Radiators increase the degree – Newspaper Kommersant No. 203 (7404) dated 11/01/2022

Russian manufacturers of heating equipment were unable to compete in the domestic market with foreign companies, even under sanctions. They believe that it is necessary to almost triple the duty on imports of such products and limit the use of foreign heating systems in state-owned buildings. Protectionism stimulates the narrowing of competition and the technological decline of the industry, experts say. And developers are afraid that the increase in duties will lead to an increase in the price of heating equipment in the domestic market.

At the disposal of Kommersant were the results of a survey conducted at the end of October by the Eurasian Heating Systems Market Association (EVRAROS) among top managers of 25 large manufacturers of such products (radiators, heaters, fan heaters, convectors and other heating equipment) and components for them from Russia. About 64% of respondents believe that in order to support them during the crisis, the authorities should introduce a ban on purchases for state needs and companies with state participation in import systems in the presence of Russian analogues. For 32% of those surveyed, an effective measure of state support for the industry would be an increase in the duty on importing equipment from abroad from 7.5% to 15–25%. An insignificant part of the respondents consider it necessary to introduce a mandatory requirement for state-owned companies to purchase at least 75% of heating systems from local manufacturers.

Manufacturers are seriously concerned about competition from foreign companies. For example, today 85% of the market for water heaters in the Russian Federation with a volume of over 2.5 billion rubles. per year share three local and three Polish companies, note in EVRAROS. At the same time, they say in the association, a significant share of purchases from Polish suppliers is carried out by companies with state participation.

In Polish VTS Polska, Sonniger and Reventon Group did not answer “Kommersant”. “After the start of the special operation of the Russian Federation in Ukraine, many restrictions imposed on our country do not allow Russian companies to compete equally with imports,” Andrey Lazurko, commercial director of KZTO Radiator, admits.

In addition, due to the strengthening of the ruble, local manufacturers of heating systems began to lose competition to manufacturers from China and Turkey, whose products cost 18-22% cheaper (see Kommersant of September 5). This led to a decrease in demand for local products and underutilization of the capacities of many Russian manufacturers, while demand for foreign systems, on the contrary, increased. Thus, according to EURAROS, in January-September 2022, the import of radiators into the Russian Federation almost doubled year-on-year in value terms.

However, not all market participants, even Russian ones, support broad protectionism. This will lead to a contraction of competition, followed by a technological decline in the industry, a Kommersant source from among the manufacturers of thermal equipment believes: “Such measures support companies that are not able to compete at the expense of quality.”

The ideas of manufacturers of heating equipment are expectedly not supported by developers, one of the main consumers of such products. “Broad protectionist measures may affect the overall level of prices for equipment,” says Elena Mironova, head of the price monitoring department at Granel Group of Companies. An increase in import duties could lead to a shortage of equipment and higher prices, Alexander Ruchev, president of the Osnova development group, agrees. This, he adds, is not beneficial to anyone: neither the state, which is the customer of state-owned construction projects, nor the construction industry, nor the end buyers of real estate.

The most effective tool is not bans, but stimulation of production within the country, Mr. Ruchyev believes. It follows from the EURAROS survey that almost 59% of the industry’s enterprises expect preferential loans, grants and subsidies from the state. Another 35% believe that support in the form of preferential rent or installment purchase of property is more important.

Daria Andrianova