Our Second Favorite City – Harbin

A frigid boom town, Harbin is located in Northeast China. Often referred to as the “Oriental Moscow”, Harbin not only has a fascinating history, it is an intrepid intellectual adventuring capitalist´s land of opportunity. We continue our journey with our trusty China correspondent, Tim.

Tim here again – Fitz gave me a hard time because I wrote so descriptively about how smelly it is in Chongqing in my last dispatch.  It added some color to the article, so we left it in anyway!  So, as I sit down to write this, I promise not to whine about the weather here. It does not really matter that the high temperature today was -9 degrees Celsius (14 Fahrenheit) because surely the Global Speculations readers who are thinking about creating their fortune in a far away land would never be interested in the fact that as I sat down to write this letter it was actually -24 C (-11 F). They say summer temperatures can reach a whopping 25 C (78 F) for about an hour one day in July. So without mentioning those silly details that have no bearing on life whatsoever, I will now tell you a bit about Harbin.

History

Harbin is a railroad town. A hundred or so years ago it was nothing but a frigid (oops did not make it very far did I) trading outpost aspiring to be a village. Then the Trans-Siberian Railroad added a branch called the Trans-Manchurian, which passed nearby, and the Russians started to arrive in droves.  Harbin became the midway point between Europe and South East Asia. Harbin has a tumultuous past.  The film The Last Emperor details the brutality of the Japanese Occupation. Things were not much better during the Russian occupation during WWII, and Mao had little use for the frigid north, so he purged those that he thought may have dangerous foreign ties.

The period that would have been most interesting to visit would have been just after the end of Czarist Russia. Many of the Aristocrats that thought the Soviet thing just a passing fancy relocated to Harbin. Harbin was a ‘White Russian’ city, where many of the landed gentry not yet willing to give up shuttled back and forth to Paris and England, plotting their exulted return and raising funds for the counter revolution. During this time there was a vibrant cafe society full of intrigue. Like the countess portrayed by Sophia Loren in “The Countess of Hong Kong”, many of the White Russians lingered too long and found themselves refugees squeezed between imperial powers.

Those that did survive to the end of the war were then incarcerated when the Soviet Army occupied Harbin in 1945 -1946. Having originally fled the Soviet Union they were repatriated often to an even colder part of the region; a Siberian labor camp.

Oil

Harbin is only a hundred odd kilometers from Daqing which is the center of the oil industry in

China. The field is just starting to decline, and the central government is putting a real effort into expanding the reserves. We sat with several oil executives who believed that there were untold barrels yet to be discovered. We visited several exploration companies and several hardened veterans of the oil patch were very bullish on the prospects.

If you are in the oil industry or have any experience beyond once changing the oil in your ‘66 Mustang, you could probably show up and get to work. They are looking for people and we met several ‘twenty-somethings’ that came to China to teach English and are now ‘oil Executives’.

Fashion

Harbin is still called the Paris of Asia. During the height of the railroad era, French buyers would come to Harbin to buy fabric from Asia. Some stayed, and many created Fashion houses that mixed east and west.

If you have seen pictures from Shanghai in the 1920s, you saw silk concoctions that mix east and west. These designs have their roots in Harbin. The influx of Russian aristocrats only added to the fashion scene and much of the French influence is not directly from France, but from this stylish Russian aristocracy who always looked to Paris for their sartorial inspiration. Fashion is alive and well in Harbin, and there are trendy boutiques found in many parts of the city. The women are very well put together and have a style that feels old world European, similar to what I would imagine Shanghai was like when CV Starr was putting together his start up called American International Group, by wearing out his shoe leather door to door.

Fitz and I both have a weak spot for the writings of Oscar Wilde. We were once going through

customs at Heathrow when one of the turban clad customs officials asked Fitz if he had anything to declare and he responded, “Only my brilliance!” We both laughed and said simultaneously “Oscar Wilde”. The customs official was not amused even when we explained that he was only quoting one of the UK´s greatest literary minds. He did not know Wilde was actually Irish, and he might have never even heard of “The Importance of Being Earnest” but he did realize that we were a harmless pair of giggling fools. He let us pass, and on the train into

London we talked about the lack of rebellious social critics in today´s society. Buggery aside we both admire Wilde´s wit and panache, so when I told Fitz I was going to Harbin he asked me to look for a Wilde fur coat but “make sure it´s manly”. I can handle Fitz´s penchant for waistcoats, bow ties and I even like the cravats but a fur coat? I promised I would explore his options.

Sergei the Russian Bear

So, while I was shopping for manly fur coats I linked up with a fascinating character we will call Sergei.  Sergei is a long time associate of one of Fitz’s friends. I had not yet met him but we had corresponded and talked on the phone in advance of my trip. I had mentioned Fitz´s fur coat fascination and he told me where to meet him.

Sergei wears a fur coat and a matching hat that sits atop his head with absolute aplomb. On his six foot four, two hundred and sixty pound frame he really did look like a bear of a man, especially in a city where the average height is about five foot two.  Sergei heard me struggling to communicate and graciously interceded with heavily accented English and Cantonese. I could feel the price of the sable coat deflating as Sergei hovered over the diminutive saleswoman with a wide smile that barely believed his raw power. Sergei smiled a crooked grin and explained that the price was now nearly 40% less than what was on the price tag.

I felt guilty when I chickened out the way I knew I would all along. After all, unless I was going to routinely dwell in Harbin or some other frigid fashion center I would never have the self-confidence to wear such garb on the streets of Mayfair or Geneva. And, Fitz will have to claim his own. So alas Sergei´s negotiating went for not.  Sergei and I chatted amiably and he told me he knew I wasn’t going to buy a coat, and so did the shop girl.  The price he negotiated had less to do with his ability to bargain than with her assessment that I was not man enough to own a fur coat. Have a think on that for a minute.

I chatted with Sergei sheepishly and he explained he just returned from Luxemburg where his family holding company is domiciled. He explained his family came to Harbin from St. Petersburg over 100 years ago, and had survived and to varying degrees prospered. Things were better under the nationalists than the Maoists, and neither were as bad as the Japanese.

The family fled back to Russia several times, and relocated to Hong Kong once or twice in the century, but they always kept their ties to Harbin. We decided to continue the conversation elsewhere and I suggested I buy him a coffee. Sergei responded in mock disgust, “Make that a proper drink or I´ll best be on my way.”  It was eleven in the morning but hey, when in

Russian influenced China…

Over spiked coffee drinks, Sergei went on to explain that his family has primarily been involved in trading between China and Europe. For a long time that meant they were smugglers. Over the last one hundred years there have been many times when it was forbidden for the Chinese to trade with Europe, but the local party bosses turned a blind eye to traders who facilitated a triangle trade, as long as they were able to use the smugglers as a source of hard currency and the occasional treat for a wife, daughter or mistress.

Sergei told stories of stealthy boat trips on the “Black Dragon” river from Harbin to the Russian border town of Khaboarovsk.  At the border some of their cargo would go to the Red Army border guards and then they would continue to the coast where a highly placed Soviet Naval officer of Chechen decent would move the cargo by sea.

He mentioned that the trip back was much more dangerous, as it was well known that that they would be carrying a relative fortune in Japanese Yen or South Korean won. He and his cousin would sometimes travel days out of their way to vary the timing and the route of their return. His trips were in the early and late 1980s when “everyone but the CIA knew that the Soviet Union was doomed.”  After the Soviet Union fell in 1990 Sergei moved first to Finland and then to Wales where he enrolled at Cardiff University to study economics. He had little formal education before University but since nobody knew what a Russian diploma looked like he simply made his own.

In those days he said everyone in Europe thought it was novel to help out the poor, oppressed backward Russians. That was before they bought the best football teams and Georgian homes. “How was your English when you arrived?” I asked. “Horrible but it was Wales and their English wasn´t much better. They probably received a grant worth twice my school fees for taking in a poor Russian.” He lasted about two years, “Long enough to learn English and discover that all Welsh women don´t look like Catherine Zeta Jones.”

So after the biographical explanation, what did Sergei want to talk about? “Those stupid f***ing Americans…”  His rant started this way, “Krugman, Obama, Geithner and their little pet Strauss-Kahn all think the Chinese need to devalue the Yuan. This is just stupid; stupid beyond zee bounds of reality.” He continued that although the Yuan has appreciated 20% over the last decade, Krugman and company argue it needs to be devalued to spur a global recovery.  “Bulllllshiiiiit,” said Sergei. His main points were that a more expensive Yuan would mean higher prices in Walmart and Target. The already indebted US consumer would have to pay more for everything made in China. He pointed out that if Walmart were a country it would be China´s eighth or ninth largest trading partner, and over 50% of the goods in Walmart are made in China. It was surreal to listen to this mammoth, fur clad Russian rattle off facts about Walmart.

He continued with, “How are all the unemployed Americans going to afford more expensive goods?”  And, “America only has consumers. They produce nothing.” You could almost see him enjoying the vindication of his countrymen in Russia who have long claimed that American growth was just as hollow as the cold war era Soviet factory production quotas. He did not say it, but I think he was thinking that the Soviets produced vast quantities of low quality goods for which there was no market. The Americans produced vast quantities of credit for which there now is no market. At least the Russians could still wear the shitty shoes and melt down the scrap from their mal investment. The Americans have nothing but paper to show for the last three decades.

“Our oligarchs figured out how to retool the factories and make a fortune.  The American government will not be able to re-inflate the subprime mortgage system and carry trillions of dollars in debt.”

Perhaps I am reading too much into Sergei´s thoughts, but it seemed that since I was not an

American he felt he could share his uncensored distain. He then continued about the Western mantra regarding the Chinese currency. He pointed out that the US needs China healthy, and if the Yuan was revalued then more factories would close in China.  “Something like 10,000 factories have already closed, and yet exports to the US still account for nearly 20% of the Chinese economy.” He snarled, “Dis Krugman Character thinks that if the Yuan appreciates then the Chinese people will buy more US products. Hah! What US products? It´s not like

Americans would start opening factories to replace the ones closing here. Those jobs would just go to Vietnam or Indonesia not California.  Even a Russian University drop out from bloody

Wales can see that Obama wants the Yuan to strengthen so it is not so obvious the dollar is doomed. Who do they think they are kidding? The US is like Iceland only a bigger island.”

I must admit that I was not only shocked by his command of the subject, I was exhausted and even intimidated after hearing him put forth his argument so aggressively. I agreed with most of it but that did not change the fact that I was overwhelmed by his borderline violent condemnation of the situation. I tried to move the subject to social life in Harbin but before I could do so he said, “I am zo sorry to be this way. It is rude. I am just so frustrated. I grew up as a dissident. I mean we did not write long, sad novels of suffering, but we were criminals and we fought against the system. As a boy we looked up to the West as the place where decisions were based on reason not political parties. Well now I see the west is no different from the East. I am glad I don´t have children because I don´t think the next generation will live well anywhere.

“Ok you want to know about the nightlife?” I must admit that by then I was depressed and just wanted to pull the covers over my head, but one must persevere in the face of adversity.

Ice Cold and Red Hot Nights in Harbin, while I would have to be twice as cool as I am to be half as cool as Sergei, I enjoyed three days on the town with the mink-clad party animal. Sergei floats through a world of Chinese party hacks turned entrepreneurs, Russian ‘businessmen’ ranging from nouveau-riche Siberian property kings to Chechen mobsters and western energy executives. He is working on a Uranium deal that required him to answer the phone and leave the room every couple of hours.

As best I can tell he speaks Cantonese, Russian, French with a Swiss accent, English and Finnish. He also claims he can copulate in Mandarin but I think he is exaggerating.  Later that evening he picked me up at my rented flat in a vintage Mercedes with a chauffeur clad in white livery. We spent the evening and morning floating from private club to private house to private club.

Actually, I am still not sure which ones were clubs and which were private homes as they looked much the same. None of these places had any signs or outward appearance of commerce. In each venue there were a bevy of attractive females. About two thirds were either Chinese or Eurasian and the rest were a mixture of Russians, Europeans, Australians and Americans. I had been out in Harbin a couple of nights before I went with the Bear, and this was a distinctly different crowd.

He explained that the Chinese and Eurasian crowds were the upper class of Harbin and the surrounding cities, or “fashion floozies from Shanghai”. They have an outwardly conservative lifestyle but in private they can party like Arabs let loose on the French Riviera. The “regular white girls”, as Sergei called them, are “rentals, not prostitutes”, but girls that came to China to teach English or travel for a while and are already tired of the average Chinese guy who, “does not know how to treat a lady if you know what I mean.”  They are invited once or twice and then they are gone.

The men in these circles were about fifty-percent foreigners of European decent and fifty-percent Chinese. The Chinese men spoke almost as many languages as Sergei and were as refined and well-dressed as any you might see at Annabel’s in its heyday. The European men were mostly metro-sexual Euro trash with more money than sense. I suspect they were of use to the Chinese men in either business or socially, but were otherwise unremarkable.  Away from the cacophony of the Harbin streets existed an alternate universe.

That weekend we went skiing in Sun Mountain, Yabuli with two of Sergei´s Chinese friends. The skiing was average but the parties were scandalous.  I can´t get into details in such a family friendly publication, but the Chinese and Russians have discovered the mixture of vodka, champagne and hot tubs. I have memories, rather blurred and intermittent as they are, of an evening reminiscent of the opening scene of Charlie Wilson´s War.  Suffice it to say the weekend was memorable, or should have been, had I not imbibed twice my annual quota of vodka in 72 hours.

Getting to Harbin

You can fly but the way to go is to take the train from Shanghai or Beijing. The overnight trains are excellent and a first class ticket in a sleeper car is an affordable one hundred and fifty dollars.  However, I chose to take the cheaper and more interesting second class car, where I chatted for hours with salesmen, Chinese students, English gap year students and one very lithe and nubile aspiring fashion designer returning from six months in Paris. I may have been more comfortable in first class but the experience and education in second class more than made up for a slightly stiff back when the train pulled into the station. Bring a six pack of beer and some biscuits and you will be more than the ordinary big nosed tourist.

Where to Stay

I tried to find an elegant Old World hotel lovingly restored to feel like a Russian tea room, with just the right mix of Russian and Chinese opulence, but alas, I could not. So, I stayed at the Sofitel, which felt just like every other Sofitel; very corporate, clean and reasonable at about a hundred US dollars a night. The bar is said to have the best selection of call girls in Harbin, but as mentioned in the paragraph on nightlife, you would need to be pretty lazy to take that route. I am told the Shangri-La hotel is much the same but a bit further away from the action.

A better bet is a short stay apartment. They are clean and if you book more than a week it comes to less than 40 US dollars a day for a clean apartment with Wi-Fi and all the modern amenities. If you are going to stay longer a one bedroom apartment will set you back about 700 US dollars a month, and a two bedroom can be found for about 1200 a month with all the amenities you would want or need. Once you arrive you are inundated with options because

of the overcapacity of apartments and it is best you begin your search for longer term accommodation after you arrive and figure out what part of town you want to be in, because it can be a nightmare to cross town in traffic. Did I mention it was cold here?

The Tourist Trail

In addition to the budding fashionistas that trek to Harbin, there is also a heavy influx of tourists for the world famous (according to Harbin) ice festival.  The ice carvings range from reproduction of Disney characters to full size ice castles that make you feel like you are on the set of a Bond film. The sheer magnitude is impressive. The festival, although very much a tourist attraction, is well worth the time to experience; and, the population swells in size by nearly 20% during the opening week in January. I enjoyed the festival more than I thought I would and at night the entire festival turns into a light show.

Another attraction sure to offend some, but entertain others is the Tiger Zoo.  It is home to over 200 tigers, including the rare Siberian version. I was reluctant to take the forty minute taxi ride to the zoo but it was worth it. Perhaps I am too jaded, but the overwhelming thought that consumed me was that this place would be an ambulance chasing US lawyer´s best chance to fund his senate race. The enclosures are so rickety that it is amazing that small children don´t disappear daily. Perhaps it is because the Tigers, who unlike most zoo animals around the world are healthy and active and are not very hungry. These tigers eat very well, mostly for entertainment.

Where to Start?

So if I were an entrepreneur looking to make it big, would I pick Harbin? Yes. Despite the cold I like it better than Chongqing because it has more style and substance, and the natural resource industry is booming. Also there is a total lack of foreign expertise here. Any professional: doctor, lawyer, architect, engineer, or accountant could set up a consultancy and have more work than they could handle in short order. Also I would highly recommend the same advice I offered from Chongqing. Try to get a gig at one of the universities. There are at least fifteen Universities here, ranging from specialties in medicine, engineering and science and technology to my favorite the Harbin Normal University which offers an intense language training program for all incoming foreign students. All of the Universities are looking for foreign faculty members and that would be a great ticket to entrepreneurial success.

Another thing I noticed was that Harbin has the lowest level of English proficiency of any Chinese city I visited. An aspiring entrepreneur should comb the plentiful language schools for more advanced local students studying English and make them your junior partner. You could then sell your translation services to businesses that want to highlight their goods in English. It was really noticeable how few companies, even those who catered to foreigners, had their website or other literature in English.  Those who did had the translations done by Tarzan´s retarded brother. It won´t make you rich but you could have a little factory floor of translators working for you and all you would have to do is proof the final product.

Like all these places, the best advice I can give you is check it out for yourself. You have nothing to lose and if you are lucky you might get invited to a hot tub party, which would make the trip cheap at twice the price.

Conclusion

So, there you have it, our two favorite Chinese cities, and some ideas to prosper in either.  At the end of the day, China plays by China´s rules, and we ‘loawai’ are little more than tolerated nuisances in the best of times, and intolerable intruders when times are difficult. The fact that most of the major finance houses have discounted the risk premium in China and the rest of the emerging world boggles the mind until you start to realize they need to have a market for their own holdings as they lighten up on their exposure to ¨risk¨.

Our job is to help you mitigate risk, and seek opportunity where the ‘perceived risk’ is greater than the ‘actual risk’.  China is fraught with risks, but they can be quantified, and you can position yourself to profit regardless of what happens with the global marketplace.  Remember, without risk there is no reward.  We hope you have enjoyed this Special Report on China, and two or our favorite cities therein that could make you very, very wealthy!

About The Author

Without Borders is a monthly newsletter dedicated to finding the best global investment opportunities and the most beautiful places to live and do business.

If you are interested in specific strategies for moving money overseas and diversifying out of the dollar –whether it’s overseas bank accounts, real estate purchases, commodity currencies, or offshore brokerages — Fitzroy tells you the safest and most robust places to park your dollars while they’re still strong and widely accepted… places that will keep your personal economy strong even as the dollar and the U.S. economy suffer. He investigates outstanding investment opportunities, companies, and stocks you won’t hear about on CNBC as well as lucrative overseas deals that they themselves scope out and test.

If you want to think, invest, and live outside the box, test Without Borders now risk-free – with a 30 day, 100% money-back guarantee. Click here to learn more.

Related Articles

• Is Thailand Just for Single Male Expats?
• Spiritual Journey: Black Butterflies My Journey to India
• Fiji – Doing Business from Heaven
• Expats in Indonesia
• Bali: A Journey to Self Realization
• Escaping to Koro Island
• Evolution and Globalization of a Disaster
• Living in Thailand: Too much fun off the tourist track
• Learning to Live in Saigon: One Day at a Time
• Traveling to Cambodia: Treading Water in an Ocean of Poverty