By Tassilo Hummel, Gleb Stolyarov, Polina, Nikolskaya and David Gauthier-Villars
PARIS (Reuters) – Nike (NYSE:) stopped promoting its sportswear to Russia quickly after Moscow launched its full-scale invasion of Ukraine over two years in the past. However that hasn’t stopped footballstore.ru, a web-based sports activities retailer owned by Russia’s Zenit soccer membership.
Among the many dozens of Nike-branded gadgets the location affords are the U.S. sportswear maker’s Phantom GT2 Elite soccer boots, for 29,999 roubles, or round $330.
The person who bought these footwear to Russia is Wijnand Herinckx, a 40-year-old Dutch citizen who lives in Moscow. For the reason that battle started, Herinckx has constructed a thriving enterprise that gives Russian shoppers with Western items whose makers have pulled out of Russia.
“Nike does not want their products to be shipped to Russia,” Herinckx advised Reuters in a video name from his workplace on the outskirts of Moscow, the place cabinets are stacked with packing containers of Western branded footwear. However he added: “They are also not telling us not to do it.”
Each Nike and Lego advised Reuters they haven’t licensed Herinckx’s imports of their items to Russia.
By inspecting customs information, company information and inner firm paperwork, and by talking to Herinckx himself, Reuters discovered how his enterprise obtains branded items together with Nike and Lego: It makes use of intermediaries with no obvious connection to Russia as patrons, then ships the products to Russia – usually through Turkey – and eventually delivers them to retailers in Russia.
There are at the least dozens of corporations like Herinckx’s using grey-market strategies to get Western items to Russia, in line with a Reuters analysis of customs information. His operation reveals how makes an attempt by Western governments and types to isolate Russia’s economic system are crashing right into a actuality of world enterprise: The place there’s demand, somebody will meet it.
Western governments’ restrictions have largely centered on industrial merchandise that can be utilized to construct weapons for Russia’s warfare machine. Such merchandise are normally topic to U.S. and European Union sanctions. Herinckx mentioned his focus is on shopper items not coated by sanctions. Reuters discovered no proof that his agency was violating sanctions.
However firms like Herinckx’s are not directly serving to the Russian economic system: Customers can nonetheless purchase overseas items they’ve grown used to because the collapse of communism greater than a era in the past. Customs information analyzed by Reuters confirmed, for instance, the worth of Nike merchandise imported to Russia plummeted 81% in 2022 to $21 million, however rebounded in 2023 to at the least $74 million.
The sportswear big mentioned it didn’t provide Herinckx’s agency or any related companies. “We no longer have any Nike-owned physical or digital retail operations in Russia,” it mentioned in a press release. “We do not ship any product to Russia, nor do we authorize any marketplace partners to distribute product there.” It additionally mentioned it has a devoted workforce to research unauthorized distribution channels. A spokesperson didn’t reply to questions on how the merchandise have been reaching Russia.
In mid 2022, following Moscow’s invasion of Ukraine, Nike introduced it was exiting Russia and Lego mentioned it was closing its Russian enterprise.
As world manufacturers halted gross sales or stopped exports over the invasion, Russia authorised companies to import merchandise from overseas with out the trademark proprietor’s permission. Russia mentioned its so-called parallel imports totalled greater than $70 billion within the two years up to the tip of 2023.
Some authorized specialists say in search of recourse beneath Russian regulation could be difficult for Western manufacturers, leaving few different authorized choices for manufacturers attempting to implement mental property rights which can be sometimes tied to the territory the place the infringement occurred.
The supply of Western manufacturers lets Russian President Vladimir Putin “project a message that the war does not undermine the ‘normal life’ of the Russian middle class, ” mentioned Sergei Guriev, a Russian economist who’s provost at Paris’ Sciences Po college.
‘PROUD OF IT’
Herinckx’s Russian firm employs 82 employees and forecasts revenues in 2024 of 35 million euros, or about $37 million, he mentioned. Final 12 months, it was $23.7 million, in line with firm accounts.
On the time of Russia’s 2022 invasion of Ukraine, Herinckx was working within the Moscow workplace of a German firm, Hellmann Worldwide Logistics. In keeping with Herinckx, he ran a workforce of greater than 20 individuals inside Hellmann that served overseas firms who wished to promote in Russia with out setting up native operations.
Hellmann rapidly determined to drag out of Russia. Herinckx stayed put. He had beforehand married a Russian lady with whom he’d had kids, Herinckx mentioned. “Our life is here. Everything we have we built up here,” he mentioned.
He took over certainly one of Hellmann’s Russian entities, renamed it Herinckx Commerce Options Rus (HTS Rus), and registered it in his spouse’s identify in April 2022. Herinckx initially used Hellmann’s e-mail servers, and a variation of the Hellmann emblem in his advertising.
Each Herinckx and Hellmann mentioned that they had a transitional settlement to let the Dutchman use a few of his outdated employer’s infrastructure. Hellmann mentioned the deal to make use of its emblem expired in October 2022, and that its mental property was used with out its consent after that. Herinckx mentioned this was an oversight and he stopped utilizing Hellmann logos in January 2024. Hellmann mentioned it now has no connection to Herinckx’s enterprise and has no operational enterprise in Russia.
Amongst items Herinckx’s agency ships to Russia are Reebok sports activities footwear and Emporio Armani wristwatches, in line with Herinckx and information recorded by a Russian financial institution that lists belongings HTS Rus pledged in opposition to a mortgage.
Herinckx mentioned he didn’t have authorisation from these two manufacturers. Armani Group mentioned it had stopped authorised shipments to Russian distributors and doesn’t understand how HTS Rus had bought maintain of the merchandise. Reebok’s proprietor Genuine Manufacturers Group, which mentioned in 2022 it had suspended all branded shops and e-commerce operations in Russia, didn’t reply to a request for remark.
The Dutchman’s agency doesn’t publicly disclose its clients. However Reuters recognized a few of its Russian purchasers by reviewing paperwork the corporate filed with Russian tax authorities. Clients included a few of Russia’s greatest grocery store chains and on-line retailers.
Herinckx mentioned his agency is an efficient company citizen that can also be concerned in charity work. Requested why he determined to talk publicly about his operations, he mentioned: “What we do is quite cool, we are proud of it.”
EUROPEAN ROUTE
Amongst his achievements is importing Lego bricks. The Danish agency mentioned it strictly enforces its coverage of not promoting to Russia. When it sells to retailers or distributors, it writes into the contract that they need to not re-sell to Russia, in line with Herinckx and Lego.
To get round this, Herinckx mentioned he inserted a series of intermediaries between Lego and Russia. Among the Lego bricks he buys are first purchased from the producer by an organization in Europe that has no relation to his enterprise, he mentioned, declining to call the corporate. He then buys the bricks from that firm, utilizing a Netherlands-registered entity he owns referred to as HTS Europe B.V., he mentioned.
The products are then trucked straight from Europe to Russia, passing by means of customs checks on the best way, in line with Herinckx.
As soon as in Russia, the Lego comes beneath the management of Herinckx’s Russian enterprise, HTS Rus, in line with the mortgage information and tax paperwork. Herinckx advised Reuters he provided Lego to round 48 Russian corporations, largely specialist toy retailers.
“My children play with Lego,” Herinckx mentioned. “I have nothing against other children playing with Lego.”
Lego has issues together with his operation, although.
After Reuters contacted Lego for remark in late April, the Danish agency mentioned it had written to HTS Rus accusing it of falsely claiming on its web site that it collaborated with Lego. HTS Rus subsequently modified the English-language model of its web site, eradicating a picture of Lego figures and changing it with generic kids’s plastic toys. The Russian-language model of the location nonetheless carried a Lego emblem as of June 13.
“We are concerned to learn of this flow of goods considering we stopped shipping LEGO products into Russia in March 2022,” Lego mentioned in a press release to Reuters. “This is an issue we take seriously and are acting upon, while ensuring that we comply with local laws and regulations where we continue to operate.”
TRANSPORTED THROUGH TURKEY
Some Western items come through Turkey, a favoured hub for grey-market imports to Russia. Herinckx mentioned he sources Nike and a few Lego merchandise in Turkey, through an organization referred to as HTS Poer Dis Ticaret Restricted Sirketi, which he mentioned procures items from Turkish retailers or distributors. He declined to call them.
HTS Poer co-founder Murat Erbelger advised Reuters the Turkish firm had nothing to do with sanctioned merchandise. “We do legitimate business,” he mentioned. Erbelger didn’t reply questions on HTS Poer’s affiliation with Herinckx Commerce Options. Requested by Reuters about grey-market items reaching Russia through Turkey, the Turkish presidency’s communications directorate didn’t reply.
Customs information for the interval from June 2022 to December 2023 confirmed HTS Poer provided at the least $4 million value of Nike merchandise to Russia. Herinckx advised Reuters that so far as he knew all these shipments of Nike items have been destined for his firm.
As soon as the Nike merchandise attain Russia, they go to Herinckx’s retail purchasers. Amongst them is footballstore.ru, in line with tax information and the inner HTS Rus doc. Russian company information present the retail website is 100% owned by Zenit soccer membership.
Zenit membership is sponsored by Gazprom (MCX:), Russia’s state-owned gasoline firm, and can also be part-owned by Gazprombank. The lender is topic to U.S. sanctions on the Russian banking sector. Gazprombank, Gazprom and Zenit didn’t reply to requests for remark.
Reuters bought the Phantom GT2 Elite Nike soccer boots from the web retailer. They have been delivered 10 days later. Nike didn’t touch upon the footwear.
The shoe field gave the date of manufacture as September 2022, three months after Nike mentioned it stopped promoting in Russia. It additionally bore a label that recognized Herinckx’s HTS Rus because the importer.