Major clothing manufacturers are starting to move orders from Chinese to Russian factories

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3/14/2015

Major clothing manufacturers are starting to move orders from Chinese to Russian factories

Translated from Russian by J.Hawk

Russian clothing manufacturers are opting in favor of
contracts with domestic light industry manufacturers over placing orders with
Chinese factories.

Several representatives of Russian light industry firms
stated that the cost of making clothing in China has increased by 80-85% due to
the increase in value of major world currencies. It is now cheaper to sew
clothing in Rusia by 15-20%, therefore domestic factories have an opportunity
to increase their share in domestic retail trade.

Some major clothing firms have already started negotiations
with Russian manufacturers. For example, the firm Sela is considering moving its
orders to Russian factories.

The network of clothing stores for young people Kira
Plastinina already has a small sewing operation which it is planning to expand.
At the moment the majority of the company’s orders are placed in Chinese
factories, but it will shift its orders to Russian factories.

The “I will be a mom” company expects to increase the share
of its products which are made in Russia to increase from 60% to 85%.

According to Andrey Razbordin, the president of the Light
Industry Union, this trend is a cause for optimism. “Domestic sewing factories
are fully competitive. Right now they have a decent chance to start
manufacturing at home. We are following in the footsteps of European companies
which used to place all of its manufacturing in China, but are now actively
returning it home, because of the convenience,” emphasizes Razbordin.

J.Hawk’s Comment: It’s not necessarily the convenience—it’s
ruble’s devaluation that suddenly makes Russian manufacturing of all kinds much
more competitive than it was in the past. Given the structure of the Russian
economy, the general trend is this: when the oil prices are high and ruble is
strong, Russia exports oil/gas and imports everything else. When the oil prices
are low and the ruble is weak (due to low oil prices but also to the sanctions
pressure), Russia exports…everything, including manufactured products, and
imports…nothing. One of the ironies of the post-Maidan Russian economy is that
Western sanctions may well have solved one of the major problems facing the
Russian government, namely how to reduce the importance of natural resource exports
in the economy and restore the balance between natural resources and
manufacturing.

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