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Kangalassi 2.0: Raising the living standards, creating new jobs

25 november 2019

anna_ivanova_xx.pngAt the V Eastern Economic Forum (EEF) held in early September in Vladivostok, the Yakut company SAYBM signed a tripartite agreement with two agencies - the Far Eastern agency and the regional one - for attracting investments and providing export support. The document was signed to attract investments within the framework of the project "Jewelry and cutting cluster in the territory of the advanced socio-economic development – the Kangalassi Industrial Park”.

Anna Ivanova, Director General of SAYBM, told the Rough&Polished information agency about the prospects that open up for the young, but already established company.

You represent SAYBM, a consulting company that implements projects on the development of rough and polished diamond sector. Tell us about the company, its tasks and projects.

The project to create the Jewelry and cutting cluster was developed by the regional Almazergienbank and was included - among 24 investment projects - in the state programme “The social and economic development of the Far East and the Baikal region”. The corresponding agreement with the Ministry for the Development of Russia was signed at the EEF-2018. Today, we pin high expectations on the document signed at the current Forum.

Our activity is directed at providing consulting services, conducting market researches, creating and promoting brands that are aimed at the foreign market. According to the project of the Jewelry and cutting cluster, we are tasked with creating a qualitatively new environment for jewelry and cutting&polishing business.

We must create such working environment and work out mechanisms, such a business model, under which local manufacturers engaged in the jewelry and cutting industry could consolidate and jointly promote their goods and services to foreign markets. In particular, we plan to use a ‘single window’ model for major industry stakeholders such as Alrosa, Rio Tinto, Rosy Blue, Hari Krishna Exports, Almod Diamonds, and others.

We are already working with some market players from the USA, Turkey, Belgium, Israel, Poland, South Korea. The plans are to expand our co-operation with India, Italy, Japan, China, Bahrain, Hong Kong.

At what stage is the cluster project development now, how is it going?

Since 2017, we have been active residents of the Kangalassi Industrial Park, which is part of the Territory of priority development. Last year, we started the implementation of the first phase of the project, now we are completing its investment phase.

The project team involves experts from the industry with many years of experience in production, trading on international markets, as well as the specialists from the financial and economic sector. The cluster includes enterprises with experience in the diamond cutting and jewelry industries.

Our understanding is that competitiveness can be ensured by four factors: low cost, high clarity of rough diamonds, excellent cut quality, as well as the manufacturer’s reliability and prestige.

We achieve cost reduction due to such factors as PSEDA (Priority Social and Economic Development Area) regime preferences (including tax relief), minimum CAPEX (capital investments), OPEX (operating expenses) optimization; preferential interest rates; accelerated VAT refund; reimbursement of the cost of finished products transportation. An additional advantage in reducing the production costs is the decrease in the exchange rate of the Russian currency against the US dollar, and the relatively unchanged national currencies of India, Israel and China.

The guarantee of the diamond clarity and ethics is ensured by the fact that the cluster enterprises work only with diamonds mined in a civilized, reduced impact recovery method in Yakutia itself. Diamond processing, cutting and polishing are also carried out locally in the republic. Later on, a technological “digital trace mark” will be introduced for the polished diamonds that contains comprehensive information about the stone provenance. It seems that this is especially important today, when the global polished diamond market faced the issues of uncontrolled trading in the laboratory-grown, synthetic, diamonds.

What is the essence of the Kangalassi 2.0 project? Why is the cluster created in the suburban village of the same name?

The main point is to raise the standard of living in the village and create new jobs in it through combining production enterprises. Simply put, to "breathe" a new life into a village located at some distance from the capital of the Republic of Sakha. We see our certain social responsibility in this.

The development strategy of the Kangalassi 2.0 territory is aimed at implementing a unique project - the northern village, which is cost-effective and socially successful. The territory should unite the production unit, creative and educational component, as well as create a new development model for the urban environment on the principles of a “smart city”.

The project also envisages an environmental component that reveals the potential of the unique northern nature. The world experience shows that the territories that have achieved the best interaction between science, business and the state reach the highest development level. Therefore, the cluster’s strategy allows for expanding the co-operation with foreign companies, establishing sustainable economic relations between Russian enterprises and Japan, China, South Korea and Singapore.

We are confident that the successful development model of the Kangalassi village can be a good example for scaling up and expansion of our experience not only in Yakutia, in the Far East, but also in other regions of Russia.

You have recently completed the Summer School of Design project with the British Higher School of Design and the Arctic State Institute of Culture and Arts. Tell us about it.

This is a project initiated by Ludmila Nikolayeva, Advisor to the Chairman of the Board of Almazergienbank Joint-Stock Commercial Bank. The idea is the interaction of business and the educational institutions - the Arctic State Institute of Culture and Arts and the British Higher School of Design. It provides an opportunity to consolidate the efforts of designers and jewelry craftsmen representing a whole pool of enterprises.

The Summer School of Design should contribute to increasing the finished product export. Now it is important to train professional designers able to use modern approaches to design, familiar with international best practices, and knowing the production cycle.

Recently, an exhibition was held, one of the organizers of which was the company SAYBM. Are you satisfied with the results?

Yes, satisfied very much! We also plan to hold similar events in future. I was very pleased that designer jewelry was presented at this exhibition - the pieces made by the graduates of the Summer School of Design.

A distinguishing feature of the exhibition was that the young graduates of the School revealed their creative potential and presented their modern style designer items to the jury. The focus is on the young audience. In this case, the pieces by several designers can be considered as experimental ones. In addition to standard materials – sterling silver and 14-carat gold - they used plexiglass, wood and even tusks of the Yakut mammoth, thereby breaking the traditional idea of ​​the modern jewelry design.

Within two summer months, 19 students of the Summer School of Design completed the first stage of training - a theoretical course - and during just a month they managed to bring their design ideas to life. The second stage consisted of independent manufacturing a jewelry piece according to a given concept within six weeks on the basis of the SAYBM jewelry and cutting cluster. The third phase of the programme was devoted to qualification of projects and consultation on them.

Why did you choose this particular School, youth, new people? …

The answer, probably, is that each person is very talented, you just need to help him/her reveal their talents. The Yakuts are very creative people. And we want the residents of Yakutia, the youth to have the opportunity to reveal their potential, without having to leave the republic. Young people need to learn how to earn while doing what they like to. Therefore, we have prioritized the youth. These are people belong to a different - free - generation. They have no restrictions on the stretch of imagination, they are not afraid to experiment or be misunderstood by the society. In my opinion, this exhibition should make a kind of “reset” in the Yakutia’s jewelry industry, where for decades, the focus has been on the classic national jewelry style.

Our main task is the development of a jewelry design at a different level so that the collections of the Yakut jewelry designers could be distributed around the world. Now, we can say with confidence that the beginning has been made.

You have the Lucky Laika line, which uses diamonds and cubic zirconia. How successful is it? Are you as a creative director going to develop this line?

The project is based on the story of a little Yakut girl - Karina Chikitova - and her dog Naida. In August 2014, at the age of 3.5 years, Karina lost herself in the taiga forest with her four-legged friend and, after staying there for 12 days, she was able to survive. “Lucky Laika” is not only a story of the friendship of the girl and her dog. Rather, it is a story of human friendship with nature, about their interrelationship.

The project was successful. We did not expect, but products from the exclusive Lucky Laika collection are purchased not only in Russia, but also abroad. Soon, the project will be two years old. People like to give the pieces of this brand as souvenirs very much. Perhaps, this is explained by the fact that both the story and the form are close to people. For example, in Japan, “Lucky Laika” was taken for Akita Inu, in Korea - for their Chindo. Undoubtedly, we will keep on developing this line.

In your opinion, how promising is the jewelry and cutting business in Yakutia as a whole?

Yakutia is the birthplace of the purest, rarest diamonds, as well as talented craftsmen. Over the past 25 years, our country has gained unique experience in processing rough diamonds; the level of the product quality - polished diamonds - is highly appreciated by the market players in Belgium, Israel, and the USA.

The turnover of the top companies supplying jewelry to the market is comparable to that of the major diamond mining companies. At the same time, it is completely obvious that the costs of jewelry manufacturing, maintaining a distribution network and marketing are significantly less than the manufacturing costs of the mining companies.

Of course, the jewelry and cutting&polishing sectors in the business are relevant and promising in Yakutia. Expectations and inspiration are based on the fact that the new leaders of the republic pay special attention to increasing the investment attractiveness of the region and creating conditions for both local business and potential investors.

Galina Semyonova, Rough & Polished