The Chinese manufacturer of gaming PCs, laptops and peripherals, Machenike, has abandoned plans to open a representative office and a service center, as well as direct supplies of its electronics to Russia. Analysts attribute this decision to the company’s intention to conduct an initial public offering (IPO) on the US stock exchange, which is incompatible with the company’s official presence in Russia. It is possible that the brand previously overestimated the prospects and capacity of the Russian market.
The Machenike brand appeared at distributors in August 2022 in the form of the first batches of laptops. Prior to this, the brand’s products came to Russia in small quantities under gray import schemes. «This is the vendor’s decision. [отказ от развития в России] is unlikely to affect its availability in the Russian market”, — noted in the company «Marvel Distribution», the main partner of the brand in Russia. Also, the Machenike brand as a supplier is listed on the websites of OCS and Treolan distributors. Representatives of these companies declined to comment on the situation.
Machenike is one of the trademarks of Haier, a major Chinese manufacturer of household appliances and electronics, which has not announced its intention to leave the Russian market. In June 2022, Haier announced its intention to expand the production of household appliances in Naberezhnye Chelny, having already built its fourth plant in Russia, while Haier’s investments amounted to almost 19 billion rubles. Another Haier trademark, the Thunderobot brand of gaming laptops and other devices, appeared on the shelves of M.Video in the summer of 2022.
Analysts argue that the presence in Russia now can worsen the performance of the company during the initial public offering on the American exchange, and the opening of the Russian representative office can be qualified as helping Russia to circumvent sanctions, which, in turn, will lead to secondary sanctions against Machenike. In this case, an IPO in the United States will become impossible.
In 2022, almost half a million gaming laptops were sold on the Russian market, which is just over 15% of total laptop sales, and in monetary terms, almost 25% of total sales. More than a third of laptop sales last year were Chinese brands, and in the second half of the year, the share of Chinese manufacturers rose to 45%. At the same time, Machenike accounted for no more than 1% of sales in quantitative terms.
There is another explanation for Machenike’s refusal to develop infrastructure and direct sales in Russia — the Chinese brand simply overestimated the prospects for the Russian market as a result of the start of sales at a good time, when laptop stocks were running low and there was a shortage of supply on the market. “A window of opportunity arose, and the brand, together with investors, decided to take the place vacated by Western brands, — IT expert Sergey Vilyanov believes. — But already in December, it became clear that supplies had recovered, competition had intensified, and the profitability of a full-fledged entry with a representative office and direct service raises questions.”
In 2022, Machenike’s sales, like those of many other Chinese companies, increased significantly due to the departure of a number of popular brands and an increase in the duty-free threshold from 200 to 1,000 euros. “Some of these manufacturers have begun to assume that brand awareness is already strong enough to open an official representative office and sell directly from warehouses in Russia to large retailers. However, the calculation of the cost for official imports, as well as the need for certification and warranty service, did not allow us to offer competitive prices compared to Huawei, Honor, Xiaomi already on the market. A large retailer was not ready to invest in the promotion of brands unknown to most users.— Arkady Markaryan, commercial director of the international distribution company Border Trade, believes.
And Sergey Vilyanov is sure that Machenike will continue to be imported to Russia with the help of distributors, and over time, an official representative office and service centers will appear. “Now it’s time to return under new legal entities and even brands”he sums up.
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