Russia has moved on since the dissolution of the United Soviet Socialist Republic in December 1991. The country is no longer globally isolated and is working on developing international trade relations to boost its economy. The country's textile and apparel imports in 2013 were nearly US$ 14 billion, with US$ 5 billion respectively, including exclusively textile products. Nevertheless, the beginning of 2015 marked a steep decline of 25-35 per cent in the Russian clothing retail market, but the textile sector is predicted to grow at about 3.5-4 per cent by the end of the year. According to Y-Consulting analysts, in terms of value, textile is likely to reach 3.21 trillion rubles or US$ 60.9 billion by the end of the current financial year. Unfortunately, with textile retail in jeopardy, Russia has taken steps to ensure that it stays competitive at the global level. Russia has seen many huge global retail brands exiting its market. These include New Look, Esprit, River Island, and OVS. As a result, the country is now focusing on its technical textile sector.

Technical matter

The current market for technical textiles in Russia relies on imports. The contribution of domestic manufacturers is estimated to be merely 17 per cent of the total market. Nevertheless, with Russia's growing automotive sector, healthcare, and construction industry, the internal demand for technical textiles will rise. One of Russia's leading producers of technical textiles and nonwovens, Balashov Textile Mill (Baltex), will invest US$ 200 million for the expansion of the production of polyamide fibers and fabrics over the next few years. Other leading groups like Kuibyshevazot, Kurskhimvolokno, and BTK Group have also declared expansion plans in Russia.

With China and other importers dominating the global as well as the Russian technical textile market, there is an urgent need to develop and expand domestic technical textile production for Russia. The consumption of technical textiles is also on a constant rise. In 2012, Russia consumed 68.5 billion rubles of technical textiles. Technical textile turnover is predicted to register a Compound Annual Growth Rate of nine per cent between 2015 and 2018. The government plans to raise the contribution of domestic technical textiles to 80 per cent by 2020.

Taking chances

The leading domestic textile manufacturers are making attempts to expand their textile business, which means dabbling in technical and nonwoven textiles. The continuous rise in global cotton prices has resulted in a gradual increase in the overall cost of the final textile product for Russia, as the country imports cotton from neighboring nations like Uzbekistan. Analysts in Russia believe that the shift towards technical textiles will augur well for the Russian domestic textile industry.

According to Russia's largest textile manufacturer Mega Holding's owner Vasily Gushchin, "The Russian textile industry will only survive in the case of reorientation to fundamentally different products, (whose manufacturing is) associated with lower production costs and more stable demand than those observed in the case of cotton-made products."

Currently, Russia uses about 200,000 tons of man-made fiber that is chiefly imported from Korea, China, and Belarus. The country's own production of man-made fiber is limited even though it has an adequate raw material base for the production of polyester.

Russia is relying on the European Union (EU) approach, where textile enterprises shifted production capacity to production of technical textile and synthetic fabrics. The rise in sales of technical textile has helped Germany achieve 11 per cent more textile sales in 2013 in comparison to 2012. Technical textile has already become part of the fashion world with brands like Hugo Boss, Escada etc launching collections of home textiles that largely depend on technical textile.


Also, upcoming events like FIFA World Cup 2018, to be held in Russia, will give much needed exposure to Russia's technical textile sector. The domestic demand for technical textile, particularly geo-synthetic nonwovens, is increasing. About 53 per cent of it is required for road construction, 18 per cent is consumed by the oil industry, nine per cent is used for civil and landscape construction, six per cent is required by the gas industry and two per cent for water constructional work. Presently, Russia imports 40 per cent of the geotextiles it uses from the European Union and other countries. The domestic production of technical textile will definitely cut costs for Russia and give a much required support to the overall economy.


The bitter pill

Though Russia is optimistic about the EU experience, some trade analysts believe that the shift to domestic textile will have its own problems. The price of raw materials like terephthalic acid required for production of technical fibres remains high globally.


Analysts also believe that pragmatically, it will take at least a decade for technical textile plants to produce results. This period of ten years can make investors shy away from investing in the sector. Unlike the EU, Russia is yet not ready for the transition. The country's weak development in the field of technical textile following low development of domestic engineering, are the biggest impediments. Developing technical textile would also mean import of technology, equipment and specialists in this area. This will amount to a significant cost, which can only be afforded by big companies.


Reality check

The sceptical approach of analysts has not deterred the government from supporting technical textile growth. The government is planning to provide funds to domestic technical textile producers to aid them in completing already launched ventures and also to commence new projects.


According to deputy head of the Tambov regional government, Alexander Alabichev, "The planned support will be provided in the form of subsidies from the federal budget that will be mostly allocated for the coverage of interest rates on loans, provided by banks."


A textile and technical textile Technopark is also being funded by the government. The Technopark will be engaged in research and development of new textiles, both regular and technical textiles. The park is expected to be launched by 2017. The endeavour of the Russian government seems to working in favour of the technical textile sector.

 

In a meeting of the Russian government, it was concluded that the current situation of Russia's technical textiles industry remains good. According to Dmitry Medvedev, an official spokesperson, "The current economic crisis in Russia, and the devaluation of the national currency the ruble, caused by Western sanctions, has not resulted in decline of the same, which is currently observed in the national textiles industry."


Global standing

While Russia is still a budding name in the technical textile market, other countries have become experts in the field. Apart from European Union countries, China has excellent knowledge of the global market, demand and changes in technology associated with technical textile. As a fairly new entrant in the technical textile field, it will be an arduous task for Russia to crack the global market.


The market size of India's technical textile has grown to 10 billion in 2013-2014 from 5 billion in 2007-2008. The domestic market for technical textile in India is predicted to grow at 10-12 per cent in the next five years. China's domestic consumption of technical textile is predicted to grow to US$ 46.5 billion through 2015. The country is exporting technical textile worth US$ 23.2 billion globally. Countries like South Korea and Taiwan are also performing fairly well in the technical textile sector.


Though the overall scenario appears to be daunting for Russia, with support from the government and big companies, Russia can expect good results from the technical textile sector.


References:

1. Innovationintextiles.com

2. Fashionatingworld.com

3. Bch.in

4. Euromonitor.com

5. Yarnsandfibers.com