Buyers will be told what kind of stones – artificial or natural - are used in jewelry
(Izvestia) - In May, the Russian Jewelers Guild will adopt a charter obliging its members to disclose what kind of gems are used in jewelry - natural or lab-grown. Eduard Utkin, CEO of the Russian Jewelers Guild, told this to the Izvestia Daily. However, now and in the future, the consumer will remain largely defenseless: the penalties for infringements of jewelry trade rules are ranging from 10,000 to 30,000 rubles. Compared with the profits gained from synthetics sold under the guise of natural gems these sanctions are insignificant.
At best, consumers will be able to get their money back in case of forgery
According to Utkin, the Guild’s group developing the Charter will have a meeting in the end of April and the document will be signed in May. He is confident that the Charter will be signed by all the major jewelry manufacturers in Russia (the Guild consists of about 90 industry players), because they will get a competitive advantage. Last week, the State Duma adopted the amendments proposed by the Ministry of Finance to the law "On Precious Metals and Precious Stones" in its third reading. One of them contains a commitment on the part of jewelry stores to indicate on a sealed label, whether a jewelry piece has a synthetic or natural stone. Currently, the Ministry of Finance is working on changes to be introduced into the trade regulations for certain goods approved by Government Decree No. 55 as far back as on January 19, 1988.
“On the one hand, consumers must be provided with the right to receive accurate information about stones being purchased, and on the other hand business should not experience additional stress due to this innovation,” the ministry spokesperson told the Izvestia.
The Ministry of Finance is planning to amend the rules to oblige vendors "selling goods made of precious metals with inserts of artificial materials having the characteristics of precious stones to indicate that such inserts are synthetic stones." Right now, the law has no concept of synthetic stones.
The amendments adopted by the State Duma (not yet approved by the Federation Council nor signed by the President) shall enter into force six months after the official publication of the law, that is, around the end of 2015. Meanwhile, one may often see the word "ruby" inscribed on a price tag, without specifying if it is natural or lab-grown. A natural stone may cost thousands of dollars per carat, while its synthetic counterpart may be a hundred times cheaper, while merchants often sell jewelry containing synthetic rubies at the price of natural gems. Consumer advocates in Moscow and in the Moscow Province told the Izvestia, that in the months preceding the New Year of 2014 they were approached by several customers complaining that they had been sold artificial diamonds under the guise of natural. Albert Tsindalov, a lawyer from the Consumer Protection Bureau based in Moscow, said there had been many complaints about the jewelry goods produced by the Sunlight brand. However, he declined to elaborate citing privacy concerns.
“Unfortunately, the larger the market player, the more often it has to face unfair competition, including the above-mentioned kind,” the spokesperson of Sunlight said in a conversation with the Izvestia. “Please, note that every description of a jewelry piece shown on its dedicated page of our company’s website indicates what kind of stone – natural or synthetic - is set in it.”
Irina Plakhova, who heads Social Protection, an agency protecting the rights of consumers and entrepreneurs, said that very often it was small stores that violated the jewelry trade rules.
“Sometimes they sell chrysoprases or emerald replicas under the guise of natural emeralds or trying to pass off artificial turquoise as natural. Large retailers will not do it unless they have a dishonest supplier, which may deceive them. Besides, the majority of large companies have gemologists on their staff who authenticate purchased raw materials,” says Plakhova. “In general, we can only welcome the innovations that may protect consumers from unscrupulous sellers: just a few consumers will go to a gemological laboratory to examine their jewelry. Even if jewelry prices will rise in this case, it will be insignificant.”
The cost of expert examination depends on the weight of stones and their number in a jewelry piece (prices are starting from 1,500 rubles). If it turns out that a jewelry piece does not meet the characteristics stated on its label, then, having the results of the examination on your hands, you can secure the return of this jewelry piece to the store (right now jewelry goods are not subject to refund and exchange).
“There were instances when a purchased diamond turned out to be lab-grown and the buyer did not know about it,” confirms Alexander Stolyarevich, Senior Expert heading the Certification Department of the Gemological Centre of the Moscow State University. “But it is rather an exception in our jewelry networks. However, the risks are rising, since our jewelers are increasingly buying diamonds in India (where manufacturing is cheaper), while checking the chain of supply, which brings a stone into the Russian retail network, is becoming difficult. And the quality of fakes is going up over time.”
Russian sales networks will not be able to check gems comprehensively
The bulk of jewelry sold in Russia contains gems mined abroad – these are almost all sapphires, rubies and emeralds. Natural diamonds manufactured in Russia from the rough produced by the national diamond-mining monopoly, ALROSA have only a small share in the market. As such, synthetic stones are not a threat - it is a separate product that has its own niche. China alone produces about 8 billion carats of synthetic diamonds and the overwhelming proportion of these stones is used in construction, power engineering and high-tech industries. But synthetic stones are increasingly infiltrating into the jewelry market under the guise of natural gems, which happens at jewelry stores and even in boxes with polished diamonds that are traded on diamond exchanges. Such cases are especially common for small-size diamonds, since they are not subject to mandatory certification and are not checked individually.
Over the past two years, the number of cases involving the adding of synthetic stones to parcels of natural gems has increased several times. In 2012, a grading laboratory in Antwerp (Belgium) identified 600 synthetic diamonds submitted under the guise of natural, their sizes ranging from 0.3 carats to 0.7 carats. The dealers and suppliers involved were confident that the stones were natural. In 2013, 200 synthetic stones were identified by a lab in Shenzhen in China; they were comparable in quality to natural. The industry producing devices able to determine if a diamond has been grown in a lab or recovered from nature is rapidly developing. Now it takes several seconds to a minute to scan a single stone (weighing 0.02 carats to 70 carats). Such devices are priced at $3,000 to $75,000. But at the same time, the techniques used to produce artificial diamonds are improving, and this theme has triggered a number of scandals in the industry. For example, the Yuvelirnye Izvestia reported last January that the Automated Melee Screening Device (AMS) developed by De Beers to detect small-size synthetic diamonds was sometimes erroneously taking natural diamonds for artificial.
A few years ago, lobbyists in the United States urged the Federal Trade Commission to require Gemesis, the leading company in the production of artificial diamonds, to mark its stones as synthetic. According to the forecasts of Bain & Co., a US consulting firm, synthetic diamond production will increase to 13 billion carats in 2020 (7 billion carats in 2010); their prices range from $ 0.25 to $ 0.50 per carat (1 carat = 0.2 g) against several thousand dollars per carat for natural diamonds.
“Neither the sellers nor the producers in Russia have appropriate inspection tools to monitor the quality of supplied raw materials,” Maxim Weinberg, CEO of Adamas said. “The industry has no more than five certified laboratories, which among other things should be independent. If you buy small-size gems, the price of their certification may be comparable to the price of stones. To ensure the efficiency of the amendments related to artificial or enhanced stones, it is necessary to ensure quality control over stones at sales points and appoint a state agency responsible for this procedure.”
Yevgeni Knutov, Manufacturing Director at the SOKOLOV Jewelry Company, has a well-balanced view of the innovations.
“First of all, if there is a precious insert of synthetic origin in a jewelry piece, you will have a corresponding marking already applied to the tag put on jewelry sold under our brand. In addition, we are most attentive to the process of selecting precious stones, using a multi-level control system. At the initial stage, we check potential suppliers. The second stage involves the inspection by our own highly qualified gemological service. The company's experts check every incoming precious jewelry insert for compliance with our internal company requirements, separating those stones that are not suitable for production by their characteristics. In addition, several stones from a supplied batch are sent for examination to specialized gemological laboratories,” Yevgeni Knutov said.
According to the annual research report of RosYuvelirExport, the Russian jewelry market was estimated at $ 7.3 billion in the end of 2013 ($ 7.2 billion in 2012). The following jewelry factories were rated as Russia’s largest jewelry manufacturers by the amount of gold in their jewelry submitted to the Assay Chamber of the Russian Federation for hallmarking in the first half of 2013: Adamas, Diamant, Adamant, Topaz, Krastsvetmet, Bronnitsky, Kristall, Kameya, Platina, Estet, Aquamarine.
