Dmitry Milin: the Russian market under sanctions has become an ocean of opportunities

Analytics
Dmitry Milin: the Russian market under sanctions has become an ocean of opportunities
Dmitry Milin: the Russian market under sanctions has become an ocean of opportunities
26 April, 16:39Photo: 1MI
Russia's "cancellation" is gaining momentum in all directions: more than 750 foreign companies have announced that they are leaving the country, ceasing investments or reducing their activities in Russia.

People keep losing their jobs. Some experts predict a complete collapse of the economy, while others see enormous opportunities in what is happening.

Recently, General Motors announced its final withdrawal from Russia with the closure of dealerships and layoffs of employees, all employees of Elle magazine were fired, only 10% of Russian staff will continue to perform part of the duties of Condé Nast (GQ and Vogue magazines), Shell fired dozens of people employed at project "Sakhalin-2", the American IT company SAS fired 300 employees in the Russian Federation and is preparing for bankruptcy. Local authorities are no longer trying to hide the extent of the losses.

Sergey Sobyanin said that about 200 thousand people were under the threat of layoffs in the capital. And the government of the Ulyanovsk region reports that from February 24 to April 19, 2022, 287 people lost their jobs in the region, 6936 people are “in the mode of changing employment” (another euphonious analogue of “employee release” - an alternative to the word “dismissal”), in Kostroma, 2.5 thousand people may lose their jobs due to the restrictions that have arisen.

Production in Russia is curtailed, but imports do not compensate for the shortage of goods. The West has drastically reduced supplies, and Asia cannot meet demand due to logistical problems. The departure of foreign companies may lead to the fact that Russia will lose up to 2/3 of the containers that were used, among other things, for domestic transportation. And although the FCS is delaying the publication of official data on imports in March 2022, presidential adviser Maxim Oreshkin reported a drop in supplies by “tens of percent.”

Novye Izvestia spoke with independent analyst Dmitry Milin about what awaits the domestic industry and how we will all live in the new reality. Let's start with the good news. According to Dmitry Milin, great opportunities are now opening up for people who are ready for hard work.

- The Russian market has suddenly become huge and empty, almost all of it has turned into one boundless "blue ocean" - a new unoccupied market without competition, living by its own rules. Its opposite is the "red ocean" of fierce competition. There will be enough work for everyone who knows how and wants to engage in creative work! Now there is an avalanche-like demand for almost everything that was banned from deliveries to Russia from raw materials, spare parts and components to finished products. Any equipment has the ability to fail and require replacement parts. KAMAZ has already returned to assembling Russian engines instead of American ones, but even modern Russian engines are dependent on foreign components. People will be willing to pay more for what they need. This will make it possible to create and develop a business not at the expense of loans, but at the expense of a high rate of return.

The bad news is that the balance of price and quality will not shift for the better. But this price is inevitable. The expert explains that it will not be possible to skip the unpleasant stage of economic development:

- Import substitution in the sick heads of our officials provided for the production of a product of the same quality and preferably as close as possible in price to an imported sample. But now everything has changed. Many things have become inaccessible and will be in demand at a relatively acceptable quality and expensive price. In any case, the consumer will have to pay for the current situation with sanctions. The question is whether these overpayments will lead to the creation of a strong and competitive domestic industry, or whether they will remain in the pockets of dealers and officials. We, as a society, need to decide this: we need the development of our own industry, or we will agree to degradation with an ever-decreasing standard of living. In the first case there is hope for a revival, in the second there is none.

People already often have their eyes on their foreheads from unusual price tags in stores. But soon there will be more. Experts expect inflation to reach 20% or even 25% by the end of 2022. And the VEB.RF Institute for Research and Expertise predicts a drop in real disposable income by 12%. It will not be easy to pay for expensive domestic goods. Dmitry Milin believes that in this situation, all that remains is to wait and work:

- At first, people will not have enough money, they will have to save a lot, but as the economy revives, the standard of living will increase, the quality of goods will improve (while maintaining competition, and not creating monopolies of various levels of unnaturalness), and prices will decrease. This was the case under the Leninist NEP, when the economy quickly revived in the country devastated by the civil war and the policy of “war communism” (showing growth rates no less than in the first two five-year periods following it) and the standard of living increased.

For some, income will simply be reduced, while for others it will disappear altogether. Analyst surveys conducted by Bloomberg show that unemployment by the end of 2022 could double and reach 9%. About 2 million jobs were at risk. True, the expert believes that this is just fixable.

- I do not share the fear of unemployment. A person who is ready to engage in creative work will be in demand. In addition to new businesses for spontaneous import substitution of almost everything, we have a lot of places freed up at construction sites and in the service due to guest workers leaving due to another devaluation of the ruble. More than 100,000 Uzbeks alone are returning home, followed by Kyrgyz, Tajiks and other migrants. The country's construction sites are waiting for Russian builders, and restaurants are waiting for Russian waitresses. "The national economy is waiting for workers." More than 70,000 IT specialists have already left the country - their jobs have become vacant. Programmers from abroad will not work for Russia, but those who worked abroad are now left without the opportunity to receive payment for their work. This is a good personnel reserve, unless of course they leave.

But then the "blue ocean" can lead to the emergence of a strong domestic industry. Dmitry Milin recalls that more than one country has traveled this path. We have someone to take an example from. You just need to look at history:

- A similar path was taken, firstly, by the USSR during the time of the NEP already mentioned by me. Secondly, Germany after World War II, thirdly, Japan also after World War II, fourthly, South Korea after the most difficult Korean War, and the most recent example is Vietnam, which showed high growth rates while under US sanctions. .

It turns out that the business has a chance to survive and there is a chance to create jobs for hardworking and skilled workers and specialists. And, although such a transformation, according to Dmitry Milin, should happen naturally, there is one significant obstacle:

- Our only and natural enemy in the process of restoring our economy is our state represented by stealing irresponsible and lying officials. If officials begin to control prices and fight speculators, then stagnation and degradation will become inevitable. Our bureaucracy has already failed import substitution, however, like everything else that it has undertaken before: from “new industrialization” and “creating 25 million new high-tech jobs” to national projects of the 2018 version: “Affordable housing”, which, as a result of “preferential mortgage "has grown in price and become unaffordable, and "Demography", which, instead of increasing life expectancy, has led to a very significant decrease in it. Our officials are able, having spent colossal money, to achieve outstanding negative results that contradict the goals set, without bearing any responsibility. If anyone is realistic and can do something creative in Russia, then these are NOT officials and "siloviki", but entrepreneurs, scientists, engineers and skilled workers.

The results of the actions of the authorities in terms of import substitution really raise very big questions. According to the National Research University Higher School of Economics, Russia's dependence on imported technologies has increased by 12.2 times over 20 years, the Gaidar Institute notes the maximum level of dependence on imported technologies from the very beginning of observations in 2015. 81% of respondents complain about the complete lack of necessary domestic equipment of any quality. Against this background, Valentina Matviyenko's surprise at the fact that "even nails" in Russia are imported looks strange. All statistics are publicly available.

One thing is clear: the transition to a new economic model will be very expensive and painful. New jobs and new industries are not created in a day, not in a month, or even in a year. But enterprises are closed literally at the click of a finger. Millions of people will have to accept the fact that the former comfortable work will not be for a very long time. The people have nowhere to go - they will have to accept a new reality. But can officials at least not interfere with the transformation of the economy?

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