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Alexey Maslov: "The key to success in the East is expertise that allows you to get into your head"

What needs to be done by business and the state for the Far East to become successful in terms of exports and attracting investments, as well as what kind of system China is trying to build on a global scale, and how Russia can be useful for it in this.

Director of the Institute of Asian and African Countries, Moscow State University M.V. Lomonosov professor Alexei Maslov told EastRussia about who is now giving expertise to the actions of the state in the East, why young specialists need oriental studies and how much they should receive, what Russian entrepreneurs do not understand their Asian colleagues and vice versa. Until September 2021, Alexey Maslov, headed the Institute of the Far East of the Russian Academy of Sciences.

Alexey Maslov: "The key to success in the East is expertise that allows you to get into your head"
Photo: Alexey Maslov

"The study of Asia in Russia is undergoing a major transformation"

- The Institute of the Far East was originally created as a center for developing the concept of interaction with Asia. Are these tasks saved?

- In general, yes. But Asia is changing, and sometimes much faster than our approaches to its analysis are changing. And this is our main challenge today: to manage to transform under these changes in order to continue to provide high-quality expertise. At the same time, our main customer, the state, requires more and more specific knowledge from us. And you need to understand that when oriental studies were just being created as a science, it was the study of economically more developed countries at that time economically less developed ones. Now these are not the same countries that they were even 40 years ago: different scales, different ambitions. The system of interaction in Asia has become more complicated, new multilateral alliances have emerged. It is no longer possible to use the old methods. The East has changed, which means we must change too. This is the whole point.

- Is the institute changing?

- Remaining a scientific and fundamental organization, we are expanding our practical work. Expertise of projects in various fields, from economics to ecology, promotion of Russian economic interests in Asia, attraction of investments, interaction with individual political groups in the elites - we must find applied answers to all these questions. The number of examinations for the year and a half, while I am managing the institute, has increased almost tenfold, while our customers are not only the state, but also large corporations. And the Ministry of Science and Education sets before us in general the task of opening, in fact, new lines of study. This is the topic of the "green economy" in Asia, and innovation, and new types of energy, given that China is switching to carbon-free media by 2060. The task is to study the legal basis of interaction with Asia - there are not enough specialists in Asian jurisprudence.

- Does the Institute's research focus remain on China?

- Of course, our main partner is China, and our main topic is Chinese. But it is expanding noticeably. There are many cross-border processes in which both China and Russia are involved. Our areas of scientific activity have traditionally been divided by country, even within the institute, so we are going through a serious transformation in this sense as well. Joint projects are planned with the Institute of Latin America of the Russian Academy of Sciences, the Institute for African Studies. It makes sense to create joint educational platforms, for example, with Moscow State University, where oriental studies are developed. Such cooperation, perhaps, will benefit everyone.

- For new projects and directions, probably, you need new specialists too?

- Of course, we need an influx of young, active, albeit less experienced, but with completely different methods of work. It is clear that Chinese history has not changed over the past five thousand years, but our way of learning is changing. Quantitative and computer analysis of databases, longitudinal research, that is, study over a long period, parsing to collect information - to apply these methods, a different style of thinking is needed, which is inherent in young people today. For this we create youth laboratories, “youth incubators”, where you can work with experienced specialists.

Of course, it is by no means possible to replace employees at once, because science is always based on school, and a school cannot be created from scratch. As long as people can work and, most importantly, pass on their experience to young people, they will work, mastering new methods. The main difficulty is to create something for the young, that for the proven specialists, the system of motivation to explore more. Nowadays, sometimes there is no direct correlation between the earnings of a researcher and the number of publications.

- What kind of earnings can a young specialist only from a university, for example, with knowledge of Chinese, count on?

- I think from 60 thousand rubles - this should be the starting price. Moreover, the rate does not change, it will always be small, for example, 20-25 thousand rubles, and the rest is earned by participation in projects and bonuses. In my opinion, this is still not enough. The norm should be about 100 thousand rubles. Then the youth will work, not looking for any other means in part-time work.

- Many people are now dealing with the topic of Asia. Why do you need to go to work or for expertise in the East?

- For a long time, orientalists and the Institute of the Far East, as part of oriental studies, had a certain monopoly on knowledge about Asia - they also spoke Chinese or Japanese. From a certain point, everyone really began to study the East. We no longer have a monopoly. But we can have a complex knowledge. It is impossible, for example, to change the thinking of the Chinese, it has developed historically. But we can get inside their heads and understand why and how they think. And consequently, to work out a solution that cannot be worked out by a representative of a narrow profession. If this is not the case, and people without the required level of knowledge begin to give expertise in the East, which, shall we say, have picked up, then this is a very dangerous story. Unfortunately, this is not uncommon these days.

- Is the need for such expertise growing, in your opinion?

- I will say more - there is almost no such expertise. Pay attention to how Russian business is built in China, not only cross-border, but in general. There are export manufacturers. There are authorities, the Ministry for the Development of the Russian Far East, sometimes the Ministry of Industry and Trade or the Ministry of Agriculture, which create a base for export supplies. But I will give just one example. Russian companies present their products to Japan. Very good products. The Japanese listened to all of this and said, “Guys, this is great, but you should read the Japanese sanitary standards at least once. Everything that you have presented will not work. " But it was possible to put the packaging in order a couple of days in advance. But who did the monitoring of the market?

- And who can do it at all?

- Neither the Russian Export Center (REC), nor the Moscow Export Center, for example, order regional or sectoral monitoring. And the same China - it is different inside. Therefore, the Russian chocolate with salt, which is produced in Vladivostok, is not successful in the Heilongjiang province, but matches the tastes of the inhabitants of the Sichuan province. And this is only the first step in the obligatory research, without which, believe me, no American or European company will even make plans to sell in Asia. Americans, for example, use the services of the Sino-American Chamber of Commerce, which consists of experts who can tell him: “You know, maybe it doesn't make sense to go to China with your product, but it makes sense to Vietnam,” or: “Let's we will make the right packaging. " Analysis of packaging, symbols, trademark patenting issues in all nuances, from cover to taste, so as not to lose the identity of the product, which is very simple in the Chinese market, and so on - all this is needed.

- Does anyone teach the entrepreneurs themselves what to do this way?

- We learn. For the second year, our joint program with the Far Eastern Federal University has been working on training and retraining of existing businessmen interacting or just about to enter the Chinese market. This is a kind of educational program, step by step - the steps of working with Asia, where Russian methods, as you know, do not work. The same goal is pursued by our pitch sessions for Russian and Asian businessmen, which are held together with REC and Skolkovo. But the most important thing is that a large amount of informational materials should be produced.

 

"The authorities in Russia are not used to contacting experts"

- It turns out that manufacturers may have problems due to their elementary misunderstanding of the specifics of doing business with China?

- This is usually how it happens. A recent example is when, after the detection of coronavirus on packages of fish products from Russia, China banned the import of pollock, in addition, stating that it is now ready to buy products for only 50% of the previous price, and our fish producers ... No, of course, they are all serious people, these are large companies ... But they went to the president's plenipotentiary in the Far Eastern Federal District, Yuri Trutnev, to write a letter to "the Chinese where they should go" or "ask Putin to call."

- Doesn't it work?

- This is generally the deepest mistake. Look, everything is simple. Vladimir Putin and Xi Jinping agreed on everything. Next is the business of real entrepreneurs. Who blocked the customs? Customs officer. He has instructions. Whether he loves Russia or not, the border is being closed. This means that we are not talking about politics, and not about whether "our friends are Chinese" or not. What does friendship have to do with it? This is pure economics. And how can you understand this without investing a penny in the analysis of the Chinese market and the behavior of the Chinese? Yes, this is not easy to understand. But it was possible in advance, years before that, to assume that something like this would happen, and develop countermeasures. For this, there are institutions like ours, which, as far as possible, train people to work with Asia and tell how to do it and how not to do it.

- Ok, but what would you recommend in the case of pollock?

- It is difficult to give advice. But it is obvious that in this situation it is senseless to demand from Trutnev that “he agree there”. Negotiations of a different plan are needed here. We need to talk about how to optimize costs, how to repatriate profits. For example, to offer work through the regime of special economic zones, tariff-free zones - there, in China, there are territories where export-import operations are conducted without tariffs and without VAT at all. And you can even calculate how to repatriate profits with the least loss. Clearly, when you know how Chinese financial law works, it is easier to negotiate. But, unfortunately, our colleagues who are negotiating are excellent manufacturers, but zero experts on the Chinese market. And the Chinese, by the way, know the Russian market just as poorly. This is a mirror situation.

- Seriously? And do businessmen from China have any illusions about Russia?

- In China, many believe that there are no laws in Russia. What you need to come, ask or insist, better ten times. To "persuade", so to speak, the problem. And if you do not agree, it is not because there are certain norms in Russia. But because you personally do not want to. On the whole, the Chinese do not really understand how to enter the Russian market. By the way, the Japanese also think that the Kuril issue is a question "we need to come to an agreement with Putin, or wait until there is someone after Putin." But the Russian consciousness works differently.

- Foreigners cannot find this information, nowhere to get it?

- Good question. If you try to search for "invest in Russia" in China, the search engines will lead you not to some ministry or the Institute of the Far East, but to intermediary firms. The mediators “withdraw” money not from the implementation of the project, but from the “movement” around it. This is how various incredible phenomena arise, for example, official hearings in the Federation Council on the completely unrealistic project of turning Russian rivers into China. Try to organize something like this in the State Council of the People's Republic of China ... And therefore, by the way, many good ideas from China are stalled in our country, and then we read on the Chinese part of the Internet: it is impossible to communicate with Russians, everything is opaque there.

- But the Chinese themselves sometimes put forward seemingly incredible projects in Russia, don't they? A recent example with the Sherwood Energy Ltd. in the Khabarovsk Territory, which was going to build the world's largest methanol plant on the shores of the Sea of ​​Okhotsk, but was stopped by a referendum of local residents who spoke out strongly against it - is this not from the same series?

- Due diligence regarding Chinese partners is also correct. We know a lot of examples when a deal is proposed, even at the level of the administration of the region of China, a letter of intent is signed, and then a Chinese colleague takes some loans from a Chinese bank at a low interest rate and uses the funds not for this project at all. There are many such cases. How can you avoid this? Deep check. That's what experts are for.

- It turns out that both parties need to explain how to do business?

- Necessary. Business with Asia is profitable from a financial point of view, but it is costly in terms of building a process. And most importantly, negativity can happen even at the peak of interaction. As, in fact, it happened with the fish: because a specific instruction worked.

- The Russian authorities in this situation, since we are talking about it, did they contact you?

- No. And not because stupid people are in power. It's just that psychologically Russian government departments are not in the mood to turn to experts. Moreover, they are not obliged to keep them. This approach is, of course, better to change before it's too late.

 

"Change the structure of trade, increase transparency, issue cheap loans"

- You can often come across messages: the Russian authorities have offered a Chinese investor to build such and such a plant in the Far East, they are negotiating with such and such a company. Why doesn't it usually go beyond intentions?

- China is interested in raw materials from Russia and the shipment of its goods to Europe through Russia. Everything else is a local matter for Russia. Look at the structure of investments, what China is investing in Russia and what it is investing in, for example, in England or even in India. We have resources. In India and England - in technology startups, tourism infrastructure, new technologies. The high-tech sector in bilateral trade with China is less than 15%. And, of course, there are brains in Russia.

- Why is that?

- China has long created its own high-tech zones, where you can get state support for an invention - about 12 million rubles, if we count it in our money, for a year - to open a laboratory, production and enter the market. A Russian company can do it like any other. But a serious analysis is needed: maybe it is better to open an enterprise in Vietnam or in Indonesia, where labor is very cheap, almost 40% cheaper than in China. Who will advise? There are a lot of intermediaries, Russians or Chinese, who say: "Let us help you to lead you to China." But in fact, what is needed here is not mediators, but lobbyists in Asia. So that they advertise investment opportunities in Russia, tell business, and this is adequate to the Chinese or Singaporean minds: this is work in social networks, the creation of sites registered "on the other side." These are the blogs of Chinese students who write about how Russia is developing. Or blogs about investing for a long or short period. In general, mass promotion.

- This task can only be done by the state. What other priorities, if we talk about the Far East, would you single out for the authorities?

- It is necessary, firstly, to change the structure of trade - to increase the share of high-tech goods, to increase the supply of Russian food products. And the second point is free economic zones along the borders, including distributed ones. The technology of distributed zones assumes that they may not physically dock with each other, but at the same time they work according to a single standard and, perhaps, even engage in the production of a single product - in stages.

- We seem to have zones with preferences - territories of advanced development ...

- It's a good idea. But there is an important point. When we say why China invests little in the Far East and in Russia in general, we need to understand that in reality we are in a huge competitive environment. Today, preferences to the same China are provided by Vietnam, Malaysia, India, Indonesia ... Vietnam, for example, provides fantastic conditions for Chinese investors, literally zero in everything and protection. When a Chinese businessman is going to invest somewhere, he literally drives all the parameters into the table and looks where it is more profitable. Plus takes into account the business transparency index. And here we are losing with our proposals.

- And Russian business, in your opinion, can change something in order to enter China more successfully?

- The Far East is psychologically and historically oriented only, roughly speaking, towards the transfer of goods across the border to China and vice versa. But China's three northeastern provinces are developing slowly, with populations falling. Elderly Chinese are moving south, flowing away from the borders, and ceasing to be our consumers. In this regard, in my opinion, the main task of the Far Eastern business is not so much to create new categories of goods as to learn how to work with different regions of China, to go deeper, where very rare Russian goods reach. And the state needs to provide cheap loans, because it is possible to gain a foothold in the Chinese market only after a couple of years of dumping. A private entrepreneur will not pull it out of his pocket.

 

"Energy exports will pay off, but the proceeds need to be invested in technology exports"

- Recently, the news came, it seems, alarming - from China: by 2060, the PRC is switching to a carbon-free economy. And here we are expanding the BAM, increasing the export of coal through the Far East. Exaggerating, of course, but how many years are left for us?

- It would be wrong to rely only on the official statements of the leaders in forecasts for China. In general, in my opinion, the time for predictive reports about China has passed: no matter how ingenious a specialist is, he cannot take into account the hundreds of trends that are simultaneously present in the economy of this country. Yes, China is likely to come out on a carbon-free basis around this time. But a number of regions will surely remain that will continue to consume energy resources of the same type. It is customary to think of China as the USSR: a planned economy, five-year plans. But in general, it is in the spirit of the Chinese - to indicate the big picture, but without any hard numbers, so that later it would be easier to edit them on the go.

- National peculiarity?

- Right. China always keeps a flexible base for itself, because the world around us is changing faster than we plan, - so say Chinese economists. No one could predict a "trade war" between the United States and China. Back to the question. If we optimize costs at Russian Railways tariffs, which are one of the most expensive in the world (and twice as expensive for the same distance than in China), then yes, we will recoup our coal export projects, and in this we are not threatened by 2060. The same is true for a gas pipe and an oil pipe: we will have time to pay off. The question is different. Obviously, not only China, but the whole world, especially Asia, will move to a carbon-free basis. As a result, it is important that the money that we extract from energy resources today is invested in new technologies in order to export them later. This is a difficult story: everything rests on the inconsistency of actions here, in Russia, while in China all actions are coordinated. But we have to do it.

- How do the Chinese do it?

“China’s success is not in the fact that the Chinese are better at planning — just like everyone else. But they are capable of rebuilding the economic model very quickly. The core does not change, but in two or three months the Chinese can rebuild almost the entire economy - a huge country. And China is not afraid, without hiding it, to subsidize those industries that are key. Take the same transportation that "accelerates" the entire economy. In Russia, a 40-foot container costs $ 5-6 thousand for one distance, in China for the same - $ 2,5 thousand. Are the Chinese interested in our roads? No. They are interested in carrying the goods as far as possible through Chinese territory - that is cheaper.

- What is the global meaning of China's policy now, can it be formulated?

- You know, China's actions in the world are to some extent a repetition of the Soviet experience in exporting ideology. Only in some places everything is rearranged: not the recognition of communism, but then money, as we had. The Chinese say: first, here is a profitable investment for you, and then we can send our administrators and show you how to manage. By the way, they are surprised if someone refuses: how can it be, because we are from a pure soul. But investment in this case is when a Chinese company enters into an agreement with a foreign one, then goes to the bank and receives a loan at a low interest rate and with guarantees. At the same time, the Chinese company remains the management company of the project - after all, China provides funds, this is a hedging of risks. And many countries agree to this.

- But no "red" ideology?

- China has been approaching the idea of ​​globalization in Chinese for a long time. There are, of course, slogans. The first is "One Belt - One Road", and this is about the economy. The entire investment and, in many respects, foreign policy of China is built under the idea of ​​the New Silk Road. The second slogan: "One destiny of mankind." Xin Jinping first proposed it to the countries of Central Asia, and this political narrative turned out to be very well received. They say that humanity is experiencing common threats (the coronavirus is proof of this), and we need to jointly prepare a common response. And the USA and some other countries, on the contrary, do not allow to unite, they constantly throw up some kind of "red lines" that cannot be crossed. And this idea of ​​China, correctly formulated, was liked by many, especially in Asia, Africa and Latin America.

- Many, however, see the danger ...

- Yes, many countries have fallen into debt traps. But it was not intentionally that China drove them there. This is precisely the question that professional expertise should be everywhere. And the fact that China is not a kind uncle distributing money is understandable. By flooding everyone with yuan, China gains control over key assets, such as deep-sea ports, around the world. And in parallel, by the way, it switches foreign trade to cyber-yuan, in fact, the first nationally oriented digital currency. And here, I think, the ultimate goal for China is the gradual ousting of the dollar from the game. Are we ready for this? I think not yet.

 

"China and Russia have the same fundamental values"

- Is Russia part of the Belt and Road?

- No. In my opinion, Russia's position is very balanced: this is a good, but Chinese project, and we have our own integration project - the EAEU. Yes, unfinished, yes, not yet so developed, but correctly oriented. At the same time, you need to understand: for us, the idea of ​​Eurasia is what we live in. Vietnam, for example, does not consider itself a part of Eurasia. China is even more so. Please note that we have many good ideas very wrongly formulated. For example, the "pivot to the East", about which so much has been written. It sounds very offensive for China, for India: "And before that, where did you stand with us?"

- Well, China formulates its ideas better. And what is the meaning of the "One Belt - One Road" project, to become a world leader?

- If we take the historical context, the experience of relations with the European powers, then the development of China is a problem of restoring national dignity. It is no coincidence that Xi Jinping says “the return of the Chinese dream,” and any economic problem for the Chinese mind is an emotional and moral problem.

At the same time, expanding influence for China is a model. There are many economic problems in China, and they are such that China cannot develop only within the country - it must expand. Like a bicycle, in order not to tip over, it must ride. In general, the model of China in recent decades has been to fit into the world economy as quickly and closely as possible. It turned out, and the country got used to living in comfortable conditions. But you cannot be a leader while you are using someone else's system, and China was well aware of this by the mid-2010s. And so the PRC proclaims a new policy - the creation of its own world system.

- How did the world take it?

- The worst thing for the liberal world is how China was able to survive the coronavirus stress test. A completely illiberal economy has been successful in arresting the problem. In January-February last year, when the virus went up in China, the publications in the American media were of an unambiguous tone: that's it, there is no more great China, it collapsed. And suddenly China is coping. Suddenly he becomes popular. And China is urgently becoming "handshake" and toxic.

- Can the Americans still prevent China from becoming a leader?

- While China was just a global producer, the Americans did not care much, the Americans bought. But as soon as China got into two areas, became a leader in high technologies and offered its own development alternative, an attack from the United States began. But it would seem that an anti-Chinese contour has been created all over the world, Australia, New Zealand, and part of Eastern Europe are opposed to China ... China fell into the same trap as the Soviet Union in the 80s, but it quickly realized it even now rebuilds the leadership system. The new principle is to act in small steps and in almost all directions.

- How will this turn out for all of us?

- I think we will get a system of not even dual leadership - China and the United States, but a system of multipolar leadership, where, perhaps, there will be leaders not only economic, but also socio-political. For example, the idea of ​​Greater Eurasia can grow into the creation of a certain movement of countries that are equally afraid to be under China and under the United States (as there was once a non-aligned movement), but at the same time they do not want to spoil relations with either others.

- And who will take over the resolution of conflicts?

- China never enters a country where there is a conflict. Once the conflict is settled, China will invest. Not with soldiers, not with guards, not with private military companies. And in this regard, China really wants Russia to take over these functions.

- We are not entering the Belt and Road. So this is our only point of contact?

- There is one more point in the relations between our countries. We and China often have some fundamental moral principles, no matter how strange it may sound. The value of the state, the value of the leadership of the state, the value of the family. And only between Russia and China in the negotiations there is the concept of "friendship". Of course, there is a historical legacy. But, you see, the concept of friendly relations exists in both Chinese and Russian society. It makes sense to develop these lines. Interhuman communication between Russia and China is, perhaps, the upbringing of the future generation, which does not yet exist today, but which will replace the current one. I think that eventually there will come a generation of rationalists who should be able to work with Asia. Our task now is to lay some foundations so that there will be no deterioration in relations for the next 10-15 years.

 

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