The world continues to expand bans on the supply of a variety of goods to Russia, and the Russian authorities say that they are coping with the sanctions. Formally, imports have indeed returned to pre-war levels, but the dry statistical figures do not reveal the main thing – the quality of these goods is completely different. Russia seems to be returning to the 90s: instead of branded goods, they buy cheap analogues or counterfeits, they are actively buying Lada once more, and equipment is increasingly being repaired instead of buying new. It’s even harder for industrial enterprises – the launches of new production facilities are postponed, factories are saving equipment because spare parts cannot be obtained, or they are switching to simpler equipment.
Large quantity, low quality
It is believed that Russia has somehow managed to cope with the ban on the supply of goods and technologies. Immediately following the start of a full-scale invasion, such sanctions were introduced by the United States and the EU in order to complicate the production of weapons, and in the future, to slow down the economic development of the aggressor. But already in 2023, the share of imports in Russian GDP almost returned to its long-term norm – following a sharp drop in 2022 to a minimum in Russia’s recent history. Total imports of goods and services are estimated at $379 billion in 2023 – almost the same (380 billion) as they were before the full-scale war. It seems that everything is not so bad, but if you take a closer look at the numbers, it turns out that it is too early to talk regarding a “return to normality”.
Firstly, the growth in imports was mainly due not to consumer demand, but to the state, which found ways to circumvent sanctions: in 2023, more machinery and equipment, as well as vehicles, were imported; these categories accounted for $27 billion of the $30 billion of growth total imports for the year. Among the consumer sectors, only the import of textiles and footwear increased. But food products and agricultural raw materials were imported even less than in the first year of the war, as well as chemical products, wood and pulp and paper products.
Secondly, these figures say little regarding the quality of imported goods. Data on foreign trade in Russia from 2022 are very limited and are not disclosed at the level of commodity items and their physical volumes; it is difficult to assess actual changes. It is clear that partly these are the same goods from developed countries that are now being bypassed and because of this are more expensive (this, as well as global inflation and the weakening of the ruble exchange rate, largely explains the increase in the cost of imports). But some things are simply replaced by more affordable and low-quality analogues. The main increase in imports of goods, once more in terms of value, came from China – as in the 90s, Russia began to be filled with a flow of Chinese consumer goods. Asia carries its own goods, but also serves as a trading hub for products from the EU and the US. Actually, there are not so many “banned goods” (sanctioned products that can be used for military purposes, technologies and luxury goods) in these flows. For example, from Kazakhstan it accounted for regarding 7% of all imports in 2023. The rest, not prohibited, travels through Asian countries due to transport and financial sanctions.
People buy counterfeit goods, save money and send things in for repairs.
Over the past two years, Russians have been switching from expensive to affordable brands – even “in fairly sensitive categories such as alcohol or children’s products, where previously there was a high level of distrust in domestic production” – “chains with low price positioning are also actively growing,” the agency notes Romir, who researched changes in consumer preferences in 2023.
New sellers are appearing in place of brands that left Russia, but their products are not always of the same quality. Thus, in place of the departed Spanish Inditex – Zara, Massimo Dutti, Pull & Bear, Oysho, Bershka and Stradivarius – Maag, Dub, Ecru, Vilet stores were opened. They, at least partially, supply clothes from the same factories where goods for the original Inditex are made, but different collections are being developed for Russia. Coca-Cola no longer produces the drink of the same name in Russia and does not supply concentrate; it is now made in Russia. However, this did not prevent the new brand “Good Cola” from entering the top ten most popular.
The Lada brand, which seemed forgotten in the distant 90s, is flourishing once more, it quickly restored the pre-war scale of production and even increased it slightly, while the Russian assembly of Western automobile brands disappeared as a phenomenon, as a result, sales of Russian cars have already increased from 22% to 33% and continuing to grow (experts predict that they will soon occupy almost half of the market). Imported cars are now mostly Chinese (their share was 14% – now 42%), and the usual European and South Korean brands supplied through “parallel” imports account for only 12% of the market.
The state is also switching to Chinese brands. Government purchases of Haval cars increased almost 5 times (to 2.2 billion rubles), taking third place among passenger cars for government needs, while Lada and UAZ were in first and second places, and Toyota was only in fourth place.
The 90s are returning in another sense: on Russian marketplaces over the past year and a half, the share of counterfeits has increased by 40%, according to consumers themselves and expert estimates. 23% of surveyed residents from 35 Russian cities encountered counterfeit auto parts. Now the possibility of running into a fake is the main risk that worries service customers. And people turn to them more and more often – as the Bank of Russia writes in its review of the regional economies, an increase in demand for car repairs is observed in several of them at once, especially many problems with servicing Chinese brands.
The Federal Customs Service itself complained regarding an avalanche of counterfeit children’s toys, clothing, shoes, perfumes and electronics back in 2022. Now the situation even seems to have improved: according to customs data, approximately 5 million counterfeit items have been identified, which is 40% less than in 2022. It must be admitted that it has become more difficult for the service to catch him – previously it relied on the list of authorized importers, but the permission of “parallel imports” disrupted the system.
“Customs will not be able to distinguish an original shoe from a counterfeit one – they won’t open the box. That is, how will they understand? If the documents indicate a well-known brand, then it is it, since the papers are prepared correctly,” explained Maxim Danilov, general director of the National Shoe Union.
The Bank of Russia notes an increase in demand for repairs of household appliances and electronics. This may indicate that the quality of the equipment is falling or it is becoming outdated, and not everyone can afford a new one. Residents choose Russian or cheaper imported ones, wanting to save money.
Although the average income of the population grew, people’s debt to banks also grew: 63% of those surveyed by the Central Bank still do not have savings. Most of them are pensioners, whose incomes have significantly decreased. “Real pensions, recalculated according to the “price index for the poor” (an indicator of the situation of the low-income), are still, for the fifth month in a row, lower than last year,” note analysts from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMAP) based on the results of 2023. Every fifth resident of Russia surveyed in 2023 said that they were cutting back on food costs (previously there were 16%), Romir showed.
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2024-04-20 09:59:43
