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Russia Calls on Foreign Apparel Brands to Boost Manufacturing

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Russian trade officials are making a plea to foreign clothing brands to localize their production in Russia. Deputy industry and trade minister Viktor Yevtukhov outlined a number of incentives, including state support programs for technical upgrades and new investment projects, long-term tax breaks for new factories until 2025, and a share of the market from the state procurement order, according to online news site Russia Beyond the Headlines (RBTH).

Yevtukhov said Russia fills the gap between expensive European product and “so-called cheap Asian-made consumer goods,” and noted that the country already has a good base of textile factories to build upon. In particular, Yevtukhov sees an opportunity for investment in Russia’s technical textiles and nonwoven fabrics, which currently accounts for about 30 percent of the industry’s sales.

The minister also stressed the importance for Russia to establish relationships with large retail chains at the mass-market level, RBTH reported. That call of action, and the push for international labels to produce in Russia, sharply contrasts recent news that fashion brands like U.K.-based New Look is choosing to abandon its Russian business due to political tensions. New Look CEO Anders Kristiansen said, “All retailers are having an extremely tough time in Russia, not just in clothing.” He added, “If that means we will not be present in the Russian market for the next one to two years, we don’t really have a problem with that.”

In September apparel retailer Benetton made a surprise move to continue with its expansion into Russia when it re-opened its flagship in Moscow, despite reports that a Kremlin aide recommended Russia ban imports of foreign clothes in retaliation for imposed sanctions from Western countries that have negatively affected Russia’s economy.

Government officials issued restrictions in September on the imports of fabrics, clothing, footwear, rubber soles and other goods not produced in Russia, Belarus or Kazakhstan, in an attempt to support Russian manufacturers. The ordinance also prevents federal contracts from being awarded for certain foreign-made light industry goods—including fabric, clothing and footwear—or any using any non-Russian made materials. The only exceptions are when a necessary good is not produced within the Moscow-led customs union.

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