Last March, as a slew of international brands, from H&M to Apple to Ikea, pulled out of Russia after its invasion of Ukraine, 24-year-old Chinese trader Alfie Chai sensed a business opportunity.
Two months later, Chai began selling made-in-China home appliances, kitchenware, and car parts on Ozon, one of Russia’s most popular e-commerce sites, dubbed Russia’s Amazon. By the end of 2022, Chai was receiving 30 to 40 orders every day, despite the fact that deliveries often took more than 20 days to arrive.
Customers would usually not want to wait a month to buy a product, Chai told Rest of World on a call from his office in the northwestern city of Xi’an, in Shaanxi province. “But because demand is high, customers are willing to wait to get the products.”
Since Russia’s invasion of Ukraine, Ozon has been trying to welcome more Chinese sellers like Chai onto the platform to profit from a supply gap of consumer goods in Russia. An exodus of global retailers following Western sanctions against Russia created a vacuum for both local and China-based entrepreneurs to fill by building new supply chains and introducing their own products. Amazon has stopped sending products to Russia. The Chinese government, on the other hand, has denounced Western sanctions as illegal and pledged to maintain trade relations with Russia.
Ozon said that more than 90% of the products listed on its cross-border section, Ozon Global, came from China-based accounts. Their sales had quadrupled in the first three quarters of 2022, in contrast to the same period a year ago. According to the company, in January, electronics, appliances, and clothing were the most sought-after Chinese goods. Popular brands include smartphone makers Xiaomi and Huawei and the robot vacuum cleaner maker Neatsvor.
“Many Western brands have left the Russian market, and currently there are many free niches,” Kirill Kotlyarov, Ozon Global’s business-to-consumer marketing team lead, told Rest of World. As a result, now is a “great opportunity for Chinese sellers to conquer the vacant market space in Russia,” and increase their sales by tapping into the country’s multimillion audience. In December, Ozon introduced products from China’s popular sportswear brands, including Li-Ning and 361. Popular Western sportswear brands, including Adidas, Nike, and Reebok have paused sales in Russia. Besides Ozon, Russian consumers are also able to buy directly from Chinese sellers on Alibaba’s AliExpress and the Latvia-based e-commerce site Joom.
News of sanctions on Russia initially prompted predictions of product shortages and economic meltdown. But so far, the Russian economy has avoided collapse because businesses and smugglers have found alternative ways to source raw materials, electronic components, and consumer goods. Despite brand withdrawals from the Russian market, third-party traders are still able to sell their products online, since Moscow has lifted a parallel import ban, to allow goods to be brought in without the trademark owners’ permission. While exports from most countries have plunged since the invasion, Russia has been buying more from China and Turkey. Bilateral trade between China and Russia rose 34% year-on-year in 2022 to a record high of $190 billion, according to Chinese customs data.
“If Ozon can position itself as a main middleman for selling between Russian buyers and Chinese sellers, then it could make a lot of money,”Alexander Titov, a Russian foreign policy lecturer at Queen’s University Belfast, told Rest of World.
Ozon said it aimed to have 100,000 Chinese sellers on its site by 2024. To attract more businesses to join the platform, the company opened an office in Shenzhen and started offering Chinese-language sales tutorials on social sites such as Weibo, WeChat, and Bilibili. The company has also partnered with state-owned China Post and Alibaba’s logistics arm Cainiao to organize deliveries from China to Russia, according to its website.
But just being available in Russia does not automatically translate into sales. A manager working at a low-end Chinese smartphone maker, who gave only his surname, Sun, because he was not authorized to speak to the media, said the phones did not sell well in Russia on Joom or Ozon, because the brand was not widely recognized in the country. The seller Chai said that the Russian market might be too small to accommodate a large number of sellers, especially in the higher end. “People are more attracted to European goods,” he said. “The impression is that Chinese products should be cheap.”
Long delivery times also remain a major obstacle. Sellers are not paid until customers receive the products, which often takes up to a month. Cherry Zhao, a Chinese trader based in the eastern port city of Qingdao, Shandong province, said that if the ruble lost value during that period, she would end up receiving much less money through her Ozon sales.
Still, her business is thriving. Zhao opened an Ozon account in late 2022, selling toys, baby products, and home appliances after reading about its China expansion online. Since then, monthly sales have grown from about $1,000 to more than $3,000, Zhao told Rest of World. She planned to add more products in the coming year. “Even when there is a war, or if something else comes up, I’m pretty optimistic about the Russian market,” Zhao said. “After all, ordinary people need to eat, drink, and live a life.”
