Russia still earns a lot of money with oil and gas, but can no longer buy anything from it, says Economics Minister Habeck. An expert disagrees: Russian traders are still stocking their shelves with illegal imports through dark channels. However, the goods are not without risk.
At the beginning of March, Apple ended all business relations with Russia. The iPhone manufacturer announced that the sale of all devices would be suspended. New deliveries had already been stopped a week earlier. Four months later, Russians can still buy iPhones and Macbooks again: At the end of June, Russian media reported that the country’s two major electronics retailers, Svyaznoy and Ozon, are again offering Western goods that can be ordered online. We are talking about the latest iPhones, Samsung smartphones and the Sony Playstation. The game consoles from Microsoft and Nintendo are also available again.
This development does not surprise Alexander Libman. The political scientist has been researching Russia at the Free University of Berlin for many years. Since the beginning of the war, he has focused primarily on Western sanctions – which are already being circumvented with the help of parallel imports. He has already seen estimates that Russian imports are already rising again after the first slump, says Libman in the ntv podcast “Learned something again”. But that’s still speculative.
Ever since Russia began its attack on Ukraine, there has been speculation as to whether and how severely the European, American and other western sanctions will hit the Russian state and the Russian economy. Economics Minister Robert Habeck has a clear opinion on this: at the beginning of June he said in the Bundestag that, despite the sanctions, Russia was making an insane amount of money from oil and gas supplies, but that it could no longer buy anything from it.
The situation is not that simple, says sanctions expert Libman. He names three possible ways that Russia could get important goods, even if manufacturers from the US or Europe no longer supply them.
The first option would be alternative products from China, which are usually of poorer quality. The People’s Republic is Russia’s closest partner and does not support the sanctions. Nevertheless, Chinese companies are reluctant to export because they fear secondary sanctions from the USA and Europe, especially in the technology sector. As recently as June, the US government fined five other Chinese companies that are said to have worked with Russian ones.
The second option would be deliveries via third countries such as Kazakhstan, Armenia, Serbia or Turkey. There, new supply chains could be set up via subsidiaries of Russian companies or even completely new production facilities specifically for the Russian market. Just a week ago, the Russian agency RIA reported that the Chinese smartphone manufacturer Honor was looking for partners in Armenia and Georgia in order to be able to sell its devices in Russia without violating Western sanctions.
However, the prerequisite for this is that the companies and governments of the countries mentioned play their part, which is not always guaranteed for various reasons: Turkey is a NATO country. Serbia may be Russia-friendly, but also an EU accession candidate. Kazakhstan, although a very close ally, is worried about its own territory after the Russian attack on Ukraine. And before you invest millions or billions in new factories, you also have to clarify which goods are really worth the investment for. However, this investigation by the Russian Ministry of Industry and Trade has only just begun.
The third and quickest channel to get important goods is therefore parallel imports – a technical and legal term for illegal imports, explains Alexander Libman. “You just import something without the permission of the brand owner.”
In the case of iPhones, the process is usually as follows: Certified retailers contact Apple and order 20,000 iPhones, which are then delivered and ready for sale. That’s how it has been in Russia so far. “But now some company somewhere in the world is buying 20,000 iPhones. Not necessarily directly from Apple and not with Apple’s permission,” Libman describes the procedure. “You just buy and sell goods without permission.”
The Russian government created the legal requirements for this two months ago. At the beginning of May, the Ministry of Industry and Trade published a list of products from around 100 categories of goods for which the manufacturer’s approval is no longer required. “This document eliminates civil liability when products are imported by importers bypassing the official distribution channels,” the ministry said at the time. Parallel imports, which are intended to protect manufacturers and brand owners, have thus been legalised.
The concept is by no means new. Other nations such as North Korea or Iran have been using parallel imports to avoid tough sanctions or import bans for many years and secure access to important components or popular consumer goods. In the center of Tehran, people can still go to a supposed Apple store and buy a more or less new iPhone. Other manufacturers such as Samsung, LG or Sony also seem to offer their goods in the Iranian capital. In fact, however, the shops are run by ordinary citizens who secure and sell goods through dark channels. By legalizing parallel imports, they don’t have to fear any legal consequences.
But the parallel imports have their price, in the truest sense of the word. In their announcement that smartphones and game consoles can be ordered again, both Svyaznoy and Ozon point out that the devices will be 10 to 20 percent more expensive than before the “hostilities with Ukraine,” as they describe the Russian attack on the neighbor . Other dealers even consider price increases of 35 percent to 50 percent possible – depending on how expensive the devices were to buy and how complicated the delivery to Russia was.
Russian consumers not only have to dig deeper into their pockets for a new iPhone, they also have to take more risks: Apple, Samsung and other manufacturers no longer guarantee the devices after they have been expropriated. The Russian dealers are responsible for repairing or taking back the illegally imported smartphones and computers. In practice, however, this only works if they also smuggle spare parts and the right tools into the country. If it is an original device at all: The Russian media are already discussing how to prevent the import of counterfeits.
Russian traders and economists only agree on one point: parallel imports are an emergency solution to deal with acute bottlenecks. They will not be able to meet the full demand.
