Difficult Transition

With a population of 147 million people, Russia had in 1999 an inflation figure of +87.5 per cent whilst its Gross Domestic Product (GDP) increased by 1.2 per cent only.

The Russian apparel industry has been faced during the 90s with the well known difficulties derived from the initiation of a market economy: withdrawal of the State's involvement, opening markets to international competition, and obsolescence of the Russian apparel production tools inherited from a system that privileged heavy industry. Since 1998, Russian apparel production seems to have regained a competitive edge due to the devaluation of the Russian rouble but, far more important, due to partnership agreements signed with Western firms. This quite naturally has led a certain number of firms to integrate the design element into their production thus upgrading the apparel sold.

Figure 1

Developing Exports

In 1999, Russia has imported $251m worth of apparel goods, Germany and Italy being their main suppliers with respectively 26 per cent and 22 per cent shares (in value) of total apparel imports.

Share of Total Apparel imports into Russia

Germany 26 per cent
Italy 22 per cent
Finland 15 per cent
France 13 per cent

Figure 2

It is essential that Russia develops its apparel exports; indeed these have increased but the growth potential still remains very high. In 1999, apparel exports from Russia amounted to $637m against $295m in 1998. Apparel exports in 1998 represented less than 1 per cent of the total Russian exports of merchandise. When considering the apparel exports worldwide, Russia's share was only 0.17 per cent according to WTO.

Although the evolution from 1998 to 1999 points in the right direction - doubling the value of exports and decreasing imports by approximately 34 per cent - Russia should in the next few years increase still further its share of the world's apparel exports.

Marc de Laroche

Source: CTCOE (Centre for the Economic Observation of Textiles)