‘Made in Kyrgyzstan is gold!’ the rise of the informal Kyrgyzstani apparel industry

Abstract

The Kyrgyzstani apparel industry has seen spectacular growth in recent years, despite informal structures, a predatory business environment, and intersecting crises. Contrary to other apparel producers in the Global South, ‘Made in Kyrgyzstan’ (MiK) has emerged from below and independently of multinational corporations or state-funded development initiatives. This article takes an ethnographic approach to examine how apparel producers navigate the challenging national and geopolitical environment in which their businesses are embedded. It does so based on long-term fieldwork, conducted before (2019), during (2020, online), and after (2021) the pandemic at the Dordoi Bazaar in Bishkek, the main distribution platform for locally produced apparel. Based on the ethnographic material, this article questions the meaningfulness of an informality framework in the corrupt context of the Kyrgyzstani state, and instead shifts the focus on attempts to build durable businesses that are capable of dealing with local and global constraints. Doing so, it makes two related points. Firstly, it traces the unique nature of post-Soviet economic transformation in Kyrgyzstan through the peculiar growth of the informal apparel industry. Secondly, it emphasises the relevance of endemic state corruption when studying informal economic practices on the ground.

Keywords:

• Informality
• apparel production
• manufacturing
• Kyrgyzstan
• bazaar economy
• e-commerce

Building durable structures in a corrupt state

Over the past two decades, Kyrgyzstani apparel producers have been able to develop a thriving industry that, after the post-Soviet era of de-industrialisation, offers relatively stable jobs and displays constant growth with high revenues for workshop owners. Between 2010 and 2022, exports of locally produced apparel grew from $127.7 million (ADB 2013, 14) – about 5–15% of the country’s gross domestic product (GDP) (Jieun 2016, 105) – to 17.5% ($326 million) in 2022 (Statista 2023). Interestingly, sales figures increased threefold even during the pandemic, from 2021 to 2022 (AKIpress 2023),¹ when borders, bazaars and factories were temporarily closed and the international circulation of goods and people was restricted.

The economic success of the apparel sector stands in stark contrast to the macro-economic performance of the country more broadly. World Bank indicators, which cluster, classify and compare national data, such as poverty, social protection and labour, health, government effectiveness, or economy and growth, place Kyrgyzstan at the lower end of most of them. The latest report of the International Labour Organization (ILO; Aleksandria and Papa 2021) attests Kyrgyzstan has one of the highest levels of informality in Europe and Central Asia, and the World Bank’s business indicators (World Bank 2023; Transparency International 2023) calculate the share of the informal economy in the GDP at 45% (Polese et al. 2023, 10). The high level of informality and corruption, together with a lack of property protection and predatory rent extraction (Sanghera and Satybaldieva 2021; Spector 2018a), recurring political turmoil² and violent border conflicts,³ led to a conventional description of the state and the economy in Kyrgyzstan as ‘poor’, ‘failed’, ‘corrupt’, ‘underdeveloped’ or ‘dependent’.

This article offers a different narrative. Shifting the focus from failure and crisis on the macro level towards everyday attempts to create (business) stability in a ‘corrupt and predatory state’ (Spector 2018a, 174), it sheds light on the creativity, flexibility and inventiveness of apparel producers in the country. Instead of viewing these activities as the polar opposite of formal business practices, it argues that the apparel sector reveals a complex web of forces that exposes the formal–informal divide as a disciplinary tool that is of little use in Kyrgyzstan. While many scholars of informality have criticised the formal–informal binary that prevails in the policy papers of international organisations, there is also significant terminological confusion about what informality is and how it can be studied. Polese et al. (2023) made an effort to bring some clarity into the conceptual diffusion by distinguishing informality from the shadow economy. While the shadow economy compiles measurable components, such as ‘misreported business income, unregistered or hidden employees, as well as unreported “envelope” wage’ (Putniņš and Sauka 2015, 472), informality includes ‘non-monetary and non-economic practices’ (Polese et al. 2022, 106) as well. In this sense, informality is a much more open framework, encapsulating all activities that deliberately bypass the state or take place outside of the control of the state.

This is a useful distinction to bring some conceptual clarity to economic practices that do not neatly fit into the binary formal–informal divide. Measuring the shadow economy in Kyrgyzstan reveals that the manufacturing sector comes top of the class in the country’s statistics (Polese et al. 2023). However, rather than adding yet another case to the wide range of studies on shadow, informal or illicit types of economic activity, this article has a different goal. It hopes to draw attention to how people create durable (not to be confused with formal) businesses that persist in the ‘predatory’ and crisis-ridden socio-economic and (geo-)political environment in Kyrgyzstan.

To better grasp the role of the state and informal economic actors within, Engvall’s (2016) study of the post-Soviet Kyrgyzstani state is instructive. Given the pervasive corruption on all levels of political, social and economic life in Kyrgyzstan, Engvall (2016) argues that these practices ‘cannot be understood as violations of universal rules, for they connote a distinct mode of social organization’ (2016, 5). Dissatisfied with the conclusion that endemic corruption renders Kyrgyzstan a weak or failed state, he introduces the concept of ‘the state as investment market’, to make sense of the widespread buying and selling of political and administrative positions. Without questioning the harmfulness of such ubiquitous corruption, he emphasises its structural role in holding the post-Soviet Kyrgyzstani state together and producing a ‘distinct political-economic order’ (2016, 19). Following a similar logic, but turning the top-down approach bottom up, Spector (2017) examines how non-elite actors create a distinctive rule of law at the seemingly messy and chaotic Dordoi Bazaar, the main retail platform for the re-export of imported and locally produced textiles. Such a shift of perspective from unruliness to durability also informs this article, yet it does so by focusing on the concrete business strategies of apparel producers, rather than bazaar retailers more broadly.

In this context, it is important to keep in mind it is not only predatory state practices that impact the development of the apparel sector. The export-orientated industry is embedded in an international supply chain network, which renders the business vulnerable to transregional and global crises as well. Against the background of corruption, instability and crisis, this article sees informality as a lens to extrapolate the ‘human dimension’ (Simone 2019, 619) of livelihood creation rather than to evaluate the degree of unlawful behaviour. To study this conundrum, I used an ethnographic and actor-centred vantage point with a focus on the perspectives of apparel producers and retailers that are located at the Dordoi Bazaar.

The material on which this study builds was collected during my fieldwork at the Dordoi Bazaar in autumn/winter 2021/2022, but it also builds on previous research stays at Dordoi (2019) and several months of digital ethnography on the market during the pandemic (2020–2021).⁴ Overall, I conducted 58 conversations with entrepreneurs, drivers, food hawkers, sales assistants and buyers, each of which lasted between 10 and 120 min. These conversations covered topics like the growth of the apparel sector, the role of the bazaar in it, the changing socio-political landscape in the country, and the impact of the pandemic, but also personal and family trajectories, the high level of migration, and hopes for the future. In addition, I collected 15 in-depth interviews (90–120 min) with traders, administrative officials, the director of a market section, information technology (IT) professionals, logisticians and consumers. The sampling is the result of the snowball technique (traders), good contact with gatekeepers (eg for getting access to the market administration), and an online out­reach during the pandemic (IT professionals and logisticians). Calling such an approach ‘actor-centred’ does not mean I claim to bring together all actors and forces that are involved in (re-)producing the rapidly growing apparel industry. Rather, it hints at a focus on those actors who are most active in making the sector successful, while being exposed most directly to crisis-prone external constraints. Ultimately, these ethnographic insights offer new perspectives from which to problematise top-down macro-economic indicators as instruments of policy advice.

The overall argument posited in this paper is that framing wholesale and manufacturing activities in Kyrgyzstan in terms of shades of (in-)formality fails to acknowledge the role and impact of small-scale actors in getting along with and, at times, even replacing a state that has been framed as ‘predatory’ (Spector 2018a, 170) and ‘thoroughly corrupt’ (Engvall 2015, 26). To develop this argument, the paper first traces the rise of the apparel industry in Kyrgyzstan and explains why the sector is an outlier compared to other apparel-producing countries like Pakistan or Turkey. It also looks at how to study the reasons for and the effects of such differences. The main body of the article analyses the cases of three apparel producers to show their efforts to make their businesses durable, despite – or because of – local, regional and global constraints. In doing so, it contributes to the broader scholarship on informal economies, including their ideological underpinnings and inherent limitations, and the study of small- and medium-scale entrepreneurship in Kyrgyzstan more specifically.

Informality beyond bad practice and temporary strategy

Informality is a relational concept that is inextricably bound to the formal, a link that is inherently political (Pratt 2019). If the formal is commonly understood as legitimate and lawful, then the informal is rendered illegal and undesirable. This rationality shapes the policies and development programmes of international organisations, especially in the Global South. The ILO emphasises the detriments of the informal economy to workers, including unsafe working conditions, the absence of collective bargaining rights, and ambiguous employment status (ILO 2013b). The World Bank has warned that tax eviction and a lack of funds for state-led social security provisions hamper democratic development (Perry et al. 2007). The United Nations Development Programme and Women in Informal Employment highlight the necessity to ‘monitor the impacts, both positive and negative, of different policies’ and ‘improve the measurement of informal employment and informal enterprises in […] economic statistics’ (Chen 2012, 20). However, scholars are increasingly challenging the normative assumptions behind such policy advice and pointing to their ideological underpinnings.

Mörtenböck and Mooshammer (2016) note that informal economies are constructed as ‘the Other’ of (neo)liberal principles, such as predictability, control and efficiency. They link the stigmatisation of informality to an expansive hegemonic model that aims to absorb complex cultural and social modes of production and exchange into calculable forms of competitive accumulation (2016, 40–43). The joint efforts of international organisations and development programmes ‘to rescue people who they consider “trapped” in the informal sector’ (Kinyanjui 2019, 7) have not only proved to be utterly unsuccessful; increasingly, entrepreneurs and freelancers prefer working in informal rather than formally paid job sectors (Merkel 2019; Perry et al. 2007). A growing body of ethnographic scholarship on informal economies shows that the long-standing perception of informality as a problem has produced a certain blindness towards the norms, values and socialities that structure informal practices (Kinyanjui 2019; Phelps 2021; Soni 2017). The complex interdependencies of local actors with global political and economic dynamics (Lindell 2010) on the one hand, and the innovative social and economic stimulus of the informal sector (Guibrunet 2021; Lindell 2010), on the other, require more embedded research terminologies that go beyond the notion of the informal as not yet or yet-to-become modern/formal (McCormick 1999). In exploring entrepreneurial practices within the informal reality of the bazaar economy in Kyrgyzstan, this article aims to contribute to the ethnographically led literature that sees informality as an ‘intensely situated’ (Simone 2019, 616), and ‘inventive’ (Phelps 2021), ‘alternative mode[s] of production’ (Kinyanjui 2019, 7).

Research on informal economies in Kyrgyzstani is abundant and ranges from studies of the grand corruption schemes of political elites (Cooley and Heathershaw 2017; Cooley and Sharman 2015; Engvall 2016; Marat 2015; Markowitz 2015) to ‘petty corruption’ of ‘ordinary citizens’ (Ismailbekova and Baialieva 2022; McMann 2014, 2). However, the difference in scale should not obscure the fact that while its perception depends on gender, age and social class, informality is a complex interaction of ‘symbolic, material, and socio-cultural practices’ (Polese, Moisé, Tokyzhanova et al. 2023, 3) that pertain to all spheres of public and private life. The ubiquity of corruption is also reflected in the commentary of the Soviet generation in Kyrgyzstan, which tends to resort to an ‘absence-of-alternatives framework’ when explaining informal economic strategies (McMann 2014, 2), while among young people, bribery and informality are increasingly accepted as normal (Ismailbekova and Baialieva 2022, 327). A recent remark by Kyrgyzstan’s President Sadyr Japarov, who suggested that ‘if we can’t beat corruption, then let’s lead it’ (Qloop 2023), can also be interpreted as a shift from fighting against corruption to accepting it as an organisational principle of the state.

‘Made in Kyrgyzstan’ – how has it emerged over time and why is it special?

The apparel industry in Kyrgyzstan is closely entwined with the bazaar businesses in Kyrgyzstan (Spector 2018a). The main retail hub is the Dordoi Bazaar in Bishkek. Due to cheap import tariffs, this bazaar has turned into Central Asia’s largest sales platform for goods from China and Turkey, ever since the early 1990s. Apart from imported textiles, there is a growing demand for apparel ‘Made in Kyrgyzstan’ (MiK).⁵ This is not fully coincidental, as the garment industry has a historical legacy in the country. In Soviet Kyrgyzstan, state-owned textile factories employed up to 100,000 specialists in the sector (Spector 2018a, 182). After the collapse of the Soviet Union, these factories were privatised and the country was transformed from an agricultural and industry-based economy into a haven for the re-export of (predominantly) Chinese goods to other countries in the region (Nasritdinov and O’Connor 2009; Pétric 2015). The Dordoi Bazaar is a direct result of this transformation process.⁶ Built from double or triple-stacked shipping containers, the bazaar spans about 100 hectares on the outskirts of Kyrgyzstan’s capital, Bishkek. The containers are used as showrooms, storage places and micro-sewing factories and build a kind of city in themselves, providing livelihoods for between 60,000 and 150,000 people (Kaminski and Mitra 2010; Karrar 2017), not to mention the uncountable numbers of auxiliary workers, such as food hawkers, cleaners, drivers and security personnel. Despite recurrent predictions about its approaching end, or ‘death’, the Dordoi Bazaar has been surprisingly resilient, however, and has turned into the main distribution platform for MiK apparel (Ryskulova 2020).

The Kyrgyzstani apparel industry is an outlier in several respects. Firstly, contrary to other global apparel-producers in countries like Bangladesh and Cambodia, in Kyrgyzstan, the sector did not receive foreign direct investment (FDI), nor was it part of a national development plan. Nevertheless, exports per working person are higher than, for example, in Bangladesh (Spector 2018a, 173). Secondly, enterprises are relatively small: in 2010 the majority of them employed either no more than 10 (micro) or 10 to 50 people (small). Only a few producers employed 50 to 200 people (medium), and there were very few companies with more than 200 workers (large) (Birkman et al. 2012, 20–21). A survey of apparel shop owners in Bishkek from 2015 confirms that workshops around the city employ an average of 17 workers (Spector 2018a, 176). In my bazaar-based fieldwork between 2019 and 2021, I noted that the majority of manufacturers worked with 5–30 seamstresses and only a few with more than 50 employees.⁷ Thirdly, the average salary of a seamstress in 2013 ranged between $720 and $1500 in the peak season and was $400 per month during the rest of the year (Jenish 2014, 10). In comparison, average monthly incomes in leading apparel-producing countries like Ethiopia (Fleck 2022) and Turkey (Dierks 2022) are $26 and $340, respectively. Thus, seamstresses’ salaries in Kyrgyzstan are competitive in the national context, and significantly higher if benchmarked against other export-orientated apparel markets globally (Jieun 2016, 115).

MiK production is closely entangled with domestic and international social, economic and geopolitical dynamics. Mobility and migration, for instance, play a crucial role in facilitating a transregional business network. Approximately 14% of Kyrgyzstan’s total population works abroad (Migration Data Portal 2022), many at wholesale and retail markets in Russia and Kazakhstan (Spector 2018b), the main sales countries of MiK apparel. On the political economy level, the country’s membership in the World Trade Organization (WTO) strengthened its export capacity and gave Kyrgyzstan a strategic and institutional advantage when it comes to the re-export of Chinese products.⁸ The success of bazaar-based retail was further facilitated by weight-based, relatively simple customs clearance and patent-based tax treatment.⁹ While all of these factors contributed to establishing Kyrgyzstan as a country for the re-export of Chinese and Turkish apparel in the first place, the human, material and technological infrastructures that arose in connection with cross-border re-export later also eased the development of MiK apparel, as producers use foreign fabrics and low-cost Kyrgyz labour and logistics (Birkman et al. 2012; Botoeva and Spector 2013; Jenish 2014; Nasritdinov and Kozhoeva 2017; Spector 2018a). On the geopolitical level, the country’s accession to the Eurasian Economic Union (EAEU) in 2015¹⁰ played an important role in boosting the development of the samoposhiv sector, even if the promise of unhindered flows of goods, people, services and capital has not been fulfilled (Kudaibergenova 2016; Nasritdinov and Kozhoeva 2017; Pak 2021). Membership in the EAEU forced Kyrgyzstan to adapt to the union’s tariffs and customs regulations,¹¹ which negatively affected the hitherto existing low-tariff agreements with China. Contrary to repeated predictions that raising tariffs heralded the end – or ‘death’ – of the Dordoi bazaar, traders created new avenues by reorientating their businesses from import to manufacturing. Locally produced apparel allowed manufacturers to avoid high import tariffs (the price for the raw material increased only minimally; see also Schröder and Schröder 2017), while their trading networks abroad and container shops at Dordoi facilitated the production and distribution of garments (Spector 2018b).

More in-depth and on-the-ground research is needed to understand the dynamics and volatilities in the sector and its effects on the everyday lives of the actors involved. Unfortunately, there is little data available on micro- and macro-economic developments in the period after 2015.¹² This is a serious gap, especially considering the fundamental disruptions and crises that the Kyrgyzstani economy and politics have gone through since. In what follows, I introduce some actors, trace the development of their businesses, and describe how MiK producers navigated external constraints and attempts to create durable structures in times of heightened uncertainty. Thus, the material presented in this article offers important insights into recent transformations and new dynamics in the vital sphere of local apparel production and bazaar businesses.

Chinese products are bronze, Turkish are silver, but ‘Made in Kyrgyzstan is gold!’ (Kitayskiye tovary – bronzovyye, turetskiye – serebryanyye, a samoposhiv – vot eto zoloto!)

This Olympic comparison is Rustam’s conclusion after a lengthy conversation we have with him and his wife Damira at the Dordoi Bazaar in Bishkek. Standing in the then crowded ‘dvadtsatitonnik’ (20-foot container (TEU), lit.: twenty-tonner), as traders often almost tenderly call their container-cum-show room, Rustam asks with a business acumen: ‘tell us, how do we get our products to Europe?’ He gestures at the abundance in the containers and says

You know, we have conquered (zavoyevali) Russia and Kazakhstan, and we survived the pandemic because we learned how to work online. We do good business on Wildberries [the biggest online retail platform in Kyrgyzstan, Kazakhstan, and Russia], and if only we had Amazon, we could go to Europe. Or do you also have markets like Dordoi?

Damira and Rustam had been in the business for about 15 years and started with no more than six sewing machines. Continuously growing demand has led themto ramp up the production, and in high season they now mobilise up to 300 machines (which is well above average). They have relatives working at markets in Yekaterinburg and Lyublino,¹³ and employ their own drivers to deliver cargo to Russia twice a month. Such large structures indicate a relatively high level of professionalisation and distinguish them from many other apparel producers who do not have stable retail partners and send goods on demand with Dordoi-based cargo companies. The pandemic is another indicator of how well a business is established. Asking about the pandemic, Damira replies:

Oh if only there was still a pandemic (Akh, yesli by yeshche byla pandemiya!). During the pandemic, we had record sales (my prosto shikarno prodavali). Once everyone was sitting at home, we received orders en masse via WhatsApp and Instagram.

During the first weeks of the pandemic, they increased their pool of subscribers from 300 (podpischiki) to more than 1000. This reflects a general phenomenon that could be observed among Dordoi-based entrepreneurs: those who had established long-term business contacts and a stable client base before the pandemic, fared surprisingly well, and the shift to online trade happened rather naturally. When asked whether they aspire to produce for multinational companies, most apparel producers answered in the negative. It appears that they are well aware of the niche character of their business. Working for multinational companies requires large-scale investment to satisfy the required production capacities. Some informants also mentioned that intense competition and low payment did not justify the effort to integrate into the supply chains of leading textile producers. These arguments echo Spector’s findings (2018b), whose 2015 survey showed that MiK producers have neither the ambition nor the means to seek closer integration into sub-contractual production for global trademarks like Nike, Puma or Adidas.

Not wanting to produce for global brands does not mean that MiK producers are indifferent to their styles. Seasonal fashion products sold via container shops at the Dordoi Bazaar resemble very closely the offer of large-scale e-commerce, multi-brand platforms like Zalando or Amazone. MiK producers made no secret of the fact that styles and patterns were directly copied from popular fashion producers. Amused by my question about whether she created the patterns herself, Damira jokes ‘Yes, yes, we copy everything ourselves’ (my sami vse kopiruyem). Before going into mass production, she usually gives a dress a test run at a local wedding or sends it to her relatives in Moscow. Depending on the reactions, Damira decides whether to integrate it into production. Thus, much more significant for the success of samoposhiv than the copying of mainstream fashion is the fact that women turn the insights gained from observing consumer behaviour at Dordoi and other markets, or local weddings, into an asset to produce products that cater to the specifics of regional style and body shape.

In a report of the United States Trade Representative (USTR) the Dordoi Bazaar in Bishkek is classified as a ‘notorious market’, a classification used for online and physical markets that ‘reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy or counterfeiting’ (USTR, 2022, 1). While the list has been criticised for producing a ‘global map of good and evil’ (Mörtenböck and Mooshammer 2016, 22), it is no secret that the majority of economic transactions at Dordoi go undocumented and intellectual property is interpreted rather laxly (Fehlings and Karrar 2020; Karrar 2019; Rudaz 2020; Spector 2017). The limited control of intellectual property has opened up a space for entrepreneurs in Kyrgyzstan to copy what they see fit and adapt global fashion to local bodies. Instead of condemning such practices as illegal, they can also be seen as a window into the complexities of globalisation dynamics. Business strategies of people like Damira and Rustan reveal the agency of MiK producers in taking advantage of their position between China as a supplier and Russia as a retail market. Economic flows, styles and knowledge are shaped not only by multinational companies and global power centres but by women and men as border-crossing designers, equipped with the inventiveness and skills to translate global trends into local opportunities.

‘There is no hope in the government, so we need to help ourselves’

Aliya, the founder and manager of a fashion line called ‘Lux’, had been in the bazaar business for a couple of years before she and her husband decided to invest in the samoposhiv sector ten years ago. They started with five machines in their two-room apartment and gradually expanded the business over time. Nowadays, they run three production facilities (tsechy) with about 25 to 30 seamstresses working in each. The 60 to 80 permanently employed workers are supplemented with additional tsechy and workers during the high season. Similar to accounts of other producers at Dordoi, the pandemic did not have a very negative impact on her business. Aliya’s brand is well established and has a stable number of clients, who continued to place orders online via WhatsApp and Instagram during the pandemic. According to her, the reason why MiK is so successful and why apparel production in Kazakhstan or Russia has not seen similar growth rates is:

because here labour is cheap. If our seamstresses sew a dress for 200 KGS,¹⁴ then the same work costs 600–800 KGS in Russia and Kazakhstan. There, people know the price of their work. Besides, in other countries of the Customs Union, there are high taxes and tariffs. All this is very cheap in Kyrgyzstan, and we have Dordoi!

Cheap labour, low tariffs and Dordoi are the most commonly cited factors in the success of MiK. However, Aliya’s response is not without a note of criticism: if workers in Russia and Kazakhstan know the price of their work, then this means that Kyrgyzstani seamstresses do not. When asked about her own payment policy, she explains that to understand her principles in running the business, she would have to give more details on her background.

At the age of 25, Aliya went to Moscow in search of work, leaving her children with their grandparents and her husband studying and working in Novosibirsk. After years of toiling in an apparel sweatshop in Moscow, she decided to go back to Kyrgyzstan with her husband and use the money they had saved to rent a tsech and open their own apparel production line. However, upon return, they realised that the house they had bought on the outskirts of Bishkek had fallen prey to a large-scale investment project. Left with only meagre compensation, all their capital went into a small city apartment for their two children, her parents, herself and her husband. ‘It was terrible; after years of hard work, we felt like we had to start from square one again’. Thus, her husband went back to Novosibirsk for work, but Aliya started travelling to China and Turkey, trying her luck at selling garments at Dordoi instead of going back to the sweatshop.

Their second attempt, after a few years, to open their own production was more successful, and Aliya admits,

It was a difficult time, but useful probably. If I hadn’t worked as a retailer at the bazaar, I wouldn’t have understood the world of sales. For five years I have been working non-stop, at the bazaar during the day and at the sewing machine at night. We have a very good team (kollektiv), without them, we wouldn’t be where we are now.

Aliya explains that her strategy to find and keep reliable workers is to pay them well, even in the initial period when they undergo professional training. It is a common problem in Kyrgyzstan that those with better skills usually go to Russia for work, where payment is still better, even if the situation is changing gradually, as some of the interlocutors note.

If we don’t want our youth to go to Russia forever, we need to change the conditions in our country. I want my seamstresses to be able to buy their own flat or a plot of land on which to build a house. There is no hope in the government, so we need to help ourselves. And I am not the only one who thinks like this.

Aliya says she pays salaries of up to $1200 in the high season.¹⁵ Notably, the pay is not per piece, but a stable salary (ne sdel’naya a stabil’naya zarplata) with an optional bonus for those who work faster.

Despite her success in the business, Aliya rejects paying the full amount of taxes required by the law. According to the Kyrgyzstani legislation, apparel producers have to register every operating sewing machine, a number that then determines the amount of taxes. Several reasons stood out when discussing the issue of under-reporting with the interlocutors; firstly, the seasonal fluctuation of employees makes it difficult to report exact numbers. Secondly, many argue that tax collectors abuse their power and demand excess fees, even if a business fully complies with the law. Thirdly, the high level of frustration with the government’s failure to fight corruption and provide even basic social security is an important legitimation for non-compliance, as well.

While this article does not aim to argue that tax evasion can have positive results, Alyia’s case complicates the value of a one-sided framing of entrepreneurs as informal agents, acting outside of a formal state economy. Rather, the insights offered by the interlocutors draw attention to the interaction of endemic state corruption and everyday economic behaviour on the ground. Alyia’s description of corrupt law enforcement agents who get away scot-free while siphoning off parts of the tariffs and taxes paid by manufacturers strongly resonates with Engvall’s (2016)¹⁶ observations of the structural misuse of political and bureaucratic positions in the country. In such a context, it is important to acknowledge that compliance with the law does not secure the durability of a business. Instead, for entrepreneurs in Kyrgyzstan, it is essential to build strategies for coping with state-produced informality. In Aliya’s case, this has a moral component as well. With no illusions about the support of local politicians, she decided that it was the producers’ responsibility to elevate the sector from the low-payment and low-quality segment. This is significant in a context where workers are hardly protected by the state in terms of working conditions, maternity or sick leave, and other labour standards, and where the private sector is an expensive, but often the only available, service for child and health care. Asking Aliya if her rather moral business model is an exception, she argues that the contrary is the case. According to her, more and more successful apparel producers create their own social security systems for employees, not least because they do not want to lose skilled workers to better-paid positions in Russian factories.

The rise of e-commerce platforms in the wake of the pandemic

One day in late December 2021 at the Dordoi Bazaar, I talk with a couple called Tynara and Aibek. They openly reveal that theirs is not a straightforward success story, as is the case with many other manufacturers. Rather, what they call ‘a global crisis’ hit them badly, and they are struggling to find a way to get back on track. Since 2013 they havehad to reduce their production capacity from 50 sewing machines to 15–20. According to Tynara and Aibek, however, it was less the country’s accession to the EAEU and more the devaluation of the Rouble a year earlier in 2014 that had a negative trickle-down effect on the Kyrgyzstani economy. As a consequence, they lost the majority of their wholesale clients, who went bankrupt or looked for cheaper suppliers. To revive the business, they took out a high-interest loan shortly before the pandemic hit.¹⁷ Then, suddenly, the borders and the market closed, while the due date of the loan kept approaching. When the raw material they had ordered eventually arrived six months later, they could not pay the seamstresses and an entire sales season failed. With the help of their extended family, they put together enough money to restart production, while others helped with sewing and deliveries. In recent months the situation had gradually improved, and they were able to pay the bills, at least. Based on the pandemic experience, however, they decided that the physical marketplace has become too uncertain as a single sales strategy. This is why they had just sent their sons to take part in a training course about how to start selling on online marketplaisy (ie retail platforms like Wildberries.ru, Ozon.ru, and Yandex.ru). The increase in online sales has produced a whole range of new intermediary actors who connect producers and consumers. Tynara and Aibek invite me to come back later and meet with their sons, who are better versed to explain the intricacies of buyery, dropshippingery (pl. of buyer and dropshipper, in a Russified version of the English term), hitherto relatively invisible actors that increasingly dominate the multi-million dollar retail business at the bazaar. Talking to the two young men revealed that online trade is an incumbent for new ‘e-nformal’ economic actors. What follows is a mix of the information shared by Tynara and Aibek’s sons and other interlocutors as well as additional research online.

One of the most widely used and offered online services at Dordoi is that of buyery.¹⁸ Buyery advertise their services via Telegram, Instagram, Viber, WhatsApp Groups, or word-of-mouth recommendation. By commissioning buyery, one can buy goods at the bazaar without travelling there in person. The process usually looks like this: the purchaser contacts a buyer and sends them a sample of what they are looking for (eg a particular T-shirt). They agree on a price, and then it is the buyer’s task to find the requested product as soon as possible. To speed up the search, buyery share details of the product they are looking for with WhatsApp groups of so-called postavshchiki (providers, ie those who sell goods at the market). Either the postavshchik who has the particular item in stock gets back to the buyer directly, or other postavshchiki or buyery who know where to find the desired product offer the location information for a percentage of the selling price. The buyery then go directly to the container shop, take pictures and describe the product’s features, price and availability to the client after having talked to the postavshchiki in person. It is a win–win situation, and since all parties involved are usually interested in future cooperation, the cost–performance ratio is said to be relatively good. According to the two informants, buyery add a maximum of 5 to 10% to the final price, as competition is very high. The organisation of the postavshchiki platforms suggests that there is an almost endless potential for the creation of ever more ancillary roles, especially when it comes to the sales potential of information. In short, knowing where to get what, from whom, and for a good price is the main skill of buyery, and they need little or no seed money to start their business.

Another group of service providers are dropshippery. While they have become important actors in the online sale of goods, they remain largely invisible in the market. Dropshippery mediate buying and selling exclusively online, without getting in touch with either party involved in the transaction. Dropshippery use personal websites or more often retail platforms like Wildberries, where they offer the goods of producers with whom they have pre-settled price agreements. If a client places an order for an article placed online by a dropshipper, the order is directly forwarded to the supplier. This not only relieves dropshippery of bureaucratic obligations¹⁹ but also means they do not have to maintain a product inventory or logistic capacity. Updating a product’s availability status, or taking responsibility for failed orders and product quality, remains exclusively the domain of the postavshchiki. Traders and manufacturers agree with the dropshippery on a price and the latter add to it what they see fit, usually between 100 and 150%; the price margin is thus significantly higher than for the buyery. To be profitable, dropshippery need to skilfully place advertisements on websites and secure the product’s visibility. Similar to buyery, they require little or no capital up front to start a business. They are middlemen whose job is in the sphere of promotion rather than logistics.

Wildberries has become a well-organised, reliable and widely used platform connecting sellers and consumers, and offering both wholesale and retail deals. To work with Wildberries, one needs to register a business, open an online account, and provide the equipment to produce and print barcodes for dispatchable goods. Similar to Amazon but Russia-based, Wildberries is an e-commerce platform and a delivery service at the same time. Tynara and Aibek’s sons predict that in the future a registration code²⁰ will be required for the retailing of trademarks, which suggests that e-commerce platforms might gradually formalise the field of small- and medium-scale entrepreneurship in Kyrgyzstan. While the platform promises relatively large price margins, competition is stiff, and it is very difficult to make a product visible. Constant investment in advertisements and special offers is costly and time-consuming. Another precondition for success at Wildberries is a detailed and accurate product description, because registered retailers can be rated by clients. ‘Bad ratings’, the two young men add, sighing, ‘are the end of the business’.

Despite already circulating myths about people who got staggeringly rich virtually overnight by trading on e-commerce platforms, the majority of interlocutors at Dordoi were passive observers, rather than actively engaging in it. For many, WhatsApp and Instagram still worked sufficiently well as a means of connecting and coordinating demand and supply. Contrary to the more formalised online marketplaisy, these social media platforms function without entry barriers or other forms of regulation. The relevance of mobile-phone technologies in shaping and transforming economic development at the bazaar can be framed as ‘e-nformal entrepreneurship’. It remains to be seen whether bazaar-based actors will be proved right in their insistence that intermittent personal contacts between buyers and sellers are indispensable for lasting business connections, or whether the future of trade is in the sphere of ‘e-nformal entrepreneurship’, or maybe a mix of both. What is clear is that the pandemic significantly harnessed the development and variety of ‘e-nformal entrepreneurship’ at the bazaar and in the local apparel industry.

The plethora of newly emerging actors and tools in online trading extend and bridge the boundaries between producers, the bazaar, and web-based retail platforms. The extent to which such transactions are formal or informal is difficult to estimate, especially at this early point of development. More research is needed to understand the degree of formalisation related to the transnational export regulations, as well as the growth potential for those working as ‘e-nformal entrepreneurs’, be it as proizvaditel’ (producer), buyer, seller, postavshchik, dropshipper or any other role that the prolific realm of e-commerce might engender in the future.

Conclusion

Both the Dordoi Bazaar and the MiK apparel industry have become important socio-economic institutions, and this article shows that what makes the Kyrgyzstani apparel sector unique is the interaction and the mutual co-constitution between them. The bazaar is where the majority of apparel producers learn their craft and profit from the market’s popularity among international buyers. The reason for the Dordoi Bazaar to persist and grow, despite the existence of similar markets in neighbouring countries, is because of the minimal tariffs for export goods from China, which, in turn, is a result of the two countries’ early WTO membership – in 1998 and 2001, respectively (Karrar 2017; Mogilevskiy 2004). Notwithstanding the significant changes in import and export tariff regulations in recent years, prices at the market have remained competitive over time. Textile producers profit from the cheap import of fibres from China, as much as bazaar retailers do from ready-made textiles. In addition, the relative absence of state-led controlling mechanisms (eg in terms of quality control, labour standards, taxation, etc.) makes it easy for small-and medium-scale producers to work flexibly and yield high profits.

Damira and Rustan’s example shows that the limited intellectual property protection and the success of small-scale textile producers have created space for local producers to creatively adapt global fashion to local bodies in Kyrgyzstan. Aliya’s narrative, however, also points towards an increasing fatigue with the migration cycle and widespread frustration about a government that is not able or willing to protect the rights of its citizens. For her the local manufacturing industry is more than a mere source of revenue; it is a space of agency from which to reverse the mass outflow of people and to build stability from the bottom up. The case of Tynara and Aibek sheds light on the readiness to take risks among actors who learnt to adapt to constantly transforming conditions of crises (pandemic, (geo-)political, or economic). Their mode of adaptation gives insights into a range of new roles and economic niches, emerging from the rapid rise of e-commerce platforms. It also poses questions for future research about how these platforms change the bazaar economy more generally.

The cases of bazaar-based apparel producers introduced in this article all point towards different dimensions of growth and inventiveness in the face of geopolitical and economic crises and a weak rule of law. This should have implications for the study of informality, which hitherto has not paid enough attention to the difference between practices that allow people to make a livelihood in a context of ineffective or corrupt statehood, and those that are ‘seriously harmful’ (Polese et al. 2022, 102). Thus, in light of the scope, creativity and resilience of bazaar-based entrepreneurs in Kyrgyzstan, one should be careful not to equate informal economic practice with criminality. In this context, it is worth remembering Portes et al.’s (1989) useful distinction between the informal and the criminal, which contrasts them based on whether the traded goods qualify as legal (eg textiles) or illegal (eg narcotics). Following such a distinction, it would be wrong to classify the Kyrgyzstani shadow economy as criminal. For the import of fibres and the export of MiK apparel, manufacturers pay customs according to a set tariff. Underreporting occurs in the production process, mostly. For the distribution of goods in other countries (Russia and other Central Asian Republics mostly), traders at Dordoi go through customs clearance or rely on officially recognised cargo companies to take over the transhipment bureaucracy.²¹ Thus, contrary to a case study on the mutual reinforcement of informality and criminality in the Mexican borderlands (Sabet 2015), these insights into the informal Kyrgyzstani apparel industry do not suggest that informality is conducive to or likely to be threatened by organised crime. It is the state, rather than criminal groups, that poses a risk for producers. Finally, most of the informants agreed that a state that does not warrant the rule of law does not deserve tax compliance of its citizens. The ethnographic material presented and discussed in this article convincingly shows that a more holistic, contextually open approach than informality is required to chart the complexities and the ways in which people navigate micro- and macro-level transformations. Examining ‘what works’ in the informal sector instead of ‘how can it be formalised’ can be eye-opening in terms of the norms, values and rationalities beyond a teleological perspective on growth and development.

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No potential conflict of interest was reported by the author.

Additional information

Notes on contributors

Claudia Eggart

Claudia Eggart is a social anthropologist with wide-ranging interests in markets, borders, geopolitics, infrastructures and gender. She has conducted extensive ethnographic fieldwork at bazaars and border regions in Russia, Kyrgyzstan, Ukraine and Moldova. Since 2021, she has been part of a research group in the cluster on Conflict Dynamics and Border Regions at the Centre for East European and International Studies (ZOiS, Berlin), in which she is developing a project on the lived experiences of customs regimes in Moldova, Ukraine and Kyrgyzstan. She is also finishing her dissertation at the University of Manchester, where she explores the intersection of large-scale geo-economic transformation and geopolitics as lived from the perspectives of cross-border market traders in Odesa and Bishkek.

Notes

1 https://akipress.com/news:690509:Kyrgyzstan_increases_clothing_export_by_3_3_times_in_2022/, last accessed 1 April 2023.

2 Mass protests led to the ousting of three Kyrgyzstani presidents, first in 2005, then in 2010 and again in 2020.

3 Especially at the border with Tajikistan, there have been increasingly militarised confrontations and violent disputes on both sides. The Fergana Valley, a vast agricultural area bordering Uzbekistan, Kyrgyzstan and Tajikistan, has also been the location of severe inter-ethnic conflict and confrontation over the past several years (see eg Reeves 2014).

4 The fieldwork was conducted as part of my PhD in social anthropology at the University of Manchester. Ethical approval was granted officially by the ethics committee of the university (project number: 2021-9407-20439). All participants in this study were informed about the aims of this project before engaging in more in-depth conversations. Informed consent was obtained by all interview partners.

5 “Samoposhiv”’ literally means self-sewed, and is colloquially used for MiK.

6 The emergence of bazaars was a phenomenon in all formerly socialist countries in the early 1990s (see eg Eggart 2023; Kaneff 2002; Mandel and Humphrey 2002; Mukhina 2014; Sasunkevich 2015).

7 Employment numbers strongly fluctuate because of the seasonal character of production, with high demand only between March and November.

8 The common regulatory framework of the WTO facilitated trade between Kyrgyzstan and China, which entered the WTO relatively early (1998 vs 2001). Other countries in the region followed much later. See also Mogilevskiy (2004), Pomfret (2007) and Schröder and Schröder (2017).

9 Kyrgyzstan has a simplified tax regime for companies with fewer than 30 employees. Registered enterprises pay a so-called ‘patent’. This is a lump-sum payment to relieve proprietors of tax payments and encourage them to formalise the business. Some argue that the licensing system has failed because shop owners do not trust the tax inspectors, which means that many do not even pay for the patent, despite its comparatively low cost (Birkman et al. 2012; Spector 2018a).

10 Other member countries are Russia, Kazakhstan, Belarus and Armenia.

11 Tariffs for EAEU members with third countries were set at $7.4, almost double the standard tariff in Kyrgyzstan, which prior to EAEU membership had been $4.10–$4.60. For details, see Tarr (2016, 4).

12 On the micro level, Henryk Alff’s (2016) study of the Kyrgyz apparel sector and the role of China, as well as Regine Spector’s (2018b, 2018a) research on apparel production in Kyrgyzstan, are important contributions, though their data was collected before Kyrgyz accession to the EAEU in 2015. See https://www.statista.com/outlook/dmo/ecommerce/fashion/apparel/kyrgyzstan#revenue, last accessed 12 October 2022.

13 A huge indoor wholesale retail market in the south-east of Moscow, close to the metro station ‘Lyublino’.

14 At the time of our talk, the Dollar–Som exchange rate was about 1 USD = 85 KGS; thus, 200 KGS is approx. 2.30–2.40 USD and 700KGS around 8.20–8.40 USD.

15 Other apparel producers at the Dordoi confirmed that they pay up to $700–900.

16 According to Engvall, the few state agents who refuse to comply with established practices of endemic bribery and exploitation are soon removed from their positions to keep the system going. Similar observations have been made in the context of border bureaucracy at the Mexican border region (see Sabet 2015).

17 They told me they pay 18% interest rates. I later confirmed with a local private bank that such interest rates are no exception in Kyrgyzstan.

18 The majority of these activities use English terms, while the plural forms have the Russian ending -y. Sometimes, buyery are called otpravshchiki, which is the Russian word for the sender.

19 For more information on dropshippers, see https://www.shopify.com/blog/what-is-dropshipping, last accessed 17/12/2022, and https://www.youtube.com/watch?v=f-6awOHjlZE&ab_channel=%D0%94%D0%B0%D1%80%D0%BC%D0%B5%D0%BD%D0%9C%D0%BE%D1%80%D1%8F%D0%BA%D0%BE%D0%B2%D0%B8%D1%87, last accessed 17 December 2022.

20 Similar to the Western ISO 9001, Chestny Znak (https://честныйзнак.рф) is a code (albeit digital) that must be assigned to a registered trademark. The equivalent labelling system in Kyrgyzstan is called Teksher (https://main.teksher.kg/index.html). In Kyrgyzstan, the labelling of goods has become obligatory by a rule that also applies to other members of the EAEU (http://cbd.minjust.gov.kg/act/view/ru-ru/157086), last accessed 1 April 2023.

21 This does not mean that cargo companies always work within legal or ‘white’ schemes. On the contrary, many apparel producers complained that their deliveries were stuck at the border because of mistakes and irregularities in the customs documents, and it was commonly known that cargo companies had dubious deals with border officials.