Russian “Chelnoki”: From Willy-Nilly Entrepreneurs to Integration with Market Economy

Abstract

The following paper is devoted to the complex assessment of the «chelnok» trade – a significant social and economic phenomenon of the post-Soviet Russia. After emerging at the beginning of Perestroika as an illegal form of business activity it happened to become an absolutely legal and wide-spread model of economic behavior, which helped meeting the demand for mass products and mitigated unemployment problem during the transformation of the economic system. On the basis of extensive empirical data this paper analyzes the tendencies for «chelnok» trade during the period after crisis in 1998. It also unveils possible development paths in the next few years.
The rising of «chelnok» trade in Russia as an institution accounts for the period of economy liberalization and the development of international tourism at the end of 1980s. A powerful factor, which stimulated the growth of the new middle class and the scale of its activities in the mid 1990s, was the economic crisis which forced a lot of people out in the entrepreneurship. According to official statistics the number of entrepreneurs grew almost 4 fold during the period of 1992-1993. The majority of them were «chelnoki», who traveled abroad to acquire basic goods there and then sold them on small wholesale markets in Russia. At the time of an absolute commodity deficit the phenomenon of «chelnok» trade significantly contributed to the enrichment of the domestic market.
The conducted survey shows, that in spite of pessimistic forecasts of the end of 1990s «chelnok» trade was at large preserved and continues to develop. It is possible to distinguish some particular qualities associated with the modern «chelnok» business. First, the most part of the former «chelnoki» today is dealing with domestic goods. For Russian enterprises marketplaces represent a cheap alternative to the stationary retail sale. Second, the inner Russian «chelnok» business is expanding, where imported goods are no longer acquired abroad, but from big wholesale importers. Third, in conformity with «chelnok» business as such one can note the following. The essential factor for the survival of «chelnok» business and maintaining its competitiveness is the emerging and preservation of informal business networks between Russian traders and their foreign suppliers. A significant growth of the proportion of quality goods in the whole volume of «chelnok» import is observed. The «chelnok» business now shifts to regions and attempts to integrate with traditional trade networks.
On the whole, one can speak of a gradual integration of «chelnoki» with traditional trade infrastructure and a its contribution of those competitive advantages which were initially immanent to «chelnok» business.
As respondents denote, they have learned much from this rough business. Marketing knowledge, communicability, enterprising, which they have earned in 1990s, can be applied in any business. Though effective use of the innovation potentials of «chelnok» business will at large depend on state policy and conditions for small business development in trade, services and industrial sector.