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Will the Russian Jewelry Industry Survive or Not?

12 october 2009

In recent years, the Russian jewelry market has been growing rapidly. But experts argue that this is not because of the wonton development of the Russian jewellery industry, but because of imports. The Yuvelirnye Izvestia tried to find out what is really happening on the Russian jewelry market during a panel discussion.

“I often hear the opinion that Russia has no good designers,” says Flun Gumerov, President of Almaz-Holding, General Manager of the Krasnoselsk Jewelry Factory (the biggest jewellery factory in Russia), the member of the Guild of Jewelers of Russia, and Chairman of the “Golden Ring” Jewelers Guild. “It is even more offending to hear that we produce obsolete and unfashionable things. Our artists and designers travel around the world, look, learn and evaluate which fashion line enjoys today the highest demand. This is without mentioning that Russia has such extensive jewellery traditions which our colleagues abroad may only dream about. And Russian-cut diamonds appear to be a generally acknowledged worldwide brand! Unfortunately, there are forces, for which it is beneficial to promote imported products on our market. And this is a very powerful lobby.”

In what is it manifested?

Foreign players in the jewelry market are somehow offered more favorable conditions than domestic producers. High customs duties and numerous tax rates make our products almost non-competitive both on the external and internal market. Why invest one’s assets and efforts in production, if it is much more advantageous to import finished products from abroad and sell them under one’s own brand putting on them domestic hallmarks and tags? Is there any way to reverse this situation? I don’t know. The impact of import is too great at the moment. We have the same problem as in all the other sectors of our economy. We have already lost so much. Two or three years will be enough to lose the jewelry industry as well.

Putin said: “This is fantastic”

So the conclusion is: If you create equal conditions for business to Russian and foreign jewelers there will be no one able to compete with us?

Absolutely correct. Our company’s jewelers turn out competitive products which have a decent niche in the international market. I was convinced in this taking part in international exhibitions in New York, Las Vegas, Italy, and Switzerland. We bring there authentic artistic works made in Russia, and they are highly appreciated. Moreover, Vladimir Putin, President of the Russian Federation, saw our products and said that this was fantastic!

In all the countries of the world the jewellery industry is under state protection but unfortunately the situation in Russia is vice versa and convenient for developing shadow business. What is hurting most is that outdoing our foreign colleagues in jewelry quality we are giving way in the pricing policy because of high taxes and all kinds of customs duties.

The jewelry market looks as if it is now divided into two camps. On the one hand, there is quality production which includes large jewellery companies based on long-time traditions. On the other hand, there are jewelry items smuggled into the territory of Russia. That is, jewelry articles of a shady origin, almost always of low quality manufactured in Asian countries, but played off as Russian-made to our customers.

How to recognize a forgery

But you will agree that products made from the so-called Turkish gold sometimes look much more sophisticated than domestic items?

“The fact is that the quality of gold alloy depends on ligatures – added metals which are silver and copper,” joining the conversation says Yevgeni Bakanin, jewelry designer specialized in tula and filigree techniques working as an apprentice training teacher at Vocational College No. 34. “Russian metal was made by very educated people and good engineers. They picked up these components in such quantities that they are very nicely smelted and mixed between themselves, and articles made of such alloys are of a high quality – they not only look well but have high wear resistance.”

These are precisely the adornments that are passed from generation to generation in many families without losing their high qualities over the years. However, in many countries there are no standards for the use of ligature metals in alloys. In the Turkish gold, for example, silver content is very high while there is almost no copper. It is silver that makes Turkish products shine. So, maybe because of this they look more magnificently, but they are significantly inferior in their durability. Silver is a soft metal; pure silver is easy to fold, so articles from the so-called “Turkish” gold can be scratched even by clothing. The chain you are maybe wearing around your neck becomes opaque and distorted over a short period of time. Incidentally, these products cannot be restored because of the alloy. Their average service life is one year and a half. Modern equipment gives you a chance to process any metal to produce “gold” luster, and to make a “diamond” of any kind of glass. It is extremely difficult to recognize a forgery visually. But to put a false hallmark and write tag is easy.

So what should the average buyer do? What should be paid attention to when buying a jewelry piece?

“Read the history of the company, visit its web-site, in other words gather as much information as possible about the seller,” says Yulia Alexeyeva, a public relations expert of Almaz-Holding. “Don't buy products from "entrepreneurs" carrying a case on the market or simply in the street. Ask for catalogues of the company. And don't be afraid to ask questions: a competent seller must know the intricacies of the jewellery business. Give preference only to the firm offering warranty, repair, and servicing of jewelry products and gemological examination. Incidentally, one interesting fact: when in July at the invitation of Flun Gumerov the City of Kazan was visited by Vladimir Mospan heading the Russian State Assay Chamber, who came to take part in the meeting with Mintimer Shaimiyev, President of the Republic of Tatarstan, some of the jewellery stores in the city simply closed on learning of this visit. So you may judge for yourself...”

The main thing is quality control

Flun, is there any possibility that a signature store gets poor quality products?

As for Almaz-Holding, this structural company owns production workshops in Moscow, Kostroma, Kazan, Ples, and Kaluga. This is an extensive sales network accounting for 136 stores in Russia and the CIS countries. For 15 years, the company had no claims to the origin and quality of its products on the part of buyers or inspection agencies. All our products from the moment they get their stones and to the time they are put on the jewelry store counters are attended by employees of the gemological service. Our products are many times checked for their quality and their characteristics to be consistent with their tags before being put into display cases. Tags for our products are printed by the Goznak Printing House and have 6 degrees of protection; our products have quality certificates, and our tableware has medical certificates. To keep this procedure in operation we have a gemologist, quality control staff, warehouse workers and merchandise experts. Each seller in our stores has knowledge in the field of gemology. My principle: all should be the winners, including the buyer and the seller. We apply the same kind of tight control with regard to products of our partners and this virtually excludes products of dubious origin and low quality in our stores.

You may often hear tempting offers to buy jewelry discounted 20, 30 or 50 per cent…

Gold which has a clear market price makes the major part of cost. It is daily fixed in London and it is similar in any part of the world. If a trinket is cheap then it is not gold or the item is of dubious origin. Such advertising is contrary to the very essence of jewellery – symbol of luxury and wealth. Gold jewelry pieces discounted by 30 percent and more cannot be of high quality. I say this as the head of the biggest jewellery factory, Krasnoselski Yuvelirprom, knowing the whole technological process. Almaz-Holding offers discounts to their customers only as gifts never using them for publicity.