Nike, Adidas, Puma…have withdrawn
Since the conflict between Russia and Ukraine broke out, many Western international brands have withdrawn from Russia…
Under the pressure of sanctions from the United States and other Western countries, well-known Western sports brands such as Nike, Adidas, Puma, and Reebok have joined the army of interrupting their business in Russia. According to the Russian “Kommersant” report, as early as March, Adidas announced the suspension of its store sales in Russia, and online shopping has also been interrupted. Puma, which has about 100 brand stores in Russia, also announced its withdrawal from the Russian market. Reebok also joined the ranks of withdrawing from the Russian market, selling its Russian business to a Turkish entrepreneur.
At the end of April, a light sign art work appeared on the streets of the city center of St. Petersburg, Russia’s second largest city. It consists of the letters “ZAMESTIM”. Each letter corresponds to a Western brand that has left the Russian market. “Z” stands for ZARA, “A” stands for Adidas, “M” stands for McDonald’s…
On June 23, U.S. sportswear manufacturer Nike told Reuters that it had decided to fully withdraw from Russia.
As many Western sports fashion brand stores close their rolling shutters in Russia, will there be a “vacuum” in the Russian sportswear market? Which brands will the “recession” of Western companies bring opportunities?
Russia’s “Kommersant” reported that Russian footwear production is growing against the backdrop of the departure of foreign clothing brand companies. According to data from the Russian Advanced Technology Development Center, this number has increased by 1/3 since February. At the end of winter in early 2022, Russian companies produced a total of about 11 million pairs of shoes, and by May production had reached 15 million pairs.
Yusupov, deputy director of the Russian Central Regional Development Center, said that Russia’s domestic production can fully meet the needs of Russians. The large-scale withdrawal of foreign companies from Russia has not had a major impact on the Russian shoe industry. Deliveries from foreign brands including Nike, Adidas, Puma and Converse have been halted since February, but their places are likely to be taken by existing players.
Russian experts believe that the most likely replacements for departing foreign brands in the future will be Russia’s own brands or international sports brands such as China’s Anta, Li Ning and Turkey’s Kinetix. In 2021, China will become the leader in Russian footwear imports. More than half of Russia’s foreign footwear goods are imported from China, with a total value of more than $1.5 billion, and the import volume is almost twice Russia’s domestic production.
According to information from the Russian consulting company “Knight Frank Russia”, only two foreign brands will enter the Russian market in 2022, including the Chinese “Li Ning” sports brand.
The two companies that have decided to enter the Russian domestic market in 2022 are the American boutique Vilhelm Parfumerie and the Chinese “Li Ning” sports brand.
According to reports, this is the smallest number of foreign brands entering the Russian market since the first half of 2014. Even at the height of the pandemic, six foreign companies entered the Russian market in the first half of 2020.
After the start of military operations in Ukraine, some large international companies announced reductions in their presence in the Russian market or their complete withdrawal from Russia, as well as the sale of their assets to local companies.
There have been media reports that Li Ning plans to open 15 to 20 retail chain stores in Moscow and St. Petersburg. In addition, Li Ning will also cooperate with local multi-brand sporting goods e-commerce companies.
Russian Minister of Industry and Trade Denis Manturov said on March 23 that the departure of some foreign brands from Russia does not mean that Russian people will have difficulty buying clothes. On the contrary, the increase in import prices and the suspension of sales of some brands will be beneficial to the development of Russia’s domestic clothing industry.
He said: “Now is the time to promote the growth of Russian local brands and open Russian local brand clothing and footwear chain stores. We will fully help our companies in this work.
Anta, Li Ning and other Chinese clothing brands
Has the potential to enter the Russian market
Since Russia launched special military operations in Ukraine, many Western clothing brands, including Zara and H&M, have announced their departure from the Russian market. So, do Chinese brands including Li Ning and Anta have the potential to enter the Russian market in the future?
Chief expert of the Collaborative Innovation Center jointly established by the provinces and ministries for comprehensive strategic cooperation between China and Russia at Heilongjiang University�Ma Youjun, chief expert of the Northeast Asian Strategic Research Institute of the Heilongjiang Academy of Social Sciences, said in an interview with the Russian Satellite News Agency on the 24th that Western sanctions are conducive to the entry of goods from developing countries into the Russian market, and high-quality and low-priced Chinese goods have greater potential.
In addition, RMB payment and settlement may become the main payment method for Sino-Russian economic and trade cooperation in the future. After Russian President Vladimir Putin announced special military operations in Ukraine on February 24, the United States, the European Union and other Western countries significantly escalated sanctions against Russia. A series of multinational companies have announced their departure from the Russian market, involving logistics, movies, digital equipment, clothing, e-commerce and other industries. On the evening of March 2, H&M, the world’s second largest fashion retailer and Swedish clothing brand, announced on its official website that it would suspend all sales in Russia. Since then, the Spanish Inditex Group issued a statement stating that it has stopped trading in Russia, closed 502 Zara stores, and stopped online sales. Inditex owns many well-known brands such as ZARA, PULL&BEAR, Bershka, Oysho, Massimo Dutti, etc. Mango, Spain’s second-largest fashion retailer, said it would also temporarily close 120 of its stores in Russia, and Tenda, the third-largest clothing group, also made a similar decision.
Talking about the Western sanctions that Russia has suffered, Ma Youjun said that since the conflict between Russia and Ukraine, the United States and Western countries have launched all-round sanctions on Russia, which has put Russia in trouble in various fields such as economy, science and technology, culture and society. Considering that one of the purposes of economic sanctions against Russia is to completely defeat Russia, these sanctions may not be lifted immediately after the war.
He also believed: “Although sanctions have had a serious impact on the Russian economy, they have indeed provided favorable conditions for the products of other developing countries to enter the Russian market. The current cooperation between China and Russia is based on the ‘China-Russia Comprehensive Strategic Partnership for Coordination in the New Era’. Chinese goods have already entered the Russian market. Since the collapse of the Soviet Union, Chinese goods have accounted for a large proportion of the Russian market. With the development of the Russian economy severely affected by sanctions, high-quality and low-priced Chinese goods may become more popular in the Russian market. welcome.”
Experts said that it can be seen that China currently sells daily necessities and textiles in the Russian market, mainly private enterprises, joint-stock enterprises or unofficial enterprises. These enterprises are not included in European, American and Western sanctions. From the perspective of strengthening cooperation in the future, economic sanctions against Russia have led to an increase in global commodity prices, which will inevitably increase the risk of a world economic crisis. Therefore, in addition to considering the possibility that the Russian market will further expand demand for Chinese goods, it remains to be seen whether the Russian market’s ability to pay will be affected by the economic downturn. Currently, Chinese brands such as Anta and Li Ning have few stores in Russia. When talking about future cooperation methods, Ma Youjun believes that RMB payment settlement and cooperation with small local banks may be helpful in promoting the export of Chinese brands to Russia.
Ma Youjun said: “According to research, about 1/3 of China’s products in the Russian market use U.S. dollars, 1/3 uses RMB, and 1/3 uses rubles. It is obviously unlikely to use U.S. dollars for payment in the future, and only RMB and rubles can be used. However, the ruble exchange rate fluctuates greatly, so RMB payment and settlement may become the main payment method for future economic and trade cooperation between the two countries.”
He pointed out that I personally believe that cooperation with Russia can be strengthened through local private banks such as Harbin Commercial Bank, because compared with large state-owned banks, local private small banks are not subject to Western sanctions. This can also provide convenient development advantages for Chinese brands such as Li Ning and Anta to export to the Russian market in the future. Of course, Chinese brands also need to be careful when entering the Russian market. On the one hand, they must not overly occupy the Russian market; on the other hand, they must also pay attention to avoid exporting counterfeit and shoddy goods to ensure healthy competition in the Russian market.
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