Foreign trade

German Machine Makers Move to Russia to Bypass European Sanctions

A German machinery firm in Chemnitz has decided to recoup its export losses to Russia by localizing the production of its machine tools in Russia's Republic of Tatarstan, local German newspaper Freie Presse reported on Wednesday.

During Soviet times Chemnitz was known as Karl-Marx-Stadt, and the Soviet Union was the largest purchaser of the machinery goods produced there.

German manufacturers continued to benefit from this trade connection until the imposition of anti-Russian sanctions in 2014, which were followed by Russia's counter-sanctions and policy of import substitution, also partly stimulated by last year's fall in the ruble's value. As a result the state of Saxony, where Chemnitz is the third largest city, has seen a drop in the value of its exports to Russia from 327 million euros ($365 million) in 2013, to 177 million euros in 2015, Freie Presse reported.