LDN - Business

The Dutchman who gets Nike and Lego into wartime Russia’s stores

[June 15, 2024] By Tassilo Hummel, Gleb Stolyarov, Polina, Nikolskaya and David Gauthier-Villars

PARIS (Reuters) - Nike stopped selling its sportswear to Russia soon after Moscow launched its full-scale invasion of Ukraine over two years ago. But that hasn’t stopped footballstore.ru, an online sports retailer owned by Russia’s Zenit soccer club.

Among the dozens of Nike-branded items the site offers are the U.S. sportswear maker’s Phantom GT2 Elite soccer boots, for 29,999 roubles, or around $330.

The man who got these shoes to Russia is Wijnand Herinckx, a 40-year-old Dutch citizen who lives in Moscow. Since the conflict began, Herinckx has built a thriving business that provides Russian consumers with Western goods whose makers have pulled out of Russia.

“Nike does not want their products to be shipped to Russia,” Herinckx told Reuters in a video call from his office on the outskirts of Moscow, where shelves are stacked with boxes of Western branded footwear. But he added: “They are also not telling us not to do it.”

Both Nike and Lego told Reuters they have not authorized Herinckx’s imports of their goods to Russia.

By examining customs data, corporate records and internal company documents, and by speaking to Herinckx himself, Reuters learned how his business obtains branded goods including Nike and Lego: It uses intermediaries with no apparent connection to Russia as buyers, then ships the goods to Russia – often via Turkey – and finally delivers them to retailers in Russia.

There are at least dozens of firms like Herinckx’s employing grey-market methods to get Western goods to Russia, according to a Reuters analysis of customs data. His operation shows how attempts by Western governments and brands to isolate Russia’s economy are crashing into a reality of global business: Where there’s demand, someone will meet it.

Western governments’ restrictions have mostly focused on industrial products that can be used to build weapons for Russia’s war machine. Such products are usually subject to U.S. and European Union sanctions. Herinckx said his focus is on consumer goods not covered by sanctions. Reuters found no evidence that his firm was violating sanctions.

But companies like Herinckx’s are indirectly helping the Russian economy: Consumers can still buy foreign goods they’ve grown used to since the collapse of communism more than a generation ago. Customs data analyzed by Reuters showed, for example, the value of Nike products imported to Russia plummeted 81% in 2022 to $21 million, but rebounded in 2023 to at least $74 million.

The sportswear giant said it did not supply Herinckx’s firm or any associated businesses. “We no longer have any Nike-owned physical or digital retail operations in Russia,” it said in a statement. “We do not ship any product to Russia, nor do we authorize any marketplace partners to distribute product there.” It also said it has a dedicated team to investigate unauthorized distribution channels. A spokesperson didn’t respond to questions about how the products were reaching Russia.

In mid 2022, following Moscow’s invasion of Ukraine, Nike announced it was exiting Russia and Lego said it was closing its Russian business.

As global brands halted sales or stopped exports over the invasion, Russia authorised businesses to import products from abroad without the trademark owner’s permission. Russia said its so-called parallel imports totalled more than $70 billion in the two years up to the end of 2023.

Some legal specialists say seeking recourse under Russian law would be challenging for Western brands, leaving few other legal options for brands trying to enforce intellectual property rights that are typically tied to the territory where the infringement took place.

The availability of Western brands lets Russian President Vladimir Putin “project a message that the war does not undermine the ‘normal life’ of the Russian middle class, ” said Sergei Guriev, a Russian economist who is provost at Paris’ Sciences Po university.

‘PROUD OF IT’

Herinckx’s Russian company employs 82 staff and forecasts revenues in 2024 of 35 million euros, or about $37 million, he said. Last year, it was $23.7 million, according to company accounts.

At the time of Russia’s 2022 invasion of Ukraine, Herinckx was working in the Moscow office of a German company, Hellmann Worldwide Logistics. According to Herinckx, he ran a team of more than 20 people inside Hellmann that served foreign companies who wanted to sell in Russia without setting up local operations.

Hellmann quickly decided to pull out of Russia. Herinckx stayed put. He had previously married a Russian woman with whom he’d had children, Herinckx said. “Our life is here. Everything we have we built up here,” he said.

He took over one of Hellmann’s Russian entities, renamed it Herinckx Trade Solutions Rus (HTS Rus), and registered it in his wife’s name in April 2022. Herinckx initially used Hellmann’s email servers, and a variation of the Hellmann logo in his marketing.

Both Herinckx and Hellmann said they had a transitional agreement to let the Dutchman use some of his old employer’s infrastructure. Hellmann said the deal to use its logo expired in October 2022, and that its intellectual property was used without its consent after that. Herinckx said this was an oversight and he stopped using Hellmann logos in January 2024. Hellmann said it now has no connection to Herinckx’s business and has no operational business in Russia.

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An image shows a pair of Nike Phantom GT2 Elite soccer boots imported into Russia by Herinckx Trade Solutions Rus. June 1, 2024, obtained on June 12, 2024. Handout via REUTERS

Among goods Herinckx’s firm ships to Russia are Reebok sports shoes and Emporio Armani wristwatches, according to Herinckx and data recorded by a Russian bank that lists assets HTS Rus pledged against a loan.

Herinckx said he did not have authorisation from those two brands. Armani Group said it had stopped authorised shipments to Russian distributors and does not know how HTS Rus had got hold of the products. Reebok’s owner Authentic Brands Group, which said in 2022 it had suspended all branded stores and e-commerce operations in Russia, didn’t respond to a request for comment.

The Dutchman’s firm doesn’t publicly disclose its customers. But Reuters identified some of its Russian clients by reviewing documents the company filed with Russian tax authorities. Customers included some of Russia’s biggest supermarket chains and online retailers.

Herinckx said his firm is a good corporate citizen that is also involved in charity work. Asked why he decided to speak publicly about his operations, he said: “What we do is quite cool, we are proud of it.”

EUROPEAN ROUTE

Among his achievements is importing Lego bricks. The Danish firm said it strictly enforces its policy of not selling to Russia. When it sells to retailers or distributors, it writes into the contract that they must not re-sell to Russia, according to Herinckx and Lego.

To get around this, Herinckx said he inserted a chain of intermediaries between Lego and Russia. Some of the Lego bricks he buys are first bought from the manufacturer by a company in Europe that has no relation to his business, he said, declining to name the company. He then buys the bricks from that company, using a Netherlands-registered entity he owns called HTS Europe B.V., he said.

The goods are then trucked directly from Europe to Russia, passing through customs checks on the way, according to Herinckx.

Once in Russia, the Lego comes under the control of Herinckx’s Russian business, HTS Rus, according to the loan data and tax documents. Herinckx told Reuters he supplied Lego to around 48 Russian firms, mostly specialist toy retailers.

“My children play with Lego,” Herinckx said. “I have nothing against other children playing with Lego.”

Lego has problems with his operation, though.

After Reuters contacted Lego for comment in late April, the Danish firm said it had written to HTS Rus accusing it of falsely claiming on its website that it collaborated with Lego. HTS Rus subsequently changed the English-language version of its website, removing an image of Lego figures and replacing it with generic children’s plastic toys. The Russian-language version of the site still carried a Lego logo 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 said in a statement 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 goods come via Turkey, a favoured hub for grey-market imports to Russia. Herinckx said he sources Nike and some Lego products in Turkey, via a company called HTS Poer Dis Ticaret Limited Sirketi, which he said procures goods from Turkish retailers or distributors. He declined to name them.

HTS Poer co-founder Murat Erbelger told Reuters the Turkish company had nothing to do with sanctioned products. “We do legitimate business,” he said. Erbelger did not answer questions on HTS Poer’s association with Herinckx Trade Solutions. Asked by Reuters about grey-market goods reaching Russia via Turkey, the Turkish presidency's communications directorate did not respond.

Customs data for the period from June 2022 to December 2023 showed HTS Poer supplied at least $4 million worth of Nike products to Russia. Herinckx told Reuters that as far as he knew all those shipments of Nike goods were destined for his company.

Once the Nike products reach Russia, they go to Herinckx’s retail clients. Among them is footballstore.ru, according to tax records and the internal HTS Rus document. Russian corporate records show the retail site is 100% owned by Zenit soccer club.

Zenit club is sponsored by Gazprom, Russia’s state-owned gas company, and is also part-owned by Gazprombank. The lender is subject to U.S. sanctions on the Russian banking sector. Gazprombank, Gazprom and Zenit didn’t respond to requests for comment.

Reuters purchased the Phantom GT2 Elite Nike soccer boots from the online retailer. They were delivered 10 days later. Nike did not comment on the shoes.

The shoe box gave the date of manufacture as September 2022, three months after Nike said it stopped selling in Russia. It also bore a label that identified Herinckx’s HTS Rus as the importer.

(Reporting by Reporting by Tassilo Hummel in Paris, Gleb Stolyarov in Tbilisi, Polina Nikolskaya in London and David Gauthier-Villars in Istanbul. Additional reporting by Anton Zverev and Christian Lowe in London, Mari Saito in Berlin and Maria Tsvetkova in New York. Edited by Cassell Bryan-Low)

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