Swamped with dubious quality Polish and Turkish jewelry, Lithuanian adornment market chokes

KLAIPEDA - “Uneasy times have gripped all jewelers,” sighs Paulius Zabielskas, president of Lithuania’s National Jeweler Association. With jewelry sales down 50-70 percent in two years, he asserts, most jewelry stores are on the brink of bankruptcy. Before the national currency’s peg, back in the 1990s, most Lithuanians used to buy up golden jewelry, precious stones and metals as an expression of investment, but with the relative financial stability in the markets, jewelry has embodied its primal purpose, which is as body adornment. However, with thousands of jewelry stores glistening out there, buyers do not plan to swamp the glitzy realm. “Jewelry is not a commodity of prime necessity. It has never been that way,” Zabielskas says.

Jewelry market insiders attribute the sluggish jewelry sales not only to that, but also to poor jewelry traditions and, especially, to the habit-redefining downturn. “What kind of jewelry market are you talking about when most people, nowadays, are mostly concerned about a possible grits, flour and semolina price increase,” says Zabielskas sounding vitriolic. With most jewelry stores offering whopping discounts, often up to 50 percent, 95 percent of customers, the president of the association maintains, pass them by without taking a glance at the “cheap” rings, bracelets and necklaces. “The other 5 percent that can afford a golden item, as a rule, buy it in France, Switzerland, the Emirates or somewhere else, but not in Lithuania. I just want to repeat myself: it is due to Lithuania’s unsettled traditions regarding jewelry. Until the downturn, nevertheless, there was a certain domestic market for the luxury commodities that jewelry entrepreneurs could count on. With the crisis still here, it [the market] is gone,” Zabielskas maintains.

According to him, if not for foreigners seeking unique Lithuania-made jewelry while visiting Lithuania, the local jewelry market would be in complete tatters. “Foreigners, particularly Westerners and Russians, have long-standing traditions when it comes to jewelry. Besides, most of them, unlike Lithuanians, have not been that much affected by the downturn. Usually, foreigners are seeking unique jewels, particularly golden rings, necklaces and brooches with amber inclusions,” the jewelry entrepreneur related to The Baltic Times. He asserts that all jewelry items, regardless of their staple, have suffered a staggering slump in sales. However, he admits, the market’s sector of handcrafted artisan amber jewelry has been affected least, as the uniqueness of handcrafted amber jewelry continues to attract buyers.

Zabielskas maintains that the local jewelry market has been flooded with dubious quality Turkish and, particularly, Polish jewelry. “From that standpoint, Poland is dubbed Europe’s China,” the representative of the association claims. “It is estimated there are over 100 jewelry manufacturers in Lithuania, while in Poland the number reaches 30,000,” he emphasizes. With free borders and a whopping supply from Poland, Lithuanian jewelry entrepreneurs are not able to compete with them on a par. “Taking that into consideration, as well as the non-existence of a domestic jewelry market, Lithuanians are not capable of targeting export markets, thus, putting local jewelry businesspeople in misery,” Zabielskas concluded.

Only golden wedding ring sales, he singles out, have not gone down. “Even those who plan having a very small wedding tend not to slash their wedding costs by saving on wedding rings. Instead of buying cheap rings in the price range of 150-200 litas (58 euros), would-be newly weds usually acquire 500-700 litas’ rings. This could be attributed to the ominous belief that a cheap wedding ring symbolizes a frail, short-lived marriage,” the president of the association pointed out. According to him, jewelry stores, unlike others, cannot apply whopping discounts. He maintains that, differently from other traders, jewelry sellers do not apply extensive markups for their items. “Thus, we have no room to slash the prices. If you see a jewelry store offering 50 percent discounts, it means it was applying a high markup to its base cost,” Zabielskas pointed out. With glimmering brooches, rings, necklaces, earrings and other adornments in the stalls, he says, only golden stuff has comparably larger demand. “Lithuanians follow the established traditions and stick with what their parents and grandparents wore – a golden ring or necklace,” he said.

Some years ago, he claims, silverware was hot, particularly among younger buyers, but Zabielskas scorns silverware, calling it “the cheap stuff of bijouterie, but not jewelry.” He cannot say how many jewelry sellers there are, but says the number is dwindling. “There are a good deal of businessmen who close down their stores,” the entrepreneur states.
Zabielskas asserts that local jewelers would be much better off if state enterprise Lietuvos prabavimo rumai (Lithuanian Assay Office), an authorized institution to perform state supervision of precious metals in Lithuania, would not be so tough with its requirements. “The office rips us off,” the president of the association fumes, explaining, “For example, in the UK, silverware weighing up to 7 grams and golden items up to 2 grams are not assayed at all. However, in Lithuania, all the goods, regardless of their weight, must be assayed. It is sheer crap, considering that the hallmark cost is higher than an earring itself.”

The president of the jewelers is as well angered by the Office’s ruling to reassay all jewelry imported from Poland. “Thus, Lithuanian jewelers were forced to pay for something that had already been done. In order to protect our jewelers, the association had to entangle into costly litigations that ended in our victory – the injunction has been revoked,” Zabielskas said. However, he says, despite the overturn, jewelry stores still are urged to end selling Polish jewelry. “Despite the ruling, the Lithuanian Assay Office’s inspectors still demand to newly assay them, which is an obnoxious attempt to cash in on our business,” the president is convinced. The association went lobbying to Seimas (Lithuanian Parliament) in order to revoke the Assaying Law, but with no success. “Jewelers are a scapegoat during the downturn for our government. It thinks it can load a heavier tax burden on us. It can be only in Lithuania that a jeweler, with a 15 year work experience and no reported transgressions whatsoever, would still be obliged to pay for a hallmark,” Zabielskas said.

However, Eimantas Mitkus, the Lithuanian Assay Office director, rebukes his critique as “unsubstantiated.” He said to The Baltic Times that “Since 1995, when the parliament passed the law on State Supervision of Precious Metals and Gems, the assay tariffs remained the same. The purpose of the law is to safeguard the rights of the consumers, to protect their and state interests when manufacturing, processing, purchasing, selling, as well as exporting and importing precious metals and gems. With the abundance of the jewelry out there, we make sure their quality corresponds.”

Since 2004, Lithuania has been a member of the so-called Vienna Convention, therefore, its provisions, Mitkus asserts, are effective in Lithuania as well. “Articles marked with a common control mark of the convention (CCM), in Lithuania may be sold without additional controls or marking. In the same manner, these articles can be sold in other countries, parties to the Vienna convention, as well. However, in Poland’s case, Mitkus stresses, though it is a member of the convention, it does not mark its jewelry as the Convention demands. It may be due its unwillingness to restrict, in any way, the Polish jewelry market with the constraint. The bottom line is Polish jewelry does not correspond to the strict international quality requirements; therefore, we urge its Lithuanian importers to newly assay Polish jewelry. Statistically, only 30 percent of Polish jewelry export matches the Vienna Convention’s requirements though, in our case, all 100 percent do so. Unfortunately, many of our jewelry entrepreneurs seek only profits, and do not want to consider the quality demands, something our office is ensuring,” Mitkus asserted.

According to him, there are over 1,200 jewelry manufacturers in Lithuania. However, he disagrees that the market is on the brink of extinction. “Do you know many jewelry stores that have been closed down during the crisis? Personally, I do not. Our estimation is that only approximately ten jewelry establishments had to close down. With gold prices going up, it [business] cannot be loss-making. We see many new jewelry stores opening up. However, the problem in Lithuania is that many jewelry merchants, as a rule, expect big profits with little investments in resources. Those who know how to work are not complaining,” the Lithuanian Assay Office director said. He presumes that even hardship-stricken jewelry businesses manage to get through the downturn using their current assets, downsizing or moving into smaller premises. “Honestly speaking, Zabielskas does not represent all jewelers, as there are several associations representing jewelers in Lithuania. How can he [complain] about high assay tariffs when we charge only a couple of litas for hallmarking a 200-300 litas ring? Maybe he brings to us 1,000 jewelry items, which hallmarking could add up to a larger amount?” Mitkus said, blasting Zabielskas’s arguments.  He emphasized that assay tariffs are unchanged since 1989.

Mitkus cautions about the dangers of the jewelry brought into Lithuania, not only from Poland, but from Turkey or some Asian countries as well. “With jewelry from Western Europe, we usually do not have any problems. Western countries, as a rule, have properly developed technologies, sell their wares in large quantities and never refuse to let them be checked. Many Lithuanians acquiring golden necklaces, bracelets, brooches or rings in Turkish jewelry stores do not even suspect that they are buying something not worthy even of their moderate cost. A quite ridiculous part of the matter is that Lithuanian jewelry stores sell high quality jewels here. There is no need to buy dubious quality in Turkey or Poland,” the director emphasized.

Alvida Plytnykiene, Aukso gija owner, maintains that the time for the jewelry business is “tough”; however, she stresses, the hardships cannot be exclusively attributed to the economy. “Nowadays, it is very convenient to explain all business failures by the crisis. We certainly feel it, but sales results are being determined not only by it, but by other factors, including the location of stores, lease conditions, commodity supply, presentation and service,” she pointed out.

The businesswoman emphasized that, in recent years, jewelry supply has surpassed its demand considerably. “It is not difficult to see that in a large mall. Even if the crisis had not affected us, we all would have felt the sales slump for one reason – the abundance of goods went upwards, while the number of customers remained the same or, likely, dwindled,” Plytnykiene pointed out. She maintains that before, many jewelry entrepreneurs often sought quantity rather than quality. “Until the crisis, all spoke of business expansion – more stores and more jewelry out there, but not about quality of the goods and service,” she asserted. Thus, she says, with unreasonable expansion, the lease costs eventually jumped higher, putting many jewelry businesses in a deadlock. “What we do is we focus on quality of service and jewelry,” she reiterated.