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The authorities of the Kaliningrad region are negotiating with the IT company Softline about deploying the assembly of laptops and other peripheral devices in the region, Denis Saliy, head of the representative office of the Government of the Kaliningrad Region under the Government of the Russian Federation in Moscow, told Vedomosti. "We are negotiating with Softline and expect that the company will deploy its own production or contract assembly of laptops and other peripherals in the region. This is beneficial for the IT company, since it will be able to apply benefits as a participant of the special economic zone (SEZ) and the free customs zone, which allows to supply components for assembly to the territory of the region without paying import duties and VAT," he said.

The deployment of own production is a rather lengthy process, which consists of acquiring rights to a land plot, designing, connecting to power grids and launching, Saliy lists. All the preparatory work may take up to two years, i.e. by 2025 it will be possible to launch production lines. Contract assembly can be deployed at the facilities of technology companies in the region within a couple of months, i.e. already this year, he said. 

The head of the Softline company noted only that the production of laptops under the Infinit brand (Softline builds its own laptops in China under this trademark) is not planned.

A source of Vedomosti at an IT company also knows about plans to launch laptop production in the Kaliningrad region. According to him, the contract assembly can be carried out at the facilities of GS Group, whose plants operate in the region. At the same time, the current assembly in China will remain, he notes. And the company plans to add the equipment assembled in the territory of Russia to the register of Russian products of the Ministry of Industry and Trade.

Technopolis GS enterprises (GS Group Technopark in the Kaliningrad Region) have sufficient competencies and capacities to deploy the assembly of laptops and other equipment for both Softline and other customers, said Fedor Boyarkov, GS Group Production Development Director. "With the current workload, we can quickly reach the production of an average of 30,000 laptops per month. Resources, as well as competencies, can be increased and scaled to meet the needs of the customer. The production capabilities of our enterprises allow us to produce a wide range of devices – computer equipment, wearable gadgets, switching and server equipment, etc.," he explained. 

It is much more expensive to build your own factory than to deploy a contract assembly, experts interviewed by Vedomosti say. According to a source in one of the IT companies, the construction of a plant with a capacity of 500,000 laptops per year will cost at least 2 billion rubles. And the contract assembly depends on the number of units of goods produced, the interlocutor continues. Basically, with small volumes, the production of one laptop will cost the company about 3000 rubles apiece. 

SUPPLIES OF NOTEBOOKS TO RUSSIA, THOUSAND PIECES

SUPPLIES OF LAPTOPS TO RUSSIA, TH. PIECES
BRAND	2020	2021	2022	COUNTRY OF ORIGIN OF THE BRAND
MSI	82	138	556	TAIWAN
HUAWEI	215	182	428	CHINA
LENOVO	841	841	415	CHINA
HP	835	1106	377	USA
ASUS	766	758	321	TAIWAN
ACER	710	621	254	TAIWAN
APPLE	243	396	177	USA
HONOR	144	231	174	CHINA
RAYBOOK			74	RUSSIA
DELL	160	210	68	USA
IRBIS	42	92	68	RUSSIA
DIGMA	19	49	49	RUSSIA

 Source:  GS GROUP 

Alexey Boyko, an analyst at the MForum agency, noted that it is necessary to build up areas of the plant, purchase equipment, recruit and train personnel. According to him, investments in its production can amount to about 1 billion rubles, and contract production does not require special investments, but only a design center.

"Many companies choose to enter the region with a contract assembly and build facilities in parallel, and then switch to them. It is better to do production in your own country, because now all the conditions are created for this. Expenses are leveled by tax and customs benefits up to compensation of part of the capex that the region can offer for such projects," Saliy said. As examples of major investment projects in the region, the official called the construction of a plant for the creation of lithium-ion batteries "Reners" (part of Rosatom), a factory for the production of silicon wafers "Anchor" and pharmaceutical production "Otisipharm Pro".

IT companies already have benefits, but they are tied to activities related to software development and licensing, Chukanov notes. When the question arises that the company will engage in other activities, such as assembling devices, then there is no question of IT benefits, he explains. This is where the benefits from the SEZ comes to the rescue, the lawyer points out.

The main fiscal advantages of a SEZ resident in Kaliningrad include reduced tax rates and full exemption from a number of taxes during the first years of the project, as well as exemption from customs duties and import VAT both for components before the export of finished products and for equipment used in the SEZ, says Anna Zelenskaya, associate partner of MEF Legal. Tax exemptions for residents of the Kaliningrad SEZ include a zero income tax rate for six years and half the standard rate for the next six years, as well as exemption from land tax for the first six years, reduced property tax rates and insurance premiums for property/employees involved in the investment project, she says.

All these parameters are very important when assembling PCs from components, since the margin here is initially not too high and any serious income is achievable only with a large volume of production, which means with a large staff and a large area of the premises, Ilya Zharsky, managing partner of the Veta expert group, draws attention.

It will be safer to assemble laptops in Russia from the point of view of protecting business interests and rights, says Anna Sarbukova, a leading legal adviser at the EBR law firm. When assembling in China, the provisions of the contract are governed by foreign law, and disputes are subject to international arbitration, she gives an example.

IT is also advantageous for IT companies to manufacture products in the region, since the region is closer to the main consumer market than China, Sarbukova points out. Accordingly, the cost of delivering finished products to Russian users should also decrease.

Source: https://www.vedomosti.ru/technology/articles/2023/04/20/971672-softline-sobiraetsya-delat-noutbuki-v-kaliningradskoi-oblasti?ysclid=lguumvi55j905316825