 2015, 09:54

Russia now offers so much

By Ashley Galina Dudarenok

Russia is invariably seen by Hong Kong people as a “Western country”, but some 60 percent of Russia actually lies in Asia, and the Russian Far East (RFE) is further east than Hong Kong. Precisely because it is “Asian”, the RFE offers specific opportunities to Hong Kong.

For most Asian investors, not without reason, Russia is primarily seen as a supplier of natural resources. Although only a small part of Russia, the RFE comprises a vast area of 6.2 million square kilometers, with much under-utilized land and plenty of natural resources, including timber, nuts and fish. Although its immense territory is sparsely populated with 6.3 million people, they are highly educated, industrious and concentrated in the main economic centers. The RFE’s natural and human resources are made all the more attractive by a very low ruble exchange rate. The only constraint to “traditional” business is that nowadays one cannot buy the raw materials with cheap rubles and simply export them.

Take timber, for instance. Not only it is now difficult to break into the timber export market, which has been long dominated by Chinese buyers, but the Russian government is tightening resource export regulations as illegal activity in oak alone has resulted in the logging of 400 percent of the permitted volume.

The universal answer might be “arbitrage by processing”, by manufacturing in the RFE, one could benefit from low, internal ruble prices for both natural and human resources. In the case of timber, one could establish a timber-processing factory and export semi-finished goods; this arrangement would remove most of the export problems while simultaneously generating support from local and regional governments keen to encourage manufacturing and employment.

A less obvious extension of the same principle could apply to university cooperation. The RFE currently has 75 institutions of higher learning, most notably the Far Eastern Federal University, the top-ranked, largest, and oldest university of Eastern Russia. Founded in 1899, it is older than the University of Hong Kong. The university runs 64 academic exchange programs with universities worldwide, including those in the US, Japan, the Chinese mainland, South Korea, New Zealand, Taiwan, Great Britain, France, Australia, Thailand, India, and Vietnam — but as yet, not with Hong Kong.

Most exchange programs — such as the successful two-decade-long cooperation between Russia and the Chinese mainland — concentrate on language, but Hong Kong and RFE universities could also cooperate in other fields of study, including archaeology, ethnography, geology, oceanography or the environment.

The cost of archaeological expeditions anywhere in the RFE, for instance, would be much lower than work undertaken on the mainland, and many exciting sites are available for investigation which may reveal a common past. The sites of particular interest might include ancient towns of the Jurchen people, the ancestors of the Manchus who established China’s Qing Dynasty (1644-1911). Anthropological and ethnographic programs might investigate the cultures and traditions of such indigenous Asian peoples as the Evenki of the “Russian North” whose small population is now equally distributed between Russia (over 35,000 people primarily along the Amur River, or Heilong River) and China (31,000 people in Hulunbuir region).

In short, RFE universities are again a resource that could benefit their Hong Kong counterparts and which offer better value than universities in comparable habitats as well as their own unique areas of study directly relevant to East Asia concerns.

Another branch of interest for Hong Kong businesses might be in active, adventure and eco-tourism to the RFE. This sort of project-based tourism is increasingly popular with Hong Kong tourists with many tour operators offering biking, river rafting, and glacier hiking in Iceland, New Zealand and Canada. The RFE with its vast virgin taiga would be a perfect destination for “Robinson Crusoe” experiences, fishing, volcanoes and even natural springs. The tourist infrastructure is limited. This means adventurists may have to live in tents in the middle of the taiga, but this is the experience many are seeking. The RFE is less than 5 hours from Hong Kong and, once again, the ruble is cheap.

The author is a co-founder of the Russian Business Club in Hong Kong. Her marketing firms focus on Hong Kong and the mainland, and Sino-Russian business exchange.

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