Crafts, the Scalability Dilemma
The Riddle of a Chinese Merchant in Isfahan

More than half a century ago, two American economists proved that the rising cost of art was the byproduct of what they called the "cost disease." In other words, the lower capacity of the arts to exploit technology leads to lower productivity; furthermore, because those involved have to use more workforce and face rising wages, the cost of producing a work of art increases. With an increase in the price of a product or service comes a decrease in its demand, and accordingly artists’ businesses earn less out of selling their products.
One of the most crucial features of handicrafts, shared with other creative industries, is the rather high fixed cost and the low marginal cost. In other words, the production of the "first" product is expensive; however, it costs considerably lower to produce another one of the same product. Therefore, the profit margin in such industries is high, and that is why the more products artisans produce and sell, the higher their profit margin will be. So, it makes sense for artisans to make their businesses scalable.
At first glance, through modification of the cost disease and applying technology, crafts will be closer to the industry and have higher capacity for production when compared to other creative industries; therefore, we may think that craft businesses have the comparative advantage of becoming scalable and growing faster than other businesses because of the lower marginal cost. But, is this feasible?
Since crafts are still dependent on artisans personal work trying to maintain the “artistic” aspect in many cases, they suffer from the cost disease to some extent. Moreover, if we define scalability as an increase the number of customers, more profitability without increasing capital, and a small increase in the cost/profit ratio, and consider the field experience as well, then we can conclude that Iranian craft businesses have not been able to become scalable because if they scale up, the additional costs and the use of more artisans will limit their profit. This is why craft businesses have found their own reasonable scale through trial and error and do not scale up.

An Isfahani artist says around seven years ago, an Iranian-Chinese businessman wanted to buy nine hundred thousand pieces of a Khatam artwork at its retail market price, but none of the craftspeople accepted his order, because they could not provide the sufficient human resources around, even if they could, their production cost would even go beyond the total contract price. In other words, higher production would lead to higher expenses rather than higher profit. This shows that the scalability of crafts is more difficult than it seems at first glance.

Hamidreza Sheshjavani,
Cultural Economist and Director of CACIMA, Center for Cultural and Creative Industries

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Creating New Value Propositions and Adjusting the Existing Ones
Approaches for the Admission of Handicrafts into Global Markets

About thirteen years ago, my brother and I came to China with our families. First for further education, then for business and life. One of our biggest concerns has always been defining Iranian identity for ourselves and our families, and introducing it to friends and Chinese society. Most of our time and volume activities during these thirteen years have been related to handicrafts, carpets, and other Iranian cultural products, and a large part of our credibility and identity among artists or Chinese society is related to these issues. But handicrafts and carpets are still a small part of our company's revenue. That is why I have to ask myself questions that we might have to ask ourselves before entering any business.
What products are suitable for the global handicraft market? Does welcoming foreign tourists to local handicraft markets in Iran mean welcoming the same products in foreign markets? What is the way to adapt a handicraft to enter global markets, and turn it into a big business? Our years of experience in the Chinese market have clearly shown us that there are many obstacles to selling any country's handicrafts in new markets, and I will mention only one important point here, and that is recognizing values. Audiences buy goods based on their values. These values include a very wide range of functional values, aesthetic values, symbolic values, and etc. The industrial designers’ job is to identify the values desired by the audience and create those values in new products.
For example, by considering the audiences’ lifestyle , we will find what this audience requires or desires as functions of a product and provide appropriate answers to those needs. Responding to the functional requirements of products may not seem so complicated, but correct identification of the requirements needs a great deal of knowledge and experience. For example, the value of a handicraft product for a tourist who eagerly buys it when visiting a tourist destination is more of a symbolic value, and a reminder of the joys and memories of the trip.
Just as we may bring a piece of rock as a memento when climbing a high peak, while in everyday life we never notice such boulders on the side of the road. handicrafts Customers also do not see such a performance for imported handicrafts in their country's market, so they pay more attention to goods with certain functions for them. Products with a purely ornamental or so-called decorative function will have less chance of attracting customers' attention.

On the other hand, designing handicraft products requires a different approach in designing new products and artifacts. All the components of a handicraft product, including materials, manufacturing methods, form and shape, and details and decorations, all have their own symbolic values and identity the violation of which can change the identity of the product. In this situation, in addition to creating new values, the common values in the cultures of origin and destination must be sought among the products.

Different societies have common and non-common values, and entering the market of any country requires accurate identification of the destination market values, and finding common points between the countries of origin and destination. For example, the rich and ancient Iranian culture has common points with neighboring countries and Muslim countries (such as calligraphy or religious beliefs), and also has common points with ancient countries such as China and Japan (including common myths or historical ties). Choosing the products that are most in line with the target market values increases their chances of success.

Collaboration of industrial designers with handicraft artists and craftsmen, in order to find common values on the one hand, and create new functional values in handicraft products on the other hand, can create very positive results. On the one hand, it provides an endless source of inspiration and infinite treasure of valuable traditional patterns for industrial designers, and on the other hand, it leads to the creation of products that are more practical, best-selling, and compatible to the needs of the target community, for artists and craftsmen. I hope we can address this issue with more precise elaboration later.

Dr. Majid Shamaeizadeh, Co-founder Of Gemini Global And Persian Treasure Brand