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By Park Jae-hyuk
Korean exports to Russia's neighboring countries have grown rapidly since the international community imposed sanctions against Moscow following its invasion of Ukraine in February last year, data showed Monday.
Given that Korea's exports to Russia dropped sharply since the war began, experts assumed that Central Asian and Eastern European nations have been used for Korean exporters to circumvent international sanctions against Russia.
According to data compiled by the Korea International Trade Association, Korea's exports to Russia last year fell 37 percent year-on-year to $6.3 billion.
The downward trend, which started after Russia's invasion of Ukraine, has continued this year, as Korea's exports to Russia during the first three months of this year also declined 20.2 percent year-on-year to $1.7 billion.
In contrast, Korea's exports to Kyrgyzstan in 2022 jumped 231.4 percent year-on-year to $373 million. During the first three months of this year, the figure even showed a 480 percent year-on-year growth. In particular, Korea's exports of smartphones to Kyrgyzstan in February was 294 times larger than that of last year. Exports of consumer goods, such as toothpaste, also showed a sharp increase.
Another Russian neighbor that showed a rapid increase in imports from Korea was Kazakhstan.
Korea's exports to Kazakhstan soared 115 percent year-on-year to $1.66 billion in 2022 and 121 percent year-on-year to $468 million during the first three months of this year. Exports of used cars accounted for the largest proportion of Korea's entire outbound shipments to the Central Asian country.
Russia's other neighbors, such as Uzbekistan, Azerbaijan and Georgia, also increased their imports from Korea, enabling Korea to reduce the negative impact of its falling gross exports in recent months.
Jeong Min-hyeon, head of the Russia and Eurasia Team at the Korea Institute for International Economic Policy (KIEP), said that it is difficult to rule out the possibility of Korean products flowing into Russia via its neighboring countries.
"Amid the setback in direct trade with Russia, its neighboring countries can be used as detours," he said. "For each Korean exporter, this can be a strategy to maximize profits, while reducing risks."
The KIEP researcher added that it will not be easy for Korean manufacturers to pull out of Russia, considering fixed costs and sales networks they have built up there.
U.S. and European companies cut their ties with Russia last year. But Korean companies have maintained their operations in Russia. They have also remained cautious about condemning Russia's invasion of Ukraine, despite criticism of their failure to denounce Moscow.
"When most global enterprises left Russia at the time of its moratorium in the late 1990s, Korean companies stayed there, expanding their presence," Jeong said.
An executive at a Korean conglomerate with operations in Russia also said that his company is unlikely to leave the country, as it is virtually impossible for foreign companies to return to the Russian market after it pulls out.
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