Russian equipment vendors move production abroad
Source：kommersant
From：Taiwan Trade Center, Moscow
Update Time：2023/07/19
The number of Russian companies producing telecom equipment and electronics is decreasing: in the past year, about 10% of vendors moved their assembly to China, Vietnam, and Turkey, and many small manufacturers have teamed up with large ones. The main reasons, according to market participants, were the sanction pressure and additional checks of components supplied to the Russian Federation.
Executive Director of the Association of Electronics Developers and Manufacturers Ivan Pokrovsky told "Kommersant" that over the past 12 months about 10% of companies that develop and produce telecom equipment, computing equipment, Industrial and other electronics in contract manufacturing in Russia or had their own assembly lines, moved production to other countries. According to him, earlier on the territory of the Russian Federation equipment was produced by 3 thousand companies. Migration of Russian developers of electronic equipment to foreign contract production has intensified, the president of Zelax (a domestic manufacturer of telecom equipment) Sergey Sukhman confirms the trend. Basically, companies are moving production to China, Vietnam, India and Turkey, says Mr. Pokrovsky.
There are several factors in favor of the transfer of production abroad, experts say. «This is both the workload of Russian production, and sanctions restrictions on the supply of foreign components to Russia», - says Mr. Suhman. Mr. Pokrovsky also reminds about the inspections of imported components in Russia:
«Permission to import chips containing cryptography requires long-term verification at the licensing center of the FSB, and permission to import finished products under your own brand is easy to obtain through the registration of notifications».
In addition, it has become very expensive to produce in Russia: for example, during the period of various sanctions and restrictions from the West, the cost of foreign equipment for the production of printed circuit boards in the Russian Federation increased by 40% (see Kommersant on Feb., 14). Problems with the availability of capital amid rising production costs have forced some small companies to join large vendors, says Alexander Sivolobov, deputy head of the Skoltech-based NTI Competence Center for Wireless Communication Technologies. “In Russia now, the main goal of the industry is survival, and consolidation is becoming the optimal strategy,” he says.
More and more Russian companies will transfer their production abroad, because «to supply the Russian Federation with finished products - even from a foreign entity - easier than foreign components», the director of «Norsi-Transa» Sergey Ovchinnikov summed up.
Mr Sukhman notes that it is not yet clear whether the products produced at foreign sites under contracts with Russian companies will be entered into the register of domestic equipment of the Ministry of Industry and Trade.
«On the example of radio electronics we see that companies with products from foreign components easily pass into the register of the Ministry of Industry and Trade, while Russian companies are really facing bureaucratic difficulties,»,says Maxim Koposov, director of Promobit (server and storage manufacturer Bitblaze).
The Ministry of Industry and Trade told Kommersant: “With the introduction of sanctions on the supply of electronic products to our country, Russian manufacturers have deepened the localization of telecom and network equipment and increased the volume of product supplies.” The ministry noted that in 2023, compared to 2022, the number of telecom equipment included in the unified register of Russian radio-electronic products has significantly increased.
Source: https://www.kommersant.ru/doc/5999154?from=doc_vrez