Why are Chinese not buying plywood mills from Russia?

According to Yale School of Management's list, over 1,000 companies have curtailed operations in Russia by May 2023. While the list is mainly occupied by Western companies, very few Chinese companies have stopped operations in Russia. Chinese companies don't bear the same reputational risk as companies in the West.

Last week, Russia's Prime Minister Mikhail Mishustin was in Beijing to sign bilateral agreements to deepen investments in trade services. Now, Russian exporters regard China as the easiest country to trade with. A yuan-based payment system works, freight subsidies exist, and new logistic routes are being established.

Chinese exports to Russia are flourishing. According to China Customs, from January to April 2023, exports to Russia grew massively by 67.2% to $33.7 billion. During the same time period, vehicle exports rose by 254%. The list of exported items is versatile, which means that Chinese brands will dominate the Russian market, from mobile phones to industrial machine spare parts.

But why settle only for expanded exports when you could buy Russian assets as well? China has its Belt and Road strategy and has bought ports, etc., in Africa, Greece, and Germany. While Western companies withdraw from Russia, why aren't Chinese companies stepping in?

The current circumstances are tough for the Russian industry. According to Rosstat, plywood production volume in March 2023 was close to the volume of previous years. However, when the average price has halved, so has revenue, resulting in profits turning into losses.

If an investor can bear the short-term risk, isn't it a buyer's market to acquire assets like plywood mills or harvesting companies? Or is the risk too big, even for the Chinese? Today, Europeans wouldn't buy Russian plywood, even if the mills were owned by the Chinese. How about in 2030?

Experts say that even though China is determined to run its own trade policy, it doesn't want to disrupt the global market too much.?Establishing too strong of a foothold in Russia might bring more sanctions against Chinese brands in Western markets.

Extended trade is a secure strategy. China hungers for imported raw materials, and now they will have an almost sole buyer position in Russian fossil fuels, minerals, timber, etc. At the same time, they deliver technology to Russia that the West no longer supplies. And what the Chinese don't know how to produce today, they have a tendency to learn by tomorrow.