Russia's Foreign Trade Strategies and International Competitiveness Trends and Opportunities

08/Aug/2024 | Admin

On March 31, 2023, the Ministry of Foreign Affairs of the Russian Federation announced a new Russian concept approved by President Mr. Putin. In the concept, the Ministry pointed out the multipower world order. The aim of the concept is broadly related to protecting the Russian nation, building human capital, and improving the quality of life and well-being of citizens. In addition to these aims, the concept considers the establishment of an equitable and sustainable world order.

In the new concept, International economic cooperation and support of international development are listed in 8 articles. Encouraging the participation of developing countries in global economic management is the aim of Russia. According to the concept, Russia will cooperate with EAEU, CIS, SCO, and BRICS organizations as regional and interregional thus Eurasian policy will be shaped by such kind of cooperation.

In the Asia region, Russia has a deep historical background with the Eurasian Economic Union states because of the Soviet Union's time. This organization is of vital importance in joining the markets of Kazakhstan, Kyrgyzstan, and Uzbekistan. On the other, Russia has a bridge role in achieving markets of Kuba, Moldova, and Belarus for Turkic States. With the Participation of Iran and dialogue partner Saudi Arabia, the Shanghai Cooperation Organization enhances its regional power day by day. Asian regional cooperation is not limited to regional. On the other hand, Under the Leadership of Brazil, Russia, India, China, and South Africa, developed interregional and international cooperation between Asia, Africa, and South America. In this context, these countries established new development banks to finance new projects among BRICS states.

Russia builds up Asian relationships to prevent Western economic sanctions and threats. Even though Russia wants to evolve its policy, the world trade system is governed by Western rules. Therefore, nowadays Russia is in a trade crisis because of Money transfers. For instance, according to the trade map data, Türkiye is a significant trade partner for Russia but looking at the data (2024 Jan. and Feb.) of the Turkish Exporters Assembly (TİM), there was an increase in only 3 of 25 sectors in two-month exports to Russia, in the same period, the contraction in 7 sectors exceeded 50 percent. The Money transfer problems cause logistics as well because importers or exporters cannot trade therefore it harms shipowners.

The main question is why Russia has some trade troubles even with non-Western countries. When examining the data from the Russian Federation of Trade Map some clues emerge. There are three tables with the first one representing “Export and import of goods of the Russian Federation by groups of countries”. Western and Asian importers are listed in the other two tables. The list of Western and Asian importers was obtained using "Mirror Data" retrieved from Trade Map, that is, the data shared by the relevant countries and the vertical break management.

(You can achieve these Excel data via this link https://docs.google.com/spreadsheets/d/1MKy03BKeTvISiGx99u1d-WEITDQarWsx/edit?usp=sharing&ouid=100132981460837710052&rtpof=true&sd=true )

When examining the data in 2022, while Russia had about 310 million dollars in export potential in Asian Aggregation, on the other hand, it had about 250 million dollars in Western Aggregation. Also, according to the Russian Statistical Institution, Asian and African growth rates are higher than European and American rates.

Asian Importers:

(You can achieve these Excel data via this link https://docs.google.com/spreadsheets/d/1CRtJTDltE6pJYb2ksHFcvQfcxiDe8hlE/edit?usp=sharing&ouid=100132981460837710052&rtpof=true&sd=true )

When considering the Yearly Major Market in 2022, China, Türkiye, India, and Kazakhstan have important potential for Russian exporters. On the other hand, the same year Growth Market points out that the United Arab Emirates, Malaysia, Israel, and Saudi Arabia changed their market position in 2022 and Russian exporters are trying to achieve these markets. In the 2022 Quarter Export Major markets still seem the same with Türkiye, India, And China except for Japan. In addition, Mongolia, Georgia, and Indonesia changed their position in the Growth Market. According to the monthly data in 2023, China, Türkiye, and India are still the same. Malaysia, Indonesia, and Mongolia keep to save their position however in the growth market, Singapore, Türkiye, and Korea lost their position because of money transfers, sanctions, or other issues such as new techniques (for example, despite the sanctions, Korea still purchases fossil fuels, but wants to reduce importing fossil fuels and turn to renewable energy sources instead).

Western Importers:

(You can achieve these Excel data via this link https://docs.google.com/spreadsheets/d/1pmmXw-fNy3LpmA-XimmcvpPkGnEc_xFl/edit?usp=sharing&ouid=100132981460837710052&rtpof=true&sd=true)

In the West, Major markets were Italy, Germany, Netherlands, Poland, France, and the United States of America in 2022, and also in the growth market, Hungary, Greece, and Belgium are increasingly demonstrated. When examining the last month's data of 2023, Italy has lost its importance because of sanctions. On the other hand, Belgium, Bulgaria, Slovakia, Finland, and Lithuania increased their imports from Russia. Even though there are some political issues, some Western countries try to trade with Russia, and also new countries such as Belgium, Slovakia, and Lithuania are significant importers.

When the water is cloudy, no one wants to drink that water, but when the water becomes clear, everyone will flock to that water. The future will bring new opportunities to Russia. Therefore, all companies in Russia should know their competitors in the world for the new markets to be created and develop their production locations in the east. For this purpose, the most suitable locations, both logistically and geographically, should be researched and new marketplaces and competitors should be discovered in the light of the trade data given in the world.

The resulting structures should continue to trade legally by developing various methods according to the situation of the target country or through the countries they are related to. High Value-Added Products should be identified young entrepreneurs should be given both logistical and market research support and investment should be made for new production facilities. Not only citizens of the Russian Federation but also young people from friendly and well-intentioned countries should benefit from these investments. Therefore, it is crucial to conduct research according to the competitors and potentials of countries such as China, India, Turkey, Indonesia, Malaysia, Singapore, Belgium, Slovakia, and Lithuania in import and export with Russia. This will contribute young entrepreneurs to leading in the production and logistics of these products, managing them through public-private sector cooperation. This study in Russia will greatly assist logisticians in identifying new routes in advance and young entrepreneurs in determining the right product for production and the right market.