Behind Apple Sanctions Against Russia: Electronics Soaring 30%!

As the conflict between Russia-Ukraine conflict has become increasingly intense, the “war” has gradually spread to the Russian mobile phone market.
On March 2nd, Apple’s sales in Russia ceased. This means that customers in Russia can no longer purchase Macs, iPhones, iPads, and other Apple devices. “If you attempt to make a purchase from a Russian store, when you attempt to add a product to your online shopping cart, you will experience a” non deliverable “result.”.
Ukraine’s Deputy Prime Minister Mikhail Fedorov wrote to Apple CEO Tim Cook requesting Apple to stop device sales and block AppStore access in Russia, as well as restrict ApplePay in the country.
Apple expressed its deep concern over the Russian invasion of Ukraine and stood by all those who suffered as a result of the violence. Currently, the main page of Apple’s Russian official website displays “Apple Store Closed”. Tim Cook also said he had stopped all other sales channels to the country and banned traffic and real-time events on Apple Maps in Ukraine as a safety and preventive measure for Ukrainian citizens.
Electronics soared by 30%
In addition to the risk of sanctions, the Russian mobile phone market is facing sharp price fluctuations due to the devaluation of the ruble. It is understood that the ruble has depreciated rapidly in the past half month, with a decline of around 30% against the US dollar.
On the second day of the outbreak of armed conflict between Russia and Ukraine, on February 24th local time, DNS, a Russian retailer giant that focuses on electronic products, raised commodity prices. Dmitry Alekseev, its director, said on social networking platforms that some product prices have increased by 30%.
In addition, on the Russian e-commerce platform OZON, the 256GB version of the iPhone 13 ProMax has a list price of 30495 rubles (about 8216 yuan), which is more than 10000 rubles (about 600 yuan) higher than the official price. According to netizens, after seeing the devaluation of the ruble, some businesses immediately announced a suspension and price increase, and the iPhone 13 series has generally increased by 20000 rubles (about 1250 yuan).
According to the latest report from iMore, the Russian Apple dealer re: Store temporarily closed its store and reopened only one day later. The prices of the iPhone 13 Pro Max and the MacBook Air with the M1 chip increased by about 50%.
“Due to the fall of the ruble, limited inventory and suspension of delivery in the short term, mobile phone prices may face a sharp rise.” The latest report released by Counterpoint pointed out that in the Russia-Ukraine conflict, the Russian mobile phone market is expected to further shrink.
Xiaomi may become the biggest winner
Regarding Apple’s move, Ben M., chief analyst at research firm CCS Insight? Ben Wood said that Apple is leading the way in the mobile phone industry, and the announcement released by Apple is important, “absolutely” putting pressure on competitors such as Samsung to make the same decision. Wood also added that some of Apple’s competitors have significant sales in Russia.
Currently, Samsung and Chinese manufacturers have not made any further moves, and Samsung has not yet commented on Wood’s statement.
It is reported that, unlike domestic smartphone manufacturers, 80% of the people in Russia are still using feature phones, while only a small number of people are using smart phones. In 2021, the annual shipment volume of smart phones was only 8 million, compared to 80 million in China during the same period.
According to data, throughout 2021, Samsung accounted for 30% of the Russian mobile phone market, ranking first among all mobile phone brands, followed by Xiaomi, with a 23% market share. Apple accounted for 13% of the mobile phone market in Russia last year, ranking third. Then came the domestic brand Glory and True Self phones, with 6% and 5% respectively. Last year, Chinese mobile phone brands accounted for 34% of the market share.
With the suspension of Apple’s sales, the price of Apple’s products has skyrocketed, yielding a huge market share in the short term. Domestic brands led by Xiaomi may become the biggest winners in the Russian mobile phone market.
Taking Xiaomi as an example, unlike Apple and Samsung in their product positioning, Xiaomi’s products in Russia focus on price performance, which is relatively low end and highly recognized by the Russians. According to relevant statistical data, Xiaomi ranked first in the shipment of smart phones in Russia from January to June in 2021, with a market share of 32%. Apple’s share was less than half of Xiaomi’s, with 15%.https://www.stoneitech.com/
It is reported that domestic mobile phone brands generally sell their products to the local market through local cooperative agents. After the agent conducts a transaction with a mobile phone manufacturer in US dollars, it is settled locally in Russian rubles. After the devaluation of the ruble, it is necessary to increase the terminal price to reduce losses.
If manufacturers want to reduce losses and achieve profits, smartphone prices in the local market will definitely increase in the future. At that time, the sales of mid to low end mobile phones may usher in a new round of growth, which is just conducive to domestic brands such as Xiaomi, Glory, and Realme, competing with Samsung in terms of sales and revenue.
However, if the United States explicitly stipulates that it cannot sell products with built-in American technology in Russia, Samsung and Chinese manufacturers may also temporarily abandon the Russian market.