Source: Zuunii Medee                   Date: 27 April, 2011

After mopping up most of the cashmere in the Eastern provinces, Chinese traders have now moved to the central areas, offering more than MNT70,000 per kg. National cashmere factory owners cannot pay so much from their own resources and wait in vain for Government support. Bonds worth MNT100 billion are supposed to be sold to raise money to be lent to local buyers, but there is little chance that any of this will be in Mongolian hands before all the cashmere, at least the quality stuff, has crossed the border. Even more regrettable is the fact that there is no export tax on cashmere.

Trade officials are faced with a bleak future. Raw material sales are fully under the control of Chinese traders, and with a fall in the number of goats, production of cashmere will come down, putting prices even further beyond local access. While Chinese traders have obvious support from their Government and banks, the situation here is just the opposite. The Mongolian Government is a mute spectator, if not a willing conniver in not reimposing the export tax. With less and less stock every year, local production is much below capacity, leading domestic cashmere factories to wonder why the Mongolian State should be seen as weaker than Chinese traders in its territory.