The overnight bus arrived at the border of Kazakhstan and China at about 4am. The 20 passengers on the 50-seat bus were still sleeping. There was three hours to wait before the border checkpoint would open.
The passengers had come from all over Kazakhstan to visit a visa-free duty-free shopping zone inside Khorgos, a town that spans the Kazakhstan-China border.
The two countries conceived the cross-border development in 2011 to transform Khorgos into a major trade and transport hub. It sits on the New Silk Road, a section of China’s Belt and Road Initiative, creating an over-land trade route linking China to European sea ports through Central Asia. Eight years in, the town hasn’t become a global-trade nexus. Nonetheless this 5.3-square-kilometer (2-square-mile) shopping zone, formally called the Khorgos International Center of Cross-Border Cooperation (ICBC), has lured entrepreneurs hoping to get rich and shoppers trying to get a bargain.
Part inside Xinjiang Uyghur Autonomous Region of China and part inside Kazakhstan, the ICBC is a neutral territory. Visas aren’t required for Kazakhs to go to the Chinese side, or Chinese to the Kazakh side. Most shoppers, however, come from Kazakhstan and nearby Central Asian countries to buy Chinese goods: Five multi-story shopping complexes housing over 2,000 shops have been built on the Chinese side. The single shopping mall on the Kazakh side is still under construction.
Shoppers typically travel long distances on tour buses to spend the day traversing the Chinese malls. The zone estimates that 4,000-5,000 Kazakhs visit the shopping area on a weekend day. A fur-coat store owner estimated to Quartz that on a good day, there’d be around 7,000-8,000 customers.
Quartz talked to some shoppers and business owners to learn why they came here, and what they’ve been trading.
The shoppers in Khorgos
Shoppers from the tour buses get to the malls after the Kazakh customs building opens at 7 am, and leave before it closes at 7 pm.
Valerka is a 22-year-old hotel receptionist from Almaty, the most populous city in Kazakstan. An overnight bus brought her, her mom, and her aunt to Khorgos. They departed around 11 pm from Almaty, spent four hours on a recently-built four-lane expressway to reach the border, and waited three hours in the parking lot for the customs checkpoint to open at 7am.
This was Valerka’s first trip to the trade zone. She bought an electric scooter for 84,000 tenge ($215). Her mother said that the same scooter would be priced over 240,000 tenge ($615) in shops in Almaty. She also bought Elizabeth Arden Green Tea Scent Spray for the equivalent of $30. That’s about the same price the company sells it for in its US store before taxes.
On the same bus with Valerka were Anna and Alexander. They were on a buying trip for their cosmetics store in Karagandy, Kazakhstan. They flew to Almaty to purchase supplies and continued to Khorgos. They came to meet their supplier of Chinese medicines and also bought clothes and linens for their family.
Baket, a makeup artist living in Nur-Sultan, the capital of Kazakhstan, came to Khorgos for a two-day shopping trip. Baket was born in China and is ethnically Kazakh. She bought socks, facial masks, flip flops, false eye lashes and some souvenirs for her friends. She said that everything back home was much more expensive than in Khorgos.
Aigul is a social worker at a special-needs facility in Bishkek, the capital of Kyrgyzstan. She took an eight-hour bus with her daughter and a facility resident from Bishkek to Khorgos. They came to test and buy electric wheelchairs for the facility. Electric wheelchairs sell for 130,000 tenge ($330) in Khorgos. Aigul said that’s about the half the price of those in Bishkek. She comes to the trade zone about three times a year to buy things for the facility.
Saule and Balnur are school teachers and colleagues from Shymkent, the third-most populous city in Kazakhstan. They came with a tour bus for a one-day trip. Khasenovna spent 155,000 tenge ($400) for a fur coat, about one month of her salary.
The border officials keep records of visitors to the ICBC. The Eurasian Economic Union, of which Kazakhstan is a member, fears an influx of cheap Chinese goods. The Kazakh government prevents shoppers from entering the Khorgos ICBC more than once a month. It also limits purchases to 25 kg of goods worth less than €500. The limit was lowered from 50 kg worth less than €1,500 in January.
There’s a size limit too. Purchased items get boxed together and tightly wrapped up before being loaded onto the bus. To take advantage of duty-free benefits, some family-business operators have their Chinese supplier ship goods to the zone, and then bring family members there to increase the amount of goods they can carry back home duty free; others pay workers inside ICBC to skirt the limits.
The shop owners of Khorgos
Stores operate around the hours of the border gate. Seven days a week, stores open when the border does, and close before the border gates are locked. The Chinese side of the zone follows Beijing time; it’s two hours ahead of the Kazakh side.
Fur is popular with Kazakhs, and coats are cheaply sold by Chinese merchants at Khorgos.
“All shops here are owned by Chinese traders from all over the place,” said Wenyuan, the owner of a fur coat store in King Kong Fur Center, a five-story shopping mall designated to sell fur coats.
Wenyuan is from Hebei, a province next to Beijing, known for manufacturing and exporting fur clothes. He sources supplies from there and Europe. At 33 years old, he owns fur-coat stores in Beijing, Moscow, and Khorgos. He said the depreciation of yuan has lowered his profits this year.
Wenyuan, like many shop owners on the Chinese side, doesn’t speak Russian, but the three shopkeepers in his store do. Together they speak Russian, Kazakh, and Mandarin.
Changhe‘s linen and blanket store in ICBC opened six months ago. Changhe is from Shaoxing, a city in eastern China. He used to supply Khorgos linen sellers, but decided to operate his own shop when he realized that he could make more money by selling directly to consumers. He has one Chinese employee and has found success selling colorful, soft blankets with cartoon patterns for 2500 tenge ($6) each. He said that 30% of his business is retail, and 70% is wholesale.
Xianpeng operates a leather shoe store on the first floor of one of the shopping malls. He came to Khorgos in 2015 from China’s northeast province of Jilin and can speak Russian. Xianpeng used to export goods through the ports in Northeast China to Russia and Europe. He moved his business to Khorgos when he saw a better opportunity to profit.
Ziyuan and her husband Yuan own a shop on the fifth floor of the Zhong Ke shopping mall. They sell medical equipment, household containers, Chinese teas, and even diapers. Most items don’t have price tags. On the day of Quartz’s visit, Ziyuan and Yuan’s interpreter was late. Ziyuan communicated prices by displaying numbers on a handheld calculator. The Khorgos store is an outlet of the couple’s first store in Urumqi, Xinjiang, nine hours’ drive away from Khorgos.
Beka’s tire shop sits outside of the shopping malls. He’s ethnically Kazakh from Yili, Xinjiang. The heavy weight of tires is a huge problem for Beka because of the 25 kg per person weight quota enacted in January. “You can only carry two tires out at once,” said Beka. Items that are shipped out of the zone loose their duty-free treatment. Combined with freight fees, that can more than double the cost of the typical 195 yuan ($30) tire.
On the day Quartz was in Khorgos, large anti-Chinese-investment protests in Almaty and Nur-Sultan led to dozens of arrests. China is Kazakhstan’s second largest trading partner. The protesters said that Chinese infrastructure projects took jobs away from the locals and resulted in high national debt. They also protested against China’s mass imprisonment of Muslims in Xinjiang, many of whom are ethnically Kazakh.
The shoppers Quartz talked to were unfamiliar with the protests. But businesses and sellers in Khorgos knew. They said that certain topics were not allowed to be talked about because Khorgos was inside Xinjiang, a region under the highest level of Chinese national surveillance. It’s home of the largest Muslim community in China. There were security checks at the entrance of each shopping mall. The police officers inside the malls wore jackets emblazoned with “anti-riot” in Chinese characters. Some shop owners and restaurant staff can be spotted wearing red badges with the words for “security personnel” written on them. One shop owner told Quartz the badge wasn’t very hard to get.
Despite all this, shoppers come everyday before dawn and leave before dusk. For Khorgos, that’s business as usual.