Foreign business activity in Russia has shown significant growth, surpassing pre-sanctions levels, according to a study by VTB Bank and Online Patent. In 2024, the number of applications for foreign trademark registrations increased by 18% compared to pre-sanctions data. Companies from China, Belarus, and the UAE have emerged as key players in Russia’s market, with a particular surge in applications from Chinese businesses. The study highlights the diversification of foreign business involvement in Russia, with a focus on electronics, retail, and cosmetics, among other industries.
Rising Foreign Involvement in Russia’s Market
In 2024, Russia witnessed an 18% increase in foreign trademark registration applications compared to the period before sanctions were imposed. This rise reflects a broader trend of growing foreign business activity in the country. The surge in applications spans several industries, including electronics, retail, and pharmaceuticals, marking a clear shift towards an expanding international presence.
The VTB and Online Patent study also revealed a significant increase in business activity from Chinese, Belarusian, and UAE companies. These companies, which previously did not have a notable presence in Russia, have now actively engaged with the Russian market. Notably, companies from the UAE, which had not been registering trademarks in Russia before 2022, are now entering the market with greater enthusiasm.
Industry Focus: Electronics and Retail Lead the Way
The study shows that foreign businesses are not only entering Russia but also focusing on a variety of sectors. Of all foreign trademark applications in the last five years, about 10% have been in the electronics sector, making it the most popular industry for foreign companies. Wholesale and retail trade comes in second at 8%, followed closely by cosmetics at 7%.
In addition to these sectors, the fashion industry and pharmaceuticals also make up a considerable portion of trademark applications, each representing 6% of total filings. This diversification of foreign interest indicates that businesses are not only seeking to enter established markets but are also targeting new and emerging sectors within Russia.
Chinese Companies Lead the Charge
The presence of Chinese businesses in Russia has notably grown, especially since 2022. According to the study, the number of trademark applications from Chinese companies has doubled in the 2022-2024 period compared to the previous two years. Chinese businesses have been particularly active in the electronics sector, which constitutes 16% of their applications. Clothing, machinery, and machine tools follow closely behind, each representing 8% of the total applications.
This increase in trademark activity from Chinese companies reflects their growing interest in the Russian market, which has become a key part of their global expansion strategies. As economic ties between Russia and China strengthen, this trend is likely to continue in the coming years.
Belarusian Business Expansion
Similarly, Belarusian companies have significantly increased their presence in Russia, with a two-fold rise in trademark applications compared to previous years. The study indicates that the largest number of applications from Belarusian companies were in the wholesale and retail trade sector (12%), followed by sectors like confectionery, groceries, cosmetics, and dairy products, each accounting for 7-8% of applications.
This expansion is part of broader regional economic integration efforts and reflects the close ties between Russia and Belarus. The increase in Belarusian trademark applications further underscores the shift in foreign business activity towards Russia since the imposition of sanctions.
The UAE’s Emerging Role
While Chinese and Belarusian businesses have led the charge, companies from the UAE have also emerged as significant players in the Russian market. Unlike Chinese and Belarusian companies, UAE businesses had not registered trademarks in Russia until 2022. The recent surge in applications suggests a strategic move to tap into the Russian market, particularly in sectors such as retail, electronics, and luxury goods.
The rise of UAE businesses in Russia highlights the changing dynamics of global trade and the willingness of businesses from non-traditional markets to engage with Russia despite political challenges.
Impact of Sanctions on Foreign Business Activity
The VTB and Online Patent study provides insight into the broader trends of foreign business activity in Russia. In 2022, the number of foreign trademark applications dropped significantly, decreasing by 25% compared to 2021. However, this downward trend has been reversed in 2024, with a notable increase in applications. In total, non-resident applications to Rospatent, Russia’s trademark registration body, amounted to around 50,000 over the past five years.
Experts believe that the growing foreign business activity, despite sanctions, is indicative of Russia’s evolving economic landscape. Companies from certain countries, particularly China and Belarus, are capitalizing on opportunities in Russia, while others, like those from the UAE, are exploring new avenues for growth.
The Future of Foreign Business in Russia
Looking ahead, the continued growth of foreign business activity in Russia could reshape the country’s economy. While challenges remain due to international sanctions, foreign companies are finding ways to enter the Russian market and adapt to new conditions. The rise in trademark applications is just one indicator of this shift.
For companies in China, Belarus, the UAE, and other countries, the Russian market presents both risks and opportunities. As businesses navigate the complexities of international sanctions and trade regulations, their strategies in Russia will likely evolve.
