Czech exporters see Russian demand continue to suffer

By bne IntelliNews February 3, 2015

Czech exporters are seeing demand out of Russia continue to fall, as EU sanctions, the dropping ruble, and the coming recession hit hard, a new survey revealed on February 2.

Over 60% of Czech companies active in Russia have already registered a decrease in demand, the survey by the Confederation of Industry reported. However, 99% say they have no plan to leave the Russian market.

Yet they may have little choice, reports CTK. Some Czech exporters have had to cut prices in connection with the fall of the ruble. Some continue to perform only contracts signed earlier. 

Meanwhile, owing to the EU sanctions and the devaluation of the ruble the Russian market currently prefers domestic production and tenders for imported products are being cancelled.

"Russian partners do not want to risk that European and U.S. companies will supply them (goods) but will refuse to provide servicing and further supplies in the future. This is also why they are gradually focusing on technologies from South Korea, Japan and China," Confederation of Industry spokesman Milan Mostyn said.

By November, exports of Czech companies to Russia had dropped 23%. That left Russia accounting for 2.8% of total Czech exports, compared with 3.6% in July.

About 25% of Czech companies to respond to the survey said they have not reduced supplies to Russia yet. However, the weak rubl has been so notable that Czech companies are losing competitiveness in some tenders. In addition, a number of investment plans have become unprofitable.

According to more than 50% of respondents, the development on the Russian market has also influenced exports to other members of the Commonwealth of Independent States (CIS), particularly Ukraine, Belarus and Moldova.

The solvency of Russian partners has deteriorated as well and it has been registered by around 50% of Czech exporters to Russia, the poll revealed.

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