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Russia Looks to China, India as Western Retail Brands Exit

Russia is looking to China, India, Iran and Turkey to plug the gap created by an exodus of western retail companies after it declared war on Ukraine, an industry body has said


China industrial output
People walk past an H&M store at a shopping centre in Beijing. As shoppers were confined to their homes in Shanghai and other cities, retail sales were still down 6.7%, though better than the drop forecast in a poll and an improvement from a 11.1% slump in April. File photo: Reuters.

 

Russia is looking to China, India, Iran and Turkey to plug the gap created by an exodus of western retail companies, an industry body has said, as Moscow grapples to find ways to combat its growing isolation in the face of sanctions.

The Russian Council of Shopping Centres (RCSC), an organisation representing developers, shopping centre owners and retail chain operators, said it was negotiating with its corresponding representatives in the four countries about finding alternatives to western brands.

“A list of foreign companies that have temporarily ceased operations in Russia was sent to them so that appropriate equivalents can be found,” a statement on the RCSC website read.

“Over time this will help supplement or completely replace goods of the defunct brands with ones of a similar quality and design.”
 

Also on AF: Chinese Trade With Russia Feels Sting of Ukraine, Sanctions

 
Dozens of big brands have temporarily shuttered operations or exited the country since Russia sent tens of thousands of troops into Ukraine on February 24 in what it calls a ‘special operation’.

Sanctions have hampered supply chains and fuelled panic buying among some Russians, with medicine and sugar shortages reported, and accelerating inflation is set to send prices higher.

During an RCSC meeting of more than 100 market participants, the challenges facing Russian retailers were discussed.

RCSC cited Igor Maltinsky, director of development at Melon Fashion Group, as saying that the main challenge facing domestic retail firms was the uncontrollable growth of production costs, due to huge increases in procurement and logistics costs, as well as many other related factors.

Melon owns four, mainly women’s, fashion brands – Zarina, Befree, Love Republic and Sela – and had 846 stores across Russia and CIS at the end of 2021. It had been planning to hold an initial public offering (IPO) this year.

On Thursday, Swedish real estate firm Eastnine, a minority shareholder in Melon, said the planned IPO had been postponed. It said western sanctions had negatively affected the company, making valuing it very difficult.

 

• Reuters with additional editing by Jim Pollard

 

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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