'Manufacturing 70% of our jewellery will reduce costs'

Dubai: Haji Abdul Razzak Yaqoob, chairman of the ARY Group, is a prominent Pakistani businessman based in Dubai. The ARY Group's business interests in the UAE span the gold, property and media sectors.

ARY is investing Dh400 million in a jewellery complex in the Dubai Multi Commodities Centre that will house refining, retail and manufacturing facilities. With this new facility, ARY expects to boost its jewellery production capacity by 10 times.

Yaqoob was born in 1944 in Surat in the western Indian state of Gujarat. He migrated to Karachi in 1946 and became involved in the family's business there.

One of Yaqoob's major achievements as a teenager was to start a gold refining facility in Karachi. He describes it as the "first official bullion refinery" in Pakistan in those days.

Two of his five daughters are now involved in running the ARY Group, representing the third generation of a family-owned gold business.

Yaqoob has lived in Dubai for about 40 years, in which time he has built a multi-billion-dirham gold and jewellery business.

In an exclusive interview, Yaqoob talks about Dubai's jewellery market and his company's plans to keep pace with the city's growth.

Gulf News: How do you view the current volatile conditions in the gold market?

Haji Abdul Razzak Yaqoob: Today the market is on a roller-coaster. Speculation has driven gold prices high. It has affected consumer confidence and jewellery sales badly. We have almost stopped bullion trading because there is too much price fluctuation and no profit. These conditions in the gold market are going to continue as long as the global [economic] climate does not improve.

The UAE is growing as a tourist destination. Do you plan to expand your business to keep up with this change?

We are opening new showrooms to increase our presence. The change is not only that there are more people who want to buy jewellery but also there is demand for different types of products. Consumer taste for designs has also changed. There is now more demand for high-end jewellery. We are increasing the range of products that we manufacture.

How has the local market evolved over the years?

Today's market is unbelievably different form the old days. You would not have received any customers if gold prices had increased by $100 [in a short period] in the past. Now people still come to buy despite these big price fluctuations. There is a generational change in buying habits of people. Traditional buying is still there, but younger people [from Asia and Gulf] also buy 18-carat jewellery.

With gold and diamond trading exchanges being established, there is a new level of sophistication in the precious commodities trade in Dubai. Did you foresee such changes?

I could see Dubai becoming a world hub for gold trading. It is in my habit to go with the change. We are establishing ARY Aurum Plus [new gold trade hub] to cater to the modern market. It will have the complete manufacturing process. I was pushing for jewellery-making in Dubai [in the past], and when people were telling me it would not work. Dubai's jewellery business will continue to see strong growth if current economic conditions continue and government keeps up its [current level of] support. In the near future, we will increase our production in a big way.

What is your production capacity at the new factory?

At the moment, our manufacturing is no more than 10 per cent of what we sell. Our target is to produce 70 per cent ourselves. We have still not finalised our business plan for Aurum Plus, but we are talking about several tonnes of jewellery at this factory. By increasing manufacturing, we will be able to offer jewellery at more competitive prices.

There will be cost savings because the whole process is concentrated in one place. The factory will have about 500 employees. Our investment in the new factory is about Dh400 million. We are focused on the UAE market and we will make all types of jewellery in demand here. This will cater to consumer tastes of at least 10 to 15 countries. With the new facility, we also want to become one of the largest exporters of jewellery in Dubai. The target is to export at least 50 per cent production of Aurum.

What are your expansion plans?

We have jewellery showrooms in the UAE and Pakistan. We aim to expand our business to the US, Britain and some countries in Europe. In the UAE we will open four to five new showrooms in the coming years. We are not just focused on retail so the number of showrooms is not important. There is no expansion planned in the GCC at the moment.

Dubai's character as a city has changed drastically over the years. There are new attractive areas of business. You have ventured into the property sector. Are there any more sectors you are exploring?

These changes in Dubai have benefitted every sector. I have not gone too fast in the property sector. We are developing that business slowly. We do not jump from one project to another. One should develop a property that will make both buyers and tenants happy. We are focused on the ARY Business Avenue project in Karama. It is a Dh100-million project. It should be ready next year. We have another commercial property project in Jumeirah. But our main focus is still on the gold and jewellery business.

Do you feel any pressure from the rising cost of doing business in Dubai?

Inflation is a major issue. You cannot do proper business planning if you do not how much your rents are going to increase tomorrow. In our projects, both in Karama and Aurum Plus, we have decided to keep rents fixed for at least 10 years. This will be helpful for new businesses to grow. This will be our solution to relieve pressure on our tenants.