5 Mar 2022 12:44

Russian cos have three-six months reserve if all foreign purchases stop - experts

MOSCOW. March 5 (Interfax) - Russian companies have an average reserve of three to six months of resources if all foreign purchases stop altogether, corporate purchasing experts believe, a source told Interfax, citing the results of the first meeting of the anticrisis center of the Purchasing Directors Association.

Representatives of about 40 of the largest private and state companies, with combined procurements of about 1.5 trillion rubles, took part in the meeting.

"No one is panicked, many companies introduced previously prepared plans to ensure the continuity of business that are working," the source said. "Many companies have managed to substitute for imports of the most critical items in the past eight years and don't see systemic risks for themselves."

Companies estimate that even if all purchases stop altogether they can continue to do business fully for three to six months with existing resources, the source said.

At the meeting, companies also discussed the possibility of operating through neutral countries, the source said. "Many companies are already receiving offers to establish alternative supply channels," the source said.

Purchasers at the largest Russian companies are only pinning some of their hopes on China, primarily as concerns critical products.

"For the rest [noncritical items], it's often better to cultivate one's own local suppliers [than to buy in China], which many major companies have been working on as part of their ABC strategies. Particularly since the crisis of semiconductor underproduction after the pandemic, which itself is more dangerous than sanctions, is still continuing in China," the source said.

Companies also discussed organizing barter exchanges and sharing inventories if foreign suppliers actually leave the Russian market.

"Right now Russian businesses view the moves of some western companies regarding 'closures' in Russia with understanding, expecting a planned opening with the first signs of the end of military action. Many of these foreign companies are actually not falling out of business cycles, they're just polishing their image through public relations," the source said.

The source also said that every sector is now preparing anticrisis proposals for presentation to the government. The implementation of these proposals is expected to make it possible to solve many problems in a targeted manner. There is a dialog with the government and sectoral ministries that is taking place at a good and constructive level, the source added.

The situation in a number of sectors was reviewed at the anticrisis center meeting. In the construction sector, for example, businesses only expect problems with shortages of aluminum powder for production of autoclaved aerated concrete. "For the rest, companies from Turkey and Kazakhstan have already offered their 'services' as regards supplying construction activities. A shutdown of builders is not expected at all," the source said.

Retailers, meanwhile, are worried about problems maintaining the operability of their information technology infrastructure, as regards servers, VMware virtualization solutions and "a little about jobs." In order to solve these problems, participants in the meeting proposed switching to Russian cloud services, including those of Sberbank, Selectel, Mirantis and others.

The source also said that Russian retailers have learned how to work well with China on direct purchases of products and are now shipping a large share of indirect products from there.

Banks, meanwhile, are worried about being left without chips for plastic cards. However, experts said that Russian law does not require the use of chips in bank cards and it is possible to start issuing cards without them. As for banks' IT infrastructure, problems are not expected. "Many state banks have already substituted for imports in their main automated banking systems and other critical information systems," the source said.

Purchasers for telecom providers pointed to an acute shortage of Wi-Fi repeaters, but they think this problem is solvable.

The mining industry expects problems with large tires. There are plans to use Chinese tires, which experts believe are just of worse quality. Problems are also expected at Belarusian truck maker BelAZ, which previously imported Cummins engines from the United States for which there is currently no replacement.

The participants in the meeting said that, in the current difficult situation, many companies have set significant limits for their purchases and given them extraordinary powers to make intraday purchasing decisions.