Art of business: How a jewelry brand may become an element of creative economy in Azerbaijan

Fundamental changes that occurred in development of civilization in late 1990s - globalization and new economy (economy of knowledge) set conditions for emergence and development of the so-called "creative economy".

Especially notable is dynamic growth of creative economy in US, Australia, Great Britain, New Zealand and Hong Kong which is confirmed with findings of studies on mapping cultural and creative resources of these economies. Note that creative economy is based on the following sectors: Mass media, cinematography, music, entertainment software for games automats, computer games, scientific research etc. For example, in US these sectors employ substantial part of the country.

Due to development of the creative sector the new social class is emerging nowadays - creative class. Richard Florida (American economist - ed.) was the first one who used the term in his bestseller with the same title "Creative Class: People Who Change the Future". Florida specified the new class of employees engaged in the creative economy. They are people in advertisement, architecture, various arts: visual art, design, fashion, cinema, music, literature, publishing business, computer games and toys as well as radio and TV.  Florida also pointed out contribution to economy of scientists, actors, talented individuals with creative thinking and ability to generate innovative, non-standard ideas. They produce the highest added value in developed economies.

Thus, economic growth today depends on talented people. Along with it need in creative individuals proportionally increase along with investments in research.  For example, in US since 1950s investments in creative activities through R&D has been increasing. Volume of such investments in this area increased from USD 5 tln in 1953 to USD 250 tln in 2000!  Increased investments in research and development resulted in annual increase of issued patents.

And what is especially important: creative economy is based on inexhaustible source - human capital. It is an unexpendable resource which increasingly influences the economic process as well. It is a new paradigm based on unlimited resources of creative human potential and dismisses theory of limited good. Let's recall huge success of E-Bay company which became one of the richest companies in the world within a short period of time. Its success was based not on quantity and quality of human labour, capital or new technologies.  No, it was about distinctly different approach: capital was added to human resources based on existing technologies (i.e. no investments were made in new technologies).  The main success factor was creative idea of one of its creators.

Yet it does not mean that only creativity is enough today for production process. But it certainly means plans and ideas that are based on modern and mature technologies and accumulated knowledge base in society have no limits. Besides, there are broad social strata that can consume these new products.

Note that circulation of cultural and creative  industries products account for about US$1.3 tln. and its growth rate overtakes that in production and service sectors. Cultural tourism alone provides about 40% of revenues in the world tourism sector and has demonstrated sustainable growth for the last decade. For the last 10 years the world circulation of the creative products has more than doubled and reached US$624 bn. 

Along with economic benefits creative economy produces intangible assets and ensures sustainable human-oriented development.  The term "creative economy" also includes areas where innovators can freely present their products, get feedback and exchange ideas. It is ideas, not money or technologies that bring the biggest success today and, most importantly, personal satisfaction.

Besides, creative economy gives new life to production, services, trade and entertainment. It sets an environment where people want to live, work and study, think, invent and create.

And can business sector get along without creative economy when consumers cannot be attracted with simple and standard methods in our time of overwhelming information? Nowadays creative approach together with continued innovations quite effectively helps small but ambitious start-ups while some of them do not simply strive to take position on the market but create new or long-forgotten niches. In such cases creativity often finds large inspiration in cultural values.

A few years ago we described one such example.  Four years ago we met Rasmina Gurbatova,  a young business lady  who told us  about her dream to open a boutique shop to offer her own jewellery brand products and just two years later  she managed to fulfil that dream.  

Today Resm brand is known far beyond Azerbaijan and Rasmina herself is surprised about success of her business.

What is Resm and how was it possible to combine in one brand ornaments of world-known Azerbaijani carpets and traditions of the jewellery market which experiences certain "crisis of creativity" today?

Read it all in our article and interview with entrepreneur Rasmina Gurbatova.

What does statistic say?

Unfortunately, to date there have been no jewellery market research in Azerbaijan. Experts can only dream about statistics on the market trends. Situation with import-export data is a bit better. But these data are more of a general nature.

 For example, according to State Customs Committee  of Azerbaijan  in January-September 2016 Azerbaijan imported  non-organic chemicals, precious metals, rare metals, radioactive substances and isotopes of non-organic and organic compounds in the amount of US$64 mln  878.21 thsd or by 2.76% lower than in the same period of 2015 when it was US$66 mln 716.96 thsd.

 Export  of these products accounted for US$3 mln 340.35 thsd which is by 18.53% lower than for the 9 months of the last year (US$4mln 099.99 thsd).

In its turn, import of natural and cultivated pearls, precious and semi-precious stones, precious metals, metals and products covered with precious metals, bijouterie and coins accounted for US$23 mln 340.07 thsd. This is almost 4.35 times higher than for 9 months of 2015 (US$5 mln 367.4 thsd.) 

 Export  of these goods accounted for US$59 mln 854.36 thsd and decreased by 4.58% in relation to the same period of the last year (US$62 mln 727.91 thsd.)

According to some experts, such statistics is explained inter alia with reforms and increased control and transparency in customs in accordance with the head of state's instructions.

In order to understand niceties of the market our correspondents surveyed and monitored market participants, their findings show that jewellery market has relied on imports and domestic manufacturing for years has traditionally been confined to replication of foreign products.

Such situation is also stipulated with demand when consumers are used to foreign goods.

Complicated issue

Experienced jewellers are also sure about complexities that the bold will face when striving for creation and promotion of their own national jewellery brand.

For example, speaking to 1news.az correspondent, jeweller Rufat Aliyev  pointed out to "certain difficulties in development of domestic manufacturing and especially in promotion of national brand".

"The most difficult problem today is to purchase necessary technical equipment. It is constantly upgraded and its purchase is quite expensive.  

As a result, even if hypothetically a jeweller decides to start his own production of the new national brand, most likely it will be unjustified investment. If it could be possible a year ago, today due to change in foreign exchange rate and in consumption level it is unlikely", he believes.

According to the experienced jeweller, considering high cost of equipment, there is a risk that "it will simply not recover expenses" 

"As a result, in the best case equipment will stand idle even if there is certain number of regular customers. Which means, first, it will wear and tear. Secondly, it will be outdated in time as the market develops continuously.

Talking about professionals, they are many in Azerbaijan. Our jewellers cede only to Italians, that's my professional opinion", the agency's interlocutor noted.

Also Anar Babayev, manager of "Moscow" trade centre shared with 1news.az his view on the market situation.

"For many years our trade centre leases quite large premises for jewellery trade purposes. Within a couple of recent years we can note obvious decrease in activity.

According to our lessees, the reason is inevitable increase in cost of imported products which affects consumption ability. Also there is certain decrease in customers’ activity due to psychological reasons as many try to save money as much as possible and thus spend less. All this constrains market growth.

Nevertheless, there is no panic. Demand in jewellery products always exists considering traditional consumption in our society, the market just searches for natural balance", trade centre’s representative thinks.

Young brand's ambitions

"I do not rely on numbers in that context. Just after four years I suddenly realized that my past strong desire transformed into everyday work.

In my case, leaving a full-time job for creating own business was a real shock for my nears.  And I myself did not think that I would get so indulged when I started working on Resm. And now I understand that probably I did not have any other option.

But the bottom-line is that today after four years I keep working with the same drive that I had when started dealing with decorations which are distinct with national ornaments and patterns. And the main goal is promotion and popularization of our cultural heritage", Rasmina Gurbatova, founder of the national jewellery brand Resm tells 1news.az.

"Does drive remain the same because own business gives moral satisfaction and pleasure or because it has made profit?"

"For both reasons. But for me the main incentive is emotional pleasure from my doings. I am confident that everything you invest your emotions in will always make a return. Moreover, such attitude to work will result in moving towards new achievements and not vice versa. And more... I would not call it "100% business".

"What do you mean?"

"I never thought and do not think now that you should dedicate 100% of your time and effort to business, as they say. In time you start realizing that it is too much. You should not live to work even if you love it. Otherwise, you either become obsessed with work or die emotionally.

Today I regard Resm like I did at the beginning - as my favourite work, my child... Yes, it's business too. But... let me give an example.

Let's assume that at a certain moment I realize, if I work harder, I will quite quickly achieve an astonishing effect. But if I feel that I cannot make that breakthrough due to various reasons - lack of inspiration or something else, I will not do it. Because in my opinion it will not worth it in this case.

Of course, own business is always a responsibility not only for your own but also for its other participants. In this case I try to make the best choice. But I am human and can make various choices - right and wrong. The main point is that afterwards when analyzing the success you do not find out that you considerably lost emotionally.

I am for gradual and smooth development of our Resm"

"Have you ever wanted to give up during these four years?"

"I have. Emotions sometimes take over. In such case you have to wait and when you calm down rethink what happened and understand what actually you should do and what goals are your real ones.

"Many still believe that own business includes only two aspects: free time and big earnings. But you, as I understand, noted right at the beginning that self-employment is much more intensive. And how is it today? Have you managed to develop a schedule to be able to work and rest?"

"Of course, in time you learn more efficient time management. But working day still does not have fixed working hours. You just need to work on priority areas and to do that it is necessary to choose those priorities correctly. And, of course, there are tasks which involve not only you and then you have to abandon your own plans. But I think it's quite all right and correct.

I treated Resm as a business which will remain after me. It is trace that I will leave... Someone may believe it is too pathetic but this is my sincere attitude to what I do. I always wanted our decorations would live through generations. And it means that memory of me as its creator will live as well. This is something that rejoices me and makes me happy.

"Rasmina, I recall you spoke about your participation in the exhibition and your willingness to present Resm as an independent brand. Is there any success in this direction?"

"Recently, we have been at the international exhibition of jewellery and watches in Basle (Switzerland) where Resm was very much welcomed.  By the way, it was spontaneous decision to go to this exhibition, though preparation was very serious an labour-intensive.  We already have reached certain cooperation agreements.

Very recently we presented Resm at a cultural event Village d'Azerbaidjan in Paris. Along with my collection inspired with ornaments and historical monuments at the opening ceremony we also presented to Mehriban Aliyeva, the First Lady of Azerbaijan and guests the new collection "Map of Azerbaijan" which will be soon presented in Baku. Using this map we described each region of Azerbaijan to the guests and participants of the exhibition.  

"Two years ago you said that you want to create collection at more affordable prices for general public."

"Yes, I wanted that. During two years we worked to make high quality products at more affordable prices. And soon we will present outcomes of that golden mean to the general public. I just want to stick to the original goal which is to make really valuable products which will live through generations."

"You designed all brands in the collection. Where do you get new ideas?"

"In fact, they always come to my mind. They are endless, they can only transform. And I constantly struggle with my personal feature which sometimes impedes my work: to constantly improve what I already achieved."

"Rasmina, do you plan any other business project?"

"No, not yet. But I do want to deal more with social projects. We already implemented some earlier this summer. It was round of lectures which Resm gave with the Ministry of Culture and Tourism and the Baku Studio of Children's Art. I talked with children about history of national ornament and children also participated in a contest on this topic. I do like that experience and I intend to continue working in this direction. During years when I worked on the brand I acquired quite much knowledge which I want to share now. And this is in line with the main idea of the brand: to promote national culture and art."

"How do you assess current level of entrepreneurship in Azerbaijan? Do you agree with those who complain that today it is more difficult to live than it was in, let's say, 2000s?"

"It is difficult for me to compare as I was far from private business in 2000s but heard similar talks. I think, it's a matter of legislative developments in the country which bring new restrictions and procedures. And previously it was simpler to some extent due to lack of those procedures and the market was more free meaning that almost no niches were taken which certainly was good for business people. Nevertheless, to do business is quite realistic today. It's not easy but realistic."

"Rasmina, how do you assess situation in the jewellery sector of Azerbaijan today?"

"I am glad to see that after certain stagnation jewellery sector in Azerbaijan starts developing again. I think and do hope that soon development will be focused on quality and creativity. We have huge potential and need to implement it. 

Overall, Baku has always been famous for its jewellers. In Soviet era our Baku Jewellery Factory ranked the second in the country for quality and beauty of products, they were very popular. But they were not much diversified in terms of design, there were just a bit more than 10 product models. Nevertheless, they were popular. 

The main difference of jewellery market today is change in psychology of consumers. In the past we wanted to buy something others had because it was, first, expensive and, second, prestigious. 

Today consumers have different attitude - they want to have something unique, exclusive. Besides, and it's important, today an Azerbaijani consumer prefers domestic products and wants to get the jewellery and be proud of buying something manufactured in his independent country.   This makes me happy, of course, especially considering the fact that I had to encounter the first stereotype (the foreign product is the best one) when I was at the beginning of my business."

"What other difficulties did you have to face? Private jewellers always existed in Baku. But there was a factory which shut down due to certain reasons. These difficulties could not but have impact on the private sector."

"The factory shut down when the country collapsed. So, its closure did not influence my business specifically as I launched it much later. But overall situation on the jewellery market was certainly affected with the factory's shutdown. Because right after that large import of jewellery products was observed in the country. They were much better in quality than the local products and thus, imbalance emerged. Many did not sustain competition and quit jewellery manufacturing. some completely changed work profile, others started importing products and opened small boutiques. And the very few continued manufacturing independently, often manually. 

It should be noted that at the time new manufacturing technologies of jewellery products were actively introduced and utilized abroad.  But for us they were innovative. But gradually Azerbaijan imported equipment to manufacture products domestically. Of course, scale of manufacturing was much less than in Soviet era.

And new equipment almost fully excludes (apart from the last phase of work) manual labour work, everything is done on 3D printer.  On the one hand, it is good, as it makes jeweller’s work easier. But on the other hand, there are lots of cheap copies.  By the way, some of them are imported.  Consumers understood that and started looking for alternatives.

And only afterwards small individual domestic manufacturers emerged and started to advance just because they launched specialized work process like leading world jewellery brands do." 

"But manufacturing is not only about equipment. It is about human capacity, i.e. masters. And raw material.  Are there any problems with import of raw materials today?"

"Not with import.  There are no problems either with customs office, or with tax inspection. It is enough to know legislation and comply with all rules. Human capacity is a bit of an issue. We are behind foreign manufacturers in this regard as we do not have established manufacturing with clear specialization.

Therefore, we have either small manufacturing businesses where each employee fulfils a set of functions or small private jewellery shops where master and his apprentice work.   But I think this is about to change and manufacturing will expand. Because demand already exists for high quality domestically manufactured exclusive jewellery products."

"In one of articles about jewellery market I read that initial capital of USD10000 is needed to open private jewellery manufacturing business.  Is it really enough?"

"No, I think this is a very understated amount for manufacturing business.  But it is enough to open a small shop, for example."

"Rasmina, have you encountered forge of your products?"

"Yes, unfortunately. Though all our products are patented but a number of incidents of forge occurred. I realize it's a kind of recognition... but it hurts. Because we invest a lot of efforts, time, emotions in each product but then someone just copies it and does it bad. Because quality of forged products is far from the original ones. But we fight with that, of course."

"In the past you placed your manufacturing abroad. What about now?"

"Nowadays we involve local masters as well, so manufacturing exists domestically too. In Azerbaijan we currently manufacture major share of our products. We have many professionals, the bottom-line is to find such people and attract them."

Natalie Alexandrova

Photo: Lala Guliyeva

The article is produced in cooperation (or with support / or jointly) with EU-Eastern Partnership Culture and Creativity Programme

www.culturepartnership.eu 

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