Russia Tries to Curb Shadow Economy by Tracking All Consumer Goods

Russia has in recent years came close to joining a digital power club of nations including the U.S., Japan, and Singapore, as its citizens are becoming more tech-savvy and exposed to massive state and privately-operated digital ecosystems, Ivan Streshinsky, member of the board at USM Holdings, writes in an article for the World Economic Forum.

A nationwide transition to online fiscal cash registers in the retail sector was Russia’s first big step toward the digital economy, followed by plans to digitize all industries.

In 2018, the country launched Chestny ZNAK TM, its first nationwide digital track and trace system, set to become the cornerstone of industrial digitalization. By 2024, the system is expected to cover most of the commodity and consumer goods traded throughout Russia.

This system authenticates and tracks any merchandise as it makes its way down the supply chain, from the point of manufacture to the final consumer.

Traceability is implemented by means of a unique ID code, assigned to every physical unit of merchandise in the form of a Data Matrix QR code and/or an RFID tag. This code is then scanned and registered in the government’s central database each time the merchandise passes from an importer or producer to a wholesale trader, to a retailer, and finally to the end buyer. The code can also be scanned by consumers at the point of sale via a special app, which serves to prove that the merchandise is genuine and has been legally produced or imported and retailed. This creates a digital passport and digital twin for each item of merchandise and a digital copy of each industry sector.

Track and trace systems have been trending internationally for some years now, with China, Brazil, Turkey, the USA, and the EU being the pioneers in this area.

“The Russian project stands out due to its ambitious plans to cover all product groups, unlike other systems, which mostly monitor excise goods like tobacco and alcohol, and pharmaceuticals. It is entirely unmatched across the world in terms of its scale and capacity to process up to 100 billion unique codes per year,” Streshinsky writes.

The system already traces over 6 billion codes under several projects for the mandatory marking of goods. Almost a dozen product categories are already covered by the system, including drugs and medical goods, fur coats, milk and tobacco products, clothes, footwear, perfumes, bicycles, wheelchairs, photo cameras, and tires. And the project is only in its early stages, the businessman notes.

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