Russia Seeks Electronics Export Strategy

Eastern and Central Europe have been a focus for electronic companies seeking new market opportunities. (See: Central Europe: Where Opportunities Equal Challenges.) Russia in particular bears watching. Its electronics component market grew 25 percent in 2011 to $2.4 billion, and a study recently released by the Association of Suppliers of Electronic Components (ASPEC), a Russian nonprofit group, forecasts that the market will grow 9.5 percent in 2012.

The Russian market consists of a large number of small and medium customers; the 30 largest customers hold about 30 percent of the market, according to an ASPEC release. Like other markets, the Russian electronics market follows the 80-20 rule -- the 400 largest customers make up 80 percent of the market, and 3,000 smaller customers make up the rest. The largest vertical markets in Russia are industrial and military electronics.

According to the ASPEC report, electronics production in Russia is targeted at meeting domestic demand. However, the nonprofit said an export-oriented strategy has more growth potential and would reduce Russia's dependence on oil, natural gas, and raw materials exports.

This strategy requires substantial simplification of the customs procedures, which currently present a major barrier to exporters of high-tech products. Moreover, the export-oriented strategy shall provide institutional support to the numerous small and medium-sized innovative exporting enterprises. This has some major contradictions with the current policy aimed at consolidating the industry assets in large, but inactive national holdings. The policy is unlikely to undergo significant modifications in the next six years.

The Russian market heavily utilizes distribution services, the report said. Local electronic components distributors serve more than 65 percent of the available market. Russian manufacturers of electronic components hold a marketshare of about 30 percent.