Presently there are over 1000 companies manufacturing clothes in Ukraine. At the same time, the number of large-scale factories (over 100 employees) exceeds 300. The annual gross sales proceeds of these companies amount to UAH 350 million (approximately, USD 70 million).

Nowadays, light industry is experiencing restructuring, change of management approaches, patterns of ownership, product line, technology of manufacturing as well as implementation of new cost optimization schemes. One of these new approaches designed to safeguard the position on the market is cooperation with customers on the basis of customer-furnished raw materials. Such schemes became popular in domestic light industry since the 1990s. Presently, from 70 to 90 per cent of light industry products in Ukraine are manufactured applying the customer-furnished raw materials approach. Customers – European and North American companies – provide Ukrainian enterprises with materials, designs and equipment. Bearing comparatively small (mainly, cost of labor) expenditures when contracting Ukrainian companies, Western light industry giants receive high quality products.

In view of that, foreign companies have become more and more interested in Ukrainian light industry companies as potential investments. Having reached the international standards of manufacturing technology and product quality, Ukrainian producers were recognized by the world leading companies - Hugo Boss, Vidivan, Valdi etc. – as competent participants of the market.

Konnov & Sozanovsky lawyers advise on the following light industry related issues: peculiarities of doing business in Ukraine and business patterns optimization; agreements servicing various transactions, negotiations of the terms and conditions of transactions; expertise of international sales, lease, franchising etc. agreements;  product liability; foreign economic transactions, customs clearance, customs duties optimization; tax optimization; investment models;  drafting of loan agreements to be entered into with foreign lenders, registration of loans with the National Bank of Ukraine;  pre-acquisition due diligence for the foreign investor; reorganization of companies and optimization of companies networks; registration of enterprises with foreign investments, joint ventures; interrelations with competition, financial and controlling authorities; antidumping investigations; dispute resolution.

Light industry in the Russian Federation comprises a large-scale economic complex, including 17 segments of industry, about 14 thousand enterprises and organizations, 1437 of which are big and average. The total manpower engaged in the area is over 550,000.

Light industry enterprises are located all over the Russian Federation. The main regions determining the industrial policy of the branch, are Central (54 enterprises) and Privolghsky (30 enterprises) federal okrugs/regions/districts. The major producers of light industry output (in percentage to the general industrial discharge/ commercialization) are: Ivanov Region (14,5%), Chuvashskaya Republic (8,3 %), Krasnodarsky/ Krasnodar Region (7,6%), Moscow Region/ Oblast (6,6%), City Moscow (5,11%), Smolensk Region. Many enterprises of the branch are located in the towns and small settlements where job placement is a serious problem.

In the outputted product mix, along with the manufacture of the consumer goods, high is the specific share of goods with the production and technical, as well as special-purpose assignment, including material for the food, chemical and electrotechnical industry, cords for tires, fabric and manufactured articles for the agriculture, automobile, aviation and space technology, special garments for the workers of the different sectors of economy, clothing and equipment allowance for the  officers of the national power departments.

A distinguishing feature of light industry is a quick return of invested funds. Their turnover inside the branch, despite the factual absence of wholesale trade, occurs 2-4 times per year. Every supplementary 100 million rubles turnover means provide increase of the production volume to the sum of 350-500 million rubles, depending on the rate of turnover.

To date, in the light industry sphere the processes of restructuring are implemented, management techniques are changed, patterns of ownership, as well as range, organization and technology of manufacturing, means of expenditure optimization are developed.

With the advance of the branch, domestic enterprises attract more and more considerable interest on behalf of foreign investors.

Possessing knowledge of the specific character of the business pursuit in the light industry sphere, Konnov & Sozanovsky’s lawyers advise clients on matters of  terms and conditions, as well as peculiarities of commerce conducted within the territory of Russia by non-residents; carry out assistance in the conclusion of business transactions by the light industry sector enterprises and signing of the agreements on the profitable for the client terms and conditions with observance of his interests; carry out legal examination of the external economic contracts, including contracts, regarding industrial equipment import on the terms and conditions of leasing; advise on matters of liability for the product’s quality, optimization of the customs duties, customs regulations, implementation of the export-import transactions; develop schemes on taxation optimization, investment schemes; prepare external economic loan agreements with the non-residents, accompany presales due diligence of the enterprises for the benefit of the potential overseas investor, reorganization of the legal entities and optimization of the relations between groups of the companies; carry out establishing of the enterprises with the foreign investments, provide assistance with joint ventures, and represent clients’ interests in court disputes.

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