The following research report contains market research, analysis, statistics and business intelligence relating to research on Textile Fabrics In Russia.

Order the 2008 Edition of this report now by adding this item to your cart or for faster service call us at 212-398-5505 to speak to a customer service representative.

ABSTRACT
The market for apparel, furniture, and other textile consumer goods is developing rapidly. For the past three years, local consumption of consumer goods has steadily increased. By early 2002, consumer goods prices will reach levels surpassing those just before Russia's 1998 financial crisis. This will present siginificant opportunities for U.S. firms.

Various surveys show that the textile market is very receptive to high-quality products imported from Western countries. Nevertheless, low quality and inexpensive Asian products maintain a considerable presence in the market (close to 50%).

Competition is stiff with many European suppliers operating in Russia. Germany, Italy, the Netherlands and other countries continue to hold larger market share than U.S. suppliers. However, Customs statistics do not readily provide information on the country of origin for textiles arriving from Europe. For example, the majority of U.S. textiles enter Northwest Russia via Scandinavia, but statistics are not available through official channels.

European and Asian manufacturers continue supplying traditional materials such as wool blends or synthetics. There is also a growing interest in "techno" materials which are currently fashionable for young consumers.

The distribution system has improved in recent years. Nevertheless, many famous foreign companies prefer to have direct business relations with local apparel manufacturers to ensure long-term and regular orders.

Twenty-five percent of the textile trade is concentrated in Moscow, Moscow Oblast, and St. Petersburg. U.S. companies should expand into the regions where a large number of end-users are based.

The keys to success for U.S. textile exporters are:
- a flexible pricing policy
- barter options,
- aggressive promotion of new products
- a continuous presence
- direct contacts with end-users
- cooperation with reputable and knowledgeable local distributors
- expansion into regional markets with a wide product range

The best prospects for U.S. textile suppliers in the next three years will be in new "high-tech" product lines for all textile categories, but especially those for upholstery and adolescent fashions. End Summary. Report Text Continues in Section A.

Gold/Silver Key Services and Website: The U.S. Commercial Service (CS) in St. Petersburg, part of the American Consulate General, encourages U.S. companies wishing to do business in St. Petersburg and NW Russia to utilize its Gold Key Service. Experienced Commercial Specialists identify opportunities, arrange business appointments with pre-qualified Russian agents and distributors, and accompany you to the meetings. Gold Keys cost $400 for a full day of appointments (typically 6), and $150 per additional day. Driver and professional interpreter services are strongly encouraged and charged at cost. CS requires sufficient company literature and price lists at least three weeks prior to the desired appointment dates, and accepts payment by VISA, MasterCard, American Express and Discovery cards. Additionally, as part of CS' regional program with Commercial Service offices in Scandinavia and the Baltics, CS St. Petersburg will be happy to share your Gold Key inquiry with these offices, who may contact you directly. Or, for $600, you may be interested in our International Partner Search (IPS). Upon ordering an IPS directly from us or through one of our U.S. regional offices, we will respond within 15 working days of receiving all necessary materials by providing the contact information of 10 potential buyers, distributors, or agents who are interested in your products. Alternately, CS St. Petersburg's Silver Key Service provides a list of at least 10 quality contacts, contact information verified - but interest not vetted, for $100. For more information about CS St. Petersburg services and programs, please visit: http://www.usconsulate.spb.ru/fcs.
A. Market Highlights and Best Prospects

Russia's financial crisis in 1998 resulted in a tremendous increase in import prices (almost 300%). It also created a niche for domestic manufacturers of textile products (fabrics and sewn products) and raw materials. Consequently, domestic production grew by 20% in 1999 and approximately 15% in 2000. Relative stabilization of Russia's currency has gradually brought consumer goods prices closer to pre-crisis levels. Therefore, U.S. firms can expect new opportunities for their products in Russia's market.

Despite recent financial progress in the textile industry, investments are still very low. In the first quarter of 2000, total domestic investments were only $5.5 million and foreign investments were only $2 million. With almost no support from the Russian government, local textile and apparel manufacturers rely on their own funds to create new apparel collections and manufacture competitive fabrics. In St. Petersburg, The U.S.-Russia Investment Fund (TUSRIF) and the St. Petersburg Bank for Reconstruction and Development fund a credit program for small businesses with fewer than 100 employees.

The primary challenges confronting the domestic textile industry are:
- inadequate raw materials;
- obsolete production equipment (40% of production facilities do not meet modern technical requirements);
- lack of capital;
- low disposable income levels.

Because of these problems, domestic products cannot compete with imports either in price or in quality, which leaves considerable subsector market share open to imports. Such imported products include synthetic fabrics, high-quality fabrics for fashion items, woolens and semi-woolens, knits, and others.
Western European, Asian, and Eastern European suppliers dominate the import market. Official statistics indicate that the following countries as market leaders:
- Italy
- Korea
- Taiwan
- Germany
- Czech Republic
- Slovakia
- India
- France
- Austria

Official import statistics are available on selected textile categories and do not provide a complete picture because they only reflect official cross-border volumes but not the country of origin. Consequently, these countries are overall market leaders, though in specific categories of fabrics, the situation may be different.
For example, the United States and Germany each claim 10% of the knitted fabrics subsector, while other European countries share another 30%. The remaining 50% belongs to China, Korea, and Taiwan. Interestingly, the U.S. is the leading exporter to Moscow, one of Russia's major textile importers.

Uzbekistan, Kazakhstan, and Turkmenistan hold 50% of the cotton fabric market. A considerable amount of imports also arrive from Moldova. Western Europe has about 30% of this market, led by Germany. U.S. imports of cotton fabrics are insignificant. It is important to note that materials arriving from Germany are not necessarily produced there. It is possible that certain volumes of U.S.-made products are imported into Russia through Europe.

Russian exports primarily include linen and cotton. These fabrics are exported for further processing in foreign markets. Woolen and semi-woolen fabrics exports are low. The European Union cancelled import limitations in May 1998, and Russian exporters now only need to apply for an export license. A number of linen producers export linen to the Unites States where U.S. firms dye and finish them.

Fashion Trends
The most popular colors range from black and gray to hints of cyclamen and red, orange and terra cotta, and navy blue and violet. Natural fiber colors are also popular.

The most popular summer fabrics are blends such as flax with cotton and artificial materials.

A new trend is to use natural and synthetic transparent materials. "Techno"fabrics, such as polyurethanecoatings on rigid backings, hold a large market share. Manufacturers of traditional suits prefer elastic fabrics as well as woolens blended with Lycra and PAN. Producers of women's and children's wear use natural and blended knits.
Compressed fabrics represent embroidered silk and silk prints. Synthetic fabrics are also very popular due to low cost; however, they have to resemble natural materials and must be easily cut and sewn. B.Competitive Analysis

Domestic Production
Approximately 25% of domestic manufacturers are well established and account for 70% of domestic production volume. In 2000, 47% of domestic manufacturers reported losses.

Public sector programs to support local manufacturers are insignificant or rarely utilized. The Russian government funds one program to stimulate flax development; the program will end in 2001. Furthermore, Sberbank, the national savings bank, has earmarked $67 million for loans to the textile industry. Nonetheless, textile industry borrowers in 1999 applied for only slightly more than $7 million out of a total of $67 million allocated for their use. Russian producers use government credits to the textile industry in order to purchase raw materials. However, the majority of local firms prefer short-term bank loans.

Domestic production volume (in millions of square meters) from January to July 2000 was:
Wool 19.78
Silk 80.75
Cotton 269.41
Flax 39.16

The table below lists Russia's major textile producers and provides information on the status of their equipment (as available)

Material Company Location Capital Eqpt. Depreciation Wool Ulan-Ude Manufactura Ltd Republic of Buryatia 40%
Pyotr Alekseyev's Factory Moscow 69%
Kupavna Textile Company Moscow region 63%
Rostokin Factory Moscow --
Krosno Ltd Tyumen --
Tver Combine Tver
55%
Nevskaya Manufactura St. Petersburg --

Silk Orenteks Ltd Orenburg 46%
Chaikovsky Textile Ltd Perm --
Balteks Ltd Kemerovo --
Orton Ltd Kemerovo --

Cotton Shuyskie Sitsy Ltd
Ivanovo 42% Krasnaya Talka Ltd Volga region --
Kamyshinsky Cotton Com. Volgograd --
Ramensky Textile Moscow region 41%
Cheboksary Cotton Com. Cheboksary --

Flax Yakovlev Flax Factory
Ivanovo 71% Vologda Flax Factory Vologda -- Severlen Vologda --
Melenkovky Flax Comb. Vladimir --
Gavrilov-Yamsky Flax Com. Gavrilov-Yamsky --
Great Kostr. Flax Manufactura Kostroma --

In Northwest Russia, the largest manufacturers of fabrics are Severlen (flax, Vologda region); Northern Textile Ltd (cotton, St. Petersburg); Nevskaya Manufactura (woolen and semi-woolen, St. Petersburg); Uzor Ltd (upholstery, Leningrad region); Gardinno-Kruzhevnaya Company (lace and curtains, St. Petersburg); Kvarton Ltd (threads and upholstery, St. Petersburg).

Third Countries
The following companies lead the import market:

Italy Roli Elsa and Gruppo Frati (suit and coat fabrics)
Bellandi S.P.A (100% wool)
Lanificio Markolana (wool, wool blends, coat fabrics)
Styletex (wool, wool blends, imitation furs)
Cevibi s.p.a. (swimwear and sports wear fabric)
Lanificio Fortex S.P.A. (coat fabrics)

Korea Startex (synthetics, blends)
Sachan (synthetics)
Yongtex (raincoat and jacket fabrics)

Taiwan Hong Ho (synthetics and blends)

Germany Ulmia Stoffe GmbH (viscose, blends, synthetics)
Gunter Drews Textil Werke (fabrics for dresses and blouses)

Czech Republic Slezan Frydek-Mistek (wool, wool blends)
May (viscose and blends)
Carpola, Textilana, and Slovena (wool blends)

France Tissavel (imitation fur)

Austria Ebner Franz Embroidery (lace)

Turkey Flokser Group (microfibers and imitation leather)

Korean-made fabrics dominate the low-cost niche of the textile market. Small companies purchase these fabrics through offshore intermediaries, which offer low prices. Only large factories make direct purchases. This is because of long production cycles and delivery combined with a narrow range of colors and textures. Small manufacturers simply cannot compete on these terms.

In the past 18 months, Asian suppliers have gradually lost share in this niche. Suppliers of low-cost artificial and natural fabrics are taking up the slack. These suppliers include the CIS, Germany, Slovakia, the Czech Republic, and Italy; their products cost about $2-4 per meter.

Russia imports approximately $1.7 billion of cotton from Uzbekistan and Tajikistan, which accounts for almost 50% of cotton imports. Germany, the major European cotton supplier, exports approximately $500 million to Russia.

U.S. Share
Direct U.S. imports are very small. American-made fabrics primarily enter Russia via Finland and other European countries. Consequently, U.S. fabrics are not reflected in official statistics. Several direct importers of U.S. products are based in Moscow and distribute:
- knits (natural fibers and blends)
- raincoat fabrics
- non-apparel fabrics (e.g., upholstery)
- breathable fabrics (e.g., Polartek)

U.S. fabric suppliers are not very well known in the market. U.S. suppliers should participate in local trade shows, as there is considerable interest in all fabrics that meet fashion and quality requirements.
C.End-User Analysis

Large apparel manufacturers, which have recovered from the financial crisis and partially upgraded their equipment, are major end-users. Significant end-users also include small businesses primarily manufacturing low-cost apparel, fabric wholesalers, and upholstery producers.

The following list profiles major imported fabric end-users in Northwest Russia:

FOSP, St. Petersburg.
Products: men's coats, raincoats, jackets, pants, suits, apparel for boys.
Fabrics used: 50% Russian, 50% of imported. Primarily high-quality wool/lycra blends.

Bolshevichka, St. Petersburg.
Products: men's and women's apparel.
Fabrics used:
- coat fabrics containing cashmere, angora wool and mohair. Current suppliers: Lanificio Kistermann (Italy), Pontetorto (Italy), Ulan-Ude Factory (Russia);
- suit fabrics, wools and wool blends. Current suppliers: Fortex (Italy), Chaikovsky Textile (Russia), Kubanteks (Russia); synthetic fabrics - Korean manufacturers;
- water-resistant fabrics, velure, and imitation leathers.

Slavyanka, Pskov.
Equipment: German, Italian, and Japanese (Durkopp, Pfaff, Rimoldi, Juki)
Products: men's and women's suits, children's' apparel.
Fabrics used: wools and blends containing flax, cashmere, elastic fibers, and teflon-coated.

Pervomayskaya Zarya, St. Petersburg.
Products: women's suits, dresses, jackets, skirts, blouses, pants (Note: 1999 volume was 600,000 pieces)
Fabric used: high-quality European-made fabrics of mixed fibers, flax, viscose, cotton, natural silk.

Ladoga, St. Petersburg
Products: hats for men, women, and children
Fabrics used: wools and wool blends from domestic suppliers (Nevskaya Manufactura); Domestic cotton; Korean-made fabrics; artificial fur imported from Korea and Belarus.
Tribuna Ltd, St. Petersburg
Products: women's lingerie

Volna Ltd, St. Petersburg
Products: women's blouses, dresses, skirts, pants

Mayak, St. Petersburg.
Products: coats, raincoats, suits, overalls
Fabrics used: domestic and imported

Salyut, St. Petersburg.
Products: a wide range of children's apparel

Severina, Ltd., St. Petersburg.
Products: men's and women's suits, jackets, skirts, pants, coats.
Fabrics used: imported from Europe and Asia.

Foreign orders, mostly from France, Germany, and Belgium, account for 30-70% of the production of large factories such as FOSP and Bolshevichka. In many cases, the ordering firm supplies the material and the factory receives payment only for the work of producing apparel from it.

The U.S. Commercial Service in St. Petersburg can provide contact information for these and other companies and end-users.

Small Businesses

Small apparel manufacturers use domestic and imported fabrics. The majority of
fabrics imported by small businesses are low-cost and low-quality synthetics made in China, Turkey, and Vietnam. They cover the market for cheap products that are in demand by population with low income.
Only a few small companies import elite fabrics from France and Italy to create exclusive collections. However, St. Petersburg's light industry is demonstrating considerable development. In addition to such well-established and successful companies as Nevskaya Manufactura, Bolshevichka, FOSP, and Pervomayskaya Zarya, there are a number of new small- and medium-size firms which producing apparel and hats.

Upholstery
There are 60 small and large furniture manufacturers in St. Petersburg which are members of the Furniture Manufacturers Guild. The upholstery they use is almost 100% imported, primarily from Belgium, the United Statees, Syria. Importers purchase directly or through Moscow-based distributors. The most popular upholstery is currently solid microfibers.

Market Access

All imported fabrics are subject to a 20% Value Added Tax (VAT) and the following customs duties:
- natural fibers: 20%
- blends with more than 50% natural fiber content: 20%
- blends with less than 50% natural fiber content: 10%
- synthetics: 10%
- Non-woven materials : 5-10%.

Russian Customs does not require a certificate of conformity, though local apparel manufacturers need it to certify products consisting of imported fabrics.

Fabric Distribution In Northwest Russia, a well-established distribution network belongs to domestic manufacturers based in other regions of Russia and the CIS countries. These manufacturers primarily supply cotton fabrics. European manufacturers have Moscow-based representative offices which supply their products through regional dealers. The main trade event for regional buyers is the Moscow Federated Textile Fair. Consequently, there are no large, regional warehouses. In St. Petersburg, about 40 small wholesalers distribute fabrics through a retail network of about 50 stores specializing in imported fabrics.

CS St. Petersburg recommends U.S. company participation in these annual trade shows:
March/September: Federated Textile Fair (textile products and equipment), Moscow.

May: World of Textiles, Moscow.
International Specialized Fair of Textiles, Equipment and Accessories for Apparel Production", Moscow.

February/September: Regional Northwestern Wholesale Fair of Textiles, Apparel, Footwear, Accessories, and Equipment, St. Petersburg.

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

$3500 USD
For the 2008 Edition

Published: 2006 August
Market: Mens Womens Childrens
Region: Russia
Industry: Textiles
Pages: 45
Delivery: 7-12 Business Days
SKU: infre0000296