Russia will become the next big country in clothing

Financial News: In March of this year, Amancio Ortega, the world’s second-richest man and the owner of the Inditex clothing empire, received an unexpected invitation. The Russian government wanted him to move the factory to Russia because of the ruble. The production cost there is already lower than China’s.

　　 Hezhong International News Agency reported that the Russian Ministry of Industry and Trade announced that they are communicating with Inditex. Other manufacturers such as H&M, IKEA and Decathlon will also follow this trend.

　　 At present, Inditex's garment factories are mainly distributed in Vietnam, Indonesia, China, Turkey and Eastern Europe. In terms of retail stores, this is already their third largest market after Spain and China.

　　 In November 2015, a Russian military plane was shot down by Turkey near the Syrian border. After the tension between the two countries, foreign players' interest in the Russian textile industry further increased.

　　 Since then, Russia has drastically reduced Turkish imports. Although textiles are not covered by the ban so far, Kommersant reported in December last year that the Russian government may also include Turkish clothing in the list of prohibited entry.

　　 In addition, at the end of last year, Turkish T24 TV station also reported that brands such as Zara, Mango, and H&M required Turkish manufacturers to remove the “Made in Turkey” label to prevent clothing from being boycotted by Russian consumers. However, to solve the problem fundamentally, of course, the factory can be moved to Russia once and for all.

　　At present, Russian clothing factories mainly only face domestic retailers and consumers. Therefore, how competitive they are compared with their Chinese and Vietnamese rivals remains to be further observed. The output of the latter two is 100 times that of them.

　　 Now, those major international brands use global outsourcing systems, such as contracting with a garment factory in a certain country to produce and selling finished products to the world. This system requires the most stringent standardized production procedures, and the factory must also invest a lot of money, which is a challenge that has never been encountered for Russian manufacturers.

　　 Lyudmila IVanova, the head of the Fashion Industry Committee under the Russian Textile Industry Association, firmly believes that if Zara or H&M choose to produce in Russia, the quality of the product will not be reduced.

　　 "We have learned to produce high-quality clothing. Many Russian brands are very popular among our consumers. Some things, if you don't tell you that they are made in Russia, you would think they are made in Europe."

　　 Russia’s major clothing brands, and the current production plants are mainly in Asian countries.

“At the moment, our orders are mainly fulfilled by factories in China and Bangladesh, but we are very interested in Russian manufacturers.” According to Eduard Ostrobrod, vice president of Russian clothing chain Sela, they are considering adding Production moved back to Russia.

　　 "At a textile industry forum of the Ministry of Industry and Trade not long ago, we met some interesting Russian manufacturers. We would love to cooperate with them."

　　 Since the beginning of the economic crisis, many Russian clothing brands have moved their production back from Asia and invested in factories. At the same time, foreign clothing brands have begun to enter more and more. In February 2015, "Russian Business Daily" reported that French sportswear brand Decathlon had signed a memorandum with Novosibirsk S-Tep to produce sports shoes from this factory. In the short term, these products will only be supplied to Decathlon’s Russian stores, but in the future, they will also enter the global sales network.

　　 The Russian textile industry calls on the government to provide greater support to ensure that they can better integrate with brands and consumers. They also hope that the government will improve the investment environment so that foreign brands can enter with greater peace of mind. They emphasized that the devaluation of the ruble cannot continue forever, and Russia must come up with other competitive advantages (love base, net worth, information).

　　 Now, there have been some successful examples of the integration of international brands with local factories in Russia. The Swedish company IKEA was invited by the Russian government to enter, and has been happily cooperating with Russian manufacturers for a long time. IKEA has been stocking in Russia since 1991, when there was no IKEA store in Russia.