Seeking Russian Gold: Despite Turmoil, Brands Rush to Booming Market

Fashion and retail firms are heading to Russia in droves, attracted by a vibrant economy, a free-spending elite and a demand for style and status.

Leon Max, owner of in Pasadena, Calif., with 150 contemporary stores worldwide, grew up in St. Petersburg and defected to the U.S. in the mid-Seventies. He, too, has shunned doing business in Russia. “There’s a distinct lack of enforceable commercial codes and contractual laws there,” he said, noting that, just after the Soviet regime, there was even significant amounts of unclaimed retail real estate in cities like Moscow and St. Petersburg. “No one knew who owned the properties. And up until a few years ago, one would have to have protection from strongmen to do business and not be bothered with local bandits. I’m quite sure it’s still a problem around Russia. Also, there’s a growing middle class but a slow-growing middle class. There are very few credit cards in use. I’m better off opening a store in Glendale, [Calif.,] — and they speak Russian just as well there.”
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