COVER STORY to pick pace, thanks to the growing penetration of internet users, higher income levels and stronger purchasing power and cross-border sales. As per the report, cross-border internet retailing continued to drive internet retailing in Russia in 2017.
This retail boom has opened the floodgates for apparel exporters from around the globe. In the backdrop of rising fabric prices and the fact that local manufacturers cannot produce enough to cater to the burgeoning demands, Russia has been traditionally dependent on overseas players to feed its domestic requirement. China, in particular, has played a significant role in fulfilling its mass market( segment) demand.
Bangladesh, Vietnam to gain?
Even though a major exporter of apparel items to Russia, still rising labour cost is taking the sheen of China( according to China’ s National Bureau of Statistics, there has been a near double digit increase in the national average annual wage for urban employees since 2004) as a sourcing destination. This has opened up the avenues for the other players. Increasing by over 30 per cent year-on-year, Vietnam is aiming to take its apparel export to 10 per cent of the country’ s total export to Russia( which currently stands at 2 %), thanks to the FTA with Eurasian Economic Union( which came into force in October 2016). Bangladesh, on the other hand, riding high on its price competitiveness, cheap labour and huge capacities, is making steady inroads into the Russian market to already become the second biggest apparel exporter to Russia, after China.
At present, Vietnam exports around US $ 320 million worth of apparel each year to Russia, which is expected to exceed US $ 1 billion in the next few years while Bangladesh’ s apparel export to Russia stood at US $ 379.41 in FY 2016-17, marking an impressive year-on-year growth of 52.2 per cent( according to BGMEA & International Trade Centre, ITC).
China is still a dominant force in the Russian market, exporting apparel worth US $ 2.14 billion( as in 2016) while another Asian exporting hub, India, exported apparel worth US $ 188 million, as in 2016, to Russia.
“ At the moment I would say Russia is one of the most attractive markets …,” maintains Maksym Sukhanov – General Director, Maximum Sourcing, a Vietnam-based exporter, who supplies outerwear, jeans, woven & knit items and swimwear to the tune of US $ 5-10 million annually to names such as Melon Fashion Group, Modis, 12Storeez, etc.
Maksym’ s optimism is also shared by BGMEA President Siddiqur Rahman, who earlier speaking to Apparel Online maintained,“… Of all the potential markets, we consider Russia as the biggest market for us. We have requested the Government to seek out facility of duty-free entrance into this huge market”.
Keeping pace with the apex garment exporter body’ s appeal, Bangladesh Commerce Minister Tofail Ahmed recently discussed with Russian authorities on the prospects of dutyfree market access.
“ I have requested Russia to give duty-free, quota-free market access to all Bangladeshi export products, including RMG, as per the decision of the ministerial conference of World Trade Organization,” the Minister maintained.
Hoping to make early progress in this direction, Bangladesh has also signed a memorandum of understanding with the Eurasian Economic Commission, awaiting for its membership approval, which would pave Bangladesh’ s way for duty-free market access to Russia.
[ Eurasian Economic Commission ] EEC is the executive body of the Eurasian Economic Union responsible for implementing decisions, upholding the EEU treaties and managing the dayto-day business of the Eurasian Economic Union.
Once a part of EEC, Bangladesh automatically qualifies for duty-free and quota-free market access to Russia, which along with Armenia, Belarus, Kazakhstan and Kyrgyz Republic forms the EEU Bloc.
“ We are working for the Russian market for more than 10 years now; currently we are doing women’ s dress for brand Outventure … The dissolution of LC between Russia and Bangladesh have definitely opened up new opportunities for the garment exporters here,” opined www. apparelresources. com | MARCH 2018 | Apparel Online Bangladesh 15