TV Plants Massively Closing Down In Kaliningrad

Due to sanctions.

Kaliningrad region continues to lose TV manufacturers due to the difficulties that have arisen against the backdrop of sanctions. Following Telebalt, whose closure became known a week ago, the STI Group decided to leave the region, writes Kommersant.

The company has been assembling TCL, DEXP, BBK, BQ and Erisson TVs since 2011. CEO Kirill Skvortsov said that the company had to shut down production in Kaliningrad region due to logistical problems, including those related to the cessation of sea deliveries.

STI Group plans to move capacity to Moscow region. It launched a plant in Voskresensk in 2023 and is now looking to increase the number of assembly lines from two to four. According to Skvortsov, investments in the expansion have already exceeded 150 million rubles. At the end of last year, the Moscow Region enterprise produced more than 300 thousand TV sets, and this year it expects to reach 1 million.

According to SPARK-Interfax data, STI Group's revenue in 2023 was 642 million rubles against 4.2 million rubles a year earlier, with a net profit of 8.9 million rubles.

Telebalt, which before Russia invaded Ukraine produced Hyundai, BBK, and Toshiba TV sets near Kaliningrad, had earlier also decided to leave the exclave, moving to Leningrad Region. The enterprise ceased operations in 2022. The regional ministry of economy and industry said that one of the main problems was the importation of components for assembly.

The plant may be launched at the new location as early as this year. According to Kommersant's sources, the company will be registered under another legal entity that will share investors with Telebalt.

Kaliningrad region used to be popular due to its proximity to Europe, but it lost its logistical advantages after the outbreak of war in Ukraine. Now businesses are fleeing the region, not wanting to feel the effects of current geopolitics. Ivan Kulemanov, a member of the Korean Information Display Society (KIDS), has previously warned that the trend will continue if restrictions remain in place.

However, the move will not be a panacea for electronics manufacturers as they may be hindered by competitors from China. According to Vladislav Borodin, Director of the Consumer Electronics Department at OCS Distribution, local customers are already returning to purchasing finished products in the Middle Kingdom, and there is no significant increase in demand for localisation of TV assembly in Russia. Among other things, this is because Chinese factories are willingly offering discounts on their services to attract customers.

In turn, the CEO of STI Group pointed out that due to the threat of secondary sanctions and the loss of major clients in the West, Chinese banks have started blocking transactions related to Russia. According to Skvortsov, domestic manufacturers may face problems in settlements for components because of this.