Investigation: How Russia’s military-industrial complex evades international sanctions
A cutter produced by YG-1. Photo by product.yg1.solutions
South Korean company YG-1, which manufactures drills and milling cutters used by defense enterprises, supplied $13 million worth of products to Russia in 2024, The Insider discovered. The import volume is only 19% less than in the previous year.
While many other South Korean companies exited the Russian market completely due to the full-scale invasion of Ukraine, YG-1 expanded its Russian operations, taking over the high-precision tooling niche vacated by German and Japanese manufacturers. The net profit of YG-1’s Russian subsidiary, YG One Rus LLC, has grown by a factor of between five and six since 2022.
Net profits of Russia-based YG-1 Rus LLC in 2020-2024: from 499,900 USD in 2020 to 2,451,200 USD in 2024
The Insider
The quality of YG-1’s equipment has been highly rated by Russian weapons manufacturers and related enterprises. According to public procurement records, even after February 2022, YG-1 drills and milling cutters were purchased through the state procurement system by Academician Pilyugin Scientific Production Center of Automation and Instrument-Building, which develops control systems for launch vehicles; the Oktyabr Production Association, specializing in radar systems; and the Mayak Production Association, which works with nuclear weapons components.
The Insider reported on YG-1’s deliveries in 2023, when the total value of products supplied to Russia exceeded $16 million. In response to The Insider’s inquiry, YG-1’s Korean office stated that the company produces general-purpose tools used across all industrial sectors and that it has not sold anything to weapons manufacturers. The YG-1 statement also noted that the profit growth of its Russian branch was linked to the overall growth of the Russian economy. In reality, however, the growth rate of YG-1’s Russian business significantly outpaced general economic growth in the country — although it was comparable to the increase in military spending.
In 2024, YG One Rus imported $13 million worth of products from the parent company, and its domestic sales totaled roughly 2 billion rubles ($24 million). The products were supplied not only from the South Korea-based parent company, but also from Germany through Werkzeug-Eylert GmbH & Co. KG and AVHD Industriebedarf Handelsagentur Andreas Rudi.
South Korea’s largest manufacturer of end mills and other metal-cutting tools, YG-1 also ranks among the top five leading global producers. The company has been in operation for several decades, and its products enjoy strong demand among Russian government clients.
The Insider has reached out to YG-1 for comment.
