Withdrawing from Russia, Western brands create great opportunities for Chinese competitors

Data from the manufacturing industry shows that smartphone giant Xiaomi and Chinese carmaker Geely are among the companies that have seen sales spikes in Russia in recent months. .

According to a report by the research firm Counterpoint Research, although the iPhone and Samsung Galaxy used to be the best-selling products, now the phones from Xiaomi and Realme are topping the sales charts in the market. Russian school.

As of December 2021, products from Chinese manufacturers account for about 40% of the Russian smartphone market. However, after only 1 year, they have dominated almost completely, up to 95% of the market.

Meanwhile, Samsung and Apple – which usually hold the number one and two positions respectively – saw the two manufacturers’ combined market share drop from 53% to just 3%.

The same is true for the auto market. Over the past year, Chinese carmakers such as Chery and Great Wall Motor have entered the top 10 best-selling car brands in Russia, while Germany’s BMW and Mercedes have disappeared from the top 10. According to Autostat, Russians bought a record number of Chinese cars in 2022. Sales of Chinese cars in the country increased by 7% in 2022, to 121,800 vehicles.

Lada, the domestic brand that was once Russia’s most popular carmaker before the economic war with the West, also sees its market share increase from about 22% to 28% by 2022.

Like Renault, global automakers such as Hyundai and Kia pulled out of Russia following the Ukraine conflict. “ It leaves a huge hole in the market. And Chinese manufacturers are happy to fill that void ,” said Tu Le, founder of Beijing-based consulting firm Sino Auto Insights.

Jan Stryjak, Vice President of Counterpoint Research, said smartphone makers Xiaomi, Realme and Honor were quick to seize the opportunity. They increased their export shipments to Russia by 39%, 190% and 24% respectively in the third quarter of 2022 compared to the previous quarter.

Xiaomi was the main beneficiary, doubling its market share throughout the year. The Beijing-based company is now Russia’s top smartphone seller, largely thanks to its popular Redmi lineup, a range of affordable devices that go with high camera quality.

In response to the wave of Western companies leaving the corporate market, Russia has come up with alternative solutions to meet people’s needs.

Last year, the government adopted a “parallel import” policy, allowing goods to be brought in from neighboring countries, such as Kazakhstan.

Counterpoint Research analyst Harshit Rastogi wrote in a blog post that the solution has helped major Russian retailers continue to sell Samsung and Apple phones after the brands announced their withdrawal from the market. However, this solution still comes with risks. Experts Rastogi noted that users who have purchased these phones may have problems downloading mobile applications that have been blocked in Russia, while finding service from providers Officially “not guaranteed”.

Although Chinese brands are reaping the profits from the Western embargo, the Russian market is said to be shrinking. Last year, Russian smartphone sales fell 33% to 21 million. Meanwhile, the Russian auto market is even worse, falling by almost 60% in 2022 from the previous year.

According to analysts, the big question now is whether the market will change forever.

Stryjak said that if the war in Ukraine ends, Apple and Samsung will likely resume operations in the country and quickly regain sales. Or like the Renault car brand, which is still open to the possibility of returning to the Russian market.

Even if Western brands return, Chinese manufacturers can still hold their ground, especially during the time it takes for international brands to rebuild supply chains.