Column by Nikita Korolev on approaches to limiting parallel imports

A new twist has appeared in the issue of limiting parallel imports of electronics: on October 19, the head of the Ministry of Digital Development, Maksut Shadayev, said that Russian manufacturers of computer equipment are faced with dumping from competitors “from friendly countries.” The minister emphasized that the situation needs to be corrected not by limiting parallel imports, but by reducing “the possibility of such price dumping for foreign equipment” (quote from Interfax). The Ministry of Digital Development refused to explain the official’s statement, but, apparently, we are talking about the introduction of excise taxes and other fees on foreign equipment (see Kommersant on October 4).

Meanwhile, a week earlier at the Microelectronics forum, Deputy Head of the Ministry of Industry and Trade Vasily Shpak said that he was ready to simply cross out from the list of parallel imports the positions of foreign vendors that Russian industry is able to replace: “I hope that by the end of the year – this will be an important signal for the market – We will carry out such an operation.”

The sharp divergence in the public position of the two ministries on a key issue for the industry reflects the complexity of the situation in the market. Russian vendors, who in 2022 were supposed to gain an advantage in the market thanks to government protectionism and the refusal of foreign suppliers to supply their equipment to the country, are now forced to compete at auctions with suppliers of Asian equipment who are ready to reduce prices.

Thus, in October a tender was awarded for the supply of servers for the needs of the Ministry of Internal Affairs. The initial price of the contract was 499 million rubles. The tender was won by the bidder who offered to supply equipment 53% cheaper than the initial contract price – for 232 million rubles. “The cost of our equipment turns out to be higher than the price offers of Chinese server suppliers,” complained an employee at one of the specialized companies.

Top managers of other electronics vendors suggest that the situation will worsen. Russian market participants claim that, for example, xFusion and Huawei “show their intentions to sell equipment at auctions, even at a loss, just to remain on the Russian market.” And even a cudgel in the form of direct restrictions on parallel imports is unlikely to correct the situation. Nameplates can be re-screwed not only at Russian, but also directly at Chinese enterprises – and now the equipment is fully permitted for parallel import. The introduction of excise taxes is also unlikely to help against large suppliers who are really interested in contracts.

I don’t have an answer on what to do. But first, it would probably be a good idea to bring the positions of the two key regulators closer together. Perhaps some truth will emerge from their dispute. Even if it consists, for example, of allowing the market to be a market and regulate itself.