Costume jewelry manufacturers have long stood in the shadows of their bigger brethren—Thailand’s jewelry, colored stone and diamond manufacturing industries, which are all among the world leaders.
Currently, the world market for costume jewelry is estimated at $2.5 to $3 billion per year. With Thailand’s level of exports having leveled over the past two years at about $70 million per year, that means that the country currently controls only about three percent or less of the world market.
Though the industry’s diminutive size should mean that there is plenty of room to expand, the dreams of most costume jewelry manufacturers are not too grandiose. Says Chanarong Wanasethi, managing director of costume jewelry manufacturer Angel Ace and president of the country’s Costume Jewelry Association: “This industry has a good future—of a small to medium size. You cannot become a billionaire from being in this business, because it’s more or less handicrafts.”
Thailand’s traditional artistry and jewelry craftsmanship have given it a small, but comfortable niche in the world market—one that Chanarong feels is likely to expand slightly, but won’t ever boom as the local silver market did in the late 1980s and early 90s.
Like the rest of the gem and jewelry industry, costume and fashion jewelry producers have been suffering the effects of recession in primary markets over the past two years. One of the problem spots is France, Thailand’s second-largest market for costume jewelry, where exports have plummeted more than Bt100 million ($4 million) over the past two years.
Since reaching a high point of Bt1.764 billion ($70 million) in 1992, exports dipped in 1993 and rose only slightly in 1994. For 1995, however, Department of Business Economics statistics project a six percent rise from last year’s Bt1.748 billion in exports to Bt1.85 billion ($74 million). “This is a real recession,” says Chanarong. “But everyone’s still here, they still survive. But maybe they’re not as happy as they were in the past. Maybe they eat less.”
While the industry has managed to survive the recession fairly well, whether the recession has ended is a matter of some debate.
Some say there is recovery on the horizon, like Chantra Chantrasaekoo, a buyer for Westown, which supplies costume jewelry to department stores in both the United States and Canada.
“Orders are definitely up,” says Chantra. “Demand in the US market is high for rings and necklaces and bangles.
But others are getting tired of waiting for the market to bounce back. In fact, they’re not even sure that it will.
“This year, nothing is hot,” says Thanate Sangwan of Teera Luck, a local manufacturer. “It’s very slow. Even the department stores haven’t ordered that much this year.”
Teera Luck is one of the pioneers of the costume jewelry industry in Thailand, having been located in the gem district’s Soi Pramote for 22 years. The company specializes in seashell and fresh-water shell jewelry, which it sells for prices ranging from 35 cents to $5.
According to Thanate, Teera Luck is currently considering abandoning the low-end costume jewelry market and moving exclusively into silver and gold jewelry.
J. Sam, export manager of costume jewelry and silver manufacturer Dang Fashion, agrees with Thanate’s assessment of the market.
“For the past two years, it’s been slow,” says Sam. “Customers whop used to order 1,000 pieces now order 500 pieces.”
However, instead of getting out of the business, Dang Fashion has attempted to deal with the tough conditions by improving its selection of product.
“We try to develop more new designs,” he says. “Even if the economy slows down, this new line can make more sales.”
Each month, Dang Fashion’s two-person design team comes up with 30 new designs. “We have simple designs, but they’re unique,” says Sam.
Far from closing up shop, Dang Fashion is currently looking to expand its workforce. The company now employs 60 people in its fashion jewelry factory, and plans to increase production beyond its current level of 50,000 pieces per month.
Costume jewelry exports
(in millions of baht)
Countries 1990 1991 1992 1993 1994 1995
United States 437.50 527.40 630.00 615.40 671.20
France 355.40 323.60 382.20 345.10 280.90
United Kingdom 102.40 95.20 141.40 86.30 120.10
Japan 22.10 31.60 47.20 72.50 73.10
Belgium 90.00 60.50 113.90 100.60 72.40
Germany 80.00 71.10 62.30 77.00 71.40
Australia 55.20 56.20 80.20 61.00 67.90
Saudi Arabia 22.40 40.50 44.20 42.50 43.50
Singapore 22.50 19.40 27.70 33.60 37.50
Malaysia 5.00 5.00 10.50 18.90 37.00
Hong Kong 11.60 14.60 14.00 30.60 28.90
Netherlands 28.70 37.10 33.40 27.50 23.90
Spain 32.80 10.70 28.50 35.90 23.20
Switzerland 15.30 9.90 12.90 19.70 19.90
Italy 15.20 14.00 14.60 11.40 16.70
Others 108.30 126.20 121.00 135.40 152.70
Total 1,404.90 1,443.60 1,764.70 1,714.00 1,748.00 1,850.00
Though the local industry’s current diminutive size should mean that there is plenty of potential to expand, one inhibiting factor is the strength of the competition. Chanarong concedes that Thailand has probably entered the game too late to compete seriously with industry giants like Hong Kong, Taiwan and Korea.
In fact, Chanarong’s not even sure they should try to compete.
“In competing, we should know what we are good at,” he says. “We should select the battlefield, and also the enemy.” He continues with a boxing analogy: “I may be good in the flyweight, but that doesn’t mean I should challenge Mike Tyson.”
Over the past five years, china has invested heavily in the costume jewelry manufacturing sector. After a few lean years at the beginning, the country is now regarded as a major challenger to Thailand’s tenuous position in the costume jewelry market. China’s emergence has put Thailand in a difficult spot: most manufacturers are unwilling to put up the cash to match the investment in machinery already made by competitors in Hong Kong, Taiwan and Korea, and they are unable to compete against the low wages and sheer numbers of the workforce in China.
However, many local manufacturers say they are not ready to abandon the fight just yet.
“The Chinese are competitive about the costs—but how about the looks?” says Adul Smanyaphirak, managing director of high-end manufacturer Maricar.
“For the basic items, we can’t compete with the Chinese,” says Vilai Patana of Crystaline, the costume jewelry division of local giant Pranda Jewelry. “But we still have an advantage in the looks and the quality of our casting.”
Still, with experience, china is gaining ground and companies which struggled at the outset are now making both profits and increasingly improved products.
“Now, the real war starts,” says Chanarong.
According to a few local manufacturers, it’s a war that Thailand might lose.
“Chinese people, they work very hard,” says Sam of Dang Fashion. “It’s not like the Thai style. [They have] more hard work, more strength. If China makes everything perfectly, then we have to make merchandise which is high-end, super high-end.”
Eventually, Sam feels, Thailand will be forced up against a ceiling where most manufacturers can no longer make costume jewelry inexpensively enough to entice regular purchases from the critical market of European and American women.
In Sam’s opinion, Thailand’s status as a major exporter of costume jewelry will last, “maximum, not more than 10 years.”
At that time, says Sam, Dang Fashion will have to look to other markets—namely, the home market. He says, “If the standard of living in Thailand continues to improve, maybe we can make some kind of franchise store of distribute in the local market.”
To avoid this fate, Thai manufacturers of costume jewelry have their work cut out for them.
“You have to take it real serious to survive,” says Narong Sutawasin, managing director of True Creation. “You have to work hard at improving quality at the same time as reducing costs.”
Says Chantra of Westown, “Right now, it is not enough. I think [the Thai industry] has to work on lowering the is prices, creating good products, and finishing and polishing. Really, everything.”
While they can’t change everything, local companies—along with the Costume Jewelry Association—are working on rectifying some of the most pressing problems.
To reduce costs, some companies are pulling up stakes and moving to the less-expensive provincial areas. At True Creations, Narong has started to train upcountry people to work on molds. He will continue to do casting and setting in Bangkok, due to the availability of experienced, highly-skilled labor. Dang Fashion is also using contract workers in other regions of Thailand, but has no plans to move its production center out of the city yet.
Another important cost-cutting factor was the government’s decision last October to reduce duties on imports of materials and parts for costume jewelry production.
In an effort to increase quality, the industry is making moves to expand the base of trained workers by creating new educational programs.
The Costume Jewelry Association recently helped establish a costume jewelry division in the jewelry studies program at Sri Nakarin Wirote University in Bangkok. The program will begin its fourth year in November, and the first group of graduates will be set to enter the job market in March.
“These people are new blood for the industry,” says Chanarong.
Despite the concerted effort to improve the quality of their products, other companies regard the low-end competition as inevitable and unbeatable. For this reason, some local companies have tried to stake out strong positions on the upper levels of the business.
One of these is Maricar. Says Adul: “Most costume Jewelry, they sell by the dozen. For me, we sell by the piece.”
Per piece for Maricar’s products range from Bt190 (USS7.80) to Bt10,000 (US$400). “But,” says Adul, “the one that is Bt10,000 looks like it cost Bt1 million.”
The company’s philosophy is “to make it look real and to make it last long,” according to Adul. While most costume jewelry manufacturers use the gold flash plating technique (see sidebar), Maricar uses the micron system to cover its costume jewelry with up to 7.5 microns of gold plating. Because of this heavy-gold plating, the company’s products last longer—enabling Maricar to offer a lifetime guarantee on its jewelry.
Currently, Maricar sells 70 percent of its costume jewelry production to the local market, with 30 percent going for export.
The company also has an innovative method of direct marketing its products through Avon cosmetic representatives. Currently, there are 30,000 representatives and Adul anticipates by the end of the year there will be 50,000.
Sale are also enjoying comparatively healthy growth. Says Adul, “Right now, we’re still in the growing process—increasing 16 to 20 percent per year.”
Crystaline, a division of Pranda Jewelry, is another company that is aiming for the high-end of the world costume jewelry market. The company’s pieces range in price from $1 for a pair of earrings to $50 for a necklace. Crystalline has its own collection, produced by freelance designers in the United States and Europe.
According to Vilai, Thailand’s advantage over its up-and-coming competitors is a familiar word: quality. “Even Korea and Taiwan, we’re doing much better quality [than them],” she says.
Ranging the costume jewelry market
With so many different types of costume and fashion jewelry being manufactured, sometimes it can be difficult to get a picture of the entire industry. We asked Chanatong Wanasethi, managing director of local manufacturer Angel Ace and president of Thailand’s costume Jewelry Association, for the highest:
• The very low end—“allows me to call it junk, what I mean is the kind of plastic jewelry you see being sold on the street.”
• Low-end costume jewelry “features stamping on very thin copper of brass sheets. These can be plated or unplanted. If plated, it is only with a very thin gold flash (up to one nil. Note: One mil equals one one-thousandth of an inch). You can’t stare at it for too long or else it will tarnish,” said Chanarong.
• Medium range costume jewelry “is made by both stamping and casting. However, the quality and the finishing is better than the low end. Plating is still flash, but is generally thicker (one to three mils).”
• Medium-high end costume jewelry “is made using casting in white metal (a mixture of lead and tin). Other medium-high costume jewelry is made with brass, using the lost wax casting technique. This jewelry is flash-plated from three to eight mils.”
• High-end costume jewelry “is often the same as medium high, but the difference is the brand name.” To prove his point, Chanarong reveals that his company in fact does some manufacturing for a world famous costume jewelry manufacturer in the United States, but declines to disclose the company’s name.
According to Chanarong’s definition, most producers in the Costume Jewelry Association (CJA) are in the medium-to high-end range. However, his strict criteria leaves out many producers of other types—like seashell and ethnic jewelry manufacturers—who are providing some of the most innovative and distinctive products coming out of Thailand.
“They have adopted some classic Thai products into an international look,” say Simon Callai, of local consultant Jewelry New Wave. “You cannot call them Thai, you cannot call them European. They are international.”
While these companies can sometimes be medium and medium-high end producers, for the most part, they are a low-end cottage industry—fishing village families stringing together a few seashells after work or hill tribe women producing jewelry in small jungle villages.
Chanarong’s definition also concentrates exclusively on manufacturers using the gold flash plating system. There are other companies using micron plating, like Maricar, which offers a line of jewelry featuring heavy gold plating of up to 7.5 microns thickness. Top international costume jewelry producers like Napier, Monet and Marvella offer gold plating with a thickness up to 20 microns. ( One micron equals 40 mils). Using Chanarong’s definition as a basis, these companies might be characterized as super high-end.
The proof is in the plating
If a woman’s beauty is skin deep, then it should follow that the beauty of costume jewelry is only as deep as its plating.
Industry figures estimate that 80 percent of local costume jewelry manufacturers use the gold flash plating system. One reason is cost: because of import duties on solutions and equipment, “plating costs in Bangkok are higher than in the US or France,” says Narong Sutawasin of True Creations.
While the techniques for gold flash and micron plating are the same, the gold solution and the length of time each piece is dipped in the solution differs.
As its name indicates, flash gold is put into the solution and taken out in a matter of seconds, says Franz Seliger, general manger of Heraeus PMR Assay, a local provider of plating equipment and solutions. On the other hand, Seliger says, “for micron plating, you have to leave it in the solution four to five minutes to get just one micron.”
Some in the industry are disparaging of gold flash plating, especially that done at the low end of the market. Says Seliger: “It’s mostly to give a nice color for selling. After a day or two, it starts wearing off.”
But J.Sam of Dang Fashion, which produces low to medium-range costume jewelry using the gold flash plating method, says that’s an exaggeration: “It depends on how well you do your plating. For us, it lasts six months to one year. For some other, it’s two, three months and it wears off.”
One company that uses both methods is Px3, a local firm which produces medium-high range costume jewelry for jewelry retailers in France. According to the company’s manager, Patrick Perringaux, Px3 uses a bottom layer of gold flash and then uses micron plating on top for a more even finish. Currently, says Perringaux, styles in France favor costume jewelry made with satin and matte gold finish.
The company also does nickel-free plating, which is now required by law in many European countries (France is slated to introduce the regulation next year.) Nickel in costume jewelry has been found to cause allergic reactions in large numbers of women.
“If you make gook quality nickel-free products, your company can be more successful,” says Perringaux.
One problem purchasers should be aware of, according to Perringaux and several other manufacturers, is companies who say that they are doing nickel-free products but actually don’t.