South African jewellery exporter makes plans should AGOA falter
Luxury jewellery brand Pichulik is one of the thriving local companies at risk of losing preferential US market space if South Africa is excluded from the African Growth & Opportunity Act (AGOA) arrangement.
Billions of rand in trade with the US flows in South Africa’s direction under AGOA; it gives certain companies tariff-free access to the US market, and constitutes about 30% of total sales.
But because of this country’s [alleged] support for Russia in its invasion of Ukraine, it is in danger of losing these benefits. The Agoa arrangement is up for consideration again in 2025.
Tracey Chiappini-Young, joint CEO and commercial director of Pichulik, is already considering alternative markets in case Agoa goes or the US sanctions South African companies.
The potential setbacks come at the time when the business has doubled in size since before Covid. It was selected by media company Condé Nast as a brand partner for the opening of a new Atlantis Royal hotel in Dubai, when 2,500 of Pichulik’s signature “Between Us” Joy bracelets were bought for guests.
“To deliver that in a four-week turnaround was testament to effective supply chain management,” Chiappini-Young says.
The business was also a retail brand partner with LVMH for its Starboard cruises, and it’s been named by the fashion organisation Institut Français de la Mode in Paris one of the top emerging African design brands.
The company was started a decade ago by Katherine-Mary Pichulik, who is creative director and joint CEO. She and Chiappini-Young own the business and have restructured operations to ease supply and demand shocks and accelerate growth.
Part of that is a disciplined approach. Payment is upfront, in cash. The company does not accept 60-day post-delivery payment, even if it means turning away business, Pichulik says. In most cases, she says, customers have agreed to this.
“We’re a small South African boutique business. We’re not pretending to have the balance sheet and resources to play in a space we can’t operate in. The customers who want to work with the company respect that,” she says.
International retail partners now include the Brooklyn Museum in the US, the Royal Academy of Arts in the UK, the Tollman Group and LVMH. In Africa the company sells through lodge operator Singita and luxury safari company &Beyond.
When actress Jennifer Lopez was seen wearing the company’s Lua earrings it led to increased online sales in the US, says Pichulik. At home the firm will open a new V&A Waterfront store in August, and it recently launched its first “signature scent”, Obsidian.
When the pandemic hit, the company lost 90% of its revenue and had to make quick decisions that would normally have taken much longer. The business, which employs 22 people, did not retrench but began to focus on its online presence. Today half its sales are to overseas buyers. It has also been ruthless with stock management, culling merchandise lines from 250 to 80 and investing in only its top 30 products.
“We’ve significantly improved gross margins, cash flow generation and profitability,” says Chiappini-Young. “We survived, and then thrived.”
She says that with a small business that has no large balance sheet to support it, “you relentlessly sweat your asset base all the time”.
“It almost took going out of business to refine that thinking; it’s been remarkable to see.”
The business doubled annual revenues last year, and is looking at growing by 50% this year. Gross profit margins have also improved significantly. The company operates an online store and has a dedicated atelier just off Bree Street. It waited 18 months for its opening at the V&A Waterfront to get the right position and terms.
The business sells to Europe, but the US became its main market because it was tariff-free under Agoa. “In Europe each country has a different duty structure. It’s difficult to navigate. Our position may change [if South Africa loses Agoa preferences] and we’re looking at it; we need to have our ducks in a row.”
The company is set to launch at New York Fashion Week in September. “We’re watching this closely. We’ve still got fantastic demand coming from [the US],” says Chiappini-Young. “Our plan at this point is to go ahead. If we find that things get messy, we’ll have to redirect to Paris, which is very strong for us but more difficult to navigate.
“There’s such an extraordinary level of innovation and a lot of success stories coming out of South Africa.”
But as any business owner will remind you, a product or brand is nothing without a market.
Read related news articles
South Africa walks a tightrope on US relations
South Africa has been conducting a high-wire act in its relations with the United States (US). It is maintaining friendships with Washington’s enemies like Russia, Iran and China while trying to avoid disrupting its economic relations with America. Tensions came closer than ever to breaking point this month as the US House of Representatives’ Committee on Foreign Affairs passed the US-South Africa Bilateral Relations...
28 March 2024
Remarks by Deputy Treasury Secretary Adeyemo on the US-South Africa economic relationship
As Prepared for Delivery in Johannesburg, South Africa Thank you for the warm welcome. I want to express my gratitude to Consul General Spera and the American Chamber of Commerce for hosting me. I am honored to be joined today by South African Entrepreneurs that are building companies to unlock the economic potential of their country. I owe my own presence here today to the inspiration I drew from South Africa. In the middle of the...
13 March 2024
South African president Ramaphosa meets with US congressional delegation
South African President Cyril Ramaphosa today, 21 February 2024, received for a visit from a bipartisan congressional delegation from the United States of America, in Tuynhuys, Cape Town. The delegation is visiting South Africa at the invitation of the Aspen Institute. The President and the US congressional delegation discussed the importance of the relationship between South Africa and the US, which manifests in strong economic,...
21 February 2024
US congress receives Bill to review South Africa relations
A bill has been submitted to the United States congress calling for a full review of the country’s bilateral relationship with South Africa following the International Court of Justice ruling that found it plausible that Israel has committed acts of genocide against Gaza. The bipartisan bill which was introduced by US Republican congressman John James and Democratic Party congressman Jared Moskowitz this week could threaten South...
09 February 2024
Fitch research unit expects better AGOA deal for South Africa
Fitch’s research arm, BMI, believes SA has done enough to get improved trade terms under the African Growth & Opportunity Act (Agoa), which it expects to be extended and modified before its expiry in September 2025. But it warns that the deal might be stillborn if Donald Trump is elected US president. The research think-tank said in a note it assigns a 65% probability that Agoa will not only be renewed but modified to the benefit of...
09 January 2024
South Africa: BLSA CEO calls for more companies to leverage AGOA opportunities
Many more South African companies could benefit from the African Growth and Opportunity Act (AGOA), which gives eligible countries access to US markets free of tariff barriers, business organisation BusinessLeadership South Africa (BLSA) CEO Busi Mavuso writes in her weekly newsletter. Apart from mainstream formal sector businesses, there are opportunities to enable more entrepreneurs, including women-led...
20 November 2023
US ambassador: AGOA is an opportunity to deepen ties between the US and South Africa
President Joe Biden last December at the US-Africa Leaders Summit affirmed that the US will elevate its relationship with Africa. The future is Africa. One example is its youthful population: the median age on the continent is 19. By 2050, one in four people in the world will be in Africa. The US wants them to be healthy and wealthy. What happens in Africa will affect the rest of the globe — and we want to work together to ensure it is...
09 November 2023
US Senator Chris Coons proposes AGOA extension by 16 years, immediate review of SA’s AGOA eligibility
Powerful US Democratic Party Senator Chris Coons is circulating a discussion draft of a Bill to renew the African Growth and Opportunity Act (Agoa) for 16 years that would also require an immediate “out-of-cycle” review of South Africa’s eligibility for Agoa. That could lead to South Africa being removed next year from the programme, which has provided considerable benefits to SA exporters to the US of cars, fruits and wine, in...
07 November 2023
AGOA benefits extend beyond trade [incl. VIDEO of Friday's opening session]
Economies in Sub-Saharan countries stand to benefit far more from the African Growth and Opportunity Act (AGOA) than notable trade statistics, says President Cyril Ramaphosa. “AGOA enhances the diversification of African economies, enabling them to export value-added products. By enabling African countries to have preferential access to the US market, this opportunity incentivises African countries to develop and export value-added goods...
06 November 2023
South Africa pins its hopes on an early 2024 US Congress renewal of AGOA
South Africa’s government is hoping that the process to renew the African Growth and Opportunity Act (Agoa) by the US Congress will be concluded by early 2024, ensuring that more than 20 African countries continue to have duty-free access to the world’s largest economy. This is the first time that the South African government has given a timeline for when it hopes the US Congress might extend Agoa, which has been renewed twice...
05 November 2023
SA trade minister Patel expresses confidence at media briefing about South Africa’s continued inclusion in AGOA
Ahead of South Africa hosting the US-AfricaTrade and Economic Cooperation Forum – also called the AGOA Forum – from November 2 to 4, Trade, Industry and Competition Minister Ebrahim Patel on October 26 briefed the media on the state of readiness for the forum, expressing confidence that the South African government’s relations with the US were strong. Various South African stakeholders have been motivating for...
26 October 2023