What is the situation with the PPE market in Russia? Prospects and trends

The PPE market in Russia is changing rapidly, just like many other segments. The withdrawal of foreign companies, as well as complications with logistics and foreign currency payments, pushed Russian companies to upgrade their internal management systems.

The current period can be characterized as a «crisis management». Rapid decision making and relevant business transformation is essential to stay commercially successful against your rivals.

A PPE industry website Getsiz.ru reports that annual growth of the PPE segment will amount to 10% in the next 5 years and will reach about 300 billion rubles, as forecasted by the Association of Developers, Manufacturers and Suppliers of Personal Protective Equipment of Russia. Prior to the COVID-19 pandemic, the market for personal protective equipment in Russia was estimated at 170 billion rubles.

Given the current situation, we should keep in mind two key factors:

• Expenses for PPE now exceed the size of the entire market.
• But the cost of purchasing PPE for consumers averages 0.3% of a company's total costs. This is a very small figure indicating a whole lot of issues.

In the opinion of experts, it is essential to prove to supply services, involving also labor protection services, that special clothing, special footwear, and PPE accomplish an important social mission at enterprises. High-quality PPE affects both labor productivity and the social climate in the team.

In addition, the PPE Association is actively developing corporate standards for PPE to set a high level of quality of PPE used at enterprises.

All these activities are aimed at addressing one of the main 2023 challenges: to prevent a decline in the quality of PPE used in enterprises, and improve market performance.

Impact of young and renewing companies in the Russian PPE market

Despite the withdrawal of major foreign players who influenced a significant share of the PPE market, now the second-tier companies have a good chance to squeeze out large federal companies by offering a viable equivalent to the products of the withdrawn foreign manufacturers.

In recent years, many new companies have emerged on the Russian market – AG-Technologies, BTR, TechnosAif, Univet Rus, Kapman, Jetta Safety, Plasmamash, Azbuka Zaschity, InterSafety and others. This shows that the Russian PPE market is developing and is a good platform for business.

In addition, some companies established long ago (Spetsobedinenie Yugo-Zapad, «Soyuzspetsodezhda», BTK-Group, Biser, Meridian, Sever-Service-Komplekt, Avangard. Professionalnaya Ekipirovka, Komus, Spetsperchatka, Liga Spetsodezhdy) have made changes, expanded their product range, intensified their operations, and have become successful in competing in different segments.

The current situation favors changes in both the internal structure of companies and the external dominance of federal enterprises in the supply of PPE to end users. The crisis has offered a unique window of opportunity for emerging market players to compete with the established leaders.

Such a competitive environment will force to excel over other manufacturers and adhere to the changes that the government introduces.

Occupational safety and quality PPE is one of the criteria for choosing an employer nowadays

To avoid a decline in the quality of PPE used at enterprises, the government has introduced a risk-oriented approach to occupational safety. This entailed reforming the operations of PPE consumers taking into account a new document, the «Uniform Standard Norms» (ETN).

With the amendments to Section 10 of the Labor Code, the new unified standards for the issuance of PPE and rules for the provision of PPE to employees, which became effective on 1 September 2023, require a qualitative assessment of occupational risks at an employee's workplace. Only then is an employee considered to be fully provided with PPE.

Experts specify that there should be no formalism and bureaucracy here. If a company overlooks a hazard, or fails to assess or misassess the risk level, the worker will not receive the necessary protection and could end up getting injured. This will cause multiple troubles for the enterprise.

Thus, by modernizing the occupational safety domain, the government aims to reduce risks for employees and to encourage developing the PPE segment.

Points of Growth

Undoubtedly, the PPE market depends on the pace of economic development, but the main factor affecting their use is the decreasing or increasing staff numbers at enterprises.

The more staff an enterprise has, the more PPE is purchased. If the staff number decreases, the PPE usage similarly decreases.

For example, as of May 2023, a new all-time high unemployment was registered in Russia. This amounted to 3.2%, as reported by the Ministry of Economic Development based on Rosstat's data.

Based on the current situation, several points of growth can be identified:

1. One should keep in mind that many highly qualified professionals from companies that have withdrawn from the market are out of work. The professionals are looking for jobs and, if they join Russian companies, could seriously affect their development and the volume of PPE purchases.
2. Defense industry orders remain relevant. Clothing, shoes, and PPE are required at all times. The order volume is growing and this is an opportunity for many manufacturers.
3. Market redistribution due to the withdrawal of foreign manufacturers should also be considered. Many niches are still vacant, and dozens of opportunities for young businesses, both domestic and foreign like of China, Turkey, and India, have emerged in the market.

It should be noted that, according to Getsiz, $2 billion worth of Chinese-made PPE was imported into Russia in 2020. A year earlier, this figure did not exceed $0.57 billion.

Medical wear had the largest share of shipments ($691 million), with masks, half-masks and respirators in second place ($659 million) and shoe covers and gloves in third place ($437 million).

Given the market reallocation, the presence of Chinese companies in the Russian market is noticeably increasing every year. Currently, experts identify several leading PPE manufacturing companies from China showing high capacity for development in the Russian market:

• Xiamen Fuyuanda Optical Technology Co., Ltd.
• Ningbo Huacow Industrial Co., Ltd.
• Guangzhou J&Y Safety Products Manufacturer Co., Ltd.
• Opsmen
• TECMEN
• Welhel
• Paloma
• Huakai
• Electropopular

Constraints

No points of growth without constraints. There are two key challenges in the PPE market:

• Shortage of garment and footwear capacity. Many enterprises of textile, clothing and footwear industry are engaged in defense contracts and do not accept orders for the production of overalls and special footwear. The resulting shortages may lead to higher prices and risks of disrupted PPE deliveries to consumers.
• Optimizing enterprise budgets due to unstable situation. This increases the risk of cuts to PPE procurement budgets. Of course, large enterprises (Rosneft, Gazprom, Russian Railways, Norilsk Nickel, Rusal, Eurochem, Lukoil) understand the social role of PPE at the enterprise and will not cut costs. But what will small and medium-sized businesses do? This is why the new PPE provisions were introduced in the Labor Code. Uniform Standard Norms serve as an additional incentive for companies to adhere to the necessary rules and not to risk the lives of employees.

Conclusions

Finding alternatives to withdrawn manufacturers is still a challenge for major Russian companies in both 2023 and 2024.

However, the PPE that is no longer available is now being widely replaced by the products of both Russian (Zelinsky Group, SOMZ, ElanPlast, Respiratorny Complex, Kimry Factory named after M. Gorky, BTR, RusSiz, Wall) and foreign companies remaining in the Russian Federation (Delta Plus, Uvex, Univet Rus, GVS, NITRAS, OPTREL), as well as domestic PPE of private label brands (Manipula Specialist, Jetta Safety).

Under the current conditions, Chinese, Turkish, and Indian PPE manufacturers are well positioned to fill promising niches in the Russian market. Experts believe that the PPE market in Russia is undergoing significant changes and that companies able to adapt to the new reality will succeed.

Thus, a sharp drop in PPE consumption in 2023-2024 is unlikely, and is even predicted to increase in the long-term forecasts.

Securika Moscow 2024 International Exhibition

Participation in Securika Moscow is an excellent opportunity to get to know the Russian market of security and fire safety equipment and technologies and converse with the industry’s chief experts.

Moreover, exhibitors enjoy a unique chance to find new partners and clients in just a few days. In 2023, Securika Moscow was visited by 19,555 professionals from 79 Russian regions and 27 countries.

Over half of the exhibition visitors (83%) looked for new equipment and planned to purchase products at the end of their visit, and 93% of them were influencing equipment purchasing decisions.

It is worth noting that the 2023 exhibition presented a new section «Occupational health and safety. Personal protective equipment». More than 2,000 visitors (12%) were interested in occupational health and safety products and PPE.

However, the base of PPE purchasing companies is not limited to this. The Securika Moscow team estimates that more than 280,000 unique visitors may be interested in PPE products. These are customers from the construction, pharmaceutical, chemical, mining, food manufacturing and many other industries.

Securika Moscow exhibition will make it possible for both Russian companies and participants from China, Turkey, India, and other countries to find new partners and to show themselves to the best advantage right during the events.