With more than 45 years in the industry, Clemente Guevara runs New Fashion Peru, one of the three largest jewelry companies in the country. All together control the 90% of a 120-million-dollar jewelry export market. Mr. Guevara is also a member of the board in the Exporter’s Association of Peru (ADEX).
With a constantly growing industry, jewelry in Peru faces a contradiction: Despite being the seventh largest gold producer in the world (with 127 tons per year) jewelry producers do not have access to this metal.
How did you start in this industry?
I wasn’t born into a family linked to jewelry, in my case the fate led me to start as a jeweler. In 1976 I was living in Quebec, Canada, and after a successful experience with a restaurant in which my partner finally bought my share, I saw the opportunity to acquire a jewelry store. Thus, without any experience, I started in this world. Buying and selling jewelry in Canada.
From there I started to contact with manufacturers, and it was precisely a supplier, who teaches me how to make the ‘star’ product, the cord chain, and that is when we began to produce our own genre.
Back in Peru in 1995 we expanded our production and founded our current company, New Fashion Peru. We expanded our production with new products, since the cord chain represents only 30% of the total income, and we also worked with other artisans from the provinces to finish assembling the pieces. You can employ a lot of people in our industry.
Which are your main markets?
We have an important presence throughout the country and most of our silver products are exported to the Latin America area such as Chile, Argentina, Uruguay, Colombia, Bolivia, or Ecuador. We barely export silver to the United States since it is more difficult for us to compete with more specialized producing countries such as Italy, Turkey or Southeast Asia.
But in the manufacture of 9 carat gold jewelry, we have no competitors. In the USA we export 100% of our production to states such as New York, Los Angeles, Florida and Texas. In fact, a single importer could buy all our production, although we prefer to have several clients in the country.
In this area Peru has an advantage over other competitors since our Free Trade Agreement with the United States allows us to export without taxes, while other competitors must pay a 5% tax.
I have visited your facilities and I have been able to see a very important investment in machinery and technology...
We employ more than 160 people in our facilities plus the workshops that provide us with assembly services. But as labor becomes more expensive and production needs increase, it is essential to raise our technological level to be profitable. Our main technology suppliers come from Italy and Turkey
Although you don't produce high-end jewelry right now, is there a customer for high jewelry in Peru?
There are indeed. After more than 20 years of sustained economic growth, there is an upper class in Peru that has grown a lot and they buy brilliantly sophisticated jewelry from local goldsmiths and also imported pieces from fairs like Vicenza or Las Vegas.
There is a high demand for jewelry with brilliants, but the European market has reached that maturity. We still don't. As producers we are in the first stages of jewelry we can say.
Is this segment in your medium and long-term plans?
We are absolutely committed with modernization and reinvestment. If we want to survive, we must modernize, buy technology and look for new fashion trends. Compete, in a word. Because if we don't do it, others will do it for us. We must modernize with new products and little by little become more sophisticated, including more exclusive designs with precious stones. This is the nature of jewelry.
Beyond technology investment you also need specialized workers. Are there enough educational centers in the country?
There are great jewelers, and we have a millennial goldsmith tradition but unfortunately, we have a great lack of educational centers, nor public neither private. As everyone knows for the correct development of any industry, there must be very well implemented theoretical and practical training, as happens in other sectors of activity. Unfortunately, we have not reached that maturity yet.
This way must be walked in cooperation with the administrations because at the end, all that wealth reverts to the State. We have a wonderful ancestral tradition, but we miss the drive of strong policies to provide our industry a faster developing, create jobs, create wealth and bring prestige to the country.
Does the industry in Peru have any kind of Government support?
Very little and specially focused on exportation, not in production. The big problem faced by jewelry producers is the lack of raw material, the lack of gold. Despite the fact Peru is the seventh largest gold producer in the world, it is impossible for us to buy the metal here to produce jewelry. We have to import it from the United States, from our clients. It is something gruesome that cannot be conceived, but it is so.
How is that possible? What solutions do you contemplate?
Mining companies export all the raw material abroad and leave nothing for the national market since the gold exportation does not pay taxes. But if they sell it in Peru, they must pay the mandatory VAT.
So, we have to ask our clients to buy the metal in the USA and we have to pay for international transport, insurance, customs, and also lose production’s days. Thus, the industry becomes less competitive and it’s almost impossible for the small producers to grow.
We have been fighting for more than 10 years to reach an agreement between the Government and the producers to solve this problem. There is gold in abundance in the country. We believe the government's mission is to force part of that production to stay in the country in order to increase our value chain.
By Salvador Hernandez, Director of DiarioJoya Magazine, Spain. www.diariojoya.com
