Manufacturers look overseas for buyers
May 15, 2008
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| U.S. manufacturers, including Gumuchian, are looking overseas for customers. Here, the brand's "Eiffel Tower" ring in platinum features a 6.25-carat mandarin garnet and 1.33 carats of diamonds; suggested retail price is $13,000. |
By Joseph Dobrian
New York—As the dollar continues to weaken against foreign currencies—and as
U.S. retailers find it harder to pay their bills—some American manufacturers are looking for new business overseas.
Manufacturers contacted recently by
National Jeweler agree that for the most part, selling to European and Asian markets is just as safe as doing business here, and sometimes less complicated, although high tariffs and other obstacles still cut into profits.
One newcomer to overseas buyers this year is New York-based manufacturer Gumuchian.
"The weakness of our dollar, or the strength of the euro, have made our prices interesting to overseas buyers," co-owner
Myriam Gumuchian says. "We would love to get into the Russian market. We'll also target England, Spain, the Middle East and various Asian countries."
She expects high-end, fashionable jewelers will be interested in Gumuchian's fashion pieces, perhaps even more so than its U.S. clients.
"My international designer friends tell me that you can get a deposit from overseas accounts, and prior payment—which is more than you usually get in the U.S.," Gumuchian says. "Moreover, overseas buyers don't usually ask to return or exchange merchandise if it doesn't sell. That's not part of their mentality."
Chuck Lein, president and chief operating officer of Stuller, says the Lafayette, La.-based company typically ships to more than 40 countries per month, but the overseas business is only a modest part of its overall sales.
"We still have significant tariff issues in many countries," Lein says. "If you play by the rules, your merchandise will be subject to duties, and unfortunately for American manufacturers, it's usually a one-way street. We've granted duty-free status to many countries, and in return, they've stopped U.S.-made jewelry from entering their country. If you can select a country where there's not an adverse tariff issue, though, there are opportunities today that might not have existed before, because of the weaker dollar, and certainly—for that same reason—retailers in any U.S. city will have an increased opportunity to sell to foreign visitors."
Lein says receiving payments from overseas is surer than doing business stateside. Stuller doesn't extend credit, but does take credit cards.
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| Gumuchian hopes to draw foreign customers with pieces such as these 18-karat white gold and diamond "Twinset" hoops; suggested retail is $27,000. |
"When we source products, it's usually on a wire transfer basis, and when we sell overseas, it's case-by-case," he says. "For a large client with a niche market, we might make an exception, but generally you don't want to have to swim across the ocean to get your money. Another nice thing about doing business by credit card is that it neutralizes the currency issue."
Curt Ley, interim chief executive officer of
Manufacturing Jewelers and Suppliers of America, based in Providence, R.I., says that the favorable exchange rate on the dollar is the most logical explanation for the increases in overseas buyers. But even with a comparatively weak dollar, labor is still shifting to the Far East or the Caribbean because of the cheaper labor, he adds.
"A lot of manufacturing is flying off to China, and this sets off a whole new set of dynamics because we can't easily sell our product over there," Ley says. "With commodity products, such as chains, beads, findings and parts, you'll find less of a move to overseas labor because it's more capital-intensive, and I'm not surprised that foreign buyers would buy product here. I've been selling findings all over the world."
There's a higher risk when dealing overseas, and some banks will insist that your receivables be insured if they're backing you, Ley adds.
"The European market is pretty well-established, though, so if you're dealing with a large player in the European market, you don't have much to worry about," Ley says. "The developing countries are another story."
Steven Mazza, co-owner of The Mazza Co. in Baldwin, N.Y., confirms that his own foreign accounts—mainly in Mexico and the Caribbean—often pay more surely than his domestic clients.
"Credit is not an issue in those markets, whereas in the U.S., it's a big issue now," Mazza says. "Some domestic retailers are having trouble paying their bills from Christmas. As a result, we're tightening credit, especially with new accounts. We're more strict about getting everything signed and making sure all the documents are in order, and instead of giving 30/60/90 [day] terms, we might only allow 30/60."
—E-mail: jdobrian@aol.com
Editor's note: This story first appeared in the May 1, 2008 issue of
National Jeweler.
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