In March this year, the United States and the European Union officially launched sanctions against Russia. Subsequently, the Russian government also adopted a series of counter-sanctions measures, and friction between the two sides intensified. The textile and apparel field has also been affected. First, the German sports brand Adidas decided to close a number of Russian branches and reduce plans to add stores. Adidas has more than 1,000 branches in Russia, with annual sales of 1 billion euros, accounting for about 10% of the total. Reducing the Russian market will deal a big blow to the brand.
Subsequently, the British fashion brand NewLook announced the suspension of its expansion plan in Russia. This year, NewLook has just deployed a new development plan, and Russia is one of the four markets it plans to focus on developing. The withdrawal of European and American businesses has led some international and domestic media to speculate that China will get opportunities from this. But in the eyes of those Chinese businessmen who are personally engaged in the textile and clothing trade with Russia, it is a different story. The Russian market is not as good as it seems.
Fur demand declines
Some media have pointed out that with the expansion of the scope of anti-sanctions, fur, as an important imported commodity from Russia, may be included in the list, which will benefit Chinese fur export companies.
However, in the view of Wang Jing, chairman of Wendeng Jinxin Fur Co., Ltd., the current situation is far from a favorable situation. She said in the interview: “This situation in Europe, the United States and Russia has caused Russia to fall into a deeper economic recession. Our company’s main customer groups are from Russia. In previous years, this time was the peak season for fur clothing sales, and many Russians Customers are coming to prepare goods for winter, which should be our busiest time. However, this year’s transaction volume has dropped significantly, half as much as in previous years.”
Due to the cold and long winter in Russia, fur clothing is a necessity in the eyes of Russians, and it is also a sign of their wealth. Most women in Russia own multiple pieces of fur, and many consumers even take out loans to buy fur. This consumption concept has made Russia one of the largest fur consumers in the world, with sales growing at an annual rate of about 25%.
However, this year the situation seems to have changed. Not only did Wang Jing receive fewer orders, the price per order also dropped. She said: “Customers have repeatedly asked us to lower prices. These are old customers. They have repeatedly emphasized how bad Russia’s current economic situation is, and we can only make concessions.” In order to keep orders, Chinese export traders can only endure the pain. Bear the consequences of reduced profits.
Wang Jing also said that the biggest difference between Russian customers and customers from other countries with greater demand for fur is that they have higher quality requirements, such as the grade of the fur, the quality of the lining and the meticulousness of the workmanship. They are all more demanding than consumers in Central Asian countries. However, today’s depressed economic situation has forced them to abandon high-quality products. At this time last year, customers from Russia expressed that they wanted better quality products when purchasing from Jinxin Fur. However, this year their requirements have changed: they want the products to be lower grade and cheaper.
Buyers cautiously reduce inventory
Ma Weidong, who has been operating shirt trade in Yabao Road for several years, is at a loss. Most of the customers of his foreign trade brand VEDONNI are from Ukraine and Russia. At the beginning of the year, the riots in Ukraine had already caused considerable losses to VEDONNI, and then the fierce competition between Russia and Europe and the United States put Ma Weidong’s business in trouble.
He said: “It is said that the Russian market is undergoing a huge reshuffle, and it is a good time for China to fill the gap in the market. But as far as my personal experience is concerned, there is really no real growth now. I have no idea how it will develop in the future. The feedback we are receiving from customers now is that the economic situation in Russia is getting worse and worse, which makes their sales poor.”
The unfavorable sales in the Russian market directly led to a significant reduction in the number of Ma Weidong’s orders, and the unit price per customer also dropped. The only thing that makes him happy now is that the number of customers has not changed much, which shows that old customers still very much recognize VEDONNI’s products, but all customers have become extremely cautious when placing orders, and no one wants to carry too much inventory. In this regard, Ma Weidong was forced to choose to do less or even no spot trading. Faced with changes in the international situation, small traders seemed particularly powerless.
VEDONNI’s products are mid-to-high-end products in Russia. When asked whether he planned to adjust the product line and produce low-end products to increase sales, Ma Weidong said: “Even if adjustments are made, it doesn’t make much sense, as it is not as big as furs and other large items. Clothing products are different. The profits of shirts are already very thin. There is not much difference between the profits of mid-to-high-end and low-end products. Now, the overall economic situation there is not good. It should be said that except for necessities, it should be said that any product is not easy to sell. “
Moscow wholesale trade is difficult to grow
Sun Weishun, who spends 1/3 of every year doing wholesale clothing trade in Russia, is currently in Moscow to take care of business and understand local fashion trends. His store is located in Liberyuno, one of the largest wholesale markets in Moscow.
According to Sun Weishun, tens of thousands of Chinese people gathered here.� people, 70% of clothing products produced in China. Other products come from Türkiye, Poland, etc.
“In the short term, the proportion of 70% of Chinese products will not increase. Although the relationship between Europe, the United States and Russia is rigid, this is more of a national level matter and will have an impact on large enterprises and important economic fields. It has not had much impact on the retail trade of daily necessities, clothing, etc. There are many wholesalers from Eastern Europe in Liberiono. They have not voluntarily withdrawn or been forced to leave Moscow on a large scale, and no one has boycotted their products. Everything is fine. It’s normal.” Sun Weishun said, “Therefore, it is still difficult to see how many opportunities there are for China. The main reason is that the Russian economy is shrinking, resulting in weak purchasing power. However, if this is a protracted war, it is possible that Chinese goods can still be Let’s look for greater business opportunities.”
Sun Weishun also said that another reason that hinders the greater development of Chinese clothing products in the Russian market is the rising domestic costs in China, which makes the product price advantage no longer obvious, while Central Asian countries such as Kyrgyzstan However, it has emerged in the market because of its low-priced products. In addition, Russia’s local clothing industry is also gradually rising. Although about 50% of the products it sells still come from China’s Albemarle Road, all those engaged in the clothing trade in high-end business districts are Russians. For example, in Luzhniki, another large local clothing wholesale market in Moscow, there are mostly local Russian businessmen. The products they sell are of a slightly higher grade, while the products of Chinese traders are still mainly mid- to low-end products. They have lost their price advantage and it is difficult to expand on a large scale. Therefore, there are only two paths before China’s apparel export trade. One is to control costs, and the other is to compete in the mid-to-high-end field.
