Russian cosmetics conquers the domestic market, 04.05.2022.
Cosmetics manufacturers from the Moscow region are expanding production in order to replace imports.
Today, regional authorities offer various business support programs aimed at developing import substitution and localizing production. There is interest on the part of entrepreneurs, for example, according to the Moscow region, more than 100 applications have already been submitted for various benefits and subsidies.
One such case is Arabia, a domestic cosmetics brand that has been operating on the market for over 11 years. Arabia's product range includes products for body and face skin care, depilation, manicure and pedicure, professional hair and scalp care, as well as antiseptics, the company said. Arabia has training centers where more than 20,000 specialists are trained annually.
The brand's production line is located on the territory of Protvino in the Moscow region. And today, according to Alexey Vyrodov, Arabia's sales director, it is planned to expand the capacity. The company is ready to replace foreign finished products - face and hand creams, hair care. And a significant part - about 30% of the components - is planned to be produced for their own production of cosmetics. Now the lion's share of preservatives is imported products from European countries, so the business of import substitution of components is especially relevant.
A company representative says that the history of the business began in 2009 with ARAVIA sugar pastes for shugaring. The products began to be in demand among Russian beauty salons, and the line quickly expanded, supplemented by products for skin care before and after hair removal, body and face care, as well as hair. In the early years, only professional cosmetics were present in the assortment, in 2014 home care products also appeared. At the same time, the network of our own training and partner centers in Russia and the CIS countries was growing. Today, according to the company, more than 150 beauty salons work with the brand, and in the context of the policy of import substitution, the company is going to actively develop, will increase production in the Moscow region and a network of partners in Russia and friendly countries.
Support measures in the Moscow region
According to Deputy Prime Minister - Minister of Investments, Industry and Science of the Moscow Region Ekaterina Zinovieva, the primary task for the region today is to stimulate business in the field of import substitution. Important sectors in this regard include mechanical engineering, electronics and electrical equipment, agriculture, food industry, clothing, textiles, leather products, woodworking, chemical industry, pharmaceuticals, production of medical equipment and medical products, production of rubber and plastic products, mineral products.
For entrepreneurs in the current conditions, financial support is especially relevant. Small and medium-sized businesses near Moscow, as well as the self-employed, can still take advantage of the preferential lending programs of the Moscow Regional Microfinance Fund*, the Ministry of Investments says. The Fund has 10 programs - SMEs can get a loan of up to 5 million rubles at a rate of 2% per annum for up to 3 years. Program rates vary. They depend on the scope of activity of the SME entity, collateral conditions and other parameters.
In addition, the Moscow Region is ready to subsidize part of the interest rate on loans so that in the end it does not exceed 10%. This subsidy is available to SMEs implementing new construction projects and modernization projects for existing enterprises. And for entrepreneurs implementing import substitution projects (should be included in a special list ), a new program of the Government of the Moscow Region and the SME Corporation is available. It will allow businesses to obtain a loan at a rate of 4 to 5.5% per annum in 10 accredited banks.
A separate program to support the development of import substitution was developed for businesses that need land: businesses can lease land for the construction of enterprises for a period of 3 years at a rate of 1 ruble per year, says Ekaterina Zinovieva. Also, according to her, the program of offset contracts again acquires an important role. The region is ready to enter into offsets with investors whose projects are aimed at participating in state and municipal procurement. Moreover, at the level of the federal government, the issue of reducing the minimum investment threshold for offsets to 100 million rubles is being considered.
There are only two criteria for receiving assistance from the Moscow region: the company must be registered in the region and work in one of the above industries. “Today we face an important task – to ensure the independence of the Russian economy from imported goods,” says Ekaterina Zinovieva. - The country's industry must work and provide the population with the necessary goods, regardless of foreign policy conditions. In this regard, the Moscow Region has always been and remains open to all constituent entities of the Russian Federation and to friendly countries: we are ready to discuss and promote the implementation of projects, we are ready to help establish production chains with enterprises from other regions and countries.”
“Support measures in the Moscow region affect all areas of small business: attracting resources at attractive rates, and generating additional demand, and infrastructural support. Infrastructure, for example, is very important for small businesses in terms of production development. The range of support programs is wide, it can be predicted that this will help small businesses to overcome the current challenges in the market more comfortably and even get resources to expand their activities. The share of small businesses in many industries remains low, this is one of the problems of our economy. Perhaps now is just such a chance to change the trend: small businesses, using their flexibility and adaptability, and, on the other hand, support programs, will be able to occupy a more significant niche, ”comments Pavel Samiev, General Director of BusinessDrom LLC.
How it works
Returning to the experience of domestic brands, within the framework of the regional program to support the development of import substitution, the Arabia company will lease a land plot in Protvino at a rate of 1 ruble per year. In this territory, the investor plans to expand the production of cosmetics by the end of 2022.
“We produce a product “from idea to shelf”. Starting from market research, recipe development, direct product creation, and ending with its sale to both end consumers and distributors. Taking into account the fact that our consumers are beauty salons, cosmetologists, the effectiveness of products, the solution of specific problems - dry skin, acne, etc. is extremely important to us. We purchased most of the components abroad from the world's leading suppliers,” says Alexey Vyrodov. – In particular, many of them were from Europe. Now we are actively working on testing components from Asian suppliers. We are also planning our own production of ingredients.” According to him, in addition to land lease benefits, the company also enjoys preferential terms of financing. “All the support measures are very useful for us,” he sums up.
“To date, the Ministry of Investments has already received more than 100 investment projects in the field of import substitution for consideration. Some of them are already receiving support. So, land plots have been selected for 15 companies, which will be leased at a rate of 1 ruble per year for the construction of industrial facilities. One of these investors, Arabia, received a 2.7-hectare plot under the Land for 1 Ruble program. Through the implementation of the project to expand production, the company will replace foreign cosmetics on the Russian market,” says Ekaterina Zinovieva. According to her, the total amount of private investment in the project is 850 million rubles. After the expansion of production at the enterprise, about 200 new jobs will be created.