Russia is banking on foreign cash to boost textile care industry20 June 2017
The Russian government has plans to attract foreign investment into its laundry and cleaning industry, writes Eugene Gerden
The Russian government is considering creating the ideal conditions for attracting foreign investment in its laundry and cleaning industry in the coming years, according to recent statements from Denis Manturov, Russia’s Minister of Industry and Trade (and the person responsible for the development of the nation's textile care industry).
Despite the ongoing recovery of the Russian economy from the financial crisis and its consequences, (which have been blamed on Western sanctions), the current situation in the Russian laundry and cleaning industry remains complex, as the majority of local players experience a shortage of funds needed for their further development.
This is mainly due to the inaccessibility of cheap Western loans and poor lending conditions in Russia. At the same time, according to the latest predictions of analysts of the Russian Ministry of Industry and Trade, the industry has good conditions for further growth, due to the ever-recovering demand for laundry and cleaning services in Russia.
In the case of foreign investment, it is planned that particular attention will be paid to attracting investors from China. A delegation from the Russian Ministry of Industry and Trade completed an official visit to China, where it reached an agreement with local business investing up to US$150 million in the establishment of a network of laundries and dry cleaners in Russia. It is planned that the project will be implemented by Idalgo, one of Russia’s leading laundry and dry cleaning operators, while part of the funds are expected to be provided by Chinese investors.
The plan is the majority of these laundries will be established in large cities – particularly Moscow, St Petersburg and Vladivostok, which are located in the Russian Far East. In the meantime, the authorities of Moscow and St. Petersburg have already promised investors benefits for the implementation of the project, in particular tax and customs remissions and exemptions.
The government had hoped that the election of Donald Trump would create conditions for a significant increase of foreign investment in the country’s economy and in particular Russia’s laundry and cleaning sector. In the meantime, while we wait and see what pans out there, there is also a possibility that the domestic laundry and cleaning industry may attract the interest of local billionaires, such as Mikhail Friedman, which already develops its own laundry business in the US.
According to Minister Manturov, the development of the laundry and cleaning industries has never been among the priorities for the Russian government. However, there is a possibility that such a situation will change in the near future, as the government is considering providing support to both foreign and domestic investors, which plan their development in this field.