Why is production of Russian electronic devices returning home from Asia?

Thanks to the fall in the ruble exchange rate it’s now cheaper to produce tablets, smartphones and other hi-tech devices in Russia than in China. Developers are also attracted by convenient logistics and a skilled workforce.
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Russian hi-tech producer: In the Moscow Region where, by Russian standards, rent is expensive, to set up a production is twice cheaper than in China. Source: Vitaly Nevar/TASS

A number of Russian gadget developers are beginning to realize their ideas at home. According to economist Nikita Krichevsky, some companies have already started moving production from China to Russia.

"Costs in Russia - wages, rent and utilities - have significantly decreased," said Krichevsky. "In addition, the logistics are easier: it’s one thing to transport goods from China and quite another from central Russia."

Often, Chinese businessmen are the ones who start production in Russia, moving their plants and factories to the country. "Managers from China already have the experience of successfully launching and managing production," Krichevsky said.

The founders of Hamster were among the first to make the move, taking production of the PlayPad, a tablet for children that they designed, from China to the town of Zheleznodorozhny near Moscow. Now the device is sold by Russia's biggest chain stores, and the company is considering deliveries to Western Europe.

"Our tablet’s main feature is that the child's actions are fully controlled through the parents' PC or smartphone," said Roman Burmistrov, one of the startup’s founders. "In the near future, we will assemble our own all-in-one devices and smartphones, as well as humanoid robots for teaching very young children."

The first batch of PlayPads was made in China, and sold out almost overnight. Then, Burmistrov and his partner, Denis Bulavin, compared production costs in Russia and China, and realized that making the tablet in the Moscow Region where, by Russian standards, rent is expensive, would actually be twice cheaper than in China. This fact was decisive.

"We renovated a facility, and employed workers with whom in the beginning we worked side by side, teaching them the whole assembly process, and a week later we started production," said Burmistrov.

In addition to the PlayPad and other tablets, devices for personal health diagnostics - for example, the AngioScan-01P - are assembled in Russia. The AngioScan-01P is used to scan blood vessels in the comfort of one’s home in order to assess the risks of cardiovascular diseases several years before clinical symptoms of a serious condition might become apparent.

"Investor interest is growing, and giants such as Alibaba now invest in, or buy outright, many Russian projects," said Vladimir Sakovich, investment director at Skolkovo Foundation. "But I wouldn't call it a trend. For full-scale development, systematic work is needed. In its absence, Russian companies are continuing to sell their products to global corporations."

Read more: Trio of Russian start-ups get financial boost for innovation>>>

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