The growing affluence Thai consumers combined with increased competition for jewelry exports is causing some major jewelry manufacturers in Thailand to consider the local market more seriously.

            The growing respect for local buying power inspired the Thai Gem and Jewelry Traders Association in February to hold Jewel Fest, Bangkok’s first large-scale jewelry fair for local consumers, featuring 100 exporters and local jewelers. About 15,000 shoppers visited the fair and exhibitors reported an average of B1 million (US$40,000) each in sales.

            Gold Master, an offshoot of the export company Gem Tech, was the first major manufacturers to launch a line of jewelry aimed specifically at the local market. The branded line of chuk kam, or 99 percent pure gold jewelry, retails for about US $25 per gram, or $200-$2,500 per piece. Since its modest beginning with two concessionary booths within major Bangkok department stores in late 1991, Gold Master has expanded rapidly. It now operates 10 outlets in Bangkok and has awarded franchises in Taiwan and Hong Kong to cash in on other lucrative Asian markets.

            The phenomenal success of the Gold Master’s 22k gold jewelry – which is heavily marketed through a program jointly sponsored by the World Gold Council – prompted one of Thailand’s largest jewelry exporters, Pranda Jewelry, to launch its own line of 22k gold jewelry, marketed under the brand name Prima Gold.

            An advertising budget of $1.2 million has been set for 1993 and Prida Tiasuwan, president of Pranda, predicted sales for the Prima Gold line to reach $12 million in its first year.

            Nature Creation, another jewelry manufacturer and exporter, also plans to introduce a line of 22k gold jewelry for the local market. “During the Chinese New Year each gold store in Chinatown was selling B30 million (US$1.2 million) worth of gold jewelry per day,” said Anuchit Medhaseth of Nature Creation. “It’s incredible. Thais have a tradition – when they have money they buy gold. That’s why gold always sells.”

            Mr. Anuchit plans to introduce a branded gold jewelry line based on a braided or woven look, backed by a marketing program similar to Gold Master and Prima Gold.

            “The face of Bangkok is changing,” Mr. Anuchit commented. “New buildings are coming up everywhere. The lifestyles are changing and the feeling is western. People have less time. We have to do marketing in a new way. Before you couldn’t sell jewelry through the mail here. Now you can.”

            Nature Creation also formed a joint venture to open a retail shop specializing in gold and diamond jewelry in Bangkok’s upscale World Trade Center. “A lot of exporters are going domestic,” Mr. Anuchit said. “The locals have money. If they want something they just buy it. They will order a five carat or ten carat ruby ring. They will pay in advance and say, okay, when you finish bring it to us.”

            Meanwhile, retailers of traditional chuk kam jewelry in Bangkok’s Chinatown are taking note of the success of branded gold jewelry focused on design. Akara Savasaetakul, managing director of Shianghai Goldsmithm operates a traditional gold shop in Chinatown, as well as shops featuring more modern gold designs in the World Trade Center, Dusit Thani Hotel and Oriental Plaza.

            Consumers of his modern gold designs are typically about 30 years old and have a high salary or run their own businesses, while buyers of his traditional gold jewelry are students and factory and office workers.

            Vichai Saengcharoentrakul, managing director of Toa Kan Goldsmith&Jewelry in Chinatown, said he also plans to develop a branded line of 22k gold jewelry and expand his sales through advertising.

            While some of the Chinatown shops have complained that Thailand’s new seven percent added tax dampened their sales, others counter that VAT had little impact since gold sales remained fairly stable in spite of a sluggish economy.

            The local consumption of gold bullion fell by 10 percent from 95 tons in 1991 to 87 tons in 1992, however official gold jewelry sales remained stable at 81 tons, Pongpan Pongsiribanyat, managing director of the Thailand office of the World Gold Council, projects a ten percent growth in Thailand’s gold jewelry consumption for 1993.

            Samai Tocharoen of Neuf Bijoux, who primarily exports his gold and silver jewelry designs, decided to open a retail shop at Thaniya Plaza mainly for logistic reasons.

            “My factory is on the outskirts of Bangkok and sometimes it’s not convenient for foreign buyers to meet me there because of the traffic,” Mr. Samai explained. “I had to open an office in the heart of town so I decided it should double as a retail shop.”

            He has since created some designs exclusively for the local market, including a line of 22k gold rings priced at about US$200 each. “At first we were a high-end shop but now we are adjusting the designs for younger people. Items priced between B5,000-B10,000 (US$200-400) are easy to sell to office workers.”

          Locals like diamonds, Mr. Samai said. “If a jewelry piece is set with a diamond it has to be a good diamond.”

            Some retailers of diamond jewelry are making inroads in the local market with the help of De Beers’ promotional campaigns geared specifically to Asians.

            “It’s an exciting time our here for us,” said Jonathon Pudney, De Beers market comptroller for Australia and Southeast Asia. “Thailand is now in a position where it’s starting to be innovative in design, instead of just copying.”

            De Beers’ surveys of the Thai market show that the key motivation for buying a diamond is the beauty of the stone. “For Thais, the diamond has a sparkle and a mystique that even gold can’t replicate,” Mr. Pudney said. “Whereas in Hong Kong and Taiwan, they cited more solid reasons for buying diamonds – that there were rare and the hardest stone.”

            About 44 percent of Thailand’s population is below 25 years of age, making it an ideal market for diamond wedding and anniversary rings, Mr. Pudney said. “We have identified Thailand as a country with strong potential, not just in the short term, but the long term. We’re not trying to get year-on-year huge growth levels but a strong pattern which will continue to go upwards.”

            De Beers has an umbrella “image” campaign of print and TV advertisements featuring shadow figures wearing diamond jewelry, which it will launch in Thailand in September. In addition, it will launch advertisements in July featuring Asian models promoting the romance of diamond wedding and anniversary rings.

            Local retailers can use their logos with the generic commercials produced by De Beers. “It costs B1 million (US$40,000) to produce a one minute commercial for TV, and B650,000 ($26,000) for a 15 second promotion,” said Yuthapong Kittiwongpaibul, manager of the De Beers Diamond Promotion Service in Bangkok.

            By applying their logo to commercials prepared by De Beers, the retailer saves the production costs any pays only the air time. Last year, three retailers, Jubilee, 99 Carat Creation and Gemsmond, participated in the De Beers television campaign.

            “They were pleased with the response,” Mr. Yuthapong said. “They didn’t expect sales to increase dramatically but they became much better known. TV is the most effective advertising medium because it reaches many more people. Even the most well-read magazines get at the most one million people but with a TV commercial you can hit five million easily.”