The boom is over for Thailand’s gem and jewelry industry, which saw remarkable growth during the past ten years. The continuing recession, rising labor costs and increased competition from India and China are pushing the Thai industry into a new era – whether it wants to enter it or not.
“Now it is time to get to work,” commented one jewelry manufacturer in Thailand. “Only those who know what they are doing will survive.” Advanced technology and innovative design are the keys to that survival, according to most knowledgeable observers of the market.
The 11th Bangkok Gems and Jewelry Fair in March underscored this message. While preliminary estimates by the Department of Export Promotion (DEP), which sponsors the twice-yearly fair, put the number of buyers at 4,000-5,000, it seemed that their dollars were not spread among many of the exhibitors.
“The few large orders are going to a few large companies in Thailand,” commented one of the 360 exhibitors at the Bangkok show.
This is only the second year the DEP has held a fair in March and attendance is expected to rise next year, said Banphot Hongthong, deputy director general of the DEP. Currently there are 67 companies on a waiting list to exhibit at the two DEP fairs in March and September, he said.
Mr. Banphot added that he expects Thai gem and jewelry exports to increase by 15-20 percent this year from last year’s total of US$1.84 billion, but consented that Japanese buyers were scarce at the Bangkok show.
“We are worried about the Japanese market,” he said. “It’s very slow. Not many Japanese buyers turned up at this fair. We expect the second half of this year the Japanese market will get better.”
Adding to the squeeze are the increased number of trade shows around the world. “Maybe March is not a good time for a fair,” said Cher Tae, managing director of Worldwide Manufacturers. “We just finished Tokyo and Hong Kong is next. People just choose one.”
Ms Tae found some new Australian customers at the Bangkok fair who were interested in gold jewelry items below $300, but said there were few major US and Japanese buyers.
Jack Adulayavichitr of Royal Saim Mining & Manufacturing, agreed that most buyers were placing orders at other trade shows. “Nobody’s looking for anything here. It’s tightening of the belt time.”
“I think people already spent a lot of money in Tucson,” said Ruth Jennings, a US stone dealer. “The Europeans go to buy in Germany. The Americans are broke. The Japanese are bankrupt, they are waiting. Who’s left?”
Jerry Weiss, who markets Fior-Drissage 18k gold diamond jewelry, as well as selling a line of low-end gold jewelry set with semiprecious stones through his Bangkok office, Blue Diamonds Jewelry Worldwide, said Thailand is at a critical turning point. Not only does it face competition from the low-wage centers of India and China, it is also behind in the technology of Europe and the US.
“I used to have the gold frames for our Fior-Drissage line made in Thailand but I found that I could have it done in New York cheaper,” hw said. “The price of gold is less in the US and they’re using robotics and other technology that makes the labor cost minimal.”
His US distributor attended the Bangkok fair but saw nothing of interest and planned to go on to the gem and jewelry show in Bombay, Mr. Weiss added.
“The lack of novelty draws fewer and fewer people to Bangkok every year,” said David Karmeli, whose Bangkok company, Manhattan Jewelry, produces high-end gold jewelry.
“You look at the Thai industry overall and you see how much of it is controlled by ten companies doing innovative things we have fewer customers, improves the market and everybody benefits.”
The Thai industry is suffering from a lack of unity and direction, Me Kameli said. “The association here is extremely weak. There’s no promotion, no concept. It’s totally haphazard. At Inhorgenta the Thai companies had a shabby little exhibit and next to it was India’s, looking totally modern and up-to-date.”
Anuchit Methaseth of Nature Creation, a manufacturer and exporter of gold jewelry set with diamonds and precious stones, agreed that Thailand is at a turning point. “The jewelry industry in Thailand has to improve in terms of designs,” he said. “We can no longer copy and expect to survive. In terms of craftsmanship I think no one can beat Thailand for many years to come, but in terms of marketing we have a big problem.”
Mr. Anuchit is branching out into the domestic market, which still shows plenty of buying power, and adapting his exports lines for the shrinking budgets of Japan and US buyers.
“We do many things besides gold jewelry now.” As an example he showed a gold-plated silver bracelet set with 12 very dark blue sapphires which he called “black sapphires.” Between the sapphire links were one-quarter point diamonds set in textured, rhodium plating for maximum shine. “We call it illusion setting,” Mr. Anuchit said.
The bracelets sell foe just $30 each but are produced by the same craftsmen who make M e Anuchit’s high-end jewelry. They are ideal for television marketing companies which need to offer customers maximum flash for a minimum of cash.
“When the economy is down people go for this type of jewelry,” Mr. Anuchit said. “Even when the economy turns upside down the love of beautiful things does not go away. We just have to adapt to the requirements of the market.”
Several other jewelry manufacturers with low-end, creative merchandise were reporting good sales. Gem Impex, which offers unusual designs of silver and gold-plated jewelry set with a wide range of colored stones said it found new customers from Spain at the show.
Herve Guilloux, managing director of Les Creations d’Oraine in Bangkok, said he was “quite happy” with the fair. Mr. Guilloux offers a selection 18k gold enamel jewelry set with precious and semiprecious stones. He said that the people who stopped at the booth were serious buyers. Most of his production goes to the US, however, one of his biggest buyers is in Argentina.
Loose stone dealers reported generally flat sales for the show. Vinod Jain of Thai American Gems said the first day of the show was busy, however, by the second day it was falling short of expectations. Japanese buyers were interested in rubies, one carat and up, Koreans were interested in three to four carat emeralds and Americans continued to want cheap rubies and sapphires, he said.
David Berg said buyers were mostly interested in tanzanite. This demand may be caused by Tiffany’s recent marketing drive for the stone, he said. “Whatever Tiffany’s New York starts, the market follows.”
Scott Davies, marketing director of GPG Co Ltd, created some excitement with his Mexican sire opals. Besides the traditional faceted, bright orange Mexican fire opals he offered two to eight carat cabochon pieces which had the brilliance and play-of-color reminiscent of Australian black, opal – but at a far cheaper price, beginning at about $10 per carat.
In a large booth at the entrance to the show was a consolidation of some of the leading Thai gem dealers. Associated Gem Dealers (AGD) formed about two years ago as an off-shoot of the Thai Gem and Jewelry Traders Association. Seventy companies contributed the $1.5 million registered capital to start AGD.
This marks the first time AGD exhibited together at a fair, although it plans to continue to do so, said Vichian Veerasaksi, owner of Aquarius Gems and of ADG’s directors.
“We wanted to have a center for trading gems,” Mr. Vichian said. “We gather gems from the association members and we do the marketing for them. In the future if anybody wants to buy or sell we will put them in a computerized matchmaking program.”
AGD will also try to work out a system for importing rough with tax exemptions from the Thai government. “It’s not a profit-oriented company,” Mr. Vichian said. “What we’re doing is trying to improve the availability of rough and the market overall, so we’re hoping we can get assistance from the government.”