"Xiaomi Expands in Russia as Global Companies Leave, Filling Samsung's Void"

Vladimir Putin (left), President of Russia, and Xi Jinping, President of China, pose for a commemorative photo ahead of the summit at the Diaoyutai State Guesthouse in Beijing, China, last February.
[Image source=Yonhap News]

[Asia Economy Reporter Hwang Sumi] Recent foreign media reports have indicated a significant increase in the scale of semiconductor and raw material exports from China to Russia. Some analysts suggest that Chinese companies have taken hold of the Russian market after global companies withdrew following the invasion of Ukraine. In particular, Chinese companies have filled the gaps in sectors such as smartphones and automobiles, where Korean companies previously held high market shares.

On the 15th (local time), The Wall Street Journal (WSJ) reported, based on Chinese customs data, that the value of Chinese semiconductor exports to Russia from January to May this year reached $50 million (approximately 66.2 billion KRW). This figure is more than double compared to the same period last year.

In addition, exports of components such as printed circuit boards and alumina have also increased significantly. Alumina is used to produce metallic aluminum, one of the main materials in military weapon production and aerospace fields. According to WSJ, China's alumina exports to Russia amounted to 153,000 tons in May this year, a sharp increase compared to 227 tons in the same period last year.

WSJ stated that this indicates a considerable number of Chinese companies continue to trade with Russia. It also viewed that China has contributed to filling the gap in basic materials that Russia has found difficult to procure due to international sanctions following the invasion of Ukraine.

In fact, since February, the advancement of Chinese companies in the Russian market has been remarkable. Chinese companies have taken the place of global companies that withdrew after Russia's invasion of Ukraine.

In particular, market shares in sectors such as smartphones and automobiles have increased. Samsung Electronics had overwhelmingly dominated the Russian smartphone market. However, after Apple stopped selling iPhones in Russia following the invasion, Samsung also temporarily suspended shipments to Russia for geopolitical reasons.

The void left by these companies has been filled by China. According to U.S. market research firm Counterpoint Research, the market share of Chinese smartphone brands such as Xiaomi and Realme in Russia increased by 17 percentage points to 61% as of May this year compared to the same period last year. Meanwhile, Samsung, which previously held the top share, dropped from 31% to 18%, and Apple decreased from 11% to 5%.

Chinese companies are also increasing their presence in the Russian automobile market. According to Russian automobile market analysis firm Aftostart Info, as of May, the market share of Chinese cars was 16.9%, up 10 percentage points from 6.9% in the same period last year. This surpassed Japan (12.3%), which ranked third last year, making China the third-largest after Russia (25.2%) and Korea (24.7%). It is analyzed that China gained an advantageous position as popular existing brands such as Hyundai, Kia, and Nissan suspended operations at their production plants in Russia due to Western sanctions.

Moreover, China's entry into the Russian market is expanding into various fields such as the fashion industry. The market share of Chinese companies in Russia is expected to continue increasing for the time being.

Accordingly, some express concerns that the effects of Western sanctions on Russia may be offset. U.S. government officials worry that such behavior by Chinese companies could hinder Western efforts to reduce the Russian military's warfighting capabilities through export controls and other measures. According to WSJ, the U.S. Department of Commerce stated that it is closely monitoring trade between China and Russia.

This content was produced with the assistance of AI translation services.