Expert: the departure of Western brands opened up new prospects for China in Russia

The departure of Western brands has opened up new prospects for Chinese companies, said Surana Radnaeva, CEO of the consulting company Sinoruss, speaking at an event of the Russian-Chinese Committee for Friendship, Peace and Development.

Last year, the trade turnover between Russia and China reached a historic milestone of $190.271 billion, and grew by 29.3%. In 2021, the trade turnover between Russia and China increased by 35.8% and amounted to a record $146.887 billion.

Radnaeva said that the $200 billion mark will be overcome already this year, although it was planned to reach it only in 2024. According to her, one sometimes hears opinions that China is actually complying with sanctions against Russia.

“I wouldn’t agree with that. At the political level, Beijing has repeatedly stated the dangers of sanctions. Yes, some Chinese companies have limited supplies to the Russian Federation, but you need to understand that many of them have assets in the West and independently assess their risks. If the risks of cooperation with Russia look more serious than the benefits, then the decision to limit cooperation is quite logical. There is no politics here, only economics, and the decision of the Chinese partners must be accepted with understanding and respect. Moreover, there is a lot of competition in the Chinese market – someone refuses to supply, and someone takes his place, ”she said.

According to her, a great interest of Chinese companies in the Russian market has already been recorded. She noted that the overwhelming majority of companies from unfriendly countries that left the Russian market did so on their own initiative, that is, not within the framework of sanctions.

“Thus, in the trade of the Russian Federation and China there are many segments that are not subject to sanctions at the same time, and have large niches that have been vacated after the departure of Western companies. I see great potential here. It’s nice to see how Chinese partners proactively come up with proposals to find a buyer in Russia for their goods,” said Radnaeva.

Among the “locomotives” of Russian-Chinese trade, she noted the products of the automotive industry. The share of new Chinese cars in the Russian market increased from 9% to 37% in 2022, while sales of new Korean cars decreased from 28.3% to 11.2%, European ones – from 28.3% to 7.3%, Japanese ones from 17.9% to 6.6%.

“This is a great example of how Chinese brands are filling in the gaps. Last year, 63.7% of new cars were imported to Russia from China, and Chinese cars are among the top sellers,” she said.

Radnaeva also recalled another record – in 2022, China delivered almost 20,000 sets of special equipment to Russia, which is twice as many as in 2021.

“These are dump trucks, tractors, bulldozers, cranes and so on. The Chinese partners themselves note that Russia has significantly simplified the procedures for processing exports in this segment,” she said.

“Thus, the withdrawal of Western brands from the Russian market has opened up new prospects for Chinese companies, and over the past year, the number of requests from Chinese partners for assistance in entering the Russian market has increased significantly,” Radnaeva said.