Chinese Automotive Companies in Russian Market: Penetration and Consolidation

The introducing of economic sanctions against Russia led to a massive exit of Western companies from the Russian market, which created favorable opportunities for expanding the activities of Chinese automobile companies. The aim of the paper is to identify the features of the activities of Chinese automakers, both those that have been present in the Russian market for a long time, and those entering it for the first time. According to the authors’ estimates, 38 Chinese companies (at the end of 2022) were present in the Russian market, which accounted to about 60 % of all operating Chinese automakers. As a result of the study, the authors proposed a classification of Chinese companies in the Russian market according to the method of market entering, which includes: “grey” exports, indirect exports through dealers and distributors, sales branches, foreign direct investment, portfolio investment. The authors come to the conclusion that indirect export, along with sales branches, is the most common way for Chinese automobile companies to enter the Russian market. At the same time, foreign direct investment is the most important method for strengthening Chinese companies’ position in the Russian automobile market. Companies such as Chery, Great Wall, and Geely are leaders among Chinese companies in sales in Russia: their total share is about 93 %, which means a high concentration of sales. A key feature of the activities of Chinese companies with foreign direct investment is the availability of powerful dealers’ network as well as the production of Chinese cars in joint ventures (brownfield investments), where the Russian company Avtotor plays a key role. The only exception is the Great Wall Motor company, which built the Haval plant in Tula “from scratch” (greenfield investment). The authors suggest that the small volumes of Chinese investment in the Russian automotive industry can be explained, among other things, by the predominance of brownfield investment over greenfield investment. Based on the study, the authors expect that the most important factors in the expansion of Chinese automobile companies in Russia will be the unfolding processes of digitalization, as well as the growing demand for electric vehicles. At the same time, Chinese automakers will have to face serious competition from both Russian and Korean companies.