Russia's Industry and Trade Ministry is urging the leading international sportswear suppliers, including Sportmaster, Decathlon and Nike, to produce some of their products in Russia, with the assistance of the federal government.
Decathlon, which has a policy of manufacturing many of its own products locally, has responded favorably to the government's call. Earlier this month, it announced a goal of getting between 45 and 50 percent of the products sold in its Russian stores made in Russia by 2020, up from a current ratio of 20 percent.
The government's discussions with various parties on this topic have been taking place since February 2017, when Victor Evtukhov, Deputy Minister of Industry and Trade, officially made the proposal. Alexander Ivanov, the spokesperson of the ministry told SGI Europe that some progress was made in those talks in recent months, although there are no specific projects in the pipeline just yet. He added that most of the details handled in the negotiations cannot be disclosed, including the types of sportswear items that can be manufactured in the country.
A foreign company has two ways of benefiting from this program, either by building its own factory or by opening a production line at the factory of an existing manufacturing firm.
Evtukhov said that foreign producers should consider opening production capacities in Russia to make sure that their products are fitting with local legislation. He mentioned the case of Zara, whose casual clothing was found to be in violation of the technical regulation of the Customs Union during an inspection in January 2017. At that point, there was a real threat that the company's products would be removed from the shelves all over the country.
We were unable to determine the kind of assistance that would be available to foreign sports firms from the Russian government. A few months ago, governmental officials had said that casual apparel companies could benefit from a Special Investment Contract, commonly known as SPIC, with the state regulators.
The SPIC is a relatively new tool that Russia's government uses to encourage foreign investors to bring money into the national economy. It provides a substantial tax break in exchange for investments in local manufacturing projects, at terms that vary from one case to the other.
