"Russian clothing industry, once highly dependent on imports has transformed dramatically over the last few years. The weak ruble has made imported clothes, shoes and accessories less affordable for consumers, giving more space for local manufacturers, especially in the lower priced segment. Russian apparel brands have adopted anti-crisis strategies by reducing prices or relocating manufacturing facilities from China and Southeast Asian countries to Russia, as labour cost has significantly fallen in the country. "

Russian clothing industry, once highly dependent on imports has transformed dramatically over the last few years. The weak ruble has made imported clothes, shoes and accessories less affordable for consumers, giving more space for local manufacturers, especially in the lower priced segment. Russian apparel brands have adopted anti-crisis strategies by reducing prices or relocating manufacturing facilities from China and Southeast Asian countries to Russia, as labour cost has significantly fallen in the country.

Although the focus has shifted, some of the largest players have continued their long-term plans for global expansion. As Western markets pose challenges due to the economic and political tensions, Russian brands have turned to Asia.

Asian an emerging market

Countries like China, Bangladesh, India, Pakistan, Sri Lanka and Vietnam are considered global apparel manufacturing hubs. However, many of these have emerged as fast growing consumer markets, offering huge opportunities for foreign apparel brands. The 2015-16 Outlook for the Retail and Consumer Products Sector in Asia report by PricewaterhouseCoopers suggests that by 2018, consumer expenditure on clothing and footwear in Asia is expected to reach almost $920 billion compared to an estimated $625 billion in 2014. The Chinese market will account for almost one-third of regional demand for clothing followed by Hong Kong, Japan, South Korea, Indonesia, India and other countries.

Several Russian apparel brands have set up shop in Asia over the last few years. Sportmaster, Russia’s largest retailer of sportswear and fitness gear started its Asia expansion several years back. While announcing plans back in 2013, Sergey Agibalov, Sportmaster Group’s Business Manager observed that the company had considered China as a potential market due to its geographic proximity to Siberia and the Russian Far East, and also because the company had been placing orders at Chinese factories. The company managed to open 12 stores in China under the Sportmaster brand and 19 stores under the O’STIN brand (casual wear of middle-level price category), despite a sharp decline in the home market in 2014 and 2015.

Meanwhile, Russia’s Carlo Pazolini Group, which has been manufacturing luxury shoes and accessories since 1991, shifted up to 70 per cent of its manufacturing from Europe to China. It also operates own boutique in Beijing and has plans to open more stores there. 

India expansion plans

In January 2016, Vladimir Yevtushenkov, Chairman of AFK Sistema said the company’s fashion retail asset, Concept Group, launched a partnership with India’s Tata Group to sell Russian-made clothes through Tata’s e-commerce venture, TataCliq. The platform was officially launched in India in the end of March, and the Russian-made Infinity Lingerie brand is already there. .

Sistema says, the conglomerate does not have a clear strategy for Asian expansion, although there is a definite interest in these markets. The launch of Concept Group’s partnership in India is considered a pilot project, and based on its success AFK would decide on further expansion. Sistema acquired 40 per cent stake in Concept Group in 2014.

Meanwhile, a foray into the Indian market turned successful for another Russian apparel brand, SELA. The company partnered with two e-commerce platforms, Amazon and Myntra, for selling its collections on-line. As Said Julia Zefirova, Head Corporate Communications at SELA says India is a fast growing market and attracts many retailers, like China 10 years ago. Their printed T-shirts with Russian themes are popular in India.

Uncertain advantage

Timur Nigmatullin from FINAM believes the current Asian expansion is the beginning of a trend predicted by experts a long time ago. More Russian companies will enter Asian markets in the future, their main advantage in these markets would be established relations with local manufacturers and good corporate management practices.

Anna Lebsack-Kleimans, Chief Executive of Fashion Consulting Group doubts whether Russian clothing brands have any significant advantages in Asian markets as local brands have loyal customers. She adds Russian brands can win over Asian consumers by offering outstanding concepts, original ‘European’ designs, or a unique retail format.

Russian designer Gosha Rubchinsky is probably one such example. Spotted by Comme des Garçons a few years ago, Rubchinsky’s name and story went viral from Moscow and London to Milan and Paris to Tokyo and Seoul. Gosha Rubchinskiy street wear, which is inspired by 1990s Russia subcultures, is also available in various retail outlets in Indonesia, Philippines, Hong Kong, Singapore and Taiwan.