Country Report

Russia’s 2018 In Review

Following the trend of the Russian furniture industry internationalization, here we offera unique and comprehensive overview of the Russian market for a foreign audience.”

Artem Vasiliev, Head of Development of Mebelny Biznes
Chairman of the International
Alliance of Furnishing
Publications (IAFP)

According to the results of 2018, the Russian furniture industry’s production increased by 5.5%.

In 2018, everything in Russia was around football. The FIFA World Cup was held here for the first time ever, and it greatly improved housing, transportation and hotel systems across the country. The furnishing industry also benefited from the sports fever, as it was before with the Sochi Olympic Games. For instance, Russian furniture manufacturers did manage to strengthen their ties with property developers (hotels & apartments), and broaden their experience on supplying complex solutions for indoor and outdoor furnishing.

Yet, the icing on the cake is that, even though some wouldn’t expect it, the tournament showed the essence of the positive mood in Russia for both fans and athletes all around the world. It revealed the Russians focusing on self-improvement, looking towards future, and being open to building up international contacts.

According to the Federal State Statistics Service, the Russian furniture industry’s production in 2018 increased by 5.5% (in manufacturers’ prices, regardless the price index growth by 2.8% during the year). Thus we can see a moderate growth in 2018, following the trend of 2017. According to the trade association AMEDORO, in 2017 the production volume increased by 3.4% compared to 2016 and amounted to 152 billion rubles.

The growth is not as significant as it was in 2009-2014. It is fully expected, considering the complex international environment. Nevertheless, the current production volume, in rubles, has broken the all-time record of modern Russian furniture industry. Judging by the volumes that raised faster than inflation, the manufacturers seem to not just maintain the status quo, but to go further with their great business ambitions and boosting activity on the market. The important thing is the producers see moderate growth as their new market reality rather than temporary difficulty. They managed to quickly reorganize their businesses to fit this new environment, and it says a lot about Russian companies’ management.

Regardless the protectionist ideas that have an impact on many national markets nowadays, Russian furniture companies and their partners from all over the world successfully employ the “Business Outside Politics” model, by actively developing both import and export trade relations.

After the sharp devaluation of ruble in 2014, the following two years saw dramatic fall (59%) in importation of furniture and mattresses (hereafter – according to Federal Customs Service of Russia). Though, within the last two years, stabilization of ruble against euro and US dollar resulted in gradual import restoration. Foreign players managed to recover approximately a half of that decline. In 2017, the Russian furniture and mattresses import numbers increased by 25%, up to USD 1.7 billion, while in 2018 imports rose by another 21% thus amounting to almost USD 2 billion in the report period. Due to significant increase in imports, Russian furniture market in general is growing faster than domestic furniture production.

In 2018, all the key countries supplying furniture to Russia enhanced their importation volume. Germany showed the most spectacular growth of 29.8% (country’s share of imports reached 7%). China, making the lion’s share of furniture imports to Russia (23%), increased its supplies by 25.8%. In the meantime, imports from Belarus increased by 14.5%, and this country continues to hold the second rank in terms of importation volume in Russia; however, against the background of more intensive growth of other importers, the share of Belarus decreased by almost one percent to 13%. Italian furniture companies increased their import to Russia at a moderate pace of 4%, reaching the share of 9%. The overall share of these 4 leading importing countries totaled 52% of the Russian furniture imports pie.

Considering other countries, where the furniture industry is highly developed, we notice a significant increase in the supply of furniture to Russia from Poland – by 40%, from Romania – by 37%, from Vietnam – by 36%.

The devaluation of 2014 nudged the most forward-minded manufacturers of the country to expand to the international markets. It allowed to fit into certain segments, for instance, cooperation with developers all across the world on furnishing condos and apartments when they are constructed. It promised impressive orders and rather high margin when concluding contracts in foreign currency. However, the exportation, as many experts put it, cannot happen once or be a temporary solution. It involves strategic and long-term focus on growing overseas supplies regardless current market environment, as well as it implies elaborated logistics. And we are happy to say, that today Russia has furniture companies that have adopted this way. During 2018 the exports of furniture and mattresses went up by 22.5%. Although it still amounts to modest USD 392.6 million, the exporters are only boosting their activity.

In the last two years, Russian manufacturers have broadened their exporting geography far beyond the Eurasian Economic Union and the CIS. Their furniture goes to many places from Kenya to Oman, from Cambodia to Australia. Today, Russian-made furniture can be a private label supply to major European retailers, complex furnishing in African high-rise houses, or products sold via online shops in China.

The international trade fairs are currently the main tools for promoting Russian furniture abroad. There were imm cologne, Index Dubai, Meble Polska, CIFF, Index Mumbai, to name a few, among the platforms Russian manufacturers showcased on in 2018. The bottom line of these exhibitions was Russian furniture had a high exportation potential, thanks to general development of the industry and its particular players; however, Russian furniture industry is only at the beginning of its export journey, and it will take a lot of effort to see the fruits of this activity.

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