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. Last Updated: 07/27/2016

Russian Clothes-Maker Must Export for Survival

The director of the Moskva factory, one of Russia's largest sewing companies, says he has learned one major lesson since the company went private nearly two years ago: Selling to Russia doesn't pay.

"We are leaving the Russian market, since we don't see another possibility to live," said Izrail Kremenetsky.

The 76-year-old director explained that Russian retailers have either been very slow in paying for the company's shirts or have defaulted entirely. Shops owe the firm 1.6 billion rubles, Moskva's debt to cloth suppliers has grown to around 1 billion rubles, and 600,000 rubles worth of shirts lay unsold in the factory's warehouse.

Moskva's only way out of its predicament, Kremenestky said, is to boost exports. Encouraged by growing orders from abroad, the factory plans to increase exports of shirts from the present 10 percent of its total production to 80 percent this year.

Kremenestky said that Moskva had recently closed a deal for 1.5 million shirts with the Singapore trading firm Agio Ganex International Ltd.

The contract, to be fulfilled this year, will make up for half of Moskva's annual production of 3 million. Agio will supply Moskva with cloth, buttons and styles, Kremenetsky said.

Like many Russian textile manufacturers, Moskva has seen hard times since its privatization in 1992, when workers took 100 percent of the company's shares. According to Kremenetsky, production at the company's six factories plummeted from 6 million shirts two years ago to 3 million in 1993.

Kremenetsky said that the company has had to idle most of its workers, while others have left for better pay. The average wage at Moskva is 180,000 rubles per month, compared to the Moscow city average of 220,000 rubles.On Thursday, however, cloth for the Singapore order is scheduled to arrive, and Moskva plans to increase production to 80 percent of capacity.

The new work will help solve some of the company's immediate problems, but Moskva must find more markets if it wants to raise money to modernize.