Russia is flooded with counterfeit goods

The Russian jewelry market though a fast growing one is flooded with low-quality gold products. The illegal import of Turkish, Chinese and Italian gold products is the main problem undermining the field development.
Although Moscow alone has some 350 manufacturers, 30-50% of retail products is imported with the value constantly growing.
In 2005, the number of gold products imported in Russia was 829.9 thousand, experts believe the value will see a 50% increase in 2006.
It is noteworthy that the importing countries are likely to change since experts say jewelry from the South America is a great success at the leading international exhibitions in Western Europe. Gold products with emeralds, topazes, tourmalines and other natural stones from Brazil attract attention of experts and broader public. Specialists can see a new stable trend on the European market, the jewelry from southwestern Asia, predominantly from Thailand, playing first fiddle for the past few years, are being forced out by products from the South America. Russian jewelry market makers think the trend will reach Moscow late this year.
Comparative table of values of gold and jewelry production in several countries in 2004 and 2005:

 Comparative table of Russian and foreign jewelry enterprises’ expenditures:

A Russian Jewelers Guild council member told a press conference at the “JewelerExpo.Kazan-2007” exhibition that fake products mainly coming from near abroad countries make 5-50% of those sold in Russia.
Some 80% of such-like products is smuggled into the country through tolling schemes. Market makers note that a considerable number of well-known Russian companies with “friendly” companies in Turkey sell the so-called “Eastern” gold through tolling. Upon receiving permission from the Ministry of Finance the companies by free-VAT gold, export it (predominantly to Turkey) and allegedly give it for processing. Then it comes back.
The Russian jewelry market can be roughly divided into those makers who use the tolling schemes and those who ignore them. The latter are disadvantaged since some 80% of contraband is imported through tolling schemes today.
The “Almaz-Holding” president Flun Gumerov says the widespread tolling schemes stultify technical retooling of Russian enterprises, wreck design schools and mislead clients since the Russian companies’ trademarks are stamped on products manufactured abroad with Russian standards violated.
Leading market makers also condemn the so-called give and take scheme, which enables importers to pay for the imported products in gold. In the case the raw materials are not subject to taxation. If the importer paid for the products in “life money”, the cost price of gold goods would be over 25% higher and Russian manufacturers would be able to compete. But the Russian market is still being flooded with cheap imported products since importers are able to find the ways to cut the customs value of goods and production services. The goods are besides stamped as Russian-made, have maker's marks and nameplates of raw materials owner and are sold as Russian jewelry products. In the case the customer is deceived.
Another problem concerns manufacture of precious metal goods without the Assay Office stamp in Russia. The necessity of profound reform of the assay service with the control focus moved from manufacturer to sales was discussed at the second All Russian Congress organized by Jewelers Guild in Kostroma.
Vladimir Mospan, the head of the Russian State Assay Office, said the Russian Assay Office (RAO) had the central staff, 18 assay supervision inspections, 9 autonomous areas, and over 1,000 of employees. The Assay Office local offices are established in regions with high-capacity jewelry production or a customs office overseeing the most part of import.
The RAO controlled 62 millions of jewelry products in 2006. The total weight was 97 metric tons in gold and 155 metric tons in silver. In the first quarter of 2007 the increase in assay operations number exceeded that in 2006 by 30%, quarter-on-quarter.
The manufacturers have officially made proposals to legislators for more strict penalties including criminal ones for sales of infringing jewelry products.
Vladimir Zakharov, firs deputy chief director of Jewelers Guild, believes public opinion, and better jewelry consumer culture should be the main market regulator. A restricted number of supervising bodies cannot perform the permanent control of continuously emerging retail outlets, and “every pedestrian subway or market cannot be given a policeman for the end”.
More often than not Russian Jewelers are critical speaking about “Turkish” gold in the mass media. Maybe the reason for this is that some 90% of Turkish gold chains, rings and earrings are sold to the Russians. Experts say 99% of the Turkish jewelry products does not match the declared parameters.
Yuliya Puzireva, the general director of the “Kristall-Gold” net, thinks base metal is the cheapest in Turkey, since they use more cheap metals instead of silver to cut the products cost price. This attitude affects gold products. The gold without silver is soft and easy to rub out. There are no state standards in Turkey; hence there are no quality control bodies. The cold “burns” as soon as Jewelers start soldering it. So the Turkish jewelry products cannot be restored. A gold chain manufactured 60 years ago in Russia, though, can be soldered, polished and used again.
Turkish jewelry owes much of its attractive design to foreigners. That is Turkish Jewelers steal the design solutions in international exhibitions. For the reason Turkish and Chinese representatives are not admitted to many well-known trade fairs.
Rough&Polished