Chinese industrial and technology parks have begun luring companies from Russia’s Far East to re-register across the border by offering cheaper financing, lower taxes and investment grants, a Russian business leader said on Friday, Sept. 4.
According to Russian business newspaper Vedomosti, rising labor and borrowing costs, combined with Russia’s high fiscal burden, have prompted some Far Eastern companies to move their legal registration to China.
Alexander Kalinin, head of the Russian small-business association Opora Rossii, said Chinese partners were actively approaching companies during remarks on the sidelines of the Eastern Economic Forum in Vladivostok.
“Our Chinese comrades are already enticing Far Eastern companies to re-register in Chinese industrial and technology parks – across the river, roughly speaking,” Kalinin said.
Russia and China share a lengthy border, with the Amur River separating several Russian Far Eastern regions from northeastern China.
Kalinin said Chinese industrial parks were offering Russian businesses lower taxes, loans at annual interest rates of just 3%, and grants covering capital expenditures.
Several companies from Russia’s Far Eastern Federal District have already begun registering in China, he said.
Relocation is considered most economically viable for businesses whose operations, customers or supply chains are already closely connected to the Chinese market.
However, consultants interviewed by Vedomosti said they had not recorded a significant surge in companies moving their registrations out of Russia.
Tatiana Kofanova, a partner in the tax and legal department at consulting firm DRT, said interest in China remained strong but that her company had not observed a large-scale business exodus.
The reported recruitment efforts highlight the widening disparity between business conditions on both sides of the border, as Russian companies face expensive credit, rising labor costs and heavier fiscal pressure while Chinese regions compete for investment.