Big Chinese Tech Brands Look To Grow Share As Western Brands Exit Russia
Big Chinese brands including Lenovo, Xiaomi, Hisense Oppo, Vivo and Realme along with Huawei, are set to benefit from the exit of Western brands from Russian stores, some are actually moving to crank up supply as the war between Russia and Ukraine intensifies.
Microsoft, Apple, Hewlett Packard, and Dell have already announced that they are pulling supply to Russia following the invasion of Ukraine but not several key Chinese brands.
Apple and Samsung’s decision to suspend sales in Russia potentially puts its close to 30% share of the smartphone market up for grabs.
Consumers are now being urged to boycott the Chinese Companies in markets such as Europe, the UK, Australia, Canada, and the USA.
Brands such as Hisense who make TV’s and appliances, Lenovo and Oppo in the smartphone market, have stayed silent and show no signs of joining the exit.
In the appliance and CE market Chinese brands such as AEG, Fisher & Paykel are now looking to grow market share claim observers, with some trans shipping goods into Russia to take advantage of the war and the shortage of Western goods.
Many of the Chinese brands have built strong ties in Russia over recent decades, capturing more than 40% of the market for some tech products.
According to Gartner and IDC data Russia is a small tech market by global standards, accounting for just 2% of the global smartphone and PC shipments market.
China’s Xiaomi is Russia’s No. 2 smartphone brand, sandwiched between Samsung and third-place Apple, according to market tracker Counterpoint Research.
Lenovo Group Ltd. is the second-largest PC seller in Russia, behind HP who have already pulled supply to the Country.
Huawei is Russia’s top telecom-equipment vendor and competes with Ericsson for 5G contracts.
Australian Defence Minister, Peter Dutton has described reports that Huawei is helping Russia after Vladimir Putin’s invasion of Ukraine as ‘deeply concerning’.
Reports in China claim that Huawei is helping Putin’s efforts to stabilise Russia’s internet network after it came under attack from hacker groups across the globe.
The U.S. and its allies imposed an array of financial sanctions and export controls in Russia and its ally Belarus in response to Russia’s invasion of Ukraine. They include a ban on exports to Russia’s defence sector and complex restrictions on the export to Russia of foreign products made using U.S. equipment, software, or blueprints.
The rules contain carve-outs for some consumer electronics such as PCs and mobile phones, experts say, potentially opening the door for some of these Chinese sellers to make gains if they stick around, but doing so won’t be easy, analysts said.
“It’s a huge opening,” said Tarun Pathak, an analyst at Counterpoint, but he cautioned that the companies face more hurdles to ramping up sales in Russia. “We see things getting a bit tough.”
Bloomberg claims that obstacles facing Chinese companies include logistical snarls in Russia, complications with payments from financial sanctions, and the risk of running afoul of the shifting and highly complex U.S. and allied export controls, even inadvertently.
“Chinese companies, like any other, don’t want to face unpaid invoices, major logistical challenges or be exposed even indirectly to sanctions or sanctioned entities or individuals, and that list is growing all the time,” said Duncan Clark, chairman of the investment-advisory firm BDA China.
Late last week the Chinese state-run newspaper Global Times published an article describing an opportunity for Chinese smartphone and automobile companies in Russia following the departure of their U.S. rivals.
Chinese companies already control 41% of the Russian smartphone market last year, according to Counterpoint Research.
They include Xiaomi and other fast-growing brands, including Oppo and Realme Chongqing Mobile Telecommunications.
Lenovo, the world’s largest PC company, was a target of outrage last week on Chinese social media following an unsourced Belarusian media report that it was joining Western tech companies in halting sales to Russia. Lenovo, which hasn’t commented on the report, didn’t respond to requests for comment.
HP, which controlled 21% of the Russian market last year, according to IDC, has said its decision to halt sales in Russia will result in a hit to second-quarter earnings.
Dell was Russia’s No. 6 seller at just under 5%.