The Russian label and narrow web converting industry is experiencing tough times due to Western sanctions and the growing isolation of the country. This isolation in the international arena has led to suspension of supplies being delivered of most Western machinery and equipment, while local producers still do not have needed competencies to replace imports.

Prior to the Ukranian-Russian war, the label and narrow web (LNW) sector had been one of the fastest growing segments of the entire Russian printing industry with annual growth rates of 10-15%. That was mainly due to a stable demand for high-quality printing services in Russia from local business and state structures. However, Russia’s invasion into Ukraine and the associated tightening of sanctions against the country has put an end for hopes of a further growth of the industry, while creating serious problems for its further long-term development.

In fact, the Russian printing sector has become one of the industries in Russia that has especially suffered from Western sanctions, which is mainly due to its almost total dependence on Western technologies and imports.

Historically, the share of imports in the Russian LNW sector was equivalent to about 90%, as most of the labels in local printing houses were produced on equipment supplied from so-called “unfriendly” countries for Russia, particularly the EU states and the US, with HP Indigo digital presses being a leader of the market.

After February 24, 2022, most Western manufacturers refused the further shipping of label converting industry supplies, equipment and spare parts to Russia and left the market.

So far, among the largest suppliers of printing equipment to Russia, were companies such as Heidelberg, KBA, Manroland, Muller Martini, Zechini, Smyth and others. Most of them have suspended their supplies to Russia and no longer provide servicing and technical maintenance for their machines and presses used by Russian printers and converters.  This has been confirmed by their representatives, according to which they have no plans to resume their supplies to Russia at least in the middle term.

According to representatives of Russian dealers and printing houses, some of the European companies broke contracts on their own initiative, and some after the introduction of the fifth package of sanctions from the EU. This package bans imports of equipment for flexography, offset, gravure and letterpress printing into Russia. In addition, according to Oleg Novikov, president of the Eksmo-AST publishing group, one of Russia’s leading book publishers, Western sanctions affected the supply of used equipment in all segments of the market.

Initially, there were big hopes on parallel imports of such equipment to Russia, however, according to representatives of dealers, most of such supplies are complicated by the fact that each printing machine has its own serial number, and many components for them will be unique, with their own catalog numbers. 

“This means that the manufacturer can understand that the component will eventually be sent to Russia and will prohibit its delivery,” explains Larisa Danilova, a representative of the Octoprint Service company, one of Russia’s largest suppliers of consumables and spare parts for printing.

In addition, the cost of such presses, along with other forms of industry equipment and machinery, which are supplied via parallel imports, is usually by several times higher than actual market prices for such products. This means that for the majority of Russian printing houses – most of which are small to medium sized companies –  such deliveries are unprofitable and economically unreasonable.

Amid the non-availability of parallel imports, one of the ways out of the current crisis for Russian companies could be found through an increase of imports from suppliers based in India and China. In recent years, many Russian companies, which previously focused on the distribution of Western companies in the domestic market, have switched on the sales of presses of Chinese, South Korean and even Indian origin, however, as a rule, the demand for them is still significantly lower than their Western counterparts, which is mainly due to their lower popularity among local customers.

According to the Russian Vedomosti business paper, citing local analysts in the field of printing and representatives of printing houses, the products from India and China significantly lag behind in terms of technology – for example, poor automation – when compared with Western models. Moreover, the range of supplies from these countries is very limited (at least for Russian customers), while many types of presses and other equipment are simply not produced in these countries.

Also, many of the Indian and Chinese machinery and equipment are seriously outdated, with the quality of finished products is low and do not meet Russian standards.

The situation is also complicated in that the newly established supply chains have already led to an increase in the cost of spare parts supplies by 2–3 times, while delivery times have increased from several days to several months. As a result, there is a serious threat of bankruptcies for many leading Russian printing houses and it’s triggering the market consolidation process. 

Faced with a lack of spare parts, many Russian companies have been forced to use the practice of disassembling old machines and presses, and using used spare parts for repair, as is often the case in the aviation industry. In addition to equipment and spare parts, there is also a serious shortage of some of the industry’s expendables, such as inks.

Analysts expect the current dependence on imports of printing equipment will lead to a shortage of printing capacities in Russia already at the beginning of 2024, that will force businesses to place its orders outside of Russia – in China, India, and Iran. Because of this, labels will become more expensive – up to more than 30% of the price and even higher.

Representatives of leading Russian printing houses have already called on the state to provide additional support for them. At present there are more than 10,000 thousand enterprises operating within the LNW market in Russia – most of them of small and medium size. In addition to equipment shortages, these companies in recent months have been faced with personnel shortages due to the ongoing mobilization of Russians serving in the armed forces. 

In the current situation, printing companies have called on the state to provide preferential loans for them to modernize and maintain production. In addition, another way of support could be the launch of joint printing ventures with India and China over the next 4-6 months.

In the meantime, the Russian government is aware of the current problems in the industry and is considering solutions. One of them involves creating conditions for the establishment of domestic productions of digital presses and equipment, along with expendable materials, including paints and inks. These are also plans that will allow for the reduction of import dependence in the majority of segments of the industry.

Implementation of these plans is however challenging due to a lack of experience in the manufacturing of such products as well as a lack of competencies. Moreover, the launch of such projects will be only possible no earlier than within the next 3-4 years.


About the author: Eugene Gerden is an international freelance writer who specializes in covering the global converting and printing sector. He has worked for several industry publications and can be reached at [email protected]