Import - when you cannot replace, but you can import
Import substitution in Russia has been going on for the eighth year. And the new wave of anti-Russian sanctions in 2022 only emphasized that the state urgently needs technical sovereignty, at least in the basic list of industries.
Russian cucumber
If you look at the development of the Russian economy, then it has several turning points. One of them is 2014, when Crimea returned to its native harbor. In the West, this was perceived as an act of aggression with all the ensuing consequences in the form of a package of anti-Russian sanctions. The Russian Federation announced its countermeasures, among which the most tangible was the ban on the import of a number of food products into the country.
Russia has launched a large-scale program of import substitution in the agricultural sector. Depending on foreign supplies for bread and meat is fraught - there is only one way to fight food riots in an amicable way. Especially for a long history There have been quite a few such riots in Russia, and the authorities apparently already have this written down in their subcortex.
Exhibiting prohibitive barriers for the import of products, various financial support for farmers and agricultural holdings have done their job. The country began to massively plow fallow lands that had been vegetating since the 90s.
As a result, Russia not only moved away from dependence on foreign supplies for grain crops, but also became one of the world's leaders in grain exports.
Another achievement is the maximum reduction in imports for such "folk" types of meat as chicken and pork. "Bush's legs" in just a few years completely lost their positions to domestic chickens. Pork has also become domestic everywhere - agroholdings have played a key role here, putting pig breeding on the conveyor.
Another recent achievement is a significant increase in domestic cucumber and tomato production. The greenhouse economy of the country has fundamentally expanded. For cucumbers, we became import-independent; for tomatoes, imports fell by about 30%.
However, no such revolution took place in the industry. The economic model, by and large, has not changed: "We are resources for you, you are equipment and technologies for us." In many areas, foreign products are both more perfect and cheaper. Few wanted to strain without any special prospects to take a place in the market. China has also added fuel to the fire, which has become a giant producer of everything that is possible.
Of course, there was the experience of import substitution in the automotive industry - some automakers really began to increase the localization of their production in Russia. But these achievements were put to rest, after foreign auto companies saluted and began to hastily leave Russia this year.
Counted - wept
After February 24, the West hit, as they say, in the stomach: oh, they decided to show independence and independence, you don’t want NATO under Belgorod and Voronezh, then get a complete technological embargo! Business, of course, did not want to leave Russia. The loss of the market always translates into multi-million dollar losses for companies.
But transatlantic "solidarity" demanded sacrifices. According to experts, about half of Western companies have left the Russian market in recent months. Some have completely curtailed the production and sales of their products, while others have transferred (sold) enterprises into the hands of Russian business.
On the one hand, significant commodity niches have been vacated in Russia, but on the other hand, a huge dependence on foreign products has emerged in many sectors of the economy. On average, by industry, the Russian Federation provides itself with industrial products by about 30%, everything else is imported. Here you can only shed a tear - a huge country turned out to be in real bondage from foreign supplies.
Thus, more than 20% of the country's furniture market until March 2022 was occupied by the IKEA group of companies. Another striking example is that Troika cards of the Moscow metro were completely equipped with chips from the Dutch company NXP, which, of course, it stopped supplying. In the metropolitan metro they assure that there is still a sufficient supply of cards, but the search and transition to new chips is just around the corner.
The most difficult situation with “import withdrawal” has developed in a number of industries: the IT industry (especially the production of microelectronic components), pharmaceuticals, automotive, machine tools, chemical and light industries, and the timber industry.
Separately, it is necessary to highlight the machine tool industry. Russia has practically lost the "production of means of production", that is, machine tools. But it is the basis of any industry. Moreover, it is simply impossible to restore the machine tool industry overnight; it will take years to restore technological sovereignty in this industry.
If you take smaller product lines, then almost everywhere you come across “holes”. There is no production of membrane fabrics in the country, vitamin C, citric acid, preservatives, pectin and flavors are not produced, sports equipment and equipment for gyms and playgrounds are practically not produced.
The filling of Russian shipbuilding is 70% of imported equipment. Engines, steering machines, navigation and communications, deck and crane equipment are 100% foreign. And there are many more such examples.
Even our main achievement, agriculture, is under real threat. It is necessary not only to sow, but also to harvest, raise pigs and bulls. And everywhere you need a variety of machinery and equipment. But even here we found ourselves in an import trap.
For example, the Chamber of Commerce and Industry of the Russian Federation has recently begun to receive complaints about the shortage of harvesting equipment. Agricultural enterprises and farmers simply moan that there are not enough tractors and combines. Domestic agricultural machine builders would like to satisfy their needs, but they cannot. Many components and components were only imported.
If you look at the sectoral import substitution plans of the Ministry of Industry and Trade of the Russian Federation, the situation becomes clearer. So, until recently, Russia did not produce grain harvesters of 9-10 performance classes, forage harvesters of several classes, gearboxes of combines, hydraulic motors, hydraulic pumps, engines of several classes, electronic control systems, bearings, etc.
State program for import
After February 24, the state woke up and seriously attended to import withdrawal and substitution. Meetings, meetings, planning meetings, operational meetings, round tables and other brain attacks began. Several general lines lined up along the way.
First, the we urgently switch to friendly countries and build interaction with new partners.
Second, the we are opening “new” countries – primarily in Africa and Latin America.
Third, we are forming a system of parallel imports that will make it possible to replace the official supplies of Western companies that have disappeared from the Russian market.
Fourth, we are developing the actual import substitution at domestic facilities.
Friendly countries - of course, it's good that they exist. In such difficult times, it is always useful to rely on them. As noted in the Chamber of Commerce and Industry of the Russian Federation, the reorientation to the East plays a significant role for the Russian economy in terms of compensating for losses. This is not only about imports - only in April - July, China increased the volume of purchases (that is, exports from the Russian Federation) by 2,2 times in physical terms, Turkey - by 2,4 times, India - by three.
Imports from friendly countries are also on the rise. Moreover, some countries are acting assertively, trying to actively occupy the vacated niches in Russia.
But still, the structure of imports to the Russian Federation is such that almost all high-tech equipment, components, chemical and pharmaceutical raw materials were supplied from countries that became unfriendly after February 24. Consumer goods are mainly imported from China, so even a 45% summer increase in supplies in physical terms could not compensate for the fall in European imports, the Russian Chamber of Commerce and Industry noted.
Therefore, companies that provide services for the supply of technological equipment have to seriously think through multi-way schemes and select “pseudo-suppliers”, which is not an easy task. In other words, the import of sophisticated equipment and assemblies from the West will not dry up, it will seep into Russia through various detours and schemes. And this is an objective reality.
If we return to import substitution, then the authorities have developed the current package of measures to support manufacturers not from scratch. Back in 2014, the state program “Development of Industry and Increasing its Competitiveness” was approved, which was updated in June 2022.
Among the support measures are the establishment of the priority of Russian goods in public procurement, the allocation of subsidies for the production of prototypes and pilot batches of products, the improvement of customs regulation and administration (primarily within the EAEU), VAT refunds for certain types of activities, the launch of industrial mortgages and others. In principle, each industry has its own set of support measures.
But if we evaluate the pace of import substitution, then they cannot be called nimble. Looking again at the plans of the Ministry of Industry and Trade of the Russian Federation, it turns out that on average by industry, the increase in the share of domestic products by 2024 fluctuates only around 10%. If this is the case, then import substitution will stretch for a considerable period.
At the same time, the plans of the state are one thing, and the views on the problem from the side of business are another. Large companies obviously have more opportunities to replace imports at their discretion, in contrast to small and medium-sized businesses. SMEs, of course, are more flexible and respond faster to changes in the market, but they also have their own concerns.
According to Elena Dybova, Vice-President of the Chamber of Commerce and Industry of the Russian Federation, business is afraid that they will invest in the creation of their own production facilities, and then the products will not be in demand due to the return of foreign companies to the market, that preferences from the state will quickly end, and entrepreneurs will be left alone with with their financial problems. Finally, the factor of internal competition worries – it is still not clear which companies and which import substitution projects are already operating on the market. Information about this is sorely lacking.
But let's still hope for the best. After all, there are specific examples when "the detachment did not notice the loss of a fighter." After all, how many prayed at McDonald's, but then Tasty - and that's it - and it turned out that you can safely maintain, or even improve, the standards for the production of mass fast food. Consumer reviews are quite positive. After all, it's delicious! And point.
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