Over the last few years, one has witnessed the Government of some of the garment manufacturing countries offering incentives for export to new destinations – a step towards promoting non-traditional markets. Turkey and Ethiopia are among the few countries which have taken significant initiatives with regard to attracting investors. The inward processing regime in Turkey enables exporters to buy input for the production of their export at global market rates without being subject to custom duties including VAT. Similarly Ethiopia too has been providing incentives for foreign manufacturers like provision to hire expatriates devoid of income tax,on-site customs’ inspections, reduction in waiting time among others.
In 2008, garment exports to non-traditional markets stood at US $ 800 million while in 2015-16, the figure crossed US $ 3.90 billion. Thus, with the increased attention that non-traditional markets are receiving from the garment manufacturing countries, Russia has emerged as the one hogging the limelight in the last few years.
Vietnam, one of the biggest textile and garment hubs of the world, has not been lagging behind in exploring the prospective Russian market by signing a free trade agreement (FTA) with Russia-led Eurasian Union (EU). Notably, EU comprises of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. Though the FTA was signed in October 2016, Russian buyers started moving production from China to Vietnam much before that. Maximum Sourcing is one such company in Vietnam that is actively dealing with the Russian buyers.
According to Maksym Sukhanov, General Director, Maximum Sourcing, the Russian economy has not been a very good one for quite some time now, but this situation has created opportunities for many local Russian brands and low-level brands. To put it in his own words, “When the economy is not good, people prefer buying cheaper goods and less; and that’s why local brands are on the rise here.” Very recently, there was also roughly a 50 per cent drop in ruble’s value relative to the dollar and one must note here that both real wages and consumption fell sharply.
Maximum Sourcing is a design-to-delivery garment supplier that works closely with fashion retailers across the globe. The company mainly produces jackets, jeans, ladies dresses, woven pants, bottoms, tops and blouses among several other products – the biggest volume, however, being that of jeans. Modis, Melon Fashion Group and Gloria Jeans are just some among the many which form an integral part of its wide repertoire of clients.
Despite market not being very good in Russia, the Russian orders in Vietnam are growing because the buyers are moving away from China. “It’s not just Vietnam but other nations. My biggest buyer from Russia opened five stores in Poland. They are moving to East Europe and Vietnam,” explained Maksym. Many big Russian brands are hiring the top management from Europe, UK or US. Those who are the market leaders in Russia today have large number of expatriates.
The journey of Maximum Sourcing to capture Russia has been no less than good so far. “It initially took some time for the company to get customers but then that can happen with any market. Today, we enjoy working with them. When I was working at a factory much before, I started my own company, and had buyers from Russia, Kazakhstan and Russian speaking people from Europe; all of them were good contacts,” said Maksym. The company received orders worth 50,00,000 pieces of different items just recently and Maksym expects the orders to get doubled by the end of 2019.
Though there has been a general notion that Russians are not good at paying, Maksym disagrees about facing any such difficulty. “Even when Russian currency dropped by 100 per cent during crisis, one of our customers cleared all debts in just 6 months despite not having enough money,” stated Maksym. He although acknowledges the fact that being a Ukrainian, things have been made easy for him.
Right from the time the company struggled to find buyers to the present day when the buyers are coming in search of Maximum Sourcing, it’s been just an upward trend for the company. Having started with small buyers, the organization’s priority on delivering quality products has led it to acquire even several big buyers.
Today, around 85 to 90 per cent of the company’s export is to Russia. “We export mainly to Russia but those brands today sell goods to ex-Soviet countries,” further substantiated Maksym. Vietnam today has the luxury of choosing buyers; interestingly, almost all factories in Vietnam are booked till August and September 2018. “I don’t have to worry. Buyers are finding me and I am having the luxury of choosing them,” added the young General Director.
Most of the buyers of Maximum Sourcing are on the path to move 30 to 40 per cent of their products from China, reason being to reduce the excessive over-dependency on China as a potential market.
For Maksym, clients’ always come first and this is what has led to the eventual success of his company. A confident Maksym asserts, “More than quantity, it is the quality of buyers and the relation I share with them that matters to me. We are transparent with our buyers and are focused to give what our customers want. This strengthens the relations.” Thus, Maximum Sourcing is definitely on its way to scale many more greater heights and it is just the start of the journey now.