With Russia-China relations at a high in 2024, according to Bloomberg about 40% of Russia’s imports and exports are completed in Chinese yuan, a stark increase from nearly zero at the start of 2022. With a $240 billion trade value between Russia and China in 2023, further business development of Chinese entrepreneurs in Russia is to be expected. At this year’s St. Petersburg International Economic Forum Anton Kobyakov (Adviser to the President of the Russian Federation) sees 2024 as the landmark year for Russia-Chinese relations.

While the Russia-Chinese business is increasing, according to Reuters, the fear of secondary US sanctions affecting banks in China and India suspected to assist Russia in helping to evade sanctions has generated a demand for intermediaries and options to keep cross-border transactions flowing smoothly.

Cross-border payment solution: China-Russia

Awara has been supporting Chinese companies for many years in Russia with their projects in the areas of company registration, Joint Venture support, due-diligence, tax advice, accounting, audit and recruiting. While our clients are increasingly reaching out for support on cross-border transactions, we are constantly working on new solutions to assist with the changing realities.

To find a possible solution to overcome these difficulties, we are looking into the option to avoid cross-border transactions from Russia to and from China, while at the same time route payments over a different path.

This alternative option required several involved parties (companies):

• Company A: Company (with headquarters abroad), which needs to transfer money out of Russia
  to China (from its bank account in Russia) to pay for goods/services abroad
• Company B: Company (with headquarters abroad), which requires funds in Russia (e.g. for
  ongoing operations in the Russian office)
• HQ/company A1 (headquarter of company A abroad)
• HQ/company B1 (headquarter of company B abroad)

Provided these parties are in place, we propose an offset agreement regarding the payment obligations
between the parties, i.e. funds will be exchanged within Russia and abroad between the companies,
without involving any cross-border money transactions. The transactions can be in any currency.

Company A transfers funds to company B in Russia and at the same time, company B1 transfers the
equivalent to company A1 outside of Russia. Please see the graph below.

Contact us for more information!

Contact us today for a consultation on how we can optimize your international business transactions.

info@awaragroup.com

+7 495 225-30-38 Moscow
+7 812 244-75-49 Saint Petersburg
+7 495 225-30-38 Tver