Silent revolution in the shoe market

“Until now, a huge number of entrepreneurs working in the footwear market, especially in the regions, are not aware that a revolution has occurred in their business,” says Alexey Chernyshev, Commercial Director of AKFA Logistics Company. At the same time, AKFA, being one of the leading importers of footwear, is celebrating the key year for the 2020 footwear market fully equipped. The Shoes Report talked with Alexei Chernyshev about the new AKFA product for labeling shoes in production, about interaction with the operator of the MDC marking system and market readiness for the new rules.

Alexei Chernyshev -

Commercial Director of AKFA.

Shoes Report: Alexey, we talked with you a year ago on the topic of preparing companies for the shoe labeling process, then the whole system was just starting to function in test mode - it was already possible to generate a code, but it was still impossible to transfer it to customs and register. How are things now?

Alexey Chernyshev: You won’t believe it, but from the point of view of customs, nothing has changed, everything is so. For customs, there is now a marking code, it’s like in “The Undergrowth” by Fonvizin “the door is an adjective ...” That is, the marking is, as it were, but it does not fulfill its control functions. Today, marking codes can be entered exclusively in text form in the customs declaration. But the main thing is that the release into free circulation of a product with a marking code does not mean automatic putting into circulation.

At the moment, in November, the entries of marking codes are not automatic, but manual. The reverse algorithm works - first you clear the goods, then you put them into circulation in the client’s office with the number of the customs declaration. And it should be like this — it cleared the goods, the customs released it into free circulation, that is, it was automatically transferred to the central distribution center and put into circulation.

And in what perspective will all this work as it should?

Well, as usual, "tomorrow."

That is, the test stage of marking is ongoing?

Nothing like this. The stage is completely not a test. Because money is already taken. We ourselves already pay for the marking codes, 60 cents for the code, and we already paid a lot of money. Now there is such a transition period when both marked and unmarked shoes are imported into the country. The turnover of both is allowed, but such a situation will most likely last until April.

It turns out that those who have already mastered the labeling prefer to pay these 60 cents?

I can’t say for everyone, but we pay. We order codes for our customers, and pay for the codes. But it lasts only a month. That is, this is the latest design.

Do I understand correctly that if there is an opportunity, it is better to label now, because then there will be no need to label the residues?

I would not agree with this, because the labeling of residues has been simplified to impossibility. By and large, marking residues when compulsory marking begins will be very simple. We also began to offer our customers a service for marking residues. It was objectively easy to deal with.

It’s probably good, what’s easy? At least retail will not have big problems ...

I think there will be no problems. Unless, of course, any new by-laws come out.

Then the reverse side of the coin may be that loopholes will appear to bypass the system? Can someone be able to label shoes without documents, for example?

In fact, if the marking scheme for the residuals is preserved as it is now, then this cannot even be called a “hole” in the system, it’s just a “gate”! That is, with the help of eight GTIN you can describe any shoes!

But maybe it still changes?

We'll see.

I heard that you have developed your It-product for labeling, tell us more!

We have made an internal program for accounting and labeling of shoes, the transportation of which we are engaged. This is a very cool and useful thing that we decided to give to the foreign market. It remains only to bring beauty, that is, to make a design, functionally it fully works. The uniqueness of the competitive offer of this software is that it is installed by the manufacturer.

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We reasoned like this: marking shoes in other people's warehouses is expensive, long and, most importantly, there will be a huge number of mistakes. The only reasonable way to label shoes is to apply it immediately in production. But so as not to cause confusion, the production should be able to get the label exactly on the pair that appears before the eyes of the specialist who puts the code.

For this, we developed the software, it is located on a Chinese server, in Chinese, with Chinese technical support. It laid down certain mnemonic rules for the description of shoes understandable to the Chinese. We presented the software to three dozen vendors in Beijing, they really liked it. Now about 70 vendors work on this software product, label shoes. This is not a boxed product, this is a network version that allows you to see the entire supply chain of shoes, all links - the manufacturer, a Chinese trading company, export, import, putting into circulation, transportation.

So, do you offer, among other things, your services for installing software in production?

Yes. We have opened an office in China, which is now engaged in all of this. Quite a lot of companies that learned about our program from Chinese manufacturers asked us to adapt it for third-party importers. We have already done this. In addition, we are now launching software not only in Chinese, but also in English and Turkish. Recently installed software in one of the Italian factories. And in China, we are already actively developing this area.

Did you get another separate business?

We would have succeeded in a separate business if we sold this product. At the moment, we do this for free for our suppliers.

That is, is this such a competitive advantage as an importer?

Yes. Accordingly, in this program we are now also making a module for marking residues. I think that special demand for our software will begin in February. But most importantly, the labeling of clothing is ahead. The clothing market is even more complicated than the shoe market. This program can also be used to label clothes.

You probably opened a new department for this task, expanded?

Yes, we are expanding now.

And how many, for example, IT-specialists were added?

They are now three times more than before.

I remember that you said that in connection with labeling, all companies will need good IT-specialists ...

This has not changed, it is actually so. If you enter the marking process on your own, you cannot do without a serious IT specialist. Yes, ready-made solutions have appeared on the market today, including on 1С, but to integrate them into your own accounting, you need to put your head and hands to this. It will not work by itself. Another important point, many were waiting for a solution from 1С, believing that 1С will make the right product, and you won’t have to do anything yourself - it’s not so simple! In fact, all updates in 1С will appear only in the newest versions. That is, if you are working on older versions of 1С, then there will be nothing on the marking.

Earlier in the market there was talk that foreigners do not all perceive the marking, that Italians do not want to hear anything about it ...

In this regard, little has changed. Many suppliers still perceive all this as a kind of Russian venture, and they say, “figure it out yourself, as you want!”. And on the other hand, recently at one of the shoe shows, I talked with one of the suppliers of our customers, a foreign manufacturer. He’s breathing indignation, they say, “they say, what a wild country, I’ve known for two years now that you have new rules here in 2020, and Russian clients come to me who haven’t even heard anything about it!” And this is not even about marking, but about the abolition of UTII. Indeed, only two months left to submit an application for a change in the tax regime, and many individual entrepreneurs in the regions do not know anything about this.

For many companies, wholesale and retail are different taxation systems, different legal entities. The cancellation of UTII from 2021 of the year, and the cancellation of UTII and Patents for shoe makers from 2020 of the year due to marking will force companies to completely keep accounting, and they must be prepared for this, they must take some action.

Until now, a huge number of entrepreneurs working in the footwear market, especially in the regions, are not aware that a revolution has occurred in their business! They don’t know that starting from 1 of January 2021 of the year they won’t be able to trade shoes while they are at UTII, that in December they should switch to another form of taxation and file a tax application. And those who know, have not decided where they will go to VAT, 6% or 15%.

I’m afraid that with the advent of 2020, it may turn out that a large number of companies selling shoes simply don’t switch to another form of taxation, they start selling shoes and something will happen that I don’t know ...

There will probably be a collapse first, and then everything will somehow resolve. And how do you think the MDG system is ready for mandatory labeling from February?

Yes, everything is fine there. At some point, it was quite difficult to get answers to many technical support questions from the MDTC, and still not everything works like a clock. In October, a huge number of players fell on the MDGs, so he simply could not "digest" them. But now October is over, the situation has become radically better. And it would be untrue to say that nothing works for them.