27 January 2012

Container ‘Mall’ – An Example of Urban Informality in Odessa

all images taken from the amazing series by Ukrainian photographer Kirill Golovchenko
The 7KM Market is probably Europe’s most extraordinary market, partly with the air of a bazaar, partly post-soviet retail eldorado, it mainly consists out of shipping containers. Its atmosphere has nothing in common with the recently opened shipping container pop-up shopping mall in East London - but probably has been inspirational thereof.
Odessa’s huge container market is located outside the city right along the main road which leads to the airport. Its name indicates its location: seven kilometres out of the city. The market covers an enormous area of 700,000 m2 and therefore is significantly tops the world’s largest shopping mall, the Golden Resources Mall in Beijing with its 560,000 m2 or retail area and covers almost twice the area as North America’s largest mall the West Edmonton Mall in Canada. Founded in 1989, the market claims to be the largest market in Europe. There are about 16,000 trades and it is also the region’s biggest employer with 1,200 people mainly working as guards or janitors. In 2004, daily sales were as high as $20 million by an estimated number of 150,000 customers per day. 

7KM Market outside Odessa (via GoogleMaps)


The shops, or market stalls at the 7KM market consist mainly of shipping containers stacked on two levels and arranged in street like layout. For orientation purposes many of these streets are colour codes and named accordingly. On the ground floor the products are sold, and the upper levels serve as storage spaces. People describe the market as a place of social interaction and home-like sociability - a place where people would meet and hang out.
The market is known far beyond the city limits of Odessa for its cheap products of any kind (from clothing to furniture, electrical goods, jewellery, cosmetics, etc., etc.). Approximately 60% of all Ukrainians (or 28 millions) buy their clothes on the 7KM market. Even customers from Russia or Moldavia and Romania come to the market, many travelling from as far away as 500 km. They usually arrive early morning by busses or trains and leave the market by midday. The bought goods are usually sold again in their home countries.  Goods like guns or drugs, are rumoured to got sold during the night before the market officially opens around 4 a.m. 

all images taken from the amazing series by Ukrainian photographer Kirill Golovchenko

 Apart from the trade with illegal goods, the market floats in a half official grey area of informal economies. Locals often refer to the market as a ‘state within a state’, a place with its own rules, laws and regulations. The local newspaper described the market to have ‘become a sinecure for the rich and a trade haven for the poor’. It is known as a place where almost any trader avoids taxes, duties and licences. To become a trader you either need to have access to the network of the market or a decent amount of capital, or both. In the late 1990’s containers could been bought for $1,000, in 2007 the prices shot up to $240,000. One model is that the owners of the containers franchise out to employers who then hire sellers on a day-to-day basis to retail the owner’s products. The sellers’ profit is reduced to a minimum. The other, more risky model is that retailers rent the containers and set up their own trading business. The owners need to make certain payments to the market authority, whether these are taxes or rent is unclear. The authority claims that the market’s owner pay $11 million per year in local taxes. But for income taxes custom duties and other taxes on goods the authority is not responsible. This is the responsibility of each trader. The tax authorities are not able to enter the realm of the market ‘state’, and therefore also the prices at the market can be kept that low. During the time Julia Timoshenko was in power, she constantly threatened the market to shut down due to violation of tax regulation. Rumours circulating within the local media claim that the later president. Yushchenko is said to visit the market every two months and pockets $ 20 million each time. No one knows what exactly the money is actually for, but most obviously this is some sort of protection money and the market is still working on. 
The enormous profitability for the traders and owners, but also for the customers who buy cheap products, obviously very much relies on the informality of the market system. Over the years the market has reached a status of operating as a complex economical ecology that is difficult to break up. The fate of the market depends very much on the economy of the Ukraine who is often been characterised as a shadow economy. Once the Ukrainian economy will develop normally the necessity of the market will shrink. Moreover and recently, the market and its informal economy have not been able to completely withdraw from the global market developments. With the world economic crisis also the economical success of the market shrank, resulting in many containers locked down, empty or even removed.

The main figures and fact have been taken out of the research by Vera Skvirskaja and Caroline Humphrey from highly interesting research group other markets and Steven Lee Myers article in the NYT.


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