The economic sanctions on Russia following its war with Ukraine are making business difficult for many fashion brands in Italy -- the fashion capital of the world. They are especially hurting clothing and shoe manufacturers, as Italy is the largest global producer of these goods. The country exports fashion goods worth $101 billion annually.
Huge number suppliers losing business
Russian customers account for around 3 per cent of Italy’s total portfolio. However, their loss affects around 80,000 suppliers, says Fabio Pietrella, President, Fashion industry trade group in Italy. These customers account for 80 per cent of the money made by small Italian businesses every year, he adds. The Marche, Vento, Umbria and Emilia-Romagna regions in Italy are completely dependent on orders from Russia for survival. They connect the entire supply chain, adds Pietrella.
Some of the world’s most famous fashion companies like Gucci, Versace and Armani are Italian with a few having operations in Russia. However, these companies have been unable to find ways to get past the sanctions, notes Jeffery Sonnenberg, Professor-Business, Yale University.
Practical concerns stop companies from snapping ties
Even though fashion makers in Russia are extremely concerned over the aggression in Ukraine, they are compelled to continue doing business owing to practical reasons as it difficult to find a substitute, says Pietrella. Companies like D Exterior are also reluctant to cut ties with Russia as it has taken them years to build business in the country. D’Exterior makes 40 per cent of its revenues from Russia every year. The company is unsure of getting payments for 400,000 garment orders for Spring/Summer season, says Nadia Zanola, Owner.
Zanola however, does not intend to abandon Russia business as customers there appreciate the extra efforts needed to make good clothes, she says. She hopes, common Russian consumers are able to raise themselves from the crisis.