Bloomberg: Russian business is experiencing a repeat of the 1990s

Analysts Bloomberg interviewed several Russian entrepreneurs who are trying to do business in the face of sanctions and the withdrawal of Western companies from the local market. Small businesses’ “creative ways” of restoring supply chains amid the economic shock are largely a repeat of 1990s practices, the agency’s analysts say.

“Many observers compare Russia’s current economic isolation to that of the Soviet era. However, this is more reminiscent of the 1990s, when the collapse of communism left gaping holes in supply chains, forcing consumers and businesses to find creative ways to fill them.

It describes the stories of several young Russian entrepreneurs who are trying to use the current situation to launch their business projects. For example, the text of the agency mentions 37-year-old Victoria Shelanova, an SMM manager from Moscow, who, in the absence of competition, negotiates with Chinese suppliers to send a batch of wakeboard vests.

Also, as an example of a platform for “situational entrepreneurs”, Bloomberg mentions Avito, where 173,000 ads for the sale of products from the Italian fashion house Gucci are posted. Despite the fact that the Bloomberg authors use this example to illustrate the ability of Russian entrepreneurs to restore the supply of brands that have left the market, as Kommersant was convinced, most of the goods from the ads in the top search results for Gucci are fake clothes at reduced prices.

“One enterprising Russian, who asked not to be named, created a company in Dubai that received a license to import gold. Russian companies buy bars and send them to him, and he sells them to jewelers in the UAE. Having received 40% of the profit, he uses the proceeds to buy car parts to ship to Russia,” Bloomberg gives an example of another business model in a “mobilization economy”.

The entry of Russian troops into Ukraine and its consequences negatively reflected on Russian business, forced to look for alternative logistics and communication solutions to continue working against the backdrop of international isolation.

Read more about how the hostilities in Ukraine have changed Russian business in the Kommersant special project “Own business in NWO-times”.

Andrey Sapozhnikov