In recent years, Russia has faced multiple rounds of sanctions from Europe and the United States, leading many European and American brands to announce their withdrawal from the Russian market, resulting in a significant decline in imports. However, the Russian economy has withstood the pressure better than expected, thanks to the implementation of its "parallel import" policy.

Background of the Parallel Import Policy

Parallel imports refer to the importation of original goods into a country without authorization from the rights holder or manufacturer. In response to Western sanctions, Russian President Vladimir Putin signed Federal Law No. 46 on March 8, 2022, amending provisions of the Russian Civil Code regarding trademark and patent protections. This amendment stipulates that Russia will no longer recognize intellectual property and patents from Western countries. Simply put, Russia will no longer protect the intellectual property and patents of Western nations.

As the scale of corporate withdrawals from Russia became clear, Russia legalized parallel imports in late March 2022. On March 29, Russian Prime Minister Mikhail Mishustin signed a government decree authorizing the Ministry of Industry and Trade to compile a list of foreign goods eligible for "parallel import." On May 6, 2022, the Russian Ministry of Industry and Trade released a list covering approximately 200 brands, includingCosmetics & Personal Carechemical products, clothing, ferrous and non-ferrous metals, vehicles, and 50 other categories of goods. These brands include well-known names such as Siemens, Panasonic, Apple, Intel, Samsung, Dyson, and Logitech. The Ministry also emphasized that the list would be reviewed quarterly or bi-monthly, with additions or removals based on product monitoring.

Legalization of Parallel Imports and Market Impact

Shortly after the list of foreign goods was announced, Igor Shaskolsky, head of the Russian Federal Antimonopoly Service, suggested that Russia's "parallel import" mechanism should be extended to all categories of goods, stating that it should become a permanent mechanism in the Russian Federation. On June 21, 2022, the plenary session of the Russian State Duma (the lower house of parliament) approved a legal amendment submitted by the Russian government, which legalized "parallel imports" in Russia.

One of Russia's largest online shopping platforms, Yandex.Market, has established a new division specializing in "parallel import" operations. It has issued multiple international procurement tenders to seek new supply channels for household appliances, power tools, electronics, health products, and more, aiming to expand direct imports. With the Russian government's legalization of parallel imports, Russian businesses have built alternative supply chain networks, importing restricted goods through third countries, effectively alleviating product shortages.

According to data from Russias Trade and Financial Services Agency, parallel imports can reduce costs for consumers by up to 50%. Data from the Russian Federal Customs Service shows that parallel imports in 2022 exceeded $20 billion. Sergei Puzyrevsky, Deputy Head of the Federal Antimonopoly Service, recently expressed support for permanently legalizing parallel imports as a long-term strategy to counter sanctions.

Optimizing Parallel Import Policy and Future Outlook

As the parallel import policy continues to evolve, Russia plans to adjust the number of brands allowed for import to optimize market structure, ensuring only those brands with genuine demand and positive effects enter the market. Recently, Russian First Deputy Prime Minister Denis Manturov announced that the parallel import list would undergo a new review and might be reduced. As domestic production of high-quality goods increases and supply expands, opportunities for parallel imports will gradually diminish.

Russian local importers commented: "Sanctions have opened many new windows of opportunity, but at the same time, some past opportunities have disappeared. During times of economic stability, all markets were already allocated. If you're not a genius like Musk, starting from scratch is quite difficult. However, times of change create new markets that are easy to enter. For example, after the collapse of the Soviet Union, there was a shortage of everything. People made millions selling chewing gum and Snickers bars. Crisis always brings new opportunities."