What did Russian shoe manufacturers live this year? What forecasts do they make on demand in the 2010 year? What should be the duties? Should I upgrade equipment? What are the prospects for Russian shoe production? We are summarizing the preliminary results of the year.
Text: Galina Kuznetsova
We lived for a year in conditions that someone calls a decline in demand, someone a crisis, someone a time of new opportunities. The panorama of the shoe world was extremely varied. For the first time, Russian shoe networks used a new advertising medium - metro tickets. Unrest began in the Asian labor market, where more than half a million people were at risk of losing their jobs. Social shoe networks have appeared in Barnaul, where beneficiaries can buy shoes using social cards. Parisian Galeries Lafayette decided to open the largest shoe store in the world - with an area of 3000 sq. m. Rental rates for retail space in Russia decreased by 15-25%. Geox took over the Diadora brand and Ara the Salamander. Cherkizovsky market closed in Moscow. One of the largest American networks, Payless, announced its entry into Russia. The best producer of the year in Germany is Wortmann. In Izhevsk, for the first time, they organized the sale of shoes by weight - by kilograms. adidas has released sneakers with diamonds and made up with Puma. The European Commission has decided to extend anti-dumping duties on Chinese and Vietnamese footwear. Orders of Russian buyers for European footwear decreased by 30%. The Russian authorities have begun another discussion on raising import customs duties on shoes. Chinese authorities have begun to discuss the abolition of export taxes. For the first time, Russian manufacturers offered to form an order in a free size. A new tannery was opened in Chegem.
Andrey Berezhnoy, CEO of RALF RINGER:
- The one who knows how to swim comes out into the storm. The outgoing year gave us confidence that almost everything that we have done and are doing over the past three years is necessary. That "mastering a wide range of competencies, raising the level of all business processes" is the most correct long-term strategy. It was she who allowed us to go through 2008-2009 without losses. And we also see our future in the growth of professionalism. One of the key results of 2009 - the deviation of the model sales forecast from the actual order was 3%. This is a unique result, and what is even more important, this result is reproducible, since it was achieved thanks to technological work, and not accidentally.
At the end of last year, demand was uncertain. But we had the resolve, and in the crisis we still made investments in the range. In the next "fall-winter" we will again invest in the product and plan to get a Europeanized collection. This will produce results. This year, we conducted several successful commercial experiments, which ultimately resulted in the creation of a “Ralf Ringer shoe sales strategy for 2010-2012.” In a crisis situation, we took steps that allowed us to significantly increase the efficiency of order formation. Firstly, we actually refused the minimum order size. Secondly, we made it possible to form an order in a free size (the only limitation is the number of pairs per model must be a multiple of twelve). If we talk about volumes, the company not only maintained the level of wholesale sales of 2008 of the year, but even added a few (there are no exact figures yet, we expect an increase in the order of 3-5%). Pleased with the statistics of retail sales. The branded retail chain RALF RINGER fulfilled the sales plan on November 1, that is, even before the start of high sales of the winter assortment.
From a financial point of view, we ended the year with a stable and diversified loan portfolio. And they returned to the situation when the offers of banks exceed our needs. Moreover, over the year we reduced our loan portfolio by more than 2 times. And today we feel much more confident than at the end of the 2008 year, when problems began with receiving money, and we needed to start production of a new collection.
Vyacheslav Zykov, General Director of Bris-Bosphorus:
- The strategic figure announced by Oleg Koscheev, deputy director of the Department of Forestry and Light Industry of the Ministry of Industry and Trade of the Russian Federation at the economic forum as part of the Shoes Access exhibition, is quite real (recall, Mr. Kashcheev said that by the 2020 year the share of Russian shoes in the domestic market should be 50%. - Note Ed.). But for this it is necessary to gain courage and admit that over the past 10 years, the policy of our authorities has been aimed at importing and supporting manufacturers of other states. According to my estimates, in 5-7 years it is possible to restore production in Russia. With the right customs and tariff regulation, you can create an investment climate so that manufacturers begin to open and develop new factories, and the manufacturer opens its production in our country.
It seems to me that at least 70% of the total consumption of shoes should be produced in Russia. This includes the country's security, taxes, jobs, salaries for people, consumer demand, and the development of related industries related to this business segment. According to my estimates, from the country annually from $ 7 billion is exported for the purchase of imported shoes. If they were invested in the development of shoe production, then he would now have a completely different level.
Our company was not able to maintain the 2008 volumes of the year, we lost about 15%. And there were two reasons for this: at first banks left us without working capital, and we were forced to reduce production volumes. The second reason is the ruble exchange rate: at the beginning of the year it was on the side of the Russian producer, and in the summer the ruble strengthened, and imports gained its turnover. In the 2010 year, we plan to restore the sales volumes of the 2008 year. We have a relatively young enterprise, it was created only in the 1999 year, so the issue of updating equipment is not yet a concern. We update the collection seasonally at 50%, and we see the future development of Russian production in cooperation with foreign companies with extensive experience in the shoe business. They have a production culture, new technologies and experience.
If we talk about the size of duties and their impact on the shoe industry ...
The duty was created to protect the interests of not so much production as the country. Now we have 80% of shoes - this is import, 20% - our production. On the one hand, these are profits and taxes left outside our country. On the other hand, there are jobs in Russia that provide the very demand that so markedly fell in the 2008 year. I doubt that the quality of goods imported from Southeast Asia meets the requirements of GOST. The quality of Russian shoes is no different from competitors, and to some extent it is even higher. At our enterprises both state standards and production standards are observed, and in SEA no one is following this. For example, for children's shoes I can say with confidence that this category is of high quality only with a Russian manufacturer. If we talk about price changes, then the buyer does not need a cheap product. By creating jobs abroad, we give an opportunity to increase unemployment, and this entails a decrease in consumer demand - there will simply be no one to buy cheap shoes. This is the law of the market.
The duty does not have a direct impact on the state of working factories, but it is the only instrument for creating an investment climate in the domestic market. For example, in the automotive industry, an increase in import duties led to the construction of almost 10 new plants. The same can be with the shoe market. Manufacturers will be interested in coming to Russia, creating their own production here and developing our economy.
Alexander Shafiev, director of the Valrus shoe factory:
- The most optimal option for the development of the Russian product is its own production combined with outsourcing, as, for example, it is practiced in Spain.
In our company, production in the 2009 year decreased by 10% compared to the 2008 year. The decrease is due to a decrease in demand for shoe products. However, in the 2010 year we still plan to enter the volumes of the 2008 year.
Despite the current crisis situation, there were no personnel changes in the company. We purchased new equipment in 2007 year. But the most serious update to the technology park was in 2003 and 2005. The assortment is still updated twice a year. In the collections "spring-summer" and "autumn-winter", as before, 75-80 is developing new men's models. In total, there are about 300 models in the seasonal collection.
In my opinion, duties cannot directly affect the quality of products manufactured domestically. It is rather a tool to help the domestic footwear industry, which in turn is a deterrent to the growth of retail prices for imported products. The duties should be such that domestic manufacturers are in comparable conditions with foreign manufacturers, including Chinese shoe factories. Shoemakers expect help from the state so that they can at least somehow compete with Chinese companies.
Andrey Beloisov, Executive Director, Nine Lines, Rostov-on-Don:
- Now the quality of shoes on the Russian market is completely determined by Chinese manufacturers, and Russian factories are forced to focus on the level they set. To set your quality level, Russian manufacturers need to have at least 20% of the market.
Local production in the Russian market should be at least 50%. To do this in a ten-year period is, in principle, possible, but it will depend on specific actions at the state level. Our company produces two seasonal collections a year. They include more than 400 shoe models, 80% of which are new models. If we compare the indicators of the last two years, we were able to keep the level of production at the same level, despite the fact that overall in Rostov-on-Don production fell by at least 50%. In 2010, we plan to work in enhanced mode.
Summing up - we spent a year balancing on the breakeven point. There is hope that we will carry out the next one, nevertheless not surviving, but developing.
For your information:
The production of leather shoes is growing in Bashkiria due to the stable operation of shoe enterprises in the city of Davlekanovo, where four factories are currently operating, including Sandra LLC, which acquired the property complex of Davlekanovskaya Shoe Factory OJSC.
Chelyabinsk shoe company Unichel (one of the five largest Russian shoe manufacturers, combines the Chelyabinsk shoe factory Unichel, OJSC Orenburg shoe factory Ural, CJSC Zlatoust shoe factory Zlato and TD Obuv) for 11 months of 2009 year compared to the same period of 2008 year increased the production of shoes by 14,4% - 1,228 billion rubles. up to 1,45 billion rubles In pairs, production increased by 3,6% - 1,87 million pairs to 1,94 million pairs. Sales volume increased by 61,8% - from 910,8 million rubles. up to 1,473 billion rubles
In the Tula region in 2009, shoe production was increased at the Donskoy Obuv and Zarya factories. At Egorievsk-Obuv company, production over the year increased by 10%. According to factory managers, in 2010, production will be increased to 3 million pairs. In the future, manufacturers intend to increase volumes to 5 million pairs per year.
The Governor of the Tver Region Dmitry Zelenin called shoe production promising: “Even in the light industry, which is considered to be the least adapted to innovations, there are“ breakthrough ”industries. An example is the Torzhok Shoe Factory, which annually produces 1,2 million pairs of shoes per year.
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