Last week the Guild of Jewelers of Russia held its extraordinary meeting in Moscow. According to its press-release, the situation on the Russian jewelry market in the developing global financial and economic crisis environment was the main question on the agenda.
The guild stated that jewelry retail sales in the Russian Federation were down by 15% (in Russian roubles) in the first four months of 2009 as compared with the similar period in 2008. High-end jewelry worth above RUR 150,000 a piece displayed a conspicuous slump in sales and the same was true for diamond jewelry. The average bill at jewelry stores decreased about two times.
The same period registered a 44-percent decline in gold jewelry production, which is above the average indicator displayed by the Russian industry. The major reasons for poor performance of domestic producers were the super-high bank credit rates (around 20% per annum); growing failures in merchant-to-factory payments (overdue up to two months); literal disappearance of trade partners who leave without paying; and growing gold prices across the world. In other words, manufacturers are among those hardest hit by crisis phenomena. Trade is in a better position since merchants take a lot of goods in credit (without paying in advance) and in this case the risks they bear are relatively small.
There may be named three positive tendencies on this background. In the first place, millions of Russian people preserve their taste for jewelry, though being squeezed financially many customers skip gold and turn more toward silver jewelry (in the first quarter total jewelry sales in pieces dwindled from 20 to 18 million). Secondly, trading area rent rates are now significantly lower which increases business viability. Thirdly, labor force offering on the market is growing which permits to hire qualified personnel at reasonable prices.
While implementing its anti-crisis program (approved at the Guild’s annual meeting on December 18, 2008), the Guild’s management discussed social initiatives and pressing problems in the jewelry industry with the Russian Finance Ministry, Ministry of Economic Development, Government Administration, Federal Tax Service, Federal Customs Service, Experts Agency at the Administration of the President of the Russian Federation and others. Some of the matters discussed encountered understanding on the part of the mentioned authorities.
Great interest was taken in the joint proposal of the Ministry of Finance and Jewelers’ Guild of Russia to extend real support to domestic jewelry manufacturers voiced by Alexander Boguslavski, General Manager of the Priokski Plant of Non-Ferrous Metals who set forth a package of programs for the so-called gold credits (starting from the 1st of July this year).
The meeting was unanimous in approving the decision to join the Russian Union of Industrialists and Entrepreneurs as its members.
Besides, the meeting voted to abstain from joining the Union of Jewelers of Russia, a non-profit partnership, until the project pursued by this new public organization will be clarified.
The meeting also discussed the Strategy of Developing the Jewelry Industry of the Russian Federation.
