Russian clothing brand turns to Asian market, unique design style wins favor

Russian clothing brands turn to the Asian market and win favor with their unique design styles

We learned from recent reports by foreign media that due to its high reliance on imports, the Russian clothing industry has undergone great changes in the past few years. Some large companies in the industry continue to implement long-term strategies of global expansion, but their focus has changed. Due to political and economic tensions in Western markets, Russian clothing brands began to turn to Asia.
It is understood that with the depreciation of the ruble, imported clothing, shoes and accessories are too expensive, which in turn gives local manufacturers more room for development, especially low-priced products. Therefore, in the overall stagnant state of the Russian clothing and footwear market, Russian domestic clothing brands have adopted anti-crisis strategies—lowering product prices or moving production equipment back to Russia from China and Southeast Asian countries, because their domestic labor costs have been greatly reduced.
​The “Call” of the Chinese Market
China, Bangladesh, India, Pakistan, Sri Lanka and Vietnam are often considered global apparel manufacturing centers. However, these countries have now also formed rapidly developing consumer markets, providing huge opportunities for foreign clothing brands.
According to a survey by PricewaterhouseCoopers, Asians’ consumer spending on clothing and shoes is expected to reach US$920 billion in 2018.
Russian clothing brands “flooded” into the Asian market and won favor with their unique design styles
Among them, the Chinese mainland market will account for about 1/3 of clothing demand, followed by Hong Kong, Japan, South Korea, Indonesia, India and other Asian countries.
“Whether it is viewed from a single country market or from the perspective of consumer purchasing power, the Asian market is extremely diverse,” said Timur Nigmatullin, a financial analyst at FINAM Group. “In Asia, the Chinese market has the largest number of potential consumers. Although economic development has slowed down, the stable value of the RMB has promoted the growth of people’s consumer demand.”
​Expansion into Asia
​In the past few years, some Russian clothing brands have opened chain stores in Asian countries. Sportmaster, Russia’s largest sporting goods retailer, began expanding to Asia a few years ago.
Sportmaster Group announced its “Asia expansion” plan in 2013. Group business manager Sergey Agibalov said that the company is prepared to use China as a potential market because of its geographical proximity to Siberia and the Russian Far East, and because the company has begun producing sportswear in Chinese factories. .
Between 2014 and 2015, sales in the Russian domestic market dropped sharply. Sportmaster Group opened 12 Sportmaster brand chain stores and 19 O’STIN brand chain stores in China (a brand of Sportmaster Group, mainly engaged in mid-range casual wear).
Sources at Sportmaster said China is the most attractive market among Asian countries. “It’s a large, rapidly growing market and we have to compete with global brands,” he said. Additionally, there are fewer barriers to entry into China than in other Asian markets.
“Sportmaster currently has dozens of retail stores in China. It is obvious that their expansion strategy is very successful. Within 5 years, the company’s chain stores in China will be larger than its retail stores in its home country,” Nigmatullin said.
Russia’s Carlo Pazolini Group, which has been producing luxury high-end shoes and accessories since 1991, has now transferred 70% of its manufacturing operations from Europe to China. It has opened a specialty store in Beijing and announced that it will open more retail stores in China.
​Focus on the Indian market
In January 2016, Vladimir Yevtushenkov, president of Russian company AFKSistema, said that the company’s fashion retail asset ConceptGroup had established a cooperative relationship with India’s Tata Group to sell “Made in Russia” clothing through Tata Group’s recently launched e-commerce platform TataCliq.
According to AFKSistema insiders, although the company is very interested in the Asian market, it does not have a very clear expansion strategy in retail. ConceptGroup’s cooperation with the Indian e-commerce platform is regarded as a pilot project and will determine the group’s further expansion strategy. In 2014, Sistema acquired 40% of ConceptGroup.
Another Russian clothing brand, SELA, has successfully entered the Indian market. The company sells its branded apparel online through partnerships with two major e-commerce platforms: Amazon and Myntra.
“We are very interested in the Asian market. India is a fast-growing market and attracts many retailers, just like China attracted many foreign companies ten years ago,” said Julia Zefirova, head of corporate public relations at SELA. “T-shirts with Russian themes are very popular in India.”
SELA does not differentiate its brand positioning in the Russian and Indian markets, although in terms of pricing, the brand adopts different price strategies. In Russia, SELA adopts mid- to low-end prices; in India, it chooses mid-range product prices.
​Advantages yet to be determined
Timur Nigmatullin, a financial analyst at FINAM Group, believes that the expansion of Russian brands into Asia is in line with experts’ previous trend predictions. “In the near future, more Russian companies will enter the Asian market. Their biggest advantage in these markets is cooperation with local manufacturing.��The old partnership established and the excellent way of running the business,” he added.
However, Fashion Consulting Group CEO Anna Lebsack-Kleimans does not believe that Russian clothing brands have great advantages in the Asian market.
“Large Russian clothing brands have manufacturing equipment in China and other Southeast Asian countries, which can help reduce logistics costs and sell products to the Asian market at lower prices,” she said. “But that doesn’t make them more competitive than local brands, it just makes them equally competitive.”
Lebsack-Kleimans said that most local brands in Asian markets have very loyal customers. Russian brands can appeal to Asian consumers by offering superior design, original “European” style, or unique retail formats.
Russian street brand GoshaRubchinsky is such a successful example. This streetwear brand from Russia has successfully integrated high-end fashion design with Eastern European street culture, bringing a lot of freshness to StreetFashion.