2024-01-24 04:32:48
Make war money? Taiwanese machine tools flowed into the Russian military industry and were even sold to the Russian Nuclear Research Institute… Red-line transactions under the export ban were exposed. (Photography by Chen Xiaowei)
Written by Today’s Weekly Editorial Team
After the outbreak of the Russo-Ukrainian war, Western countries further increased sanctions on Russia. High-end machine tool manufacturers, including Germany and Japan, stopped exporting to Russia. Taiwan, also a major machine tool country, closed the loophole in January last year. However, it still cannot completely prevent sensitive products from flowing into Russia through other channels.
Today’s Weekly cooperated with the non-profit online media “The Reporter” to visit machine tool manufacturers in Taiwan and Russia. A trade network that transits Russia through Turkey was clearly revealed.
Due to the war, Western countries have implemented a number of export controls on Russia, which is a big blow to Taiwanese manufacturers, because in recent years, Russia has long been an important market for Taiwan’s machine tools. Taking lathes as an example, Russia has been Taiwan’s top four export markets since 2017, with average annual sales exceeding NT$1 billion.
Affected by the ban, Turkey has become a transit point for Taiwanese machine tools shipped to Russia, because most machine tools exported to Turkey do not require an export license. Zhang Jinfeng, chairman of Davro, which is headquartered in Taichung and has a production line spanning mid- to high-end models, said: “If Russian machinery dealers can’t buy something, they will find a way to buy it in Turkey… But doing so is very dangerous (referring to Taiwan) (factory sells products to Russia through Turkey), because the products will leave traces no matter where they are shipped, and they cannot escape if caught.”
This statement can also be supported by trade data. According to Russian customs records from the international trade data platform NBD, between March and September 2023, Russia imported at least 193 Taiwan-made integrated processing machines (a type of machine tools) with a total value of nearly US$29 million (approximately US$900 million). Taiwan dollar). It is worth noting that nearly 80% of the Taiwan-made comprehensive processing machines flowing into Russia are transshipped through third places, and Turkey and China are the main transshipment places.
The “Reporter” crawled through trade data and found that among all Russian importers that obtain Taiwanese machine tools from third places, the one with the largest import volume is a company called “I Machine Technology” (Ай Машин Технолоджи, hereinfollowing referred to as I Machine ) traders. In particular, the machine tools imported by I Machine mainly come from Taiwan, and they almost only trade with a Taiwanese company also named “I Machine”.
Upon further observation, Taiwan’s “I Machine” is a trader established in 2008. It mainly represents Taiwanese brands of machine tools for export. Its Chinese name is “Jisheng International Xingye” (hereinfollowing referred to as Jisheng).
Jisheng International may also be said to be one of the beneficiaries of the “Russian-Ukrainian war wealth”. In 2021, Jisheng’s total export value to Russia was only US$5.26 million (approximately NT$150 million). In 2022 following Russia invaded Ukraine, when Taiwan had not yet proposed a ban on exporting machine tools to Russia, the number soared. to US$18.47 million (approximately NT$550 million), more than three times that of the previous year.
It is worth noting that among all Taiwanese machine tools flowing into Russia via Turkey, the well-known “Taichung Precision Machinery” is also among them.
Huang Yiying, assistant manager of the General Manager Office of Taichung Precision Machinery, said that following Taiwan expanded the control of machine tool exports to Russia, Taichung Precision Machinery has stopped exporting to the Russian market, but it has indeed been noticed that sales to Turkey will increase significantly in 2023. However, Huang Yiying said frankly that the machines are all sold out to dealers and it is difficult to control the flow of terminals.
However, Weng Shijie, executive counsel of Anhou Law Firm, reminded that some manufacturers will try to avoid responsibilities on the grounds that “the products have been sold to dealers” and “cannot control who dealers or buyers sell to”, but if they are ordered by the US government If it is determined that products are intentionally supplied to sanctioned targets, Taiwanese manufacturers are still at risk of being sanctioned by the United States.
In particular, some of the Taiwan-made machine tools flowing into Russia have even fallen into the hands of the Russian military industry and nuclear research institute, making it possible for Taiwanese manufacturers to invisibly help Russia on the Ukrainian battlefield.
Taiwan’s export industry is dominated by small and medium-sized enterprises. In addition to relying on foreign dealers and difficulty in controlling the flow of products, it often lacks the resources to check end customers. However, as geopolitical tensions intensify, sanctions lists and export controls are bound to become more common in Taiwan. After all, small and medium-sized enterprises need to learn to adapt and avoid accidentally stepping on the red line of sanctions.For more information, please refer to the latest issue of “Today’s Weekly” (Issue 1414)
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