Huawei closes many Russia outlets amid sanctions and supply constraints

Huawei has begun to close its official outlets in Russia, with reports circulating on Wednesday, June 8, citing a company source close to Huawei. It is noted that the first store at the Riviera shopping center in Moscow ceased operations on February 28. Subsequently, departments in Novokuznetsk, Ufa, and Rostov-on-Don followed suit, leaving 15 of the original 19 official stores still active, according to the publication. The main driver behind the closures, as described by the source, is a combination of dwindling warehouse stock and softened demand for smartphones. The source also suggested that Huawei may continue to shutter stores in Russia over the coming months. In contrast, RBC reported that the decision to close certain outlets originated with Huawei partners, since Huawei does not operate its own stores in Russia. The same source confirmed that profitability issues tied to insufficient goods made sustaining the stores unviable. Since late March, Huawei’s Moscow office reportedly shifted a portion of its staff to remote work and halted new gadget and network equipment supply contracts to Russian operators. News agencies linked the freeze in deliveries to US sanctions imposed on Russia, noting that the ban extends to both the use of American technologies and the production infrastructure involved. The Ministry of Digital Transformation later confirmed restrictions on Huawei’s supply in connection with sanctions and expressed confidence that Ericsson, a major competitor, would continue operating in Russia. Huawei had previously removed apps from sanctioned Russian banks from the AppGallery store and disabled Mir system board support in the same market. Market insiders observed that early June saw a reduction in the assortment of electronics and white goods in stores, attributing the shrinkage to the departure of foreign firms from Russia and component-supply challenges. Inside sources noted fewer dishwashers, refrigerators, smartphones, and televisions on display. According to a 2021 snapshot of the Russian smartphone market, Samsung, Xiaomi, Apple, and Realme led with 81.9% of sales, while Huawei and Honor together held about 3%. The Russian Federation began a special military operation in Ukraine on February 24, which prompted a wave of sanctions from multiple countries. Since then, hundreds of foreign companies announced suspensions or complete withdrawals from Russia, with analysts estimating that more than 350 firms have paused activities there, including more than 160 in the retail sector.