The diamond and jewelry industries have repeatedly been through various ordeals. So, should the Russian jewelers be fearful for their business in the light of recent events? And will the Russian diamond industry turn to be a winner in some way in case of sanctions on the part of Europe or America? Rough&Polished addressed these questions to the heads of diamond industry companies.
Maxim Shkadov, CEO of Kristall:
Sanctions may differ vastly. If they are related to banking, then it is unlikely that you will win anything in this case. Customers will just not be able to pay you. Typically, bank loans are tied to foreign exchange earnings, so it is not so easy to change your bank, and then it is not so safe. Therefore, we work with the banks listed among the top ten, and it is those banks to which sanctions are applied. Accordingly, your current operations may be blocked. And this is the biggest risk associated with sanctions. Payments in other currencies are basically possible, but the organization of this process is also quite complex. In short, I do not see anything positive coming from sanctions. Yes, you may deliver goods to other countries, excluding the United States and Europe, but payments for the delivery will be a serious problem.
If export is banned, the consequences for the Russian diamond-cutting industry may be very serious. Our company, for example, is 98-percent export-oriented. Certainly, there are ways how you can minimize the effects of closing the largest markets. But I do not think it will happen.
The spokesperson of Smolensk Diamonds:
To determine the degree of influence and threat posed by the economic sanctions conceived by Western countries against Russia, we should first of all analyze how closely such countries are linked together by trade and other obligations. Russia is more dependent on the Chinese market, rather than the American market, because all the brands are made in China. Russia plays a major role in the world’s commodities market. As for the jewelry market, it is much more developed in other countries, not in Russia. Russian jewelry is bought by Russian buyers.
Fyodor Poludenny, Deputy Director General of the Estet Jewelry House:
In my opinion, by and large, these sanctions will not affect us in a big way. Firstly, we almost don’t export jewelry to the United States and we supply very little jewelry to Europe. If some jewelry companies, upon hearing the call of the United States and European Union, will stop delivering jewelry goods to the Russian jewelry market, it will even be better for Russian jewelry makers. There will be less competition. Another thing is that domestic demand may slow down to some extent and people will be wary as to what to do next, and in this case the economic situation may, of course, produce its impact.
Igor Taved, CEO of Aldzena:
People will not buy less; they will start buying Russian goods. From this perspective, the industry will benefit - the main thing is not to make people live worse. Generally, there will not be any big problems in the jewelry sector, although the jewelry industry, of course, is using high-tech machines and other equipment that depend on imported expendable materials and newly developed software. Still, we are 60-70 percent independent from external manipulations. So basically, the jewelry industry cannot be affected by any sanctions.
Vadim Churkin, President of the Churkin and Roizman Jewelry House:
I think sanctions will have an indirect impact. Overall decrease of money in the market entails a drop in sales. Our banks used to take money abroad, and now they cannot do it. The expensive jewelry market will be affected to a lesser extent in this case. And when it is unclear what will happen, people deem it better not to spend money, and this brings about lower sales.
Marina Slotina, Deputy General Manager of Sergey Slotin:
Jewelers are always very busy with their work; they have no time to think of sanctions. We work only with Russian manufacturers, I believe in them, I love them, there are a lot of decent people among them, so I think that sanctions will not affect our market. But retailers in the current situation should change. They should change their formats, assortments, marketing policies, and the way they present their goods. They should understand their consumers and sell not gold, but emotions, vital power and status. By the way, jewelry manufacturers should also change their ways, creating jewelry collections having their own histories and legends, an interesting pitch. Their jewelry should be properly showcased and packed. Those who realize it will survive, and those who do not will keep accusing Europe and America.
The representative of the Diamant jewelry factory said that their company has so far not been affected. The company has no problems in its current operations and has no business relationships with the American side.
The CEO of a jewelry retail network in Novosibirsk noted that “the main problem is the opportunity to import goods to the Russian market. It is unlikely that Russia will introduce retaliatory sanctions and trade as such is possible in any case.”
The Italian jewelry business newcomer in Moscow:
Many experts are unanimous in saying that sanctions against Russia will pull a slowdown in the world economy. This is understood by all jewelry manufacturers in Europe and the United States - it took them many years to open a number of offices and stores in the Russian Federation. Jewelry demand in Russia has grown enormously over the past few years, and I do not think anyone would want to abandon such a large market and lose their profits. I would like to believe that businessmen and the jewelry elite will not allow sanctions in our industry.
Several senior executives from jewelry companies replying to our questions just said: “In no way.”
Veronica Novoselova, Rough&Polished, Moscow
