Russia’s ‘dual-purpose’ goods market too hot for Leica to resist
By Meduza 19/5/23
May 20, 2023 - 2:39:54 PM
Even after the invaders’ atrocities in Bucha shocked the world, Leica Camera continued exporting military-grade rifle scopes to Russia
The German camera manufacturer Leica Camera AG announced its withdrawal from Russia shortly after the start of Russia’s full-scale invasion of Ukraine. Afterwards, it turns out, Leica never made good on this commitment. The Insider, an independent Russian investigative project, has established that not only did Leica never leave the Russian market, but it also increased its range of imports to Russia. This was part of Leica’s apparent effort to capitalize on the potentially lucrative “dual-purpose goods” market for optical equipment suited for general consumers and the military alike. Leica now supplies Russia with binoculars equipped with laser rangefinders and with night-vision rifle scopes.
Leica Camera announced its departure from Russia in mid-March 2022, less than a month into the invasion of Ukraine. Around the same time, the company also said it was going to close its only branded retail location in the country, in the Moscow GUM shopping gallery.
But Leica’s corporate records tell a different story, writes The Insider. Russia’s Unified State Register of Legal Entities shows that Leica’s Russian LLC, Leica Camera Russia, was renamed to Vechernyaya Zvezda (“Evening Star”) on April 6, 2023. Apart from the name change, though, its structure has remained entirely the same. A 99-percent stake in Vechernyaya Zvezda still belongs to “Leica Camera Austria GmbH,” according to the ledger. The CEO listed in the Evening Star’s Articles of Incorporation is Leica Camera Russia’s old CEO, the German citizen Klaus Hauer (previously employed by Volkswagen’s corporate office in Russia).
Further, since the start of the war, Leica’s Russian LLC began filing more declarations for importing dual-purpose goods suited for the general consumers as well as the military. (Such declarations are filed to clear the first shipment of the specified goods through customs. Subsequent shipments are usually cleared under the same declaration.) Even after news of the Russian army’s atrocities in Bucha emerged in the international press, Leica’s Russian LLC filed three separate declarations for military-grade binoculars and rifle scopes: they were dated July 6, November 18, and December 15, 2022.
The LLC’s financial statements also raise some questions (or perhaps suggest some answers as to the reasons for the company’s behavior). For two years in a row, The Insider points out, the company’s management expenses exceeded its sales revenue. Leica’s losses in Russia in 2022 alone amounted to 29.3 million rubles (or about $364,000). Overall, this outlook is far more typical of companies trying to enter emerging markets than those fleeing from markets embroiled in wars of aggression.
Source: Ocnus.net 2022