Director General of LA VIVION Andrey Yanchevsky came to a jewelry business in the late 1990s, he has gone from a software programmer to a member of the board of directors. He created his own project - one of the first online jewelry stores in Russia, and in 2008, he and his partner set up a wholesale company in Hong Kong that supplied diamond jewelry to jewelry stores and chains in Russia and the CIS countries.
The company has an impressive office in the Kalanchevskaya Plaza business center where Andrey Yanchevsky told Rough&Polished about the development and prospects of the LA VIVION brand on the Russian market after the Covid pandemic and under the sanctions.
Tell us how your La Vivion company weathered bad times and what are your developments now. How is your company doing in Hong Kong now?
The main difficulty is not that the special military operation is being conducted, but that Hong Kong, like all of China, was closed for the past few years due to the coronavirus. Hong Kong and China reopened, in fact, at the end of last year and wearing the masks and submitting certificates were canceled before the March jewelry exhibition. Logistics chains were broken and it was extremely difficult to recover logistics. Transportation is mainly carried out by three international organizations (Malca-Amit, Brinks and Ferrari) and they said “Guys, we won’t carry anything to Russia anymore.” That is, we were affected both by the coronavirus and the sanctions imposed due to the special military operation. We had great difficulties at the factory in Hong Kong when almost all the employees fell ill with Covid-19, some of the orders were completed with a very long delay. But in the end, we introduced changes successfully and everything works well now.
Have you moved your production facilities to Russia?
Unfortunately, not yet. That’s what I’m trying to do. I would like to have at least a small production site in Russia. We have about 50 people working in Hong Kong. Now, we are settling in our new Moscow office and boutique, everything has become more presentable, and we will begin to address the production issues now.
The middle class has become much smaller, don’t you think so?
To be honest, we don’t really think so. Some international brands have left the market but those companies that remained see a strong influx of buyers. Rather, it has become a little more difficult to attract buyers because the customers, at least ours, are becoming more discerning and aware of many things. That is, the focus in our price segment has shifted to smart shopping: the customers should understand what they buy, why exactly this thing and why they make such a conscious choice in favor of quality. Here is what we see. Just for comparison, I hesitate to tell the average purchase amount in jewelry stores - it’s hard to say, but I can assume that it is mainly from 15 to 50 thousand rubles. Our average purchase amount today is 262 thousand rubles - indeed, it is quite high but what we give for this money, perhaps, has few analogues on the market.
Therefore, we have slightly changed and our next step will be the creation of a production site. To begin with, we will start a series production of jewelry studded with large gemstones - from two carats and more, and after that, we will smoothly go into a series production to manufacture our regular products.
There is a difficulty with large size gemstones: unfortunately, they are not often purchased, but there is a demand for them. Usually, the people who buy jewelry that costs 3-4 mn rubles and more are not young. These are wealthy people with their own business, and they have slightly different requirements for how the brand and its jewelry should look like. One of the priorities in our business is developing our brand and improving its visibility.
You once said that advertising aimed at your audience is becoming the priority now, is it so?
Right, and we must clearly understand today that this needs a lot of work. You know, when I was just a hired employee, I thought “I have a lot of work to do!” And I see now that every year, there is increasingly much more work - I mean, that each time, new horizons open up and to be able to approach these horizons, it is necessary to greatly improve the skills of the entire team. In this case, it is not enough to be an expert yourself, all your team must be experts, and experts in a number of areas like marketing, sales, finance.
Cadres are all-important. Where do you find your workers? Are you training them or are you enticing skilled professionals away from other companies?
This is generally a separate and interesting story. There are many people on the market, but it is not easy to find real professionals. We are a bit in a vacuum: we are trying to look for professionals who are ready to move to a new level, to take the next step, who can make everything with their own hands and are clever professionals - we hire them, let them get adapt and make a team. So far, we have succeeded in this. Now, we have about 35 people working in Moscow, and by the end of the year, there will be about 60 employees.
We actively improve the qualification of our personnel, each employee in our company has a development map. It is worked out by the company’s HR department together with the heads of departments and it is for a year, and during the year, we try to make every employee more knowledgeable. At the end of the year, we evaluate their qualification and work out a development map for the next year. And every person in the company, including myself, take part in this and has a specific development plan. We have a corporate library and an in-company electronic corporate newspaper published once a month. A year ago, we held the first corporate regatta, we will hold the second one this summer and will try to make it traditional.
You manufacture a certain type of jewelry. How do you position your jewelry and what is so special about it?
Many associate our jewellery with luxury goods, but this is not true. I would say, we have a very high-quality premium product - this is a slightly different segment. Our client wants to get premium quality for quite reasonable money. I admit that we give much more than many companies on the market give in terms of quality-price ratio. What people buy from our company is of guaranteed quality.
And how are you going to advertise your brand?
Today, it is a very complex matter requiring much attention. A year and a half ago, social networks made it possible to cover huge audience every month - roughly speaking, 20 mn people could be easily reached on Instagram. But today, there are no such tools that allow contacting this audience relatively cheaply. There are almost no such magazines like Vogue now. Therefore, today the main tools are advertising in Telegram and VK. We are trying to work with influencers but the situation is not easy with them today, either.
What is the situation with the certification of gemstones? Previously, they were certified by the Gemological Institute of America (GIA). What are the ways now?
Everything remains the same: we also import GIA-certified diamonds and sell them without any problems. Today, the border for imported goods is not closed and you can import any goods, the question is whether the sellers want to sell them to you. But usually, they want to. There are no problems with this - the only question is to find a logistics scheme convenient for both companies and allowing to avoid secondary sanctions. For many years, we have been buying the gemstones and giving them to be cut and polished and we have them certified. Basically, I take part in viewings of gemstones.
For buyers, the GIA certificate is a transparent standard giving a certain confidence. From the point of view of the Russian legislation, this is not a certificate but just a piece of paper showing any information. How does it work for us? There is a certain procedure for importing diamonds into Russia, and each gemstone is examined at customs under state control. Experts grade them according to the Russian reference samples. And we use the characteristics confirmed by the Gokhran (State Precious Metals and Gems Repository). This is an extremely rare case when the Gokhran’s results do not coincide with what we declared when importing gemstones. Therefore, this does not limit us in any way - on the contrary, it is an advantage that we have both the GIA certificate and the Gokhran’s state control document because the GIA is considered an authoritative organization in the world and the Gokhran has the best experts in our country. Our customers have a double guarantee.
Since any expert is a human, the following situation may arise when we buy diamonds from ALROSA (and this is a ‘state within a state’), and they have a characteristic of 3/5. In another laboratory, we are given 4/5, and in the third lab - 3/4. And in State Integrated Information System in the Sphere of Control over the Circulation of Precious Metals and Precious Stones (SIIS), it is indicated ‘3/5’. This problem can be solved in different ways: I would prefer to solve it in favor of the state. We buy a lot now from ALROSA, and this is one of the current advantages.
In general, I think that now, there are more advantages than disadvantages; from the point of view of the market, all the changes that are taking place now benefit our manufacturers. Today, it is possible to buy both rough and polished diamonds from ALROSA (earlier, rough diamonds were bought in Antwerp, which was much more difficult).
There is one more advantage of the SIIS because today, you don’t even need the GIA as the characteristics are confirmed by our state. We initially set ourselves up for the fact that our products are of high quality and transparent. Transparency works in our favor.
With the introduction of the SIIS, the market has become much more transparent. I’m afraid to incur criticism, but I would like the certification to be mandatory and, preferably, under the auspices of the Gokhran or the Russian State Assay Chamber. In this case, the buyers will understand the market better.
Your logo is beautiful. Have your designers created it?
When we decided to switch to a new signature style, we made letters slightly bent and looking like sails blown by the wind - they reflect the marine theme.
When it comes to jewelry designs, things are more complicated. Engagement rings are our main product range. We came up with the concept of a basic jewelry set, it means that every girl should have a certain set of jewelry, for any occasion like meeting friends, going to the theater ... Everything starts with an engagement ring, then wedding rings, a pendant, stud earrings, a cross, and a yellow diamond ring. We try to actively promote this concept among our customers, and it combines beauty and minimalism. It is extremely difficult to invent something within this classic range of goods, and yet, we try to launch about ten new designs a year. Speaking of designing, it’s hard to find professional jewelry designers. For example, a wedding ring. How many parameters should be taken into account when making it? Jewelers usually take into account eight parameters but we have 26 ones: in addition to the material and size of the gemstone, we consider its compatibility with the engagement ring, the angle of inclination of the internal surfaces, etc. - everything is governed by a certain standard for a design to be a beautiful, comfortable, proportionate and smooth ring. There are up to five practical evaluation cycles: we look at how the jewelry pieces ‘coexist’ with the buyers, whether everything is technologically thought out - all this requires a certain qualification of jewelers, knowledge of technology, many nuances that I have not seen in Russia - here the ‘school’ is different.
What do you think about the growing market for lab-grown diamonds?
I don’t see any problem as this is a separate product. Previously, there were cubic zirсonia, moissanite, Swarovski’s crystals - what’s the problem? The loss in the synthetic gemstones’ value is drastic today. Compared to the prices three or four years ago, they have fallen greatly today. We may say that when you buy a diamond ring in a store, you will not be able to sell it for the same money. Of course, you won’t sell it for the same money because of a 20% VAT, income tax, expenses - but this is the case with any purchase, for example, when buying a car or an apartment. If you want to invest in diamonds as a business, it is a different story. There has never been a full-fledged secondary market for this product, and the primary market was not very transparent. It is necessary to understand how good the product you are buying is. I believe that all transformations leading to higher market transparency are for the benefit of both the consumer and the global industry. Perhaps, for some short period of time, it may seem that some kind of catastrophe has occurred. But it is not a catastrophe if you look in the future and build your work in the future.
Are your customers constant or changing?
They change constantly and we always have new customers because our core product is engagement rings and new young people always come.
I would like to wish everyone who is in the jewelry industry that the business should use new approaches.
The jewelry industry should promote a culture of jewelry consumption. Firstly, our jewelry is beautiful, our goods carry certain values, for example, an engagement ring is connected, first of all, with amazing emotions - not because an incredibly expensive ring is given but because a step is made that changes the whole life of two persons… This means the most serious commitments, a promise to take care of the favored one … And, looking at a diamond ring, everyone remembers the bright moments, the wonderful day when a proposal was made. Then, the wedding ring also is connected with emotions and memories of the beginning of a life together, some specials events. Our jewelry pieces are often given as a present on the most important and special occasions. It is necessary to cultivate the emotional component as a guide to some bright moments in the past.
As for the jewelry industry, it’s necessary to learn how to work with customers. Let it be a chain of stores or a small store, it’s necessary to change the attitude towards working with the clients. Once the industry players learn this, they will not say that there is no demand. When there are people there is demand, it’s just necessary to understand how to attract people. Using new approaches means to acquire new knowledge, otherwise, it is difficult to change the approach.
If you are entrepreneurs, you need to strive after doing business.
Galina Semenova for Rough&Polished