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» Customs proposal threatens shoe price hike
13 октября 2011 | News

Russians might soon need to forget Italian footwear and try on Belarusian shoes for size as import duties would double under a Customs Union proposal, the National Shoe Union warned on Tuesday.


New Customs Union duties for all imported leather shoes have been proposed by Belarus, which together with Russia and Kazakhstan are member of the Customs Union that sets Russia’s import duties.


The regulation is aimed at “protecting local manufacturers from foreign competitors” but is more likely to do more harm than good, according to the National Shoe Union of Russian shoe makers, retailers and importers.


Price hikes


Head of shoe retailer CitySign, Alexander Gritsenko, expects price hikes of 20 to 25 percent if the current 10 percent import duty on leather footwear doubles, he told RBC.


Alexander Baier, director general and co-owner of shoe chain Alba, went further, predicting price hikes of up to 40 percent, Kommersant reported.


The price that importers are paying now is already “a bit too expensive”, Natalya Demidova, director general of the National Shoe Union, said, as importers also have to pay 18 percent VAT and about 1 percent for the paperwork done by the customs.


Unmet demand


Russian and Belarusian shoes are mostly known for their poor quality, and imports from China and Italy are still preferred by retailers, Baier said.


This, however, is not purely a matter of quality, as Russian manufactures fail to meet Russia’s demand for 570 million pairs every year, producing only 10 percent of this amount, according to Rosstat’s data, provided by the NSU. The slow growth of the industry -- just 13 percent between 2003 and 2010 – means that the local footwear industry is unlikely to meet demand anytime soon.


Low shoe consumption


Russians are already behind most countries in shoe consumption, with only 2.2 pairs bought annually on average. Only India and Kazakhstan, with 2 pairs bought yearly, are behind in the list, according to RBC.


Imports currently make up nearly 60 percent of the Russian market at present, and 30 percent is taken by grey imports. And this segment will only grow if the Belarusian proposal gets green light from the authorities, retailers say.


“A portion of imported shoes will become illegal,” Gritsenko said. “The budget will receive a completely different level of payments,” RBC quoted him as saying. 


Demidova said that higher tariffs for Chinese and Vietnamese shoes that the EU introduced in 2006 just led to the rapid growth of illegal imports – in some cases by 11-fold in just three months.

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