Cashmere war sweeps the steppes

SEVEN centuries after Genghis Khan swept across the grasslands on his steed, another Mongol, Jargalsaikhan, has switched to German horsepower in the battle against the Chinese. Two big Mercedes vans, fitted with beds for the drivers and TV to help pass those long evenings on the steppes, are parked outside his Buyan cashmere factory in Ulan Bator. They are his secret weapon in what might be called the "cashmere wars".

The ultra-soft fibre is one of Mongolia's few viable industries, and Jargalsaikhan, 39, is that rare breed in Ulan Bator, a successful private businessman, In the early 1990s he claimed to be the richest man in Mongolia. He bought Buyan when it was privatised in 1993, and has just doubled the company's production capacity to 50,000 items a year. But to feed his factory's machines, Jargalsaikhan (who like most Mongolians uses one name) must buy a great deal of raw cashmere from the herders who tend Mongolia's 10 million goats. And that means getting to the nomads before the Chinese traders do.

Hence the Mercedes vans. The Buyan buyers tour the vast expanses of Mongolia for weeks, purchasing raw fibre from the herders and loading it into the vans. In competition are Chinese traders who come over the border and persuade the herders to sell, often at knock-down prices or for bartered Chinese goods. The fine raw fibres - just 14 to 17 microns in diameter - are then whisked across the border for processing in China's factories, leaving the Mongolian industry short of raw material. Big Chinese factories also benefit from economies of scale, processing Mongolian cashmere and selling it at prices which undercut Mongolia's output.

Cashmere is Mongolia's second biggest export earner, and much more money could be made by selling processed product abroad rather than letting raw material slip into China. In 1994 the Mongolian government banned raw exports, but had to lift the edict when the country joined the World Trade Organisation the following year. In 1996, an export tax was introduced, but the long border with China has always made smuggling easy.

Mongolia accounts for about 30 per cent of world cashmere production, compared with China's 60 per cent. Mongolian raw cashmere output in 1997 was around 2,400 tonnes, all of which could be initially processed inside the country. Its factories have the capacity to make up about a quarter of the raw material into finished items.

One goat produces just 200 to 380 grammes of cashmere a year, which explains the high price of a cashmere cardigan once it gets to the West. But cashmere prices have been falling, thanks to the Asian financial crisis, which has reduced demand in Japan. The resulting surplus has made Mongolia even more vulnerable to Chinese competition.

Cashmere is just one of the flashpoints in Mongolia's wary relationship with its huge southern neighbour. For nearly 200 years under the Qing dynasty, China dominated much of Mongolia. Peking's control ended in 1911, but 10 years later the Soviet Union grabbed Mongolia as a satellite state, a relationship which lasted until 1990. The newly-democratic Mongolians now dread becoming an economic colony of Peking - since Mongolia swapped socialism for free-market capitalism, China has become its biggest foreign investor and second largest trading partner after Russia. Most consumer goods on sale are from China, and the land-locked nation's only rail link to the sea is through northern China to Tianjin.

The hostility most ordinary Mongolians express towards the Chinese is blunt. Jargalsaikhan, founder of the pro-business Bourgeois Party, is a forthright former physicist who since 1990 has had two spells in jail after falling out with political rivals. "The Chinese want to make Mongolia part of China," he says. "[They] put so much money in here for control of the economic situation in Mongolia. And after that they will control the government. That is the problem."

A big test of public opinion will be the privatisation of Gobi Cashmere, one of Mongolia's biggest companies. The Democratic Coalition government, elected in 1996, has a sweeping privatisation programme in which key corporations are for sale - including to foreign bidders. Among the few attractive offerings is the government's controlling 76 per cent stake in Gobi Cashmere. In an open auction, the most likely purchaser would be the Chinese cashmere industry, an idea that appalls Mongolians.

Jargalsaikhan says: "If the Chinese buy these factories, they are buying Mongolia. So it is easy to make Mongols into Chinese. The men will have to serve in the army, and the women will have to marry Chinese. Anyone who criticises will be shot."

Many ordinary Mongolians view the future of Gobi Cashmere as a test case of how far the free marketeers are willing to go. But Enkhsaikhan, the Democratic Union Prime Minister from 1996 to 1998, who launched the latest privatisation wave, dismisses such sentiments. "If they can pay the price," he says, "it does not seem any problem to me."

Suggested Topics
News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
News
news
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Cover Supervisor

£75 - £90 per day + negotiable: Randstad Education Group: Are you a cover supe...

Marketing Manager - Leicestershire - £35,000

£30000 - £35000 per annum: Ashdown Group: Marketing Manager (CIM, B2B, MS Offi...

Marketing Executive (B2B and B2C) - Rugby, Warwickshire

£22000 - £25000 per annum: Ashdown Group: A highly successful organisation wit...

SEN Coordinator + Teacher (SENCO)

£1 per day: Randstad Education Leeds: Job Purpose To work closely with the he...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam