Imported textiles to Russia soar

Russia's textile industry has fallen back as foreign competition, rising electricity and gas bills, as well as tough local competition, have conspired to lower output. In 2002, production fell for the first time in four years.

Although domestic factory managers have pushed for bigger orders to minimize their overhead problems, business has still been slow, with the exception of the traditional heartland of the industry in Ivanovo, 200 km north east of Moscow.

Competition is fierce, with over 400 factories in the Ivanovo area and another 200 around Moscow vying for business.

Although Russia launched a programme to develop its once-thriving linen industry, little has come of the project. High interest rates have forced companies to steer clear of development loans. Delays connected with collecting export VAT tax has also put manufacturers off exporting their products.

The local textile manufacturing sector is however attracting a modicum of interest from foreign investors. In August 2002, US$1.5 million was ploughed by investors into women's clothing manufacturer, Pervomayskaya Zarya, based in St Petersburg.

On the other hand, most local factory owners are not holding their breath in the hope of being baled out by overseas funds. Most Ivanovo textile factories survive producing chintz cotton fabrics that are used to make bedclothes, house dresses and underwear.

Success stories like the Western-style Gloria Jeans outfit, with its increasingly famous label and massive output are few and far between.

As a result, production of woollen fabrics, knitwear, cotton goods and others are down, while the undeclared grey import markets in commodities are thriving. Official imports are also on the rise, with China increasing its textile imports 61% in 2002 from three years earlier.

from Leonid Orlov, Moscow Consultant