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Over the year, the share of Russian enterprises wishing to purchase European equipment has increased, but the share of those planning such purchases has collapsed to a historical low of 9%, a survey by the Gaidar Institute showed.

Against the background of sanctions restrictions on the supply of technology from Western countries, Russian industrialists continue to consider Western European equipment to be their preference. Over the last year (from August to August), the share of enterprises that would «prefer» to buy machinery and equipment from Western Europe increased from 62 to 72%, which is more than in pre-bank 2021 (65%). Such results were shown by a survey of enterprise managers conducted by the Gaidar Institute Market Research Laboratory.

Laboratory head Sergei Tsukhlo sees one of the reasons why the preference for Western European equipment has grown in the last year is that manufacturers are not satisfied with the available analogues.

In fact, the share of enterprises planning to buy Western European equipment decreased to 9% from 55% in 2021, the material notes. «Our monitoring has not yet recorded such losses of the Russian market», - it states

The preference for equipment from the United States and Japan (this is how the survey highlighted), according to Russian enterprises, decreased to 25% (before the sanctions in August 2021 was 39%). And in the current plans American and Japanese machines and machines almost do not appear, according to the survey data.

The main beneficiaries of the unavailability of Western equipment were suppliers from China, Turkey, India and other neutral countries abroad. Now their products are planned to buy 77% of Russian enterprises compared to 59% a year ago.

As for domestic analogues, more than half of industrialists have a request for the purchase of such equipment. Moreover, over the year the share of those wishing to buy Russian machinery and equipment for their enterprises increased from 45 to 53%. This level of preference was the highest over nine years of observation. However, in reality, there are no more people who are going to purchase Russian equipment: in 2023, 63% of enterprises intend to invest in it - approximately the same as a year ago.

Interference with import substitution

In the context of massive sanctions, the desire of enterprises to replace imported components, machinery and equipment with Russian analogues, which is logical, continues to face the same set of obstacles, writes Tsukhlo.

The main obstacle to import substitution he calls «banal absence of Russian analogues of any quality» (this is how the variant of the answer in the questionnaire sounds). «Despite all the efforts of the Russian authorities and domestic manufacturers, it is impossible to achieve success in this direction in the context of worsening sanctions and growth in the scale of wear and tear and disposal of previously purchased imported equipment», - he says. According to Tsukhlo’s estimate, almost 80% of Russian industrial enterprises continue to face a complete lack of analogues of the import they need.

The second place in the number of answers to the question about the interference with import substitution is the option «low quality of domestic equipment and raw materials» (46%). This factor was especially often mentioned in the questionnaires of managers at the exit from «covid crisis», when the industry was full of optimism, but could not restore access to imports in the same volumes. Back then, the enterprises appealed to Russian counterparts en masse, but their quality was insufficient. The sanctions have forced the Russian industry to reduce the demand for the quality of domestic equipment and raw materials, but not for long: forced recourse to a wider range of Russian products has once again increased claims to its quality, indicated in the material. 

At the same time, 2023 brought to the top three among the obstacles to import substitution such factor as insufficient volumes of equipment and raw materials already produced in Russia. It used to occupy the fifth or sixth place in the rating of interference, and now a quarter of Russian enterprises complain about it. 

Import growth

In June, another market survey conducted by HSE researchers showed that two thirds of industrial enterprises are highly dependent on imported equipment. Coal production, printing and textiles are the most in short supply. There are activities, especially high-tech ones, in which it is impossible to do without sub-banking equipment, according to the director of the Center for Market Research HSE Georgiy Ostapkovich. Such equipment includes, for example, chips of 10, 15 nanometers and less, components for turbines, nuclear boilers, he specifies.

It is impossible to rebuild supply chains or start manufacturing your equipment quickly. Before the introduction of sanctions, 50% of imports into Russia consisted of machinery and equipment, and now, according to my rough estimate, it is approximately 20% (the publication of foreign trade statistics was suspended in 2022. - RBC), - he argues. -  It is curious that the volume of imports into Russia as a whole is growing: in the absence of statistics, it is impossible to say which goods exactly. But there is a general indicator in the economy: if imports fall, import substitution works».

At the end of July, the Central Bank reported that in the second quarter of 2023, the value of imports of goods increased by 35% in annual terms, exceeding the level of the same period of pre-bank 2021. The decline in imports from the EU was fully offset by an increase in imports from other countries. Parallel import and other government measures to facilitate the importation of goods also supported imports, as noted in the CB’s Balance of Payments comment.

Source: https://www.rbc.ru/economics/01/09/2023/64f0a32d9a794727112cf60f?ysclid=lmk95s1639953610901