The bluff with the Russians failed, we lost a huge market

Hello.

I have a kind of ritual, on Thursdays and Fridays I communicate very closely with people in the US, they are employees of big IT companies. No, not Googleplex cleaners or Apple Store happiness sellers. Several people from different companies hold prominent positions in the corporate hierarchy, what is called a level minus about two. The circle of such people on the one hand is quite narrow, on the other hand there are hundreds, but they have access to sensitive information. Their bosses engage in discussions that influence company policy and determine the future development of the market. Our acquaintance did not start yesterday, we have been friends with someone for many years, we communicate with someone about work issues. Over the last month, we’ve had a lot of discussions of various kinds, thanks to these links, I was able to look behind the curtain and see some of the tricks used at the political level. And share these stories with you in many articles.

The nature of today’s crisis is that we have taken the most convenient positions in the front row and we will definitely watch it to the end, regardless of your desire or mine, switching to another channel will not work. And for about the same reason my friends, you have to live this crisis to the end and feel it alone. It is clear that everyone has their own political views, which are superimposed on the image of the world and, possibly, distort it. It is possible to describe the attitude of my counterparts towards Russia for a long time, it is calm and without enthusiasm, in a way even realistic. There is no negativity, but there is no positive either, the more valuable the words they utter. I want to start with a phrase that touched me to the core: “The bluff with the Russians did not work, we lost a huge market. We are now being assured in other countries that we will not behave in the same way. There are no guarantees, sales are lower. “We can not afford it.”

Out of context, this phrase hangs in the air, sounds mysterious and you can think of anything. In fact, we are talking about the use by America of its own companies as a weapon, more specifically, as an argument for forcing other countries. Politicians are not ashamed to promise any kind of technology-related bans and background is important here. The first company to face US sanctions in recent years was ZTE, writing in 2018 that US officials are making reconnaissance in battle, apparently targeting Huawei. A year later, that is exactly what happened.

The first appeal to the market was the history of sanctions against Huawei, perceived as pressure on the company, an attempt to limit the expansion of Chinese manufacturers. And corporate America saw nothing shameful in that; in fact, politicians played their part.

The situation with Russia seems similar only in the foreground, there are several differences. The sanctions hit Europe’s largest market, where the interests of US companies are tied, selling goods worth tens of billions of dollars a year here. But the immediate losses from incapacity for work in Russia are not so great on a global scale, it is generally up to 2% of the turnover of each company, someone has even less. It seems that this money can be ignored, but in the context of the global crisis, every penny counts and the losses are painfully perceived, companies know how to count money.

American politicians offered their companies no carrots, they were not given anything in return for the lost purchase. But the main thing is that officials could not calculate the consequences for their own companies in markets outside Russia.

Suddenly, people saw that America was using business as a weapon and could deal a severe blow to its adversary. In addition, this perception is reinforced by the seizure of Russian stocks in gold and foreign exchange, which is perceived by the majority as a direct and overt theft. Suddenly, the United States and American companies are perceived as problem partners, those with high risks. This is not just the case in technology, similar conclusions are drawn in almost every business.

And here begins the most interesting. Buyers of technologies, infrastructure solutions, software require additional guarantees that no company can give. Sounds like this: sign up for additional money back guarantees if you have to break your hardware or software. The pressure is unprecedented, nothing like this has ever happened in history. The utopia lies in the fact that no company can sign such burdensome terms. Then we start talking about the fact that the product must be sold at a discount, as it contains risks. Companies such as Microsoft, Dell, HP, Cisco have faced demands for price cuts due to potential downside risks, and voices of demand are heard from around the world. We can safely say that this is just an excuse to reduce the price, but it works and becomes a factor that can not be ignored.

Since companies often bribe their customers, or rather, specific managers in other countries, the issue can be resolved with a large number of bribes. But it is also an increase in business costs that companies are forced to shoulder. Those who believe that Western companies are extremely clean and never bribe contractors live in a fantasy world, all companies do this without exception. Someone gets caught, and someone escapes, that’s the whole difference.

Right now, companies talking to White House officials have a new and strong argument: in addition to losing the Russian market, they have problems in most foreign markets, including Europe. Partners are beginning to demand additional guarantees and discounts, as they are not sure that they will not suddenly find themselves in the shoes of Russia and Russian companies.

In Europe, this approach seems strange, but here we must remember that US officials have looked to the destruction of Ericsson, the company will have to be acquired by some of the companies. The plan to destroy Europe’s largest telecommunications company, similar to how Nokia once destroyed the smartphone segment. Creating problems, constant scandals and exposure to wrong business transactions, in particular, in the same bribes. After an asset becomes problematic, an American “savior” appears who promises to take the company to the next level. But then comes the sale to someone, as it turns out that it is impossible to “save” the business and you have to unite with a strong player. I will not be surprised if Microsoft itself is chosen for the role of Ericsson’s gravedigger, they have rich experience in this field. Seeing the “partners” attack on Ericsson, European companies look puzzled, and want extra guarantees or discounts, it’s very simple.

From this we can conclude that the Russian factor has become the main factor in the world in cooperation with American companies and comes to the fore. This is what worries people in all corners of the world. And what creates a negative background for American companies.

Now I want to dwell on the beginning of the phrase – “the bluff with the Russians did not work”. What is it? Yes, just like with the sanctions against Huawei, the proportions here are just on the surface. America has been steadily increasing sanctions against Huawei, believing that now the company would die, lose the market, stop growing. None of this happened. In addition, when Huawei simply hinted that it could revise its 5G licenses (the company holds the largest number of patents in this field in the world), US companies already rang the bell and began to put pressure on politicians. In fact, it was a matter of repealing the patent law as such, China would not allow the use of its patents, America would take them that way. As a result, no one will respect the patents of American companies in the world, which means that no money will come from them. But the main thing is that the sanctions regime will cease to function, they will no longer be afraid as an instrument of US policy. China added to this opaque allusion that it could stop supplying rare earths and make it more difficult for America to deal with semiconductors in general. The aggression against Huawei gradually disappeared and the sanctions became points of contact. U.S. officials pretend to win, but Huawei continues to grow. Look at Huawei’s share of infrastructure in the world, sanctions have not stopped this growth.

What is the ratio here? It is transparent, Russia did not retaliate, it measured the level of influence from the United States. But as soon as there was an opaque hint that American companies could lose a number of materials supplied by Russia, plus blocking supplies from other sources, the rhetoric changed. A direct consequence of this was the license for the supply of infrastructure equipment, which was issued to companies.

It is also important to emphasize here that Europeans have blocked the supply of their equipment, they are under sanctions. They themselves have been deprived of a huge market, which will affect the position of European companies. But Americans act realistically and allow trade (this is not just a license for American companies, de facto for anyone – but in Europe, sanctions from Europe, and they block everything). A very funny situation is developing: according to many people, in the conflict between Huawei and the state represented by America, the latter should have guaranteed to lose. But that did not happen.

Today, the same people are betting that Russia has no chance of resisting US sanctions, but in practice everything is a bluff. We are told to “die”, but we do not believe in it and we continue to live. In conclusion, I would like to quote the phrase of another of my interlocutors, it shows perfectly the understanding of the problem, which has not yet reached everyone: “Russia was sleeping. We were selling our products and the idea that it was first class, had no competition. The best Coca-Cola, the best burgers, the best computers and software. First-class marketing is something we can be proud of. The other is debatable. Now Russia is starting to create its own technologies and will repeat the path of China. Maybe not fast. But for us, this is minus a big market for decades. “For my company, this is a loss and it is forever.”

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