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You can not eat enough shrimps

Do we need food from Asia?

You can not eat enough shrimps

After the presidential decree banning the importation of certain categories of products, diversification of importers is obvious and, moreover, inevitable. We tried to figure out how this can help our Asian neighbors and not only.

China

The volumes of Chinese production, especially in recent years, continue to amaze the whole world. The ability to keep the amount of food on the shelves at the same level due to imports from China is great. To begin with, we note that at the moment Russia is not included in the top ten of the main trade partners of the People's Republic of China in terms of exports, while being in the top ten of the partner countries in terms of the total volume of foreign trade. This means that there are many opportunities for extensive development (along with intensive development, which implies an expansion of the list of names of goods and products imported to Russia) from China, including infrastructure and logistics. Realization of these opportunities can lead to a serious increase in mutual investment, primarily from the Chinese side. In the long term, this could become a platform for even closer cooperation with the PRC, especially against the backdrop of deteriorating relations with the West. One of the catalysts for this process could be the agreement on gas supplies to China signed in May. Another circumstance that makes such a scenario possible is the recent decision of the BRICS countries to establish a Development Bank.

In 2013, exports of food from China amounted to 65,3 billion dollars, almost 3% of total exports. It should be noted that in the total export volume, food deliveries are in the fifth line in terms of revenue (after engineering, textile, chemical industries, as well as furniture exports). Over the past year, growth in this segment amounted to 6,5%, which, against the background of, for example, 10% growth in the engineering industry, leaves decent opportunities for development.

As for the specific types of products that China can supply to Russia, the spectrum is quite large. Starting with all sorts of meat, including pork and poultry, and ending with fish and seafood. This also includes fruits and vegetables, the volume of which, by Chinese standards, is small, but quite sufficient for the Far East.

The obvious advantage of the Chinese alternative is comparative cheapness with a wide variety and an unlimited amount that allows you to quickly close many of the gaps that have appeared on the market. However, the medal has a downside. The quality of the products and its environmental cleanliness raise big questions. About taste the conversation is separate, the products grown on chemicals for their taste qualities can not compete with European and Russian goods.

Indonesia

In this case, the situation is far from being as promising and promising as it is for China. In the structure of Indonesia's exports, food products occupy a very modest place (1,5%), and much more interesting from the investment point of view is the mining industry (in which the Russian business has already invested its capital).

However, the food industry in Indonesia is 20% of all enterprises in the country. Nevertheless, most of the produced products will not be in demand in Russia. Seafood and, to a lesser extent, fruit may be of interest. However, complex logistics as a result will lead to high prices for these purchases, so expanding trade relations with Indonesia in this regard is illogical. The same can be said about the possible transformation of Indonesia, as a large country, into a platform for the re-export of banned goods - this is virtually impossible.

Vietnam

The export of products for Vietnam, as for Indonesia, is also a modest income item - the same 1,5%. Therefore, again, expect some explosion in the supply is not worth it. However, part of the needs of the Russian market can be provided by Vietnamese seafood and fish (relatively cheap by world standards, excluding transportation costs), as well as cashew and Brazil nuts, for which Vietnam ranks first in the world, 24% of world exports .

India

The export potential of the Indian side across the country is small, but due to the total volumes it is still higher than that of the named Indonesia and Vietnam. Of the annual volumes of approximately 2,1 billion dollars, a significant part consists of frozen beef, clams and crustaceans, nuts (Brazilian and cashews) and frozen fish, which are very popular in Russia. However, there are no established relations between countries in this area, and the expansion of supplies seems to be problematic.

Latin America

In addition to these countries, the entire Latin America is ready to replace the forbidden import of Russia, happily responding to the news of retaliatory sanctions and expressing a desire to start food supplies. The greatest interest in this area is caused by dairy products and cheeses - partners from Southeast Asia will not help us in this regard. And if it were not for logistical problems, and the sea shipment takes about 30 days, this cooperation could be quite promising.

Investment or import?

Refusing European and American supplies, Russia primarily relies on its own import substitution and development of the food industry. In accordance with the new Doctrine of Food Security, Russia needs to reduce dependence on foreign supplies and establish production of its own products. In this context, the inability to replace a number of goods looks quite logical, otherwise domestic producers will again face cheap competitors.

If we turn to possible deliveries of products from the APR countries, this thesis can be confirmed in a number of positions. First of all, we note a shortage in the supply of cheese and dairy products. The short shelf life, as well as the specifics of the Asian market, minimize the possibility of importing these products from the APR. In this situation, an ideal climate is created for investment in the food industry and infrastructure by foreign partners. This measure would be more efficient and would allow to create products on the spot, which would solve a number of problems related to the importation of goods and complex logistics.

The second problem that is worth dwelling on is the sharp rise in the cost of products if they are transported from the countries of South and Southeast Asia and Latin America. The price, of course, will hit the consumer’s pocket, which will cause a negative reaction among the population. That is why the government is trying its best to keep prices down. Another important point is logistics. Delivering products from afar is very problematic, and in the case of perishable goods, it is completely impossible.

In other words, to assert that the export of food from Asia will expand dramatically, it is impossible. The countries of the Asia-Pacific Region, primarily China and India - Russia's “colleagues” on BRICS, have really impressive resources. Another question is how to stimulate their use in order to expand food imports to Russia. The diversity and competitive environment in the market would benefit all economic actors, but there is no guarantee that China, India and other countries will want to expand supplies in the quantities that are desirable.

At the moment, the reorientation of trade flows is already underway, and the APR is not particularly involved in this process. Apparently, most of the products that are imported from the EU and the US will be replaced by food from the Middle East and Latin America. Nevertheless, the reserves of Asia (especially in the supply of seafood and nuts) should not be discounted. From the point of view of logistics, it is much easier to bring fish to Siberia from China than from Chile, and sooner or later the process of expanding food ties with Asia will be launched. As already mentioned, the expansion of trade will entail infrastructure investments, the improvement of relations between countries, and will also create a certain number of jobs. Nevertheless, all of these dividends will go to Asian countries, and not to Russia.
Obviously, Russia will feel quite comfortable at first, getting Asian products on the same scale as before the introduction of sanctions, but over time some reorientation towards the import of products from the Asia-Pacific region will still happen, first in the eastern regions of the country. This process seems to be absolutely normal and even positive for the economy. Closer cooperation with partners in BRICS will help improve the work of the organization and the relations of the Russian Federation with each of the countries individually. As for China, with the expansion of trade relations, against the backdrop of the largest gas contract, Russia will only gain by gaining the loyalty of its neighbor. Needless to say, how important this is in an era of serious cooling off relations with the West. It seems that Chinese shrimp will still play their small but tasty role in global geopolitics.

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