03/01/2024

While the authorities repeat the mantra “we don’t care about sanctions,” foreign trade companies are faced with new and new problems. Another one arose in Hong Kong.

This is a popular place for purchasing goods for parallel imports, but by the end of February, Russian importers were almost unable to transfer payments there directly, five suppliers told The Moscow Times .

It is convenient to deliver products through Hong Kong: there is no need to go through customs clearance again. It was a convenient point for purchasing goods that were not sold to Russia due to sanctions or simply the refusal of Western companies to do business with it, as well as for payments to those who did not accept money from Russia.

Therefore, hundreds of Russian businessmen have registered companies in Hong Kong both for intermediary services and for their own foreign trade operations. Now it is not possible to directly top up their accounts or pay other companies in Hong Kong, entrepreneurs who spoke with The Moscow Times admit . “Our whole life is a continuous schematosis that is getting crazier,” sums up the owner of a Russian trading company, which, after the outbreak of the war, opened an affiliated company in Hong Kong in the spring of 2022.

But in 2022, Hong Kong banks easily accepted even rubles as payment, for example, for shipments of iPhones and other Apple products that are not officially supplied to Russia. There were no problems with the sale of rubles in one of the largest financial centers in the world – then they were bought up by companies from mainland China, which purchased, for example, raw materials and food products in Russia. But pressure from the US and EU on those helping Russia with supplies, most notably the threat of secondary US sanctions, forced Hong Kong banks to freeze transactions with Russia.

Now they do not accept payments from Russia, even in yuan, from banks not subject to sanctions and for goods free from prohibitions, Russian businessmen complain. “Or rather, individual payments go through, but this is an absolute lottery and, it seems, an oversight of the Hong Kong bank,” says one of the importers. “In our experience, the only reliable options left are payment agents who work through third countries,” says another businesswoman.

This means additional costs that will be transferred into the price of the product. The commission of paying agents, and therefore the increase in the cost of delivery, depends on the products purchased, explains a customs broker employee. For mass-market clothing they can charge 4%, and for electronics the commission can reach up to 20%. But the equipment will also have to be transported through third countries. At the same time, the payment itself takes from 3 to 10 days, which does not suit all suppliers.

Since the beginning of the year, Russian companies have been having problems making payments to banks in “friendly” countries. Credit institutions in Turkey were the first to block payments, which is why the supply of Turkish goods to the Russian Federation was initially paralyzed, and by February, according to Reuters, payments for oil sold to Turkey “came to a standstill.” Next, the banks of the United Arab Emirates began to close accounts of Russian companies, where Rosneft was also under attack, which was denied service in dirhams. In addition, the three largest credit institutions in China –  Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and Bank of China – refused to settle settlements with sanctioned banks of the Russian Federation. The terms of settlements with China have increased to 7-10 days, and in some cases delays reach 40 days, the  Association of Exporters and Importers complained.  

(C)MOSCOW TIMES 2024