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Export with risk of retry

Georgy Soldatov on the peculiarities of supply of high-tech products to China

Export with risk of retry
Photo: shutterstock

George Soldatov

General Director of LLC "Aditim"
Georgiy Soldatov, general director of OOO Aditim, a Russian producer of auxiliary parts and engineering products, shares with the assessment of the specifics of the supply of non-primary products to the PRC.

- The main thing on the part of Russia, what prevents it today from supplying China with processing products, and even more so any intellectual or high-tech - the lack of necessary investment. Needed, for example, for the construction of production facilities. The possibilities of financing from the side of banks are also absent, because this is what the prohibitively high interest rates mean - the same 10-12%. Subsidizing rates that make them feasible, reducing to 2-3%, is not provided. Such subsidization would be only beneficial for the state - launching the production of processed products, intellectual property or high technology that would be in demand in China, will earn many times more. This is beyond doubt: there will be an additional tax base.

At the same time, the supply of products of medium and high added value is associated not only with difficulties, but also with a certain danger. Even if the product has patents, it is highly likely that in China it will simply be repeated - they will make a copy of it themselves. A well-known but underestimated fact makes such a prospect possible: China has its own, somewhat specific attitude to copyright, and this country is more than inherent in the ability to very well repeat and reveal other people's secrets without giving out its own. At the same time, it is rather difficult to deliver to China because its own products as a whole are of sufficient high quality, and as for intellectual products and hi-tech, they are definitely very high. 

It is noteworthy that China today is completely calm about its future in this area. Assessing the prospects for the development of the industrial complex of Russia, the PRC are confident that they will continue to stay ahead. And if advanced production is created somewhere in Russia, they will create their own, but at a higher level. This phenomenon - a constant increase in the level of their own production along with an increase in its scale - is really present in China. It is practically unique: in Europe, for example, it does not exist.

However, along with all sorts of obstacles on the way of non-resource supplies from Russia to China, there are prerequisites for them. In particular, China has no stereotypes regarding the quality of Russian products and the presence of a pronounced demand for a number of Russian value-added goods - for example, ice cream. On the part of Russia, there are also strong preconditions for non-resource supplies to China - the availability of products at a price that significantly outperforms the Chinese. Focusing on the last factor, intending to take the price, we plan to go out with our products to China.
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