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Ban on imports of western clothes may hit Russian economy

September 15, 2014, 16:02 UTC+3 Alexandrova Lyudmila

MOSCOW, September 15. /ITAR-TASS/. The news that Russia may ban imports of clothes from Europe and the United States amid a war of sanctions has given quite a turn to the Russian public and experts. Of course, clothes are less important than food imports, a recent ban on which has been met with understanding and even supported by the population. But although clothes from Europe and the US account for an insignificant segment of the Russian market, experts fear that the quality of clothes sold may decline as a result, while prices may go up.

Russian presidential aide Andrei Belousov announced last week that Moscow had prepared a second package of sanctions to retaliate against western punishment which could involve non-agricultural products, including “some kinds of clothes”. At the same time, he stressed that Russia’s response should not harm domestic producers and consumers, but support them.

At present, the share of US apparel on the Russian market is 0.4%, and another 10 to 12% come from European Union countries. A sizable part of clothing of world-renowned European brands supplied to Russia is manufactured in Vietnam, India and China, and won’t fall under the sanctions in the event they are approved.

“However, if Russian consumers accustomed to expensive clothes from Milan and Swiss boutiques choose to travel abroad to buy them, it will be just cheap Asian goods that Russian producers will be left to compete with,” the Rossiiskaya Gazeta daily quotes the director general of the Infoline analytical agency, Mikhail Burmistrov, as saying.

“I’m afraid the ban on imports of clothes will do more harm than good to the Russian economy,” a retail expert told the New portal.

“We shouldn’t expect to be left ‘without pants’, and apparently this situation will turn as a major competitive advantage for Russian brands,” Boris Agatov, director general of Project Line LLC, said.

But most likely, it will tell on prices, not quality, pushing them up.

Besides, it will affect small and medium-sized fashion retailers who bought a foreign-based franchise. This is a common situation in the fashion industry: for example ALDO, DNKY, ESCADA, New Balance, Timberland are represented through Russian companies that brought their franchise. If this ban is imposed, dozens of thousands of people will be left without jobs across Russia, the expert believes.

Commercial property developers will also be hit. The share of foreign brands in shopping malls is well above 50% If these brands have to close their outlets, developers will run into huge losses, as very often it is foreign chains that are anchor tenants.

“In my opinion, the imposition of sanctions may bring about a catastrophe in fashion retail,” Agatov summed up.

Some analysts say the situation must not be dramatised. A ban on imports of clothes will not hit consumers, says the chairman of the State Duma committee for industry, Sergei Sobko. “The majority of our people don’t wear Versace or Valentino suits, pop clothes are supplied from the global factory named China. All that is produced there, even if these are European brands, will be sold the way it used to be,” the politician said.

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