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Russia woos big brands

Nov 20, 2014
Russia woos big brands

The Russian authorities have invited foreign clothing brands to localise their production in Russia, Deputy Industry and Trade Minister Viktor Yevtukhov says. Yevtukhov explains that State support programmes currently envisage subsidies for partially recovering the costs of materials, technical upgrades and new investment projects. New factories can also enjoy long-term tax breaks until 2025. Furthermore, the ministry guarantees manufacturers who accept this invitation a share of the market from the state procurement order.
“Since in the Soviet era Russia had a well-established textile industry, our country can occupy a certain niche between the expensive European segment and the so-called cheap Asian-made consumer goods,” says Yevtukhov. One of the ways of achieving this goal, he explains, is to establish foreign manufacturers’ production facilities in Russia, as is the case with the automotive industry. “This is, of course, a task for the future,” he said. “Having said that, our textile factories already have a good basis to build on.”
In particular, during meetings with the China National Textile and Apparel Council and some leading companies at the Super exhibition in Milan, it turned out that Chinese manufacturers view Russia not only as a distribution market for their goods but are also ready to invest in production in the country. At Southeast Asia’s biggest fashion event, the Mercedes-Benz China Fashion Week in Beijing, a three-year strategic cooperation was signed between the Russian Chamber of Fashion and the China Fashion Association.
The drive to localise production in Russia may bring down prices for clothes made in Russia. “Consumer goods production requires a considerable safety margin in terms of prices. If in terms of quality there are no issues, in terms of costs, we are still running behind [our] Asian competitors,” Yevtukhov says.
He says that in the mass segment it is important to establish relations with large retail chains and to develop sources of raw materials. As for external markets, there are more prospects there for high-tech Russian goods, such as technical textiles and nonwoven fabrics. At the moment, this market accounts for about 30 percent of the industry’s sales. Furthermore, over the last five years the production of nonwoven fabrics in Russia has increased eightfold, while on the EU market, especially in Germany, technical textiles account for 50 percent of the industry’s growth.