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In a world where transparency is more and more the standard, our business must address the lab grading issue willingly

25 june 2018

arnaud_flambeau_xx.jpgJeweler-Designer Arnaud Flambeau started his career in the jewelry business in 1993 at European Gold Company CLAL as Key Account Manager for the Jewelry Division, where he was in charge of international brands like Cartier or VCA and their subcontractors. Being in daily contact with the most high-end ateliers in the world and learning about quality and fine jewelry, Arnaud soon began working for many fine jewelry brands. Lastly, he joined Scintilla Monaco as CEO and a shareholder to develop new lines for the Asian and European markets. He opened offices in Monaco, Dubai and Tokyo and since then there was no looking back for Arnaud. He was appointed as a Board Member at the Dubai Diamond Exchange in 2007 until 2013.

Arnaud finally launched his own company, Luga Jewels, in 2010 to create only bespoke products for fine jewelry connoisseurs - a desire which was close to his heart.

Here, in a Q&A format, while elaborating on his business, Arnaud also speaks his mind on a gamut of issues currently faced by the jewelry industry globally.

Some excerpts:

Please walk us through your company’s activities from inception until today. Where and when did you start your business? Give us an overview of how it all began in Dubai…

I started my own company in the jewelry business in 2010 after working and being a partner in different companies in the same jewelry field.

In fact, I started my career in 1993 in one of the biggest gold companies in Europe as the Key Account Manager for the jewellery division. I managed the accounts of many famous brands from France (located in la Place Vendome). We supplied them products like fine gold, gold alloys, semi-finished products, components and jewels directly or through their subcontractors. I was in contact with the most high-end ateliers in the world. It taught me a lot about jewelry, the importance of the quality for fine jewelers, etc. Soon I was promoted to head the jewelry division for France and I had to manage all the jewelry business including one very old and famous French jewelry brand. It is here that I started to have interest for jewelry design. I came to Dubai in 2006 to head a fine jewelry brand from Monaco as worldwide CEO. I worked in many different countries for them. In 2007, I was appointed as a Board Member at the Dubai Diamond Exchange and helped the diamond business to grow in Dubai.

On establishing my own company, Luga Jewels, in 2010, I focused on bespoke jewelry for private clients and high-end brands and retailers. I create ‘sur-mesure’ designs and manufacture fine jewelry in Dubai with the help of highly skilled staff.

Currently, does your company cater to Dubai as well as to overseas clients? Please elaborate on your company’s business strategies, clients, markets catered, etc.?

We are focused on the Middle East for now. The bespoke process needs to be near our clients. So, for now, we deliver to all the GCC countries using our capability to develop designs with meanings and bring very rare gemstones or diamonds for our clients.

We recently had a special demand for one of the most three rarest gemstones in the world that nobody here was able to supply. It took us more than six months to find the perfect rough stones and then polish and mount them on a bespoke pair of earrings, finally delivering the order to our client, who was looking for this for 7 years. Our strategy is to not produce quantity, but to make unique pieces or unique concepts at a very high level of quality.

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To improve and reach an unprecedented quality level, we’ve invested recently in the first “Direct Metal” 3D printer developed by Cookson and EOS. This new machine, when it will be fully made operational, will enable us to print our pieces directly in gold or platinum by using gold or platinum alloyed powders. It will increase our quality dramatically eliminating porosity, attaining extreme fineness in detail and turning into a unique tool to develop new concepts, which are not possible by the standard casting process.

With this machine, we are targeting the ultra-high-end jewelry made in platinum. It will allow us to do any type of design in platinum with an extremely high quality and precision.

Clients wise, we are targeting the jewelry connoisseurs in search for personalized designs, which have some meaning for them … jewelry with a real story behind.

Does your company have an online presence in diamond and jewelry business? If yes, are you doing solo or associated with other e-commerce companies to market your products? If using other platforms, what is the equation with those companies who market your products?

Online presence is today an obligation for any jeweler whatsoever is his level. Any client is today checking credentials or designs first online.

So yes, we are using nearly every day social platforms like Instagram or Facebook and we have of course a website where the client can see our history, book an appointment to design a bespoke jewel, see some of our last creations or buy some of our collection products.

The difficulty for us is to show our ‘savoir-faire’ online. When you are making bespoke jewels, it is mainly through physical meetings with clients, sometimes you need to see your client 4 or 5 times to understand really what his or her jewelry dream is. But we are working on it and we are following the new internet trends and tools to adapt to our clients.

Concerning e-commerce platforms, they are not tuned to sell bespoke goods. There are also issues in shipping high-value goods. So, we are not using them.

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Which lab do you use to certify your stones? In your opinion, should labs need to be more assertive and think of better ways to provide services without loopholes, so that they are not misused?

Lab-wise, we are using mainly GIA for diamonds or gemstones. We choose to focus on the top grader in the marketplace in order to ensure our client gets the most accurate grading and avoid any questions about the quality of stones that we supply.

For me, grading is extremely important. We are in the business where Trust is everything. The final client must be able to buy gemstones or diamonds blindly, without any suspicions about grading. It is what protects the value of the gemstone purchased, thus making our business solid and trustful.

For years, I am convinced that our business must address the difference of grading between labs. When you buy an 18K gold piece, all labs have the same process to grade it… 75% of gold, using a standard way to measure it.

I think it is not acceptable to have differences in grading between labs and justify it by the fact that labs are independent and different.

Nowadays, a diamond has an international value based on the Rapaport / 4Cs and so the final buyer must be sure of the grading and thus of the value his or her purchase has.

Moreover, the issue of non-declared synthetic diamonds in the jewelry is also a concern for me. Like the 4Cs issue, this bears a risk for final consumers and their trust in our business and in the value of our products.

For me, regulators must act promptly by obliging any importer to verify its goods before putting them in the market. Importers, wholesalers must be liable against any issue of undeclared synthetic diamonds. At the same time, wholesalers and retailers must urge the traders to verify their goods through labs and pursue a clear tracking process focused on what they put in the market.

In a world where transparency is more and more the standard, I think our business must address the lab grading issue by itself willingly, not being forced to do this, and so also the issue of synthetic diamonds. In our business, we need to be proactive and not only reactive. As the internet changes many things in the world, it will have an impact on our business if we don’t move swiftly on these subjects. We will lose the confidence of our clients, which will be damageable for all of us.

From where do you source your polished diamonds? What quality and size of stones do you mainly source? From where do you source your colored stones? How important is legitimate sourcing for your company?

I buy my diamonds mainly in Dubai through well-known companies or in India. I mainly trade in H to F colors, VS+, 3x, none. Of course, GIA certified. My clientele is usually well aware of the 4Cs and comes to me to get the best diamond possible.

As for gemstones, it really depends on the type. But I can say that I buy from legitimate sources, long and well known in the market and always demand a certificate. The quality of each stone is very important for us, particularly because each of our jewels has its own story.

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Do you deal in color diamonds as well? How is the demand for color diamonds right now, given that price comes with a premium? What's your opinion of diamonds (white/colored) in general as investment vehicle per se?

Yes, I deal regularly with color stones, yellow mainly and recently all the range of Brown Orange, Brown Yellow, etc…

But in this region, color diamonds are not the first demand or choice by the clients. A lack of knowledge is probably the reason and a difficulty to value it.

If you see the last 10 years’ trend, obviously, color diamonds are the best investment vehicle. Their rarity makes them valuable immediately and their scarcity in the market in the long term.

With the growth of HNWI worldwide, the increase of the clients’ knowledge about gemstones (through auction results, magazines, etc…), the demand for really rare stones will continue to grow. We can see it after the recent auctions of Sotheby’s or Christie's. All the top stones are still searched by investors and collectors, and the price level is either stable or growing.

Dubai is a huge market for gems and jewelry but what is your company's niche strategy in the jewelry trade? If exporting, from which countries do you receive maximum demand?

As I said earlier, we are targeting a niche market of connoisseurs, only who are looking for unique designs and high quality of making.

Dubai’s market is flooded with “affordable/entry level” goods, and we don’t have tuned our atelier for it. We have made it to answer very specific demands in quality and creativity.

In terms of the market, of course, UAE is our first... then Saudi.

What's the current position in the diamond financing scenario in UAE? With Dubai growing into a major hub, lending banks may be vying to serve the gem and jewelry industry in the region. But, with the banks becoming extra cautious now, what's the scene at present?

I’m not really in bank financing for my own activity. But it is clear that there is a lack of finance tools for our business and particularly for the small ones.

In Europe, there are much more tools in financing than here. But in Europe, margins of the wholesalers and retailers are also much better and so the appreciation of the banks and risk managers.

The accounting system is also more developed in Europe making the banks able to check more easily the client’s accounts. For this part, I think that the introduction of VAT will help as many businesses need to have a clear accounting today.

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Wrapping up, what's your thoughts on the current diamond industry globally, given that there is a slowdown in some of the consumer markets? Has it affected your business and how?

The diamond market is slowing down probably because of the lack of genuine marketing investment and strategy. Color stones are back in the field, making the jewelry trendier, more unique and more profitable for the retailer. So, gems are taking market shares from diamonds.

But for any special event in life, clients are coming back to diamonds. So, I’m quite positive about it. If you sell the correct quality, with the correct certificate and value, there is no reason not to be optimistic.

People continue to get married, to offer jewelry as a gift or to buy jewelry for themselves. New consumers are buying massively luxury items worldwide.

The only things that have changed are that they want something for themselves; they want to buy legitimate products. Up to now, they are going more and more to brands, as brands respond to their demand in term of legitimate and intrinsic values (sourcing, quality, etc…), but it is up to us to follow the example of the big players and propose transparent products to the new generation of clients.

Eventually, luxury is always a question of rarity, good craftsmanship, creative designs and storytelling. We are trying to stick to those principles learned a long time back. And the result is that our business is growing year after year.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished