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Chinese brands take over as Western competitors flee from Russia
TRENDSCallender TrendSept. 6 2022
China’s Geely Automobile sales in Russia remained steady in July, even as Russia’s auto market collapsed 75% from a year earlier. Photo: Bloomberg
(KTSG Online) – Chinese cars, televisions and smartphones are replacing German and Korean imports in Russia, in the context of the country’s market being reshaped due to the impact of the ban. sanctions and the flight of foreign brands after the war in Ukraine broke out.
As a result, trade flows are turning upside down, with Russia seeking to insulate itself from further trade disruptions by shifting its focus to buying goods from countries not participating in sanctions imposed by the United States and the United States. imposed by allies. Moscow is also rewriting rules to allow the Russian National Investment Fund (RNWF) to invest in the currencies of China, India and Turkey, after Western sanctions prevented Russia from buying denominated in euros and US dollars.
Vladimir, a business leader in the metal industry who bought a new Tiggo SUV from Chinese automaker Chery Automobile at a dealership in Moscow, said: “Aside from Chinese cars, there are no brands. No other car there. However, there is a lot of choice with Chinese cars and surprisingly the cars are very good.”
In mid-August, Russian state news agency Tass reported that Chery Automobile was in talks with Russian manufacturers about a plan to assemble vehicles in the country.
Vadimir Shmakov, the director of Chery Automobile’s Russia branch, said he wants to increase Chery’s sales in Russia to about 80,000-100,000 vehicles in 2022, twice as much as last year.
The war pushed Russia toward Asia more quickly, with changes occurring within months, rather than years, as in the past.
Car sales in Russia by two Chinese automakers, Great Wall Motor and Geely Automobile, remained steady in July, even as Russia’s auto market collapsed 75% from a year earlier. Currently, these two automakers are among the best-selling car brands in Russia. According to Avtostat data, in the second quarter, 81% of new cars imported by Russia were from Chinese brands, up from 28% in the first quarter.
The Russian central bank said in a report on August 24 that business sentiment in the auto market turned positive for the first time since the war in Ukraine broke out in late February when the market moved from European manufacturers to Asian cars.
The Russian smartphone market has also shifted in China’s favor, with Apple and Samsung suspending shipments to Russia. Although their products are still available through other import routes, they may disappoint Russian consumers because they are more expensive and do not come with warranties.
Xiaomi (China) was Russia’s best-selling smartphone manufacturer in the second quarter, overtaking Samsung and three of the top five smartphone brands in Russia were Chinese, according to Mobile TeleSystems, Russia’s largest mobile carrier. .
“The market is witnessing redistribution,” said Alexey Zaitsev, head of telecommunications at e-commerce platform Ozon Holding. We see a growing demand for Chinese brands’
In July, the daily Izvestia, citing online retailers, said that demand for Chinese TVs nearly doubled after the war when Japanese and Korean companies stopped shipping.
The trade boom with China comes as Russia’s retail sales suffer the most severe slump since the Covid-19 pandemic crisis, with a drop of nearly 10% per month in the April-May period. 6. Household spending in Russia accounts for more than half of the country’s GDP.
Trade between Russia and China was growing even before the war. Last year, China accounted for about 25% of Russia’s total imports.
Moscow needs supplies more than ever as Russian consumers face a future with fewer choices. In July, Russia bought $6.7 billion in goods from China, up more than 20% from a year earlier. Russia-China bilateral trade, boosted by higher energy prices, could increase by more than a third to $190 billion in 2022, Tass news agency quoted a Russian official as saying.
As China becomes more important than ever, yuan trading on the Moscow Exchange has grown more than 40-fold in the first eight months of this year, and “now outperforms trades in other currencies.” other traditions,” said Ivan Tchakarov, chief economist for Russia at Citigroup.
According to Boris Kopeikin, an analyst at the Center for Strategic Studies, a Moscow-based think-tank, an increasing number of Chinese companies are looking to export goods to Russia without violating Russian sanctions. The West.
“The pace of China’s exports to Russia will pick up by the end of the year, at which point we’ll see a lot of choices for Chinese goods,” Kopeikin said.
