On the slopes above the Russian far eastern city of Vladivostok, about 5,000 second-hand vehicles stretch as far as the eye can see. Nearly all are Japanese – not just cars but lorries, cranes, concrete mixers, and even bulldozers.

This is the Zelyony Ugolok second hand vehicle market. The area’s name – it means the “green corner” – once reflected its natural beauty; locals joke it refers today to the pile of greenbacks, or dollars, the market represents.

Unofficial traders flock here on the Trans-Siberian railway – which terminates in Vladivostok – and make a living by driving cars thousands of miles across Russia to sell them on.

That virtually the whole of Siberia and Russia’s far east seems to drive right-hand Japanese cars these days – though Russia drives on the right – shows just how important markets such as these have become. And Zelyony Ugolok’s very existence is a sign of how much things have changed in Vladivostok.

In Soviet days, as home to Russia’s strategically-sensitive Pacific Fleet, the city was closed not only to foreigners but even to Soviet citizens without special permits to visit.

Today the capital of Russia’s huge Primorye region is noticeably cosmopolitan. Less than 100 miles from China and North Korea, and a short hop from Japan, Vladivostok has ambitions to become a tourist and logistics centre – even if it has yet to cast off its 1990s reputation as a “wild east” centre of corruption and organised crime.

Yevgeny Nazdratenko, Primorye’s wayward 1990s governor, stood down in 2001 in what was seen as an early example of President Vladimir Putin reasserting central authority over Russian regions.

But Vladivostok’s most recent mayor, Vladimir Nikolayev, was suspended in February 2007 and given a suspended sentence last December for abuse of office, triggering new mayoral elections next month.

The second-hand car trade is today the city’s biggest business but, locals complain, rather too much of an economic mainstay. Soviet-era defence factories have declined or closed; so, too, have massive repair yards that once serviced the Pacific Fleet. Fish processing has also declined as many trawlers now take their catch to Japan or South Korea.

“There’s not a single big industrial enterprise in Primorye,” says Vladimir Litvinov, a cosmetics salesman who also runs a non-governmental organisation, Freedom of Choice.

“The whole region is linked to the [car] business. Some people bring in cars, some people trade them, some service them, some people provide services to those who service the cars, and the state takes big import duties.”

The danger is that as foreign car makers build assembly plants inside Russia and Russians get wealthier, Vladivostok’s used car trade could be hit hard.

When the government in 2006 proposed a progressive ban on right-hand drive cars to protect struggling Russian carmakers, Mr Litvinov’s group organised a protest involving 3,000 vehicles. He says the plan would have devastated the far eastern economy.

“If they ban the import of right-hand drive cars, then people will leave this area,” he says. “And the Chinese won’t have to occupy this land, they will just be able to walk in,” he adds.

He voices a fear heard across Siberia and Russia’s far east that unless it can develop its economy, the whole area could one day be overrun by Chinese.

Igor Barannik, deputy mayor, says although Vladivostok’s population is declining – down 2,000 to 605,000 last year – the city has plans to revitalise its economy and keep Russians in the region.

“Our geographical position doesn’t allow us to set up big production facilities,” he says – Vladivostok is at the end of a narrow, hilly peninsula. “The strategy is to make the city an economic and cultural centre within the Asia-Pacific region.”

Part of the plan revolves around Vladivostok’s selection as host of the 2012 summit of the Apec group of Asia-Pacific countries – greeted with similar fanfare to the award of the 2014 Winter Olympic games to Sochi, on the Russian Black Sea.

Russky island, just off Vladivostok, a former military base now designated the summit venue, will see luxury hotels and a conference centre built. Later, says Andrei Sidorov, head of Vladivostok city’s foreign relations department, the island’s hotels will become a gambling zone, with casinos moving out from the city centre.

More summit hotels will be built in the city itself, boosting its tourism ambitions. Though plagued by an unpredictable climate, the city’s miles of coastline and hillsides plunging into the Pacific provide an attractive setting, sometimes compared with San Francisco.

“We want to position ourselves as a centre of European culture in the far east,” adds Mr Sidorov. “The Chinese and Japanese see us not as a Russian city but as a European city.”

Another part of the plan is to build on Vladivostok’s role as a transshipment centre, as trade surges between Asia and Europe through the Russian far east. Down at the city’s 110-year-old commercial port, Valery Nagorny, strategic development director, outlines plans to triple cargo from the 223,000 20ft equivalent units (TEUs) of containers handled last year to 600,000 by 2015.

As Russians’ buying power increases, says Mr Nagorny, imports of goods such as household electronics are increasing fast. The port has opened a modern container terminal and auto terminal.

There are also plans for an intermodal logistics terminal 40km from Vladivostok linked to its airport and the Trans-Siberian, with a container terminal, warehousing and distribution.

Like its counterpart in Murmansk, in the far north-west, Vladivostok’s port is looking to a planned multi-billion dollar upgrade of the Trans-Siberian railway to open a route for Asian goods across Russia to Europe.

A test shipment of new Mazda cars, says Mr Nagorny, was recently shipped by rail to Moscow.

“By sea, it takes about 60 days, through the Suez Canal,” he says. “By train, it’s 12 days.” If the vision can be realised, Vladivostok may no longer be the distant end of the line, but a new eastern gateway to Russia.

Copyright The Financial Times Limited 2018. All rights reserved.

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