Lap­idary Work

The share of Be­laru­sian com­pa­nies on the do­mes­tic jewelry mar­ket is still in­signif­i­cant – just a third of the to­tal sup­ply

Economy of Belarus - - COMPANIES AND MARKETS -

The ca­pac­ity of the Be­laru­sian jewelry mar­ket is ob­vi­ously huge. This in­dus­try is ex­pe­ri­enc­ing a ro­bust growth. The num­ber of pro­duc­ers and ven­dors is in­creas­ing, so is the sales vol­ume. In 2012 alone some 533,600 pieces of gold jewelry and gem­stone jewelry worth Br888.8 bil­lion were sold, as well as 668,300 pieces of sil­ver jewelry worth Br179.4 bil­lion. Yet, Be­laru­sians of­ten have to buy for­eign-made jewelry to sat­isfy their thirst for “time­less val­ues”. At the same time Be­laru­sian prod­ucts sell ex­tremely well abroad: di­a­monds cut in Gomel are used to make jewelry for the fa­mous jewelry com­pa­nies Cartier and Tiffany. Be­laru­sian spe­cial­ists were in­volved in the cre­ation of the finest and most com­pli­cated piece of jewelry of mod­ern times – a replica of the Great Im­pe­rial Crown of Rus­sia. In or­der to re­vive the Be­laru­sian jewelry mar­ket and boost ex­ports of do­mes­tic jewelry prod­ucts, a de­ci­sion was made to bring to­gether state-run jewelry man­u­fac­tur­ers. The hold­ing com­pany “KRISTALLHOLDING” was reg­is­tered in Septem­ber 2012 to con­sol­i­date the as­sets of three lead­ing jewelry com­pa­nies – JSC “Gomel MA “Kristall”, JSC “Belu­velir­torg” and CJSC “Bel­gran”.

Triple Ef­fect

CJSC “Bel­gran” spe­cial­izes in the pro­duc­tion of di­a­monds and jewelry, while JSC “Belu­velir­torg” boasts a broad net­work of sales out­lets. The merger of the three com­pa­nies has op­ti­mized the ex­ist­ing pro­duc­tion and sales chain and strength­ened the mar­ket po­si­tions of each of the com­pa­nies.

JSC “Gomel MA “Kristall” be­came the man­ag­ing com­pany of the hold­ing com­pany “KRISTALLHOLDING”. In De­cem­ber 2012 the joint stock com­pany marked the 40th an­niver­sary since the first Be­laru­sian di­a­mond de­buted on the mar­ket. Be­ing part of the ex­port-ori­ented di­a­mond-pro­cess­ing in­dus­try of the USSR (the Soviet Union had seven di­a­mond-pro­cess­ing com­pa­nies), Gomel-based Kristall to­gether with Smolensk-based Kristall, an­other in­dus­try leader, con­trib­uted to the global recog­ni­tion of the Rus­sian gem-cut­ting ex­per­tise.

To­day JSC “Gomel MA “Kristall” is the lead­ing pro­ducer of di­a­monds, jewelry and di­a­mond tools in Bela- rus. Its brands are rec­og­niz­able in Be­larus and abroad. The prod­ucts of JSC “Gomel MA “Kristall” are ex­ported to the ad­vanced global di­a­mond and jewelry mar­kets, in­clud­ing Bel­gium, Is­rael, the United States, China, In­dia and Rus­sia. Be­sides, the com­pany is a long­stand­ing part­ner of the National Bank of the Repub­lic of Be­larus and helps form its re­serves of pre­cious stones. The Gomel-based com­pany was granted an ex­clu­sive right to make state awards (or­ders and medals) upon the or­der of the Be­larus Pres­i­dent Ad­min­is­tra­tion.

Ahead of Time

The growth strat­egy of the hold­ing com­pany “KRISTALL-HOLD­ING” up to 2018 en­vis­ages am­bi­tious goals in man­u­fac­tur­ing, sales and up­grade.

The pri­or­ity tar­gets for the next five years in­clude in­ten­sive pro­duc­tion growth, in­crease in sales, prod­uct ex­pan­sion, im­prove­ment of prod­uct qual­ity and com­pet­i­tive­ness.

To this end, by the year 2018 jewelry pro­duc­tion will be in­creased 2.2 times com­pared to 2011. The com­pany will in­ten­sify co­op­er­a­tion with for­eign part­ners in a bid to di­ver­sify the prod­uct lineup. Un­der pro­duc­tion co­op­er­a­tion agree­ments Kristall is plan­ning to process up to 100kg of gold and 100kg of sil­ver per year, said Rus­lan Sorokovoy, Di­rec­tor Gen­eral of JSC “Gomel MA “Kristall” man­ag­ing com­pany of the hold­ing com­pany “KRISTALLHOLDING”.

By means of ramp­ing up di­a­mond pro­cess­ing op­er­a­tions (the pro­duc­tion of di­a­monds is to in­crease at least 1.4 times by 2018) JSC “Gomel MA “Kristall” will strengthen the com­pet­i­tive edge in the mid­dle and pre­mium mar­ket seg­ments and main­tain the mar­ket lead in the most pres­ti­gious jewelry seg­ment.

In ad­di­tion, by 2018 there are plans to boost the pro­duc­tion of di­a­mond tools 1.5 times as com­pared to 2011. This line of busi­ness will be strength­ened through the use of new tech­nol­ogy and di­ver­si­fi­ca­tion of prod­ucts.

The eco­nomic per­for­mance of the jewelry hold­ing com­pany does not give rea­son to doubt that the tar­gets will be met. In H1 2013 the out­put reached Br183.9 bil­lion in com­pa­ra­ble prices, beat­ing the Jan­uary-June tar­get by 1.5%. “Dur­ing this pe­riod the hold­ing com­pany “KRISTALL-HOLD­ING” mar­keted 328 new kinds of jewelry. In gen­eral, the H1 2013 out­put made up 70,000 pieces of jewelry weigh­ing 270kg.

“We of­fer a large se­lec­tion of jewelry, all in all over 10,000 ti­tles from classics to avant-garde, to lux­ury. We also of­fer a wide range of cer­ti­fied di­a­monds of dif­fer­ent price ranges,” said Rus­lan Sorokovoy.

In ad­di­tion, Kristall pro­duces cus­tom-made jewelry on or­ders of in­di­vid­ual and cor­po­rate clients and reg­u­larly of­fers new ex­clu­sive col­lec­tions of jewelry.

Fight­ing for Cus­tomers

The growth in the out­put of prod­ucts, no mat­ter how at­trac­tive they are, says noth­ing about the ef­fi­ciency of the pro­duc­tion. It is im­por­tant that ev­ery sin­gle item finds its buyer. Kristall be­lieves that it is not only the in­crease in out­put but also strong sales that at­test to the ef­fi­ciency of the sale and mar­ket­ing poli­cies. Kristall ex­pects that the com­pet­i­tive ad­van­tages of the joint re­tail chain, co­or­di­nated pric­ing and ad­ver­tis­ing pol­icy, effi-

cient lo­gis­tics will lead to stronger sales. On this front Kristall plans to open new stores, hold large-scale pro­mo­tional ac­tiv­i­ties, ex­pand the prod­uct range, and in­crease the pro­duc­tion of the items pop­u­lar on the mar­ket.

“We aim at the max­i­mum sat­is­fac­tion of con­sumer de­mand and the fastest turnover of the work­ing cap­i­tal,” said Rus­lan Sorokovoy. “It is pro­jected that the share of do­mes­tic jewelry in the hold­ing com­pany “KRISTALL-HOLD­ING” dis­tri­bu­tion net­work will ac­count for 60% in 2017,” he added.

It should be noted that the 2015 tar­get re­gard­ing the share of do­mes­tic jewelry in the re­tail net­work of the hold­ing com­pany was 55% and it was al­ready met in H1 2013 (55.4%). In gen­eral, there are plans to in­crease the share of Kristall’s re­tail net­work on the do­mes­tic jewelry mar­ket from 28% in 2011 up to 35% in 2018, and to bol­ster the com­bined share of the hold­ing com­pany on the Be­laru­sian mar­ket, tak­ing into ac­count the sales of Kristal prod­ucts in other re­tail net­works, up to 40%.

In 2012 the hold­ing com­pany ac­counted for 33% of the to­tal jewelry sales on the do­mes­tic mar­ket. To­day Kristall chain has 55 out­lets. In H1 2013 the com­pany’s re­tail sales beat the forecasts by 13.6% to make up Br148.8 bil­lion. Op­er­at­ing profit for the pe­riod reached Br152.4 bil­lion, up 2.8 times com­pared with the same months last year, Rus­lan Sorokovoy noted.

For­eign Part­ners

Along with the do­mes­tic mar­ket, ex­port sales are among strate­gic pri­or­i­ties for the hold­ing com­pany “KRISTALL-HOLD­ING”. The com­pany’s main ef­forts are fo­cused on ex­pand­ing the ex­port and op­ti­miz­ing the dis­tri­bu­tion chan­nels by in­creas­ing sales of jewelry with a higher added value as com­pared to di­a­monds. Im­port-sub­sti­tu­tion projects are un­der­way to re­duce the amount of im­ported prod­ucts. The com­pany con­stantly de­signs new high-qual­ity jewelry prod­ucts in close co­op­er­a­tion with for­eign part­ners. The com­pany also works closely with CIS jewelry pro­duc­ers (Rus­sia, Ukraine, and Ar­me­nia) to start com­ple­men­tary coun­ter­de­liv­er­ies.

It is ex­pected that the ag­gre­gate ex­port of the hold­ing com­pany will make up $22.6 mil­lion in 2015 and $30 mil­lion in 2017, an in­crease of 2.2 and 2.9 times on 2010 re­spec­tively. The fo­cus will be made on build­ing up the ex­ports of jewelry. Thus, JSC “Gomel MA “Kristall” is set to in­crease its gem sales abroad 4.4 times by 2018. Ex­ports of di­a­monds as well as of di­a­mond tools will go up 1.5 times.

In H1 2013 the ex­ports of Gomel­made di­a­monds in­creased by 10.6% com­pared to the same pe­riod of 2012. Earn­ings in­creased 1.5 times. The com­pany sold its prod­ucts to Is­rael, Bel­gium, Rus­sia, Ar­me­nia, the U.S., Lithua­nia, Kaza­khstan, Ukraine, Turk­menistan and Es­to­nia.

Ad­vance­ment to the U.S. mar­ket was an im­por­tant step for the Gomel-based jewelry pro­ducer. The U.S. mar­ket is the most pres­ti­gious and eco­nom­i­cally at­trac­tive for di­a­mond man­u­fac­tur­ers. The United States con­sumes al­most half of the global di­a­mond out­put. In H1 2013 JSC “Gomel MA “Kristall” shipped a pilot batch of di­a­monds worth of $300,000 to the U.S. af­ter sign­ing a con­tract with AV Jewellery of NY, Ltd. In July 2013 the hold­ing com­pany “KRISTALL-HOLD­ING” and AV Jewellery of NY, Ltd. inked an­other con­tract worth about $500,000.

An­other pri­or­ity ex­port des­ti­na­tion for the Be­laru­sian di­a­mond man­u­fac­tur­ers is a rapidly grow­ing jewelry mar­ket of Rus­sia. Be­larus sup­plies jewels to Al­maz Hold­ing Com­pany which is among Rus­sia’s top three jewelry man­u­fac­tur­ers, OAO Russkiye Samotsvety (St. Peters­burg), Kristall Smolensk, and EPL Di­a­mond (Yaku­tia).

The Be­laru­sian jewel­ers not only sell pol­ished di­a­monds to Rus­sian part­ners, but also suc­cess­fully im­ple­ment joint projects with them. For ex­am­ple, in 2012 as part of the co­op­er­a­tion pro­ject with Smolensk Di­a­monds Jewellery Group, JSC “Gomel MA “Kristall” man­u­fac­tured 2,400 parts from white gold al­loy to make the replica of the Great Im­pe­rial Crown which was made by Kristall Smolensk (a lead­ing man­u­fac­turer of pol­ished di­a­monds both in Rus­sia and Europe and a re­li­able busi­ness part­ner of the Be­laru­sian com­pany) on the oc­ca­sion of its 50th an­niver­sary and the 250th an­niver­sary of the Great Im­pe­rial Crown of Rus­sia. The Great Im­pe­rial Crown is the main sym­bol of power of Rus­sian monar­chs and the ma­jor Crown Jewel. It was used for the coro­na­tion of all Rus­sian Em­per­ors start­ing from Cather­ine II since 1762. The replica of the Great Im­pe­rial Crown was made with the par­tic­i­pa­tion of the Gomel jewel­ers. It is one of the most ex­pen­sive and unique works of the global jewelry art. The crown is dis­played in Rus­sia’s big­gest mu­se­ums and ex­hi­bi­tion halls.

“In or­der to boost ex­port we put sys­temic ef­forts into work­ing with po­ten­tial cus­tomers from var­i­ous re­gions of the world,” Rus­lan Sorokovoy said.

JSC “Gomel MA “Kristall” is a mem­ber of the big­gest spe­cial­ized In­ter­net por­tal IDEX which gives ac­cess to a reg­u­larly up­dated data­base of or­ders to pur­chase pol­ished di­a­monds in all re­gions of the world. The com­pany can also use the por­tal to sell its own prod­ucts. Apart from that, it is pos­si­ble to ad­ver­tise prod­ucts with the lead­ing in­ter­na­tional spe­cial­ized mag­a­zine Ra­pa­port (the U.S.).

Ad­vanced Tech­nolo­gies

The jewelry hold­ing com­pany would fail to ful­fill all strate­gic goals with­out sys­temic over­haul of its man­u­fac­tur­ing and mar­ket­ing fa­cil­i­ties. JSC “Gomel MA “Kristall” is set to im­ple­ment an am­bi­tious in­vest­ment pro­ject in 2013-2015. The pro­ject pro­vides for a num­ber of mea­sures to im­prove ex­ist­ing tech­nolo­gies and in­tro­duce new ones, as well as to build fa­cil­i­ties, re­vamp or mod­ern­ize pro­duc­tion fa­cil­i­ties.

“Reg­u­lar re­tool­ing and up­grade of pro­duc­tion fa­cil­i­ties, the use of ad­vanced equip­ment and laser tech­nolo­gies make it pos­si­ble to pro­duce high-qual­ity jewelry which com­plies with all in­ter­na­tional stan­dards. Ap­pli­ca­tion of state-ofthe-art tech­nolo­gies and mod­ern­iza­tion of equip­ment help the com­pany to main­tain strong sales do­mes­ti­cally and in­ter­na­tion­ally,” Rus­lan Sorokovoy said.

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