Why Belarusians turned to shopping abroad
11 декабря 2014, 23:27
With the economy dominated by the state and its illiberal trade laws, many Belarusians are increasingly taking to shopping abroad.
In the the middle of November, Chinese e-commerce giant Alibaba Group reported that customers from Belarus ranked fifth in the number of purchases, leaving behind the US and Canada in the online sales on Chinese anti-Valentine's Day holiday known as "Singles’ Day."
Meanwhile, shopping tours in neighbouring EU countries remain a favourite weekend trip for many Belarusians. This autumn the sharp decline of the Russian rouble sparked a shopping frenzy, with Belarusians rushing to Russian cities because of the lower prices.
The authorities in Minsk have repeatedly expressed their concerns about its citizens' shopping habits, which drain Belarus of foreign currency. Belarusians spend nearly $3bn annually abroad and domestic producers continue to lose their local markets.
However, radical restrictive measures to halt the large influx of imports is highly unlikely. The regime needs to maintain its economic contract with the public. Minsk permits people to satisfy their material needs in exchange for political loyalty. Joining the WTO could resolve some of the issues Belarus is facing, but Belarus needs to see a substantial change in relations with the West and economic reforms to obtain membership.
Belarus, an Unexpected Leader in Online Shopping
Singles’ Day in China takes place annually on 11 November. Originally a holiday commemorating unmarried young people, it has since become one of the largest online shopping day in the world. This year, the Alibaba company, one of the most active promoters of the holiday, made $9.3bn in sales - a world record for online shopping.
Strikingly, Belarusians appeared to be among the most active buyers outside of China, achieving a top 5. Russia led the ratings, followed by Brazil, Israel, Spain, ending with Belarus. Belarusians even outdid the US and Canada during this global shopping frenzy.
The Belarusian state-managed economy still cannot satisfy the consumer aspirations of its citizens. Consumers lack access to world famous brands locally and the seasonal discounts regularly found in market economies. Foreign companies in this sector are only starting to enter the Belarusian market.
Domestic prices remain high, so people prefer to shop in neighbouring EU cities like Vilnius, Bialystok and Warsaw. Recently, Russia also became a popular shopping destination, as the rouble's devaluation made Russian products more affordable for Belarusians.
Internet usage is fast growing in Belarus. According to research conducted by the Analytic Centre of the Presidential Administration, as of autumn 2014, 62% of Belarusians used the Internet, and around 50% of them were mobile Internet users. Just this June the PayPal online payment service started operating in Belarus, which makes online shopping more accessible to Belarusians.
However, a study by MASMI, a market research company based in the UK, from May 2013 showed that only 20% of Belarus' urban populace shops online. And only a quarter of them, or 5% of the urban population, made purchases on foreign web sites.
More recent data is unavailable, but it appears that Belarus witnessed a rapid growth in online shopping over the past year. The trend may be here to stay. Threads that discuss online shopping attract the largest readership on onliner.by – the most popular Minsk Internet forum.
The Russian Auto Fever
The recent economic developments in Russian provoked a real pilgrimage of Belarusians to its eastern neighbour to buy up cheap cars and high-tech gadgets. In 2014 the Russian rouble has lost 45% of its value, and this autumn it fell particularly quickly.
However, Russian businesses did not rush to raise prices to the same rate, and Belarusians had a unique opportunity to buy cheap products without visa or customs restrictions. Tourist services, cars and electronics were among the most wanted products according to stories circulating around Belarusian airwaves.
A representative of the Pegas Tourist company based in Russia told TUT.by that, "because of economic downturn many Russians have cancelled their plans to visit resorts this winter, and tourist firms have to offer discounts to attract clients". This especially concerns distant destinations like Cuba, Mexico, and Thailand. Coupled with devaluation, it has reduced travel prices considerably.
Electronic gadgets also became a hot good for Belarusians in Russia. The difference in prices between buying domestically were offset by travelling to Russian.
The biggest purchasing rush was for automobiles in Russia. The difference in automobile prices in Minsk and Moscow currently vary from thousands to tens of thousands dollars in the case of luxury automobiles.
At the moment, around 250 cars from Russia are registered in Minsk alone and around 500 throughout all of Belarus. Belarusians prefer to buy newer cars, as most of them are no older than 2008.
However, the car rush created a fertile environment for crime in car sales. Belarus's police force reported that they have uncovered several schemes of legalising the purchase of stolen cars through their registration in Belarus and other related illegal activity. They are currently investigating the history of 110 vehicles to determine their origins.
EU Shopping Concerns
While shopping in the common economic area of Eurasian Union cannot be restricted by any means, the Belarusian government continuously expresses concerns with the EU import that Belarusian shoppers bring home.
In recent years, Lithuania has been the nearest EU shopping destination for Minsk residents, being less than 200 km away. However, currently Lithuania becomes more expensive, as it introduces Euro since 2015. Belarusians continue to visit Vilnius on the weekends, but their interests are shifting from shopping to entertainment – cafes, pubs and concerts.
Meanwhile, shopping crowds have reoriented towards Poland, which is now popular not only among traditional visitors from the border regions, but for people from every corner of Belarus as well. Many companies and individual entrepreneurs offer shopping tours to Bialystok and Warsaw. According to the Polish Statistics Office, in July-September 2013 Belarusians spent $250m in Poland, more than either Russians or Ukrainians.
In September 2013, Aliaksandr Lukashenka made an announcement which gave many Belarusians pause:
[the West] criticises us for being a poor country, but our people send $3bn abroad annually and import goods which we also produce ourselves. So I have already ordered a decree - if you go abroad, you pay a $100 fee and then you are welcome to buy things. [This way] people would go to our shops and buy our refrigerators instead of carrying them from abroad.
So far these measures have not been introduced and are unlikely to be at all.
The economic contract with population means that Belarusians can satisfy their material needs in exchange for political loyalty. However, Belarus remains the only country in the region that has not yet joined the WTO. Its Eurasian Union partners, Russia and Kazakhstan, already enjoy the benefits of it, while Belarus protectionist policies keep domestic prices high.
Effectively, this means that Belarusians will carry on their mass consumerist pilgrimages to the West and East. The Belarusian government needs to intensify its WTO negotiations in order to combat this problem in future, and working on improving political relations with the West could play a major role in this process.