In early November, the jewelry industry mass media (Yuvelirnaya Russia, Yuvelirnye Izvestia, Yuvelirnoye Obozrenie and others) sparked off a racy campaign of accusations and explanations. Its instigator was the web-site of RosYuvelirExpert, which accused NP Soyuz DMDK and Alexey Shcherbina, CEO of Jeweler-Fest and Jewelry Review Holding, of attempts to “usurp social power for their own selfish purposes.”
Generally speaking, the social life in the Russian jewelry community has a high degree of tension. Over the past 20 years it was possible to witness cycles of consolidation and periods of fragmentation, as well as phases of vigorous unity (as in the campaign to repeal the excise tax on jewelry) and periods of amorphous apathy. Groupings within this community may emerge and gain momentum, then grow weak and disintegrate.
Conventionally, it is possible to distinguish four currents or “parties” among Russian jewelers:
1. "Finance Ministry rooters," who are trying to be flexible and pragmatic in following the line of the federal government in general and the Ministry of Finance (as the precious industry curator) in particular. Inside this group there are three types of companies. First of all, it includes state-run enterprises. Their typical representatives are the managers of jewelry workshops at the Moscow Factory of Special Alloys, Krasnoyarsk Non-Ferrous Metals Plant named after V. N. Gulidov, Zvezdochka, a manufacturing amalgamation based in Severodvinsk, as well as jewelry experts of ALROSA. Secondly, this group is joined by small businesses established by government-owned factories, as for instance OOO Yuvelirny Tsentr Kristall established at the Smolensk-based jewelry factory, OAO Kristall. Thirdly, it is also composed of companies founded and run by people who earlier were government employees. The Finance Ministry adherents in general tend to entrepreneurial conservatism and are little worried about the excessive presence of the state in the jewelry industry. In principle, they do not mind any further strengthening of the government role in the jewelry industry as they are “of the same blood” with the employees of the Finance Ministry and those of the Assay Chamber. In their view, the main problem is that the authorities supervising the jewelry industry are not paying adequate attention to jewelers. Because of this the state policy on precious metals and gems is for years late in addressing priority problems of the jewelry industry.
2. "Homelanders," who are seeking all possible ways to protect and block off the domestic jewelry business in the fields of production and trade. They are people coming from the same jewelry industry whose main factories are located on the territory of the Russian Federation. "Homelanders" are strongly inclined to regional communities and usually joined in regional associations: the Assembly of St. Petersburg, Guild of Volga-Vyatka Region Jewelers, ‘Golden Ring of Russia’ Jewelers Guild, Guild of South Urals Jewellers, Guild of Southern Federal District Jewelers, Union of Northwestern Federal District Jewellers, Union of Tatarstan Jewelers, or ‘Yakutia – Jeweler’ Union. As a rule, regional associations of jewelers are closely working with local authorities and enjoy a wide-range support from governors, local officials and law enforcement agencies. Often, the regions initiate laws as well as proposals aimed at reducing the functions of federal agencies. In mid-2010, some part of regional organizations teamed up in NP DMDK Union headed by Flun Gumerov, CEO of Almaz-Holding. Any real outcome of such a union will be seen in a year or two.
3. "Internationalists," who are committed to broad cooperation and international division of labor in the jewelry business. As a rule, activists to this party are recruited from service agencies and intermediary companies: news agencies, exhibition operators, wholesalers, customs brokers and insurance companies. Due to the work they are engaged in they have little interest in manufacturing or the extent to which it is domestic. The main thing for them is to have a steady flow of goods and services. The "internationalists" love to negotiate with foreign jewelers, for whom the Russian jewelry market is of considerable interest (the Indians and Thais stand first in this field). Formally supported by domestic manufacturers, the “internationalists” preach the ideas of liberal market and often accuse federal officials of slow action and all but corruption because they share their ideals not as ardently as they would like them to do.
4. "Users", who constitute 90% of all entrepreneurs and participants of the jewelry market. The members of this party want only one thing deeming it to be of top significance - the greatest possible benefits for themselves for which they can easily be “homelanders” today and "internationalists" tomorrow, or vice versa the day after tomorrow.
In addition to these four parties, one can still distinguish individual jewelers engaged in designer business (Andrey Ananov, German Kabirsky, Maxim Voznesensky and others) and jewelry workshops manufacturing for the needs of religious organizations, the largest of which is the Art Production Enterprise of the Russian Orthodox Church, Sofrino. These participants of the jewelry industry shun social activities and prefer (humbly or not) to adapt to the existing business environment, according to the commandment "Give to Caesar what is Caesar's, and to God what is God's."
All of the above four parties have their own reason and alimentary base. None of them has monopolistic advantages - neither in business nor in intellectual sophistication, or administrative clout. However, by and large they are useful because they facilitate solution of urgent and/or suddenly arising problems and misunderstandings in a democratic way.
This kind of "partisanship" has no obvious or principled boundaries. These groups look more like jelly clots in nutrient broth. On a personal level, they are noted for continuous shifts towards association and dissociation. The Guild of Jewelers of Russia is in the focus of unifying processes. Formally, this association brings together around 60 major jewelry companies and all the regional associations. The guild’s activities are far from being perfect. It is critically missing unity, coherence and systematic approach. "Jewellery oligarchs" are eager to engage the guild only in case of industry problems affecting their interests. The majority of the guild’s members do not hold to clearly defined views, they have little awareness of implicit opportunities and understanding of on-going work, but they remain with the guild just to be on the safe side.
In 2010, the centrifugal motion within the jewelry community increased to a critical point. People started talking about "discord," which seems to have a number of objective reasons, such as:
1) the global economic crisis, which brought about a drop in luxury goods consumption including jewelry in Russia;
2) the rise in prices for precious metals on the backdrop of lagging income growth, which diverted potential customers to bullions and digital metal accounts as a means of saving;
3) competitive pressure from other consumer goods of a similar price range, such as mobile phones and "anti-aging" cosmetics.
An additional factor contributing to the current controversy is seen as sprouting from subjective indifference to the jewelry industry on the part of federal authorities, who clearly, precisely and repeatedly voiced priorities for modernizing the country: health care, information technology, energy saving, nuclear industry and space exploration. Without any particular formalization considerable efforts have been made to create a national base for nanotechnology and re-armament of the army and navy.
Whatever Russia’s jewelry industry is, it still provides employment for thousands of people and brings in millions of rubles in budget revenues. And it is obvious that it is high time for the government and administrative bodies to understand that the processes going on in the jewelry community are not very simple and social opinions expressed in this field of production should be taken into consideration. In any case, there is an urgent need to voice the federal state policy in the jewelry industry.
Vladimir Teslenko for Rough&Polished
