View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
March 8, 2022updated 11 Mar 2022 4:20pm

UK fashion firms must cut exposure to Russia, Ukraine, Belarus, CIS

The UK Fashion and Textiles Association (UKFT) says companies must consider their exposure in Russia, Belarus, the CIS and Ukraine as it will become increasingly difficult to receive payment for goods and ship goods to customers.

By Hannah Abdulla

The UKFT says it is monitoring the situation closely but adds it is reasonable to assume it will not be business “as usual” for the foreseeable future with Ukraine, Russia, Belarus and possibly the CIS which have all been “traditionally good markets for UK exporters”.

“It is safe to assume that Ukrainian retailers will not be able to receive or pay for goods under any circumstances – sadly many of these businesses may not survive as the devastation of the country is likely to be felt for a long time,” the UKFT said.

“Many businesses are already uncontactable and they certainly have other more immediate priorities to consider around the safety of their families and children.

“If Ukraine is occupied by Putin’s forces, the UK and other Western governments may well decide to outlaw exports and payments to Ukraine (as well as Russia and Belarus) for as long as the country remains occupied by Russian forces.”

The UKFT said in terms of goods sold to Russia, Belarus and possibly other CIS countries, the following should potentially be anticipated:

  • Cancellation of orders (even where deposits may have been paid) either because of logistical issues or because of the damage the Russian invasion has done to the trading relationship between Russia/Belarus and the rest of the world
  • Inability of Russian/Belarusian businesses/individuals to import goods/border closures
  • Inability of Russian/Belarusian businesses/individuals to pay for goods even after deposits have been paid
  • Exclusion of Russian/Belarusian (and allied) businesses from international banking operations
  • Inability of UK companies to make refunds/payments to Russian/Belarusian businesses due to sanctions on Russia which are likely to extend also to Belarus
  • Russian/Belarusian consumers being told to boycott Western goods
  • Cancellations of flights between Russia/Belarus and Ukraine with Western countries

Whilst most companies do not import from Russia, some import from Ukraine. It is likely that the supply of these goods will be completely disrupted. Similarly, it is possible that there may be disruptions to the supply chain for those companies importing raw materials from countries such as Kazakhstan, Tajikistan etc., many of which are in a customs union with Russia and Belarus.

Companies should also consider risks to their commercial relationships with Russian/Belarusian and CIS owned businesses based outside Russia and the CIS bearing in mind that these may not always be obvious. Individuals behind some of these companies may have been also be targeted by asset freezes and there may be liquidity issues in the businesses they own outside the region.

“Engage with your customers and suppliers wherever you can and to anticipate and adapt to any changes sooner rather than later as it is likely that this invasion will lead to a significant change to the regional and global business outlook and balance in ways which are impossible to predict,” the UKFT advised.

“It is reasonable to expect uncompleted orders for Russia/Belarus and Ukraine to be cancelled either officially or because there may be no way to make payment for the goods.”

The UKFT’s note follows one from the British Fashion Council last week in which it said it had been having contact with many of its members and the first thought for all was how to support with humanitarian aid to Ukraine.

Just Style is keeping you up to date with all the latest developments of the Ukraine Russia war and their potential impact to the apparel industry via a Special Focus.

UPDATE – Ukraine-Russia crisis: Fashion firms support Ukraine as Russia conflict rages

TIMELINE – Ukraine-Russia crisis: The impact on the global apparel industry

Fast Retailing CEO “defends position” to continue Russia trading

EXCLUSIVE: US apparel industry prepares for impact of Ukraine-Russia war

Related Companies

Topics in this article:
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Monday. The industry's most comprehensive news and information delivered every quarter.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Just Style