China’s Huawei Poised To Exit The Russia Market
Sales to Russia to be picked up instead by distributors, parallel imports and by making Russia-only kit
The Chinese MNC Huawei, a major smartphone and tablet producer, is poised to leave the Russian market – although that doesn’t necessarily mean that Huawei kit will be unobtainable in Russia.
Huawei has recently the ceased supplying smartphones, tablets, TVs and other equipment to Russia, while the lease at their main Moscow office has become available from February 1, 2023, and indicates the probable termination of the company’s direct work in the Russian market.
However, (possibly pre-agreed) parallel import mechanisms allow at least three routes to enable Huawei products to be imported into Russia, while Huawei has not excluded deliveries to Russia through distributors.
Russia’s Telecom Daily CEO Denis Kuskov has stated that Huawei stopped selling base stations for cellular communications in spring this year. In early June, Huawei announced the closure of its official retail outlets in Russia. Some pieces of equipment are still sold in the brand’s official store, but these are the remnants of previous deliveries, said Kuskov. The lack of new batches could lead to the closure of the company’s online store, he believes.
The probable departure of Huawei from Russia is also indicated by the Property Agent responsible for the lease of Huawei’s Moscow office in the Krylatsky Hills business center has announced that the premises will be free from February 1, 2023, and the price will be about 8 million rubles per month. “Huawei has moved its employees to Kazakhstan and Uzbekistan, and they will definitely not be returning in the near future.” says Kuskov.
Further digging about revealed that Huawei is no longer recruiting employees in Russia, and there are no Huawei vacancies on Russian recruitment services. There are, however, numerous job advertisements for the vendor’s offices in Almaty and Tashkent, with the latter requiring product managers, project managers, and data engineers.
This will not be the end of Huawei in Russia however. Brand products will be able to be imported into the country in at least three ways. In addition to parallel imports and gray schemes, deliveries can be made to Russia through distributors, who will purchase equipment from intermediaries in China, and not directly from the manufacturer. Huawei is almost certainly negotiating the supply of smartphones and other equipment through intermediaries for the Russian market demand.
Direct deliveries under the current sanctions conditions is a very complicated concept. China’s Xiaomi was the first to come up with a scheme for importing equipment to Russia through a partner in China – a structure in use for many years. In this example, the Chinese company that supplies goods to Russia assumes all the risks, while the vendor itself controls all processes.
However, the impact of such supply chains on achievable business volumes is over exaggerated. Prices for equipment, are expected to remain at previous levels. To a much greater extent, the business of Huawei, Honor and Xiaomi, which use a similar supply chain, is influenced by other companies from China, including RealMe, Infinix and Tecno.
Huawei though is one of the Russian market leaders in terms of supplying the widest available types of telecom equipment and IT solutions . Demand for the products of Huawei are guaranteed to be robust in Russia. Prices will obviously be higher than last year, but the Russian market is already adapting to these realities. Moreover, Russia’s inflation rate is slowing down and the Ruble is strong. The retail final price for Huawei equipment in Russia will depend on the ratio of functionality and price.
It may also not be ruled out that Chinese brands are likely to create specific trademarks for equipment destined solely for the Russian market – another way to limit exposure to Western sanctions.
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