Keeping Cisco Tech in stock in the gray market in Russia

The US has mocked countries such as Turkey and China for supplying Russia with weapons that could help Moscow’s war effort or thwart Western sanctions. But Western goods—severely cut back—are still flowing into the country.

Tracking how Cisco products are still being imported helps gauge the difficulty of isolating Russia economically.

According to an analysis of customs data from 31 countries by Brussels-based Bruegel, between March and November, Russia sanctioned or banned $12.4 billion worth of goods from the West, including telecommunications equipment supplied by Cisco.

Between August and the end of December, $27.5 million worth of Cisco equipment was shipped to Russia, according to Russian customs data collected and sold by a China-based data provider and reviewed by The Wall Street Journal. Information about some of Cisco’s suppliers and buyers was cross-checked in the database by C4ADS, a Washington-based nonprofit that identifies national security threats.

“Anything that passes is problematic,” said Tom Keating, director of the Center for Financial Crime and Security Studies at the Royal United Services Institute, a UK think tank. “The challenge for the West in 2023 is how to find third countries that don’t have sanctions… to stop this.

A Cisco spokesman said the company ceased operations in Russia in March and began downsizing at the end of June. It has stopped doing business with all Cisco partners and distributors in Russia and Belarus.

According to the spokesperson, any Cisco gear currently in Russia is fake or sent by third-party middlemen without Cisco’s permission. She said the company would crack down on any sales to Russia by its authorized partners.

Cisco said its brand protection team is looking for unusual ordering practices, combing open source data and working with customs authorities to monitor such transactions around the world.

“Combating gray-market operations is a challenge for the entire technology industry,” the spokesperson said.

Cisco was one of hundreds of Western companies that supplied products to Russian customers before abruptly stopping after the invasion. Exporters now need approval from the US government to sell Cisco components to Russia. Those are given in very limited circumstances, for example for humanitarian purposes.

The United States can prosecute foreign companies and individuals who sell or service US products that are subject to export controls. But most of these entities are beyond the reach of any real enforcement action, especially if they have no business exposure or reside in the US.

Turkey and China both said they would not participate in Western sanctions and allowed companies to sell goods to Russia. Moscow, for its part, allows brokers to import Cisco gear into Russia, among other sanctioned Western products. Others on Russia’s list include Lexus and BMW cars, Lego sets and Apple products.

The Cisco orders included in the Chinese-compiled customs data include purchases of network switches, communication cables, routers and general computer components. They include large purchases, including a $2.6 million order, and smaller purchases, such as one for $13.58.

Comptech, a Moscow-based IT equipment distributor, said on its website that it maintains a large warehouse of Cisco equipment and offers a full selection of the company’s gear online. “Surprisingly, we still have Cisco gear,” the website said in June when US Gear announced its summer sale.

This month, CompTek’s sales manager, Cisco gear is still coming in, but availability depends on each product. A CompTek spokesperson could not be reached for comment.

Cisco said its distribution agreement with CompTek was terminated in March.

According to a customs database reviewed by the Journal, CompTek shipped some of its Cisco products from Hong Kong-based Pixel Devices Ltd. and acquired RBW Lab Co., a Thai IT distributor. Pixel Devices said it could not disclose sales details to customers, but said it had no business relationship with CompTek. RBW did not respond to requests for comment.

Among the largest suppliers of Cisco equipment in the period covered by a database compiled in China are Istanbul-based companies listed as Irvakan Makina Equipment and Sanay Tederik Ltd. Cisco said it had no ties to the company.

Airvacan’s website states that it sells locomotive parts. A company official reached by phone said he used to sell Cisco equipment, but stopped doing so after Western sanctions came into effect in Russia. In a later call, the same official said the company only sells locomotive parts. The official did not respond to additional attempts to seek comment.

Less than half the value of five months’ worth of orders in the database compiled in China came from a Moscow-based company called Eastern Trade LLC. Eastern trade suppliers were mainly Chinese and Turkish, the database said.

Eastern Business was incorporated on April 13, according to the Russian corporate registry. The company does not have a website or phone number. Its CEO and sole shareholder could not be reached for comment.

Other large Russian buyers of Cisco equipment include Nag LLC, a self-described IT online mega-market that lists its main clients as Russia’s largest energy companies, the FSB spy agency and several other government departments.

A dealer in Nag said the company was selling Cisco equipment but he did not know when it arrived or where it came from. A company representative did not return calls seeking comment.

—Elvan Kivilsim, Qianwei Zhang, Jared Malcin, and Ian Talley contributed to this article.

Write to Alistair Macdonald at Alistair.Macdonald@wsj.com