Russia is looking to overhaul the system it put in place last year to allow for the importation of grey market goods following the exit of most major Western brands from the market. The Russian Industry and Trade Ministry opened the floodgates for grey market goods last spring when it released a 25-page list of brands/products that could be imported into Russia without the threat of trademark infringement ramifications, paving the way for potential imports of luxury cars bearing Bentley, Ferrari, and Rolls-Royce’s trademarks, consumer electronics from Apple and Dyson, cosmetics, and fashion and leather goods. Russian authorities characterized the move as an attempt to “defend the interests of domestic consumers for products of foreign companies that left the Russian market under the sanctions regime imposed by ‘unfriendly’ countries.”
Russian news outlet Izvestia reported on Monday that the Ministry is in the process of adding new names to the list of goods that can be imported without trademark holder authorization to include those that bear the trademarks of IKEA, American toymakers Hasbro and Mattel, Nintendo, and haircare brand Kerastase, Lancôme, Tommy Hilfiger, Giorgio Armani, and Yves Saint Laurent, among others. The list is expected to increase further, per Izvestia, which “has the correct list [that] is now being registered with the Ministry of Justice,” the Russian trade ministry said in a statement to Reuters.
“Tommy Hilfiger clothes will quickly appear on shelves … after the [new list] comes into force,” Izvestia reported, citing an unnamed source in the market. Meanwhile, goods from other newly included clothing and fragrance/cosmetics brands are slated to become available to consumers in Russian “in mid-summer, [as] purchases are already being prepared.” And demand for these new goods is expected to be substantial, with Artem Sokolov, President of the Russian Association of Internet Trade Companies, stating that “buyers had formed a high degree of loyalty” to these Western brands and their offerings before the onset of the war with Ukraine.
Potentially even more noteworthy than the addition of new names on the grey market goods list is an impending overhaul of the system, itself. Izvestia reports that in addition to “significantly” expanding the range of allowable goods to include those from more companies that have left the market, the not-yet-implemented changes will also introduce a “mechanism for removing [from the list] companies that have decided to return to the Russian Federation,” which might be welcome news for brands down the line.
Primarily, the Ministry says that it will increase the breadth of the list by moving away from the current approach of indicating a type of goods (clothing/footwear, electronics, auto parts, etc.) and then specifying brands of those goods that can be imported through parallel channels. The new system will see the Ministry broadly identify the names of companies whose goods may be imported “or, conversely, that should be excluded from [the parallel trade system].” In other words, the list will green-light companies – including those that own multiple brands and many corresponding trademarks – instead of individual marks. An Izvestia source cited Inditex as one example of the many companies that manage several brands, noting that the Spanish retail giant is parent to Zara, Bershka, and Pull & Bear, among other brands.
The final version of the Ministry’s amendments – which it being touted as a way to simplify the administration of Russia’s pro-grey market system – is currently in the process of being reviewed by the Ministry and cooperating authorities, such as the Federal Anti-Monopoly Service.
LOOKING FORWARD: As for how such a system may prove to be challenging for Russian officials but advantageous to companies that one day may be looking to put a stop to such unauthorized sales in Russia, one expert told Izvestia that “it may turn out that if a company starts officially supplying goods of one of its brands to Russia, the parallel import of its other brands will be prohibited.”
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