Russia And Zara Signed Clothing Production Agreement Fast Fashion Into Russia Made?

In recent years, from manufacturing to creation, China has gradually lost its position as "world factory". After some of the labor-intensive industries have been transferred to Southeast Asia, Russia also intends to develop into a new generation factory power. Recently, Zara, a Spanish fashion giant, signed an agreement with Russia, which will try to produce costumes for fighting ethnic groups.

"We agree to set up a project team to cooperate with Zara in the future and help to collect reliable Russian partners. All this will accelerate the localization of Zara supply chain in Russia. " Viktor Evtukhov, Deputy Minister of Russia's Ministry of industry and trade, said.

Prior to clothing production, Zara confirmed earlier this year that it produced its home products in Russia and intends to expand its supply chain resources locally. The Russian Ministry of industry and trade will then provide a list of factories for Zara headquarters, while Zara will send experts to test the actual performance of these factories.

According to Evtukhov, the number of products manufactured by Zara in Russia will double this year, and "in 2017, they plan to sell millions of products in our country."

The cooperation was facilitated by the Ministry of industry and trade of Russia. In the past two years, the Russian government has actively attracted foreign brands to produce locally, and IKEA and H&M have received production licenses last spring. In line with this trend, Russia is expected to become a new production base for fast fashion.

This trend is related to the growth of domestic production costs in Russia. Last year, the Russian Textile Association said that Russia's production costs had been flat with China, and in some cases it might be cheaper by 10%. Therefore, foreign and Russian local brands began to withdraw their production lines from China to bring about some chain reactions, such as higher prices of finished products or reduced profit margins.

"The increase in unemployment provides more cheap labor, which is very interesting to retailers." Mikhail Burmistrov, chairman of Infoline, an investigation company. Russia's local news network Russia Beyond the Headlines observed the above trend in May 2016, saying that with the ruble's depreciation, the sister brands such as Zara, Pull&Bear and Massimo Dutti intended to move their production addresses to Russia. It is reported that the Inditex of the parent company holding the above brands has already started negotiations with the Russian authorities.

However, according to the guardian's 2014 report, according to the past Zara, most of the clothing it produced in China was sold to local stores, which is a strategy for fast fashion to achieve brand localization, which is intended to shorten logistics costs and facilitate the management of orders. The same logic can also be landed in Russia, but the premise is that the brand in the Russian market is large enough and profitable. According to the data provided by Russia Beyond the Headlines, from 2007 to 2016, the number of Inditex stores in Russia increased from 29 to 485.

According to the agreement reached by IKEA and the Russian Ministry of trade, the brand moved to Russia in order to achieve localization of the supply chain, but only 60% now, and the number is still growing.

Therefore, if Russia wants to become a global light industry distribution center, I am afraid it will still be a while. It needs to be centred on how long the Russian economy will last, and how long will the advantage of such low cost be able to sustain.

Burmistrov believes that Russia's manufacturing process is satisfactory, but the low cost brought by the ruble depreciation is hard to maintain. "Unless Russia can provide other competitive advantages, there will be little significance for the brand to invest in Russia for a long time, or to establish sustained relations with local manufacturers." Moreover, some factories have already accused some of the foreign brands from producing products, but they do not value Russian consumers.

Careful, this has made the fighting nation unhappy.