Apple Sells Over US$1 Billion Of New iPhones In Russia During H1 2023
Russia’s consumer market is also rapidly expanding with strong domestic growth
Russian imports of Apple iPhones jumped by 15% in the first half of 2023 year-on-year, amounting to 1.1 million devices, according to data by the analytical center of Russia’s GS Group who specialise in the tech area.
According to the report, iphone sales into Russia in H1 2023 were worth ₽105.7 billion (over US$1 billion). In monetary terms, Apple devices are still leading on the Russian market (34%), followed by China’s Xiaomi (19%) and South Korea’s Samsung (16%). However, in unit terms, the share of Apple smartphones dropped to 9% due to declining demand, compared with Xiaomi’s 27.9% market share and Samsung’s 12.7% share.
The GS Group statistics also showed that the number of iPhones imported into Russia by parallel imports in the first six months of this year was one million units lower than in the same period of 2021 – before the sanctions.
Apple stopped selling iPhones and other products in Russia in March, joining the exodus of Western brands amid Ukraine-related sanctions. In April this year, the company stopped providing warranty service for Macs and iPads in the country.
But that hasn’t stopped Apple from indirectly selling to Russian market. Russian retailers have been buying iphones and related Apple products from other countries via parallel imports, a practice by which a non-counterfeit product is imported without the permission of the intellectual property owner via alternative supply channels. Russia legalized the mechanism to provide the market with goods that Western companies stopped delivering or producing in Russia because of sanctions. The impact on retail prices of absorbing this additional cost element to the supply chain and allowing a middle-man profit is about 10% – suggesting that just from handling Apple products into Russia, third party vendors in this one company sector alone have a business worth about US$200 million annually (Apples annual value of iphone sales into Russia are about US$2 billion. The US$1 billion quoted above was for the first six months of 2023).
Apple will be aware of this as a significant part of their revenues is still the Russian market – it’s just that they sell them to a third party country, yet still receive the sales revenues.
Internally, Apple will have factored in indirect Russian sales to their business plans as such huge volumes require the products to continue to be made. In such a manner, US companies are being seen as sanctions compliant whereas they still actually sell to the Russian market. European Union manufacturers have not been so flexible in their approach to this continuing, ‘one-step removed’ trade corridor.
The Russian domestic consumer market has been expanding. According to the Russian advertising industry association AKAR, Russia’s advertising market spend grew 27% year-on-year to over ₽315 billion (US$3.2 billion) in the first half of 2023, while the market also grew by 19% compared to the first half of 2021. An increasing advertising spend is a sign of a rebounding consumer market.
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During these uncertain times, we must stress that our firm does not approve of the Ukraine conflict. We do not entertain business with sanctioned Russian companies or individuals. However, we are well aware of the new emerging supply chains, can advise on strategic analysis and new logistics corridors, and may assist in non-sanctioned areas. We can help, for example, Russian companies develop operations throughout Asia, including banking advisory services, and trade compliance issues, and have done since 1992.
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