Surenas
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Before the sanctions were imposed, Mr. Eshghi, whose thick hair has grayed since he started his business in 2005, would walk to the bank just around the corner from his office. There he would sign a letter of credit to buy parts from China, pay a small portion of his order up front, have tea with the clerk and be back behind his desk in less than an hour.
But things are far more complicated these days. When he wants to order components for his buses now, Mr. Eshghi has to follow a long, complicated and sometimes dangerous procedure.
His partner in China also works with European carmakers, who might drop him as a supplier if they know he is dealing with an Iranian, and is scared to death that “the Americans” will find out and punish him with high fines. “They treat me like a mistress they have to keep secret,” Mr. Eshghi said.
To avoid detection, his partner works through a third party. “Let’s call this middleman Mr. Chen,” said Mr. Eshghi. “Mr. Chen says, ‘No letter of credit,’ because the Americans have already fined the only bank willing to work with Iran in China, the Bank of Kunlun.”
So Mr. Eshghi, without any bank credit, must pay the banker all the money up front, through a bank in Dubai, where his wife and children have moved. First, he needs to gather all the cash rials, Iran’s currency, and give them to a money-changer. The money-changers then send the cash through couriers to partners in other countries who have stepped in to fill the void, asking up to 10 percent in transfer fees.
“Just last week one of these money-changers disappeared into thin air, stealing around $160,000 from me,” Mr. Eshghi said, lifting his hands in the air in a sign of desperation.
Barring theft, the payment slowly makes its way to the banker in China, who also takes a cut. Only then will the Chinese company begin to fill Mr. Eshghi’s order. “They promise loading in 10 days, but take two months.”
When the shipment finally arrives at the factory, “there are lots of issues,” Mr. Eshghi said, saying he felt he was losing on all sides. If the products are late or defective, he said, there is not much he can do about it. “What do I do? Send it back? That’s impossible,” he said. “I have to trust everybody and take all the risks.”
In July, he joked, he “nearly had a heart attack" when he found out that President Obama had imposed sanctions against any company working with Iran’s automotive industry. “That’s me,” he said. “I feed 100 families in a city where nobody has work. Is Mr. Obama waging economic war on our leaders or on us?”
Businesspeople in Iran have seen this coming and have been adapting, said one economic analyst, who asked not to be named to avoid trouble with the government. “But the government is slow and way too optimistic in their predictions,” the analyst said. “Now they are starting to feel the full force of what has been unleashed on them.”
The sanctions have introduced numerous distortions into everyday life. For example, Iran is allowed to use money it earns from oil sales only to buy products from the purchasing country. As a result, Iranian supermarkets are filled with low-quality Chinese products, while several infrastructure projects are being built by Chinese companies, rather than Iranian.
“We don’t have an oil-for-food program like Iraq,” the analyst said. “We have an oil-for-junk program.”
One economist, Mohammad Sadegh Jahansefat, said the government had been taken hostage by countries benefiting from the sanctions — particularly China, which he called the worst business partner Iran had ever had.
“China has monopolized our trade — we are subsidizing their goods, which we are forced to import,” he said, adding of its work in the energy industry, “They destroy local production and leave oil and gas projects unfinished so that no one can work with them.”
The state’s dire financial straits are especially tough on contractors and their workers. Akbar, 50, a building contractor from Isfahan, said a big state foundation had not paid $40,000 it owed him. “I will never again work for the state,” he said. “We just can’t trust they will pay up.”
Iranian business families are used to dealing with the roller coaster that Iran’s economy is. Patience is key, said Ali Khalilpour, 34, who operates a chain of sports apparel stores with his father. “We have fired many people, lost dozens of stores and lots of money following the collapse of the national currency,” he said.
There were times when the rial would fall 20 percent in value in a few months while the Khalilpours owed the equivalent of millions of dollars to Western sports brands in Dubai. They were forced to absorb the loss.
“It’s is hard, but some things are beyond your control,” Mr. Khalilpour said, before finding a silver lining.
Most of his competitors have gone bankrupt, he said, leaving the field to his family.
“We have faith that good times are finally coming to this country,” He said. “When they come, we will be the biggest player in the market.”
http://www.nytimes.com/2013/10/01/w...conomy.html?pagewanted=1&_r=1&ref=global-home
His claim seem to be in line with what most people at the moment in Iran think of China. Crappy low-quality products which flood the market due to sanctions, unreliable Chinese energy companies, etc.
Quite foolish by these Chinese companies; they will definitely lose their market share in the Iranian economy once the sanctions are gone/eased. The reputation of Chinese companies and quality in general is extremely low. Even government officials are beginning to criticize its influence.
But things are far more complicated these days. When he wants to order components for his buses now, Mr. Eshghi has to follow a long, complicated and sometimes dangerous procedure.
His partner in China also works with European carmakers, who might drop him as a supplier if they know he is dealing with an Iranian, and is scared to death that “the Americans” will find out and punish him with high fines. “They treat me like a mistress they have to keep secret,” Mr. Eshghi said.
To avoid detection, his partner works through a third party. “Let’s call this middleman Mr. Chen,” said Mr. Eshghi. “Mr. Chen says, ‘No letter of credit,’ because the Americans have already fined the only bank willing to work with Iran in China, the Bank of Kunlun.”
So Mr. Eshghi, without any bank credit, must pay the banker all the money up front, through a bank in Dubai, where his wife and children have moved. First, he needs to gather all the cash rials, Iran’s currency, and give them to a money-changer. The money-changers then send the cash through couriers to partners in other countries who have stepped in to fill the void, asking up to 10 percent in transfer fees.
“Just last week one of these money-changers disappeared into thin air, stealing around $160,000 from me,” Mr. Eshghi said, lifting his hands in the air in a sign of desperation.
Barring theft, the payment slowly makes its way to the banker in China, who also takes a cut. Only then will the Chinese company begin to fill Mr. Eshghi’s order. “They promise loading in 10 days, but take two months.”
When the shipment finally arrives at the factory, “there are lots of issues,” Mr. Eshghi said, saying he felt he was losing on all sides. If the products are late or defective, he said, there is not much he can do about it. “What do I do? Send it back? That’s impossible,” he said. “I have to trust everybody and take all the risks.”
In July, he joked, he “nearly had a heart attack" when he found out that President Obama had imposed sanctions against any company working with Iran’s automotive industry. “That’s me,” he said. “I feed 100 families in a city where nobody has work. Is Mr. Obama waging economic war on our leaders or on us?”
Businesspeople in Iran have seen this coming and have been adapting, said one economic analyst, who asked not to be named to avoid trouble with the government. “But the government is slow and way too optimistic in their predictions,” the analyst said. “Now they are starting to feel the full force of what has been unleashed on them.”
The sanctions have introduced numerous distortions into everyday life. For example, Iran is allowed to use money it earns from oil sales only to buy products from the purchasing country. As a result, Iranian supermarkets are filled with low-quality Chinese products, while several infrastructure projects are being built by Chinese companies, rather than Iranian.
“We don’t have an oil-for-food program like Iraq,” the analyst said. “We have an oil-for-junk program.”
One economist, Mohammad Sadegh Jahansefat, said the government had been taken hostage by countries benefiting from the sanctions — particularly China, which he called the worst business partner Iran had ever had.
“China has monopolized our trade — we are subsidizing their goods, which we are forced to import,” he said, adding of its work in the energy industry, “They destroy local production and leave oil and gas projects unfinished so that no one can work with them.”
The state’s dire financial straits are especially tough on contractors and their workers. Akbar, 50, a building contractor from Isfahan, said a big state foundation had not paid $40,000 it owed him. “I will never again work for the state,” he said. “We just can’t trust they will pay up.”
Iranian business families are used to dealing with the roller coaster that Iran’s economy is. Patience is key, said Ali Khalilpour, 34, who operates a chain of sports apparel stores with his father. “We have fired many people, lost dozens of stores and lots of money following the collapse of the national currency,” he said.
There were times when the rial would fall 20 percent in value in a few months while the Khalilpours owed the equivalent of millions of dollars to Western sports brands in Dubai. They were forced to absorb the loss.
“It’s is hard, but some things are beyond your control,” Mr. Khalilpour said, before finding a silver lining.
Most of his competitors have gone bankrupt, he said, leaving the field to his family.
“We have faith that good times are finally coming to this country,” He said. “When they come, we will be the biggest player in the market.”
http://www.nytimes.com/2013/10/01/w...conomy.html?pagewanted=1&_r=1&ref=global-home
His claim seem to be in line with what most people at the moment in Iran think of China. Crappy low-quality products which flood the market due to sanctions, unreliable Chinese energy companies, etc.
Quite foolish by these Chinese companies; they will definitely lose their market share in the Iranian economy once the sanctions are gone/eased. The reputation of Chinese companies and quality in general is extremely low. Even government officials are beginning to criticize its influence.
