Named the total cost of goods imported by parallel imports: “Good, but not enough”

The government initially expected more

The head of the Ministry of Economic Development Maxim Reshetnikov announced the latest indicators on parallel imports: by mid-September, more than 1.3 million tons of products worth $9.3 billion had been imported into Russia. appliances, household chemicals. However, it is clear that the pace of increasing the volume of parallel imports lags behind the forecast figures and targets, and that the program has a number of ineradicable flaws.

At the beginning of May, when the parallel import mechanism (PI) was just being launched, analysts and government officials were talking about $100-120 billion – approximately this amount, according to their then estimates, foreign goods would enter the country through PI at the end of the year. Today, the Ministry of Economic Development is citing a figure of $20 billion, and it is adjusted from $16 billion. Yes, it is possible that parallel imports “worked well,” as Reshetnikov put it in the State Duma, at a meeting of the economic policy and control committees. However, IP in its current form clearly does not solve the global systemic problems that sanctions have created for Russian markets and the industrial sector.

According to the Federal Customs Service, on average, PI expands by 18% per month by weight and by 20% by value – for example, 383,000 tons were imported in August. But the final volume of $9.3 billion is clearly not impressive. If we take all imports (not only parallel ones), then, according to the Central Bank, in the first half of the year it amounted to $161.1 billion, falling by 6.5% in annual terms. In the second quarter, total imports decreased by 22.4%, to $72 billion. As for last year, according to FCS statistics, it grew by 26.5%, to $296.1 billion. About half (49.2%) were purchases of vehicles, equipment and products of the chemical industry, mainly in China, Germany, France, Italy and Poland.

“The figures voiced by Reshetnikov speak for themselves,” argues Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. – The volumes of parallel imports do not correspond to the scale that the government initially expected and that the country needs. An indirect confirmation of this is the situation with the ruble: it does not even think of weakening due to low demand for foreign currency. DI volumes remain low even six months after the launch of the mechanism, although in the conditions of a modern market economy, which is characterized by adaptability, new supply chains are built in a couple of months.”

It is also alarming that parallel imports are still focused on the sphere of domestic consumption, there is no benefit from it for the industry. As the authorities assure, the turn of investment PI will come later. But the question arises: will such imports work at all, even in the long term? After all, potential foreign partners will face the risks of secondary sanctions, they absolutely do not need it, Nikolaev sums up.

“Parallel imports in the current situation can be characterized by the words “good, but not enough,” notes Mark Goykhman, chief analyst at TeleTrade. – Largely thanks to him, the supply of electronics, household appliances, mobile phones, clothing and footwear, accessories, auto parts remains on the market. However, there are natural limitations that do not allow to fully satisfy the demand for foreign goods. According to the Ministry of Industry and Trade, “parallel” supplies ensure the import of products worth $2-2.5 billion per month. This is about 8% of the total level of imports, which until the beginning of March 2022 amounted to $32 billion monthly, according to the Central Bank.”

Moreover, PI applies mainly to final consumer products. The import of equipment and technologies is much more difficult to put on a “parallel” track, which seriously limits the possibilities of domestic production, including for import substitution. In addition, Goykhman argues, in comparison with official supplies, PI has many disadvantages that are critical for ordinary consumers. This, in particular, is the absence of the usual after-sales service support from the manufacturer. It is difficult to adequately provide warranty, repair and replacement of purchased goods. There is also a risk of substitution of original products with counterfeit products at some stage of delivery. Well, the price of goods, as a rule, is higher than with direct imports. For example, “gray” smartphones and other gadgets turned out to be 10-20% more expensive compared to the market in mid-February, although then the official dollar exchange rate was higher.