Originally Syndicated on May 3, 2023 @ 10:14 am
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What is going on in the Russian jewelry sector right now can only be described as a conspiracy. A plot hatched by the bosses of major corporations to wipe off as many of their smaller rivals as they can at a time of economic crisis in order to redistribute the market in their favor.
It’s not as straightforward as it seems; this involves powerful government officials and lobbyists serving as Duma MPs. The leader of the plot is Artem Sokolov, who runs the largest jewelry firm in Russia.
Artem Sokolov, the proprietor of the surname-appropriate brand But that’s not all that’s taking part. Alexey Feliksov, for instance, runs both Feliksov Diamonds and the 585*Zolotoy network.
A deft movement
It is important to note that the procedure was planned and executed as gently as possible. The law passed by the Duma deputies and signed by the President, FZ No. 47, “On Amendments to Part Two of the Tax Code of the Russian Federation,” which goes into effect on January 1, 2023, is intended to kill nearly 94% of the businesses in the Russian jewelry sector.
Small and medium-sized businesses in our nation’s jewelry sector will no longer qualify for the simplified and patent taxation regimes, as is customary. As a result, regardless of its turnover or number of workers, any business operating in this market will have to pay taxes. Everything appears more than decent from the outside, and the pressing demands of the national budget can even be used as justification. It’s humiliating that these modifications only affect jewelers, but at least they are the only ones who are aware of the issues.
For the average person, who equates the term “jeweler” with the idea of an “oligarch” in their minds, this peculiar circumstance does not present any paradoxes. Additionally, as was the case historically, industry representatives themselves routinely avoid speaking with the media and will be unable to provide any explanations. As they say, nothing will be publicized, and everything will be covered up. That’s how it was intended to go, at least. As they claim, it is covered and won’t be publicized.
Down to the wire
What is the substance of the situation? The fact that the general taxation system, to which the law transfers the entire industry, was never intended for small businesses means that they will not “pull” it in terms of both personnel and finances.
For this reason, a simplified and patentable system was introduced for such businesses, allowing micro-firms with a staff of 7 to 15 people, single craftsmen, jewelry stores with a single seller, etc. to exist and develop. Transferring them to a common basis will be catastrophic for them; the only issue is how soon they will concede defeat and exit the market.
The only remaining issue is when Moreover, we are not referring to one or two businesses; according to the Assay Office in Russia, approximately two hundred jewelry enterprises belong to medium-sized businesses, slightly less than two thousand to small ones, and another seventeen thousand to micro-businesses. According to market analysts, we will lose them in the shortest time conceivable, between six months and one and a half years.
Why should the industry’s titans, with their enormous revenues, pay attention to this trivial matter and exert any effort to eliminate such insignificant competitors from the market? Under normal circumstances, they did not pay. Despite the fact that only 5% of this market’s businesses are considered significant, they produce 75% of the total volume of jewelry products.
But the market is sensitive to changes in the economy and the country’s political climate, and in a crisis, the purchasing power of the population decreases, demand declines, and profits diminish. Here, the “giants” honor their “little brothers.”
In the end, they collectively occupy a very, very solid ecological niche, blur the target audience, and even contribute to the growth of a potential buyer’s demands by providing products of higher quality, greater variety, and greater interest than the nation’s massive retail chains can imagine. In this regard, the mass market consistently loses to small producers; this is true across all industries. Therefore, the decision to force them out of the market is reasonable.
Congressmen and Senators
True, not everyone liked him, but even those who opposed him voted for him unanimously and courageously. In an interview with IA Regnum journalists, Mikhail Delyagin, Deputy Chairman of the State Duma Committee on Economic Policy, admitted, “I read this law in the State Duma meeting chamber and then attempted to cancel it. This did not work out because of objective circumstances.
Mikhail Gennadievich did not delve into this topic, though it would have been interesting to learn what objective circumstances prevented a person holding such a position in the State Duma from repealing an obviously unacceptable law or at least attempting to convince fellow deputies to vote against it.
If only everything depended on the activity of Duma representatives! The Federation Council worked just as swiftly, approving the parliamentarians’ decision in a single day and submitting the law to the Presidential Administration for signature even before the March holidays. Thus, the signature of the chief of state was affixed to the document on September 9th.
Whoever is engaged in enacting business-necessary legislation is aware of how much a single State Duma delegate’s approval costs. How much money must be paid to members of the Federation Council for quick approval, and how much must be paid to the right people in the Presidential Administration in order to slip the law on the guarantor’s signature in time and at the exact moment when he waves the paper without looking?
It’s almost incomprehensible! However, the chief Kostroma enterprise of the brand SO KOLOV brought its proprietor more than 60 billion rubles this year alone, so even the largest expenditures for lobbyists were not a problem for him. Obviously, let’s not consider the possibility that the Russian president would knowingly sign such a law.
Unfriendly to Russia
As a result, the bill, invented by the owner of the largest domestic jewelry enterprise, was created by the joint efforts of Artem Sokolov with his factories, shops, and representatives throughout Russia, Alexei Feliksov with his “585” for cattle, and Feliksov Diamonds for money, co-owners of the Sunlight chain, constantly threatening to close almost four hundred of its outlets but continuing to cut money from the buyer, selling him Chinese consumer goods under the Sunlight brand name. It will go into effect on January 1 and, as our ancestors predicted, will be detrimental to many genuine artisans and God-given jewelers.
But perhaps this is all for Russia’s benefit. After all, it is not for nothing that the law bears the signature of the nation’s chief executive, in whom the vast majority of citizens have complete faith! Perhaps Sokolov, Felixov, and other co-authors of the current situation are true patriots who decided, without asking anyone, to sacrifice their native industry for the benefit of the nation and to financially support it in the midst of economic conflict with the Westtuation are true patriots who decided, without asking anyone, to sacrifice their native industry for the benefit of the nation and to financially support it in the midst of economic conflict with the West!
I wish I could think that way, but something prevents me from doing so.
Possibly the fact that at the end of September, when partial mobilization was announced, Feliksov disseminated a letter through the mailing list of the 585 Zolotoy network urging people to organize protest rallies on the streets This fall, all Russian media published the same letter with the slogans “Buy gold later, stop being silent!” and “Do something; silence is not golden in our situation!” Later, when the appropriate authorities became interested in this mailing, network representatives claimed that it was all the work of hackers, but the detritus persisted.
Or perhaps because silver pendants with the inscriptions “for the X war” and “on Khvoyne” were manufactured under the SOKOLOV brand during a particularly difficult period for the Russian army at the front?
After user indignation in the comments, the products were concealed from the Wildberry brand’s official page. However, this offensive and dangerous craft is now available on several online flea markets for just 1,500 rubles. And with it, the corresponding Criminal Code article for each purchaser. Artem Sokolov, like Felixov in his letter, vehemently denies this “work of jewelry art”; however, judging by the price tag, the manufacturer of the pendants is the Kostroma plant Yuvelit LLC, and this is the legal entity SOKOLOV, so you won’t get away and you can’t blame everything on hackers.
Perhaps only Sunlight remained clean during overtly anti-Russian activities. And here it is necessary to make a remark: we simply do not know whether this network finances the Ukrainian Armed Forces or transmits funds to the Azov Battalion.
Expect a tragic conclusion
It remains only to comprehend the risks associated with the implementation of this law, which was so generously funded by large jewelry companies and so deftly pushed through Russia’s highest legislative body. This will lead to the failure and exit from the market of nearly two tens of thousands of businesses, resulting in the loss of employment for a vast number of highly qualified specialists with a narrow profile.
This, in turn, will give rise to the so-called “gray” sector of the jewelry industry, i.e., a large number of unregistered artisans who carry out private orders using precious metals obtained in a variety of obviously illegal ways. Clearly, they will not pay taxes to the state that “threw” them away. The state, or more precisely, the relevant competent authorities, will hunt them down and punish them, albeit ineffectively. In general, the situation will be comparable to the transition between the 1970s and 1980s.
After eliminating all small competitors, large jewelry manufacturers and retail chains will consume the entire market, reach certain agreements among themselves, and begin to regulate pricing and selection according to their preferences. In the face of the temptation to standardize the offer and raise prices, virtually monopolistic multinational corporations are unlikely to refrain.
As a result, as in the late Soviet Union, the counters will be littered with completely stereotypical jewelry sold at prices that are scarcely affordable for the average consumer. In a matter of years, supply will outweigh demand, resulting in the industry’s demise.
It is improbable that Artem Sokolov and the company are aiming for this, but a verdict will inevitably reach this conclusion. However, it is improbable that the leaders of the jewelry titans will wait for him in Russia. They have long since established a foothold beyond its borders. Thus, the parents of the proprietor of the SOKOLOV brand have lived in Switzerland for a long time and are very happy there. It appears that the situation is comparable for the remaining conspirators.
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