Trade shifts and corporate revenue in a sanctioned economy: the case of Russian manufacturing firms in 2022

Despite frequent international trade shocks, the impact of sanctions-induced trade reorientation on firm-level revenues remain insufficiently explored. This study examines how the shift in imports from Europe to Asia influenced revenue dynamics among Russian manufacturing firms following the 2022 sanctions. Utilising a representative sample of 1879 firms, we employ weighted probit and ordered probit regressions to analyse the relationship between import dependence and revenue outcomes. Our findings indicate that firms reliant on imports experienced higher revenue growth, a counterintuitive result given the severity of supply disruptions. Notably, the availability of imports from China played a critical role in this growth, particularly in regions characterised by strong trade ties with China. Moreover, contrary to expectations, continued sourcing from sanctioning countries did not lead to revenue declines, likely due to firms’ successful reorientation towards Chinese and other Asian suppliers. These results highlight the heterogeneous impact of sanctions at the firm level, demonstrating that businesses embedded in global value chains exhibited resilience in sustaining their trade activities. This resilience appears to be driven primarily by market mechanisms rather than direct government intervention.