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Fashion as a driver of light Industry in the Russian regions

May 29, 21:33 UTC+3
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Fashion today is a key facet to boosting the completive edge of the Russian light industry, although opportunities created by the new technology, market shifts and changing consumption models come along with risks. It can be a major growth driver for the countrys non-commodity exports, with the Russian regions having an important role to play.

The fashion industry is a part of a creative economy which keeps going up even amid the overall downturn, outpacing the growth rate of the global economy.

  • The industry leaders (top 100 publicly traded companies) boast an aggregate market capitalisation of over USD 1 trillion (as compared, for instance, to USD 635 billion reached by Russia’s top 100 most expensive companies in 2016).
  • The Russian players are not yet found among the world’s top 100 major fashion companies. The country accounts for just 0.014% of the global fashion market, with imports making up 78%, or RUB 2.3 trillion, of its apparel, footwear and accessories sales domestically.
  • Only 12 Russians made it to the Business of Fashion 500 list being an annual index of the most influential people in the fashion industry, dominated by the citizens of US (126), the UK (86), France (53), Italy (51) and China (25).

Instead of trying to catch up with the fashion leaders, Russia should rather focus on “building and rolling out a new market concept to give a boost to its own fashion brands,” according to Alexander Shumsky, Executive President at the National Chamber of Fashion.

Emerging fashion industry trends can be leveraged in pursuing these goals.

  • Decentralisation is gaining momentum as a global trend, with a wealth of new fashion brands entering the market in recent years, and a class of consumers emerging who do not pay attention to the recognition of domestic brands abroad. In Russia, this trend is being further backed by the import substitution policy.
  • The fashion industry is embracing robotic automation and taking on 3D printing technology. This creates opportunities for the Russian players to boost the quality of products by rolling out advanced manufacturing facilities.

The Government is ready to bolster the development of the light industry:

  • The Government’s anti-crisis plan for 2017 provides for RUB 2.2 billion injections into the sector. These include subsidies to finance current manufacturing operations, purchase of domestically produced fabrics, upgrade of production facilities, and import substitution projects.
  • In the spring of 2017, the Russian Parliament passed a bill that would allow textile, leather and apparel manufacturers with more than 250 employees to qualify as medium-sized rather than large businesses. This will grant them access to cheaper loans and government-supported SME programmes.
  • Anti-counterfeiting efforts are another priority, with electronic labelling of fur products introduced in late 2016. In 2017, the Ministry of Industry and Trade plans to endorse e-labelling for other types of products.
  • The 2017 budget of the Ministry of Industry and Trade includes RUB 370 million to promote the Made in Russia brand overseas.

The Russian regions are important players in driving forward both the light industry and fashion.

  • The Ivanovo Region accounting for 80% and over 50% of the entire Russia’s cotton fabrics manufacturing and processing, and the Russian Agency for Strategic Initiatives have set about to create a new market as part of the FashionNet National Technology Initiative.
  • In the summer of 2017, the Vichuga special economic zone in the Ivanovo Region will see the kick off of construction of a synthetic fibre plant. This fibre type is not yet produced domestically, and 80% of the plant’s sales is already secured with customer orders. The area will also host an industrial technology park built to accommodate small enterprises that will use this fibre to produce finished products.
  • The St. Petersburg light industry development programme until 2020 includes a set of measures to support small businesses in the textile and apparel sectors, as well as service and trade companies engaged in the sale of apparel, accessories, footwear and other related products. The city is also building an industry-specific business accelerator to promote new designers, including through the use of advanced technologies (3D printing, robotic sewing machines and others). The project “St. Petersburg as the Centre of High Fashion and Light Industry” won three nominations of the national competition organised with the support of the Agency for Strategic Initiatives. 
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