In Booming Russian Economy, Similar Product Opens Gateway to Anything -Rampant Counterfeit Practices Unveiled

“It’s unbelievable how prosperous life is despite facing economic sanctions. Our stores are overflowing with goods, and you can get anything, even similar Western brand products,” says a Japanese businessman who visited Moscow, the capital of Russia, at the end of last year.

According to economic journalist Takashi Matsuzaki,

The Russian economy is doing well. In 2023, the real gross domestic product (GDP) increased by 3.6% compared to the previous year, reaching approximately 226 trillion yen. In 2024, it continued to grow by 2.6%, surpassing the growth of major advanced countries.

 

“One of the driving factors behind the Russian economy is the ‘copy economy,’ where foreign brands are imitated. In response to the invasion of Ukraine that began in February 2022, many Western companies withdrew from Russia. Russian authorities then forced these companies to sell their businesses to local entities at low prices and openly sell copied products. Essentially, they are seizing assets and making enormous profits just by changing the signs,” Matsuzaki explains.

 

With brands like Stars Coffee taking over from Starbucks and Cool Cola succeeding Coca-Cola, Russia has seen rampant imitation business practices since the government issued a law in March 2022, shortly after the invasion of Ukraine, stating that the compensation to rights holders for intellectual property of unfriendly countries will be 0% of the revenue. Even with Western companies withdrawing and imposing economic sanctions, it’s understandable why Russia’s economy has suffered minimal damage.

“Russia is also rich in energy resources. Natural gas, which Europe depends on, is not subject to sanctions, and oil is purchased by China and emerging countries known as the ‘Global South,’ with which Russia maintains friendly relations. Much of the profits are allocated to the defense industry. This year’s defense spending is expected to be about three times that of 2021,” explains Matsuzaki.

Against the backdrop of a buoyant economy, Russia is steadily deploying more weapons, ammunition, and new weapons to the Ukrainian front lines. They are said to be turning the tide in the conflict, which had temporarily challenged them, as explained by military journalist Fumitaro Kuroi.

“The situation in Ukraine is dire. Both the United States and Europe are facing shortages in the weapons and ammunition they can supply. Furthermore, there is a tendency for support to be delayed due to domestic political turmoil in the United States. In some parts of the eastern front, the ratio of shells used between the Ukrainian and Russian forces is reported to be more than 1:5. Despite having artillery and tanks, they are experiencing shortages of ammunition,” Kuroi explains.

According to research institutions in Europe and the United States, there is a view that if support were to completely stop, the Ukrainian military would collapse within two to three months. The nightmare of Russia, enriched by its “imitation business practices,” declaring victory, is becoming increasingly plausible.

 

 

From the March 15, 2024 issue of FRIDAY