Quality or Quantity? The Dilemma of Aggressive Export

Predictably, the issue of domestic product quality has surfaced during the “Year of Quality” declared by Lukashenka. In March, the regime announced the development of industry-specific quality programs, intended to be the main driver of development for all Belarusian enterprises in 2024. However, these standards are currently more of a nuisance to manufacturers who are still primarily tasked with maximizing exports by any means, including ignoring high production standards.

During an extended meeting on the state and tasks of industrial development, Lukashenka addressed the quality of domestic products. “I am informed that today our domestic products are inferior to competitors both in price and quality. The price can be explained, but why the quality? The export of Belarusian tractors in 2023 fell by 18%. Our share in the Russian import market has dropped to a decade-low of 10.5% for tractors and 6% for trucks,” Lukashenka cited the statistics.

He acknowledged the difficulty of competing on price with Chinese manufacturers. “Therefore, we must excel in exceptional product quality and the provision of necessary customer service,” he noted. “We need to reach a Japanese level of quality.”

However, achieving a Japanese level of quality is far from realized. Periodic incidents of MAZ buses catching fire and increasing claims on other products have ultimately become a barrier now starting to hinder exports to Russia.

Attempting to capitalize on the vacated niches in the Russian market in 2022-2023, experts from “Our Opinion” note, the Belarusian regime directed manufacturers to maximize export volumes by any means—through dumping prices, at the expense of financial performance and product quality. While export figures have been somewhat managed, quality has not. This circumstance is successfully exploited by competitors from “friendly” countries, pushing Belarusians out of niches they once monopolized, such as tractors.

“Import substitution,” declared by Minsk as a basic strategy to overcome Western restrictions, has become the foundation of Belarusian dumping. Forced (due to cessation of supplies from the West) or on a patriotic surge (according to top-down directives), many producers, experts note, have switched to using domestic materials and components. This quickly impacted the quality of the final product, which noticeably declined. There are also numerous issues regarding the service of the delivered equipment.

As a result, Russian consumers are increasingly favoring products from Chinese, Turkish, and other friendly manufacturers. This is evident in markets for trucks, tractors, loaders, refrigerators, and more.

Meanwhile, the government is entirely unwilling to abandon the focus on volume. The Belarusian ambassador to Russia, who also heads the Interdepartmental Working Group on monitoring the situation with supplies to Russia, Dmitry Krutoy, suggested imposing penalties on those manufacturers who fall behind the planned export growth rates of Belarusian goods to the Russian market.

Previously, in February, Lukashenka promised that Belarusian quality is here to stay, not just for one year…