The first wave of panic occurred in February 2023, when people bought several televisions and tape recorders, not because they expected a shortage of these goods, but simply to invest their money somewhere.
Recently, many well-known European and Asian companies specializing in the production of household appliances, including LG Electronics, have left the Russian market or suspended deliveries. Televisions, refrigerators, washing machines and other products from this Korean giant are very popular among our consumers and are in high demand.
The end of supplies of foreign household appliances to Russia – should we expect a shortage?
LG's departure sparked unprecedented consumer excitement. The company operates a factory in Russia (in the Ruzsky district of Moscow Region), employing approximately 1,500 people. The future of the factory remains unclear.
Until February, prices for household appliances increased by an average of 8% annually. This year, prices for household appliances have risen by approximately 33%. In March of this year, sales in retail chains in Belarus and Russia increased by 50-70% year-on-year.
The situation with household appliances in Russia
Russians are buying up everything available in stores, trying to invest their money. Some people buy appliances in advance, even before they plan to start renovations.
The full impact of the crisis is still unclear. One thing is clear: the exchange rate has soared, price dynamics are showing alarming upward trends, and there are delivery issues and component shortages. Given all this, manufacturers are raising prices on consumer goods.
Due to the suspension of seaport operations (both in Russia and Europe), maritime shipping is suspended. Most maritime operators (including the Danish company Maersk) have been subject to sanctions from their authorities, so maritime shipping from China is closed to Russians. As for Turkey, the only shipping line that delivers cargo to the port of Novorossiysk continues to operate. However, this represents a very small percentage of the total volume of household appliances shipped.
The only remaining option is rail transport. It must be said that even here, things aren't so simple, given the tight schedule. Rail freight prices from China have immediately risen.
Road transport costs have risen due to massive congestion at border crossings, with queues stretching for miles. Fuel consumption and travel time are driving up prices. For example, road transport from Turkey immediately halved.
As delivery deadlines are delayed, prices are rising. Another significant issue is the supply of components, which will inevitably impact Russian customers. Therefore, we will experience a crisis in equipment supply for the foreseeable future.
Today, LG is leaving the Russian market, Samsung is pursuing an unclear policy (will they or won't they), and some Europeans are simply laying low, so it's not surprising that there is a shortage of goods.
Given the sanctions imposed on us, consumer spending will be low in the near future. Therefore, we'll need to focus on simpler goods. Companies that can offer adequate pricing and product availability will be in the lead.
How to replace LG appliances
Domestic manufacturers struggle to compete with imported products, but they do have their advantages: no duties, prompt delivery of components (though many still use imported components). All of this ultimately impacts the cost of goods.
In today's climate, when purchasing power is weakening, the availability of domestic goods in stores will be very welcome. Even Bosch can be replaced with a Russian brand under these new circumstances.
Among domestic producers, it is worth highlighting:
- "Biryusa". In addition to washing machines, they also assemble refrigerators and excellent freezers for homes. Similar products imported from China and Turkey are significantly more expensive.
- Elikor - A domestic company in Kaluga that manufactures range hoods. Their products have proven themselves in the market.
- "Darina" – specializes in the production of ovens and hobs designed for cottages and houses in the budget segment; they are especially popular in the regions.
Conclusion
One can talk endlessly about long-term projects in the area of import substitution for household appliances and electronics. But it's important to understand that it takes time to establish production at the levels established by global leaders. Therefore, we conclude that if electronics supplies from Southeast Asia are not resumed, Russians will face shortages and subsequent price increases.
