Kazakhstan’s fight against re-exports will blow up prices for household appliances in Russia

Astana is not going to contradict Western sanctions against Moscow

Very soon, within a month or two, the price tags for foreign household appliances in our country will begin to grow rapidly, and the range will narrow. This is due to the recent tightening of controls on parallel imports by Kazakhstan, which clearly followed US Secretary of State Anthony Blinken’s lead. Russian distributors have to move supply chains to China, Kyrgyzstan and the UAE. Perhaps the situation can still be stabilized, but it is obvious that in the near future ordinary consumers dreaming of a new food processor or washing machine will have to save every penny.

The fact that Kazakhstan “will not allow its jurisdiction to be used to circumvent anti-Russian sanctions,” said Deputy Foreign Minister Roman Vasilenko. The official recalled that since April 1, an online tracking system for goods supplied for subsequent re-export has been launched in the country. Meanwhile, according to the Russian Chamber of Commerce and Industry, trade between our countries grew by $2 billion in 2022, to $26 billion.

Electronics and large household appliances from Bosch, LG, Samsung, Electrolux and a number of other brands were imported to Russia mainly from Kazakhstan and Uzbekistan. In the second half of 2022, these manufacturers began to lose positions in the Russian market, their share in sales money fell several times. At the same time, the vacant seats began to be actively occupied by Chinese and Turkish brands. “Kazakhstan was a convenient and cheap channel for deliveries under “gray” schemes,” says Artem Deev, head of the analytical department at Amarkets. “Now, for many importers in our country, it is simply unprofitable to import equipment from there. Of course, “nature abhors a vacuum”, and business will look for new channels to replace the one that has left. China, the United Arab Emirates and Kyrgyzstan remain the main ones. But this will lead to a rise in the price of goods by at least 10-12% in the medium term. In general, the situation on the market looks tense. According to some reports, the United States has already persuaded Turkey to stop re-exporting goods to Russia through the free trade zone.”

On the one hand, until Beijing breaks off trade relations with Moscow, which is not yet expected, the domestic consumer will not be left without refrigerators and microwave ovens. Yes, and dealers managed to accumulate a stock of household appliances in warehouses – so we will not see a jump in price. The rise in prices will be “creeping” – but significant, sums up Deev.

“Prices may well rise even more, since the transportation of large equipment is costly, and logistics has become more complicated because of Astana’s position,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. — In addition, the very structure of the Russian consumer electronics market is rapidly changing. For example, the share of Bosch products (in pieces) fell over the year from 8% to 1%, and LG – from 14% to 3%, even regardless of the customs control measures taken by Kazakhstan. At the same time, the degree of presence of other brands, mainly Chinese and Turkish, increased sharply, from 44% to 61%.

The example of Kazakhstan may well be followed by Kyrgyzstan and other countries of the EAEU. Accordingly, a serious adjustment of the EAEU customs regulation mechanisms to these risks is needed. Another problem is that parallel imports are always finite: product and nomenclature groups are constantly changing in it, and it is impossible to predict in advance what will happen with one or another imported product. Accordingly, in order to overcome this bad dependence on external conditions (not only technological, but also political), it is necessary, not in words, but in deeds, to develop national import substitution, to establish localized production of household appliances, with the help of China or Belarus.

“It is necessary to take into account new realities, changing priorities, in particular, the fact that today China is a much more privileged and important partner for Kazakhstan than Russia,” says Maslennikov. – In addition, it is not clear what awaits Turkey after May 14, when the presidential elections will be held there. If the opposition candidate wins, control over transit to Russia will most likely be tightened. Finally, any item of modern household appliances has its own life cycle, which today rarely exceeds five years. And what should we do if the main channels for the receipt of goods through parallel imports are blocked? Domestic analogues do not reach world standards.

Published in the newspaper “Moskovsky Komsomolets” No. 29026 dated May 11, 2023

Newspaper headline:
Fear has a price