Rapaport Magazine

Adapting to Change

India manufacturers have cracked the code for selling to the U.S. market.

By Zainab Morbiwala

One doesn’t have to go to great lengths to prove the passion Indians have for jewelry. Jewelry designing in India today is explosive with creativity and jewelry designing is a vocation well accepted and well regarded by the younger generation. What gives India an advantage in the world market is its willingness not only to recognize, but its ability to adapt quickly to, the demands and needs of potential customers, whatever they want and wherever they live. 

When the U.S. was in Crisis
The unexpected crash of the U.S. economy in 2008 had the gems and jewelry industry across the world, and specifically in India, on tenterhooks. Many players, sensitive to the dominance of the U.S. market in global diamond trade and anticipating a dramatic decline in orders from their U.S.–based customers, felt that it was time for them to curtail their manufacturing operations. But over time, the recovery gained hold and business today with the U.S. seems to be about back to normal.
   Gold Star Diamond Pvt. Ltd. has had an ongoing relationship with the U.S. throughout the five years of recession and recovery. “The equation with the U.S. has remained consistent over the years,” says Sanjay Shah, director of Gold Star. “Though many players moved on to other markets like China, India, Russia and South America, all these markets have their own limitations. We still feel the U.S. is, and will be, a major consumer for jewelry and Indian manufacturers and designers will continue to find a lot of opportunity in the U.S. market.  The challenges are to create the kind of new products that appeal to U.S. customers and at the price points they want to spend.”
   Gold Star supplies to most of the majors like Zale, Sterling, Helzberg Diamonds, Afees and Jewelry Television (JTV) and to some smaller chain stores like Reeds, Rogers and Samuels. Shah notes that “We have products on cruise lines, also. We sell to independent stores, mom-and-pop stores, in Canada and the Caribbean islands, as well.”
   Aarti Sheth Cooper, general manager of strategy and business development for the exports division of Tara Jewels Ltd., adds, “The economic turbulence in the U.S. in 2007-2008 saw demand for jewelry stagnate and even decline slightly. However, the tough economic experience has ensured that only healthy, responsible and strong companies survived the turmoil. These companies have since been rewarded with a larger share of the business from the days when smaller, less stable companies were unable to meet retailer needs.”
   Tara Jewels takes pride in being prime supplier to a large number of blue-chip companies in the U.S. The company has long-standing relationships of more than a decade with leading jewelry retail chains. “We currently supply to a wide variety of retailer formats from discount megastores like Walmart and JCPenney to specialty mall jewelers like Zale, Helzberg Diamonds and Sterling, and TV and online retail leaders such as QVC and Blue Nile. We have won the Walmart global supplier of the year award twice. Totally, we are present in nearly 10,000 U.S. points of sale.”
   Gitanjali’s relationship with the U.S. market goes back many years and was initially focused on supplying loose diamonds and later diamond-accented jewelry to retailers and large chains. The relationship changed significantly in 2006-2007 when Gitanjali acquired two U.S. retail chains, Samuels and Rogers. The 110-store Samuels chain is the fifth largest in the U.S. and is now the central focus of Gitanjali’s presence in the country. Also, through Gitanjali USA, the company directly distributes to over 800 U.S. retailers its proprietary company brands such as Passion Stone, Canadia and Love Universe.
   Mehul Choksi, chairman and managing director, Gitanjali Group, says the timing of the U.S. acquisitions, just before the country’s economic crisis, led to a difficult period for the acquired stores. “However, sales have improved in the past three years, based on better merchandising, improved execution and effective promotions,” says Choksi. “The Italian brands that Gitanjali acquired in 2010 also play an important role in our U.S. operations.”

Bonding on Jewelry Designs
“India continues to be a main supplier to the U.S. stores,” Choksi says. “Like Gitanjali, there are many large Indian companies whose designs are well accepted in the U.S. market.” Cooper agrees that “Absolutely, less expensive labor coupled with highly skilled craftsmanship makes us leaders in the industry.”
   Haritsons Designs Pvt. Ltd., the jewelry and lifestyle arm of the Haritsons Group, entered the U.S. market with its retail brand Symetree. From supplying contract manufacturers, wholesalers and importers, discount stores, television sales platforms, internet sites to high-end boutiques and mail order, Haritsons has managed to carve a niche for itself in the U.S. market, offering products that still retain their artisan old-world charm with ethnic and retro sensibilities.
   With more than a decade of experience in dealing with the U.S. market, Abhishek Haritwal, managing director, Symetree–Haritsons Designs Pvt. Ltd., feels that the American buyer is extremely choosy when it comes to design sourcing from Indian vendors. “Design houses that have won the trust and confidence of their customers still are sought-after options every season,” says Haritwal. “Having worked personally with signature labels, museums and art curators as a consultant, adviser or design board member, I realize the U.S. predicament of not being satisfied with the sourcing of designs from India. Indian companies that are skilled at manufacturing often cannot design at all and those that have the art of conceptualizing design often do not have the manufacturing infrastructure.” 

Tara Jewels

Maintaining Relationships
In explaining the working relationship between its U.S. buyers and Indian manufacturers, Tara Jewels’ Cooper says, “Every retailer has a calendar of when they work out assortments. For example, most organized retailers work up to nine months in advance. They start to plan Christmas assortments in March. On average, we see our customers four to six times a year. Price-point-driven collections are an important part of all the product planning we do. We have over 50 designers who have great experience generating designs for the U.S. market. They analyze U.S. flyers, catalogs, fashion and trade shows for trends that are then translated into designs. Eighty percent of our designs are produced in India and are well received. We also have design studios in Hong Kong and Los Angeles.”
   In addition to scheduled one-on-one meetings with buyers and potential buyers at international jewelry shows and personal meetings before all-important festive and holiday seasons, the majority of Indian manufacturers also opt to establish some office in the U.S., with sales staff employed to meet with the clients in the U.S.
   To assess and track product demand from the U.S., Shah has a staff that is assigned field duties. “We have a team of salesmen who are out on the road meeting clients and showing them goods and collecting their feedback on sales, what their thoughts are about the products and what the consumers are looking for. They are asked to be vigilant about the new trends, designs, etc. We also participate in various shows in the U.S. besides Vegas, including Atlanta, New York and Miami,” says Shah. He adds that participating in shows always helps to gauge future trends and the demand that can be expected based on the manufacturing that has been scheduled for the following seasons. “All the feedback received by our U.S. office is then forwarded to our office in India, where we work on creating products based on that information. Once trade relations are established, we receive mood boards — a collage of illustrations, images, text and samples depicting season trends and inspirations — from the buyer merchandisers.”
   Haritwal says that “Over the past five years, Symetree has been a part of almost all the major jewelry trade shows in the U.S., where we get to meet most of the big-league companies. Although the general buyer footfalls in such shows have declined, the traffic for India Pavilion exhibitors has increased due to the product specialization by Indian exporters.”
   According to Haritwal, the best U.S. buyer–Indian seller relationships occur with companies that establish their own India liaison office or employ an Indian-based buying agent because this proves their seriousness about working with Indian companies. He says such companies understand the Indian dynamics.
   Haritwal explains the many steps that lead to the purchase order, including design selection, alteration, buyer design inspiration, price-point establishment, product reengineering to meet price-point targets, quality parameter establishment, compliance in certification needs and payment term agreement. At some point, buyer trade samples are sent for component testing and certifications to confirm their compliance with U.S. standards.
   “This does involve an almost daily email/telephonic interaction, especially between the designers, merchandisers and production managers of both companies,” says Haritwal. 

Is China a Threat?
Competition from China has kept the gems and jewelry industry in India on its toes, though established players in India do not really see China as a serious threat. “China is not able to provide the ‘brand-label’ quality to a large extent because of their excessive scale of production,” explains Haritwal. “Plus, China’s lack of an inherent design sense has restricted it to more mass reproduction and replication center, with the original prototypes coming from Europe and America. India is still at a level where the ratio of ‘brand quality’ is pretty high compared to the total production.”  In addition, Haritwal cites the fact that China is unable to meet worker-friendly standards because of its internal trade and human resources policies.
   “The Indian market is the hub of manufacturing, with more than 90 percent of the world’s diamonds processed here,” says Kalpesh Vaghani, partner, Kapu Gems. “China is coming on in a big way and the Chinese cutting and polishing industry will rise fast, but it still will take time to come close to the Indians and we will have a significant advantage until that happens.”
   Shah from Venus agrees that “The manufacturing market in China is growing very fast and their cuts are now becoming accepted in the world market. However, due to issues such as the huge language barrier, the lesser manufacturing know-how and a diamond industry at a very nascent stage, China has many obstacles to overcome in the manufacturing of diamonds before it can be considered a serious competitor. Looking at this optimistically, positive competition from China will be helpful in encouraging Indian manufacturers to be more alert, innovative and competitive. If we keep adding value to our product, we do not need to worry about any competition from other countries.”

Government Contribution
The Indian gems and jewelry industry also is supported by its government and by the government-subsidized Gem and Jewellery Export Promotion Council (GJEPC). One result is the establishment of special geographic zones — including Special Economic Zones (SEZs) and Export Promotion Industrial Park (EPIP) zones — that grant special tax and other exemptions to companies operating within their boundaries. Such zones in Mumbai and Sitapura in Jaipur are two of the best examples of jewelry trade zones promoting and facilitating trade with the U.S. “As a member of the Sitapura Jewelry Association, I am regularly witnessing the sentiments, energy and commitment with which new factories are coming up every month based on the demand from the U.S. market,” says Haritwal.  
   Total Indian gem and jewelry exports for the year 2012-13 were $39.033 billion and Vipul Shah, chairman, GJEPC, projected that “The U.S. jewelry markets will bounce back with an estimated 5 percent growth.” But the U.S. is not GJEPC’s only focus. The council has launched extensive initiatives around the world to promote diamond jewelry designs from India. Along with organizing various jewelry shows for international buyers in many regions, the council is also investing heavily in vocational training for jewelry designing. The council has appointed approximately 13 international coordinators within key markets such as the Commonwealth of Independent States (CIS), Europe, China, Iran, Russia, Australia, the Middle East and Japan. These coordinators are in close contact with the trade of their respective regions and actively promote the local shows and encourage buyers to visit the country’s manufacturing centers.
   No matter how many new markets India taps, the relationship the country’s manufacturers share with the U.S. market remains incomparable and irreplaceable and this is well proved by Indian manufacturers still wanting to have the U.S. as their major client. India companies understand the requirements of their U.S. clients and have evolved their own capabilities to meet those requirements. This is nowhere more obvious than in their strong customer service component and robust information technology structure dedicated to logistics and finance.

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