Chinese companies Xiaomi and TCL are considering moving their production facilities from Russia to Kazakhstan due to the threat of secondary sanctions from the U.S. and the EU. For example, TCL has recently refused to supply its components to STI Group and Kvant, which are the company’s contractors in Russia. Xiaomi also stopped delivering its electronic components to Kvant back in 2022, causing the TV set production plant in Voronezh to halt its production process, according to the Russian business edition Kommersant, citing sources in Kvant and STI Group.
As the media outlet noted, if the companies move their business out of the Russian market, it would lead to a 10% to 20% increase in prices and shortages of ready-to-use products due to more complicated logistics. Russian facilities have stocks of TV set components sufficient to run production until November and will probably suspend operations after that. Xiaomi and TCL hold 10% and 6% of the TV set market in Russia, respectively.
Head of Strategic Development at STI Group Cyril Skvortsov has confirmed that the company has to deal with disruptions in component deliveries and payments via Chinese banks.
However, Kazakhstan’s Ministry of Industry and Ministry of Trade and Integration, in response to Kursiv.media’s request, said that they have no information about the potential relocation of production facilities from Russia.
According to Kvant’s website, the company was established in 2016 based on several enterprises with solid experience in the electronic industry. Currently, Kvant runs two plants in Zelenograd (Kvant) and Voronezh (Videophone). The company produces 24 to 65-inch LCD TV sets for brands such as DEXP, AMCV, Lumus, Starwind, Hyundai and Xiaomi.
STI Group has a production facility in Kaliningrad. It’s unclear when the company was established and what brands it cooperates with. Many foreign companies in Russia have started relocating their regional offices from Russia to Kazakhstan because of the Russian invasion of Ukraine. According to Vice Minister of National Economy Bauyrzhan Kudaibergenov, more than 40 businesses, including prominent brands like InDriver and TikTok, valued at more than $1.5 billion, moved to Kazakhstan as of March 2024. Moreover, 37 more companies with a combined market cap of $1 billion were in the process of relocation, as the official noted at the time. Last year, the Astana International Financial Center (AIFC) registered two new participants – Solidcore (formerly Polymetal International), a gold-mining company and FixPrice, a supermarket network – which moved to the AIFC from the British island of Jersey and Cyprus, respectively.
