How to save the shoe market of Russia
30.06.2011 8185

How to save the shoe market of Russia

The National Shoe Union proposed to the Russian government anti-crisis measures in the field of tax regulation, banking policy and infrastructure development. Particular attention in the document is paid to special measures aimed at stabilizing (maintaining) the Russian shoe market.

Today, Russian footwear is provided by micro, small and medium businesses. Employment in this area is more than 100 thousand people. More than 90% of consumption comes from imports. In order to somehow correspond to the structure of demand, more than 60% of which is accounted for by elegant women's shoes, 70% of them use imported shoe blanks and also depend on foreign suppliers. “But in the current conditions, it is not worth spending energy and energy on confronting two integral components of the footwear market - domestic production and imports,” Natalya Demidova, Director General of the National Footwear Union, is sure. “First of all, we need to focus on those initiatives that will give the Russian consumer, who has had time to feel the taste for fashionable, comfortable and varied footwear, a real chance for free choice.”

The devaluation of the ruble, the decrease in consumer demand, the lack of affordable credit funds necessary for the normal operation and development of companies, already now lead to higher prices for shoes. Under these conditions, some Russian shoe manufacturers have a chance to maintain and develop their production niche, but unfortunately they will not succeed in fully satisfying consumer demand. Significant growth in Russian production is impossible for objective reasons. Today in Russia there are practically no factories capable of working on a contractual basis for large retail customers; there is no proper infrastructure, technical capabilities, or own working capital. As a result, manufacturers cannot offer the market competitive products by world standards.

According to the Government of the Russian Federation, already in November-December of 2008, imports decreased by 25-30%, its even greater decrease will lead to a significant deficit and an increase in prices for products of this kind. “Unreasonable protectionist measures can do much more harm than good to the industry,” Demidova continues, “the actual ban on the import of shoes (weakening the ruble by 40% and the possible introduction of a duty of 25%) will throw the Russian population not even into the 20th century (shoe consumption in the USSR - 3,6 pairs per person per year), and in the 19th century, forcing the population to weave bast shoes. ”

In this regard, in order to legalize and stabilize the shoe market during the crisis, the NLB proposes to reduce and unify the import customs duty on shoes and abolish the duty on components to simplify customs administration. For example, during the validity period of reduced import customs duties on shoes from 2006. the volume of legal imports increased 10 times. Legalization of imports reduces competitive pressure on the domestic producer, contributing to its "exit from the shadows."

In addition, the existing policy regarding large and medium-sized market players allows the state to benefit from their activities. After all, only 15-20% of the price of imported products is returned abroad, the rest settles in Russia, creating added value, and taxes and customs payments replenish the state budget.

“The investment level in the shoe market is low,” adds Demidova, “therefore we pay special attention to the need to increase the competitiveness of the industry in order to attract investment from around the world. And for this, all market players need to unite and act together! ”

How other countries save the shoe market: Canada

The Canadian Shoe Manufacturers Association has requested the Canadian Border Service to conduct a price study on rubber shoes exported from China and Vietnam. This request followed similar anti-dumping measures taken in the EU, Brazil, Argentina, Mexico and Peru.

Domestic Market Protection: India

In the current crisis, the Indian Leather Export Council has sought help from the government. The Council asks to lower interest rates on export and term loans. The council is also concerned about the negative effect of fluctuations in the national currency. Indian manufacturers have been hit hard by the economic downturn in Europe and the United States and the resulting drop in orders.

National Shoe Support: Ecuador

To support the national footwear industry, the government of Ecuador imposed an 10% duty on all shoes imported into the country. It is said that the footwear industry of Ecuador now operates only half its capacity. The National Tannery Association welcomed the government measure, but warned of the need to strengthen border and customs services due to the expected increase in smuggling of goods.

    The National Shoe Union proposed to the Russian government anti-crisis measures in the field of tax regulation, banking policy and infrastructure development. Particular attention in ...
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