Chinese TV brands TCL and Xiaomi are planning to move their production operations from Russia to Kazakhstan, according to a report by Kommersant. This shift is prompted by the refusal of TCL to supply components to Russian contract manufacturers Quantum and STI Group, amid threats of secondary sanctions from the U.S. and EU. Additionally, Xiaomi has ceased supplying components to the Russian Federation.

The companies are eyeing a new production facility in Kazakhstan, with potential plans to deliver products to Russia afterward. However, this relocation might result in a 10-20% increase in product costs due to changes in logistics.

Both Xiaomi and TCL have yet to comment on the planned move. Kirill Skvortsov, Director of Strategic Development at the STI contract plant, indicated that the decision by the Chinese companies was influenced by their preference for operating in countries with larger market volumes.

Furthermore, Skvortsov highlighted ongoing issues with payments through Chinese banks. Several Chinese banks view yuan purchased in Russia as “dirty,” prompting Russian importers to seek “clean” yuan abroad, which consequently raises the cost.