Global brands come back to Russia via parallel imports

Ever since Russia invaded Ukraine in 2022, major global brands have abandoned their businesses in the country. But Russia authorised businesses to import products without the trademark owner's permission. This has led to the creation of 'parallel imports' totalling more than $70 billion in the last two years.

Reuters analysis shows that most products are still available for Russian consumers via third-party retailers. Nike products, for example, are still selling in Russia. Footballstore.eu, an online sports retailer owned by Russia's Zenit soccer club, sells dozens of Nike-branded items like the Phantom GT2 Elite soccer boots for $330.

Brands like Nike have denied any authorisation. Their statement read, 'We no longer have any Nike-owned physical or digital retail operations in Russia.' This was further confirmed by a Reuters analysis that examined customs data and corporate records.

Analysis showed that businesses obtain branded goods, including Nike & Lego, using intermediaries with no plausible connection to Russia as buyers and then ship them via Turkiye. The data also revealed that Nike products imported to Russia plunged 81 per cent to $21 million in 2021 but rebounded to at least $74 million in 2023.

Technically, there is no evidence of these firms' violating sanctions. This is because most of the sanctions by both the US and the European Union focus on industrialised products aiding Russia's military. Legal specialists also feel that seeking any action under Russian law would be difficult for those brands, other than those trying to enforce intellectual property rights, that are also tied to the territory where the infringement occurred. Turkiye is also tied to this trade 'heist.' It's a favoured hub for these grey-market imports. Turkiye has denied any involvement.

This is just one of the many ways Russia has been able to circumvent Western sanctions. Shadow fleets, local-currency push, and such back-end selling of Western products to meet domestic demand allow the country to remain optimistic about its economic resilience.