Thai manufacturers are gearing up to expand their exports

            After weeks of a production slow-down, Charnarong Wanasethi, managing director of Angel-Ace Co, is working overtime.

            “During the Gulf War, everybody told me that they would wait to order,” says Mr. Charnarong, who is a leader in the Thai costume jewelry business. “Now that the war’s ended, everybody says they need the goods yesterday. I’m happy, yes, but I also have a lot of headaches.”

            Last year, Thailand produced B1.5 billion worth of costume jewelry for export, and this year is projected to produce B1.9 billion. This amounts to a mere fraction of the world demand, which comes to B50 billion a year.

            “The potential for us to take over the market is there,” Mr. Charnarong sys. “It’s just a matter of analyzing the situation and conducting some public relations.”

            Mr. Charnarong fulfills his role as public relations director of the Thai Costume Jewelry Association with relish. “The most important needs for producing costume jewelry are high-quality labor and a good supply of tin,” he says. “Thailand has both. The Japanese currently buy from Taiwan, Hong Kong and Korea because they don’t know about the high-quality costume jewelry we’re producing here.”

            The 17 members of the association went on a trade mission to Japan in February, sponsored by the Department of Export Promotion and the Japan Export Trade Organization of Bangkok.

            “The Japanese buyers were surprised when they saw the quality of our samples, and the low prices. It looks very promising,” Mr. Charnarong says. “They like designs related to nature. They also like abstract shapes, but soft, curving ones, not a solid look.”

            He hopes to expand his Japan market, which now consumes only five percent of his total production. Eighty percent of his market is Europe and 15 percent the US.

            Mr. Charnarong, one of the pioneers of the Thai costume jewelry industry, entered the business 17 years ago. “I was a factory manager at a large plastic company,” he says. “Someone referred me to Prida Pasawong, a member of the Hua Seng Heng goldsmith family, who had the idea of setting up a costume jewelry factory.”

            At that time there was only one major producer in Thailand, a company called Sunflower. Mr. Charnarong accepted the job offer of Mr. Prida, to manage a new factory called Lotus International.

            “We started with 40 workers,” Mr. Charnarong recalls. “I had experience controlling production line workers, but the big problem was I had no knowledge about the technology of producing costume jewelry.”

            The workers used the same polishing and soldering techniques for producing fine jewelry, but it was difficult to apply these techniques to white metal—the mixture of tin and lead which is used in most costume jewelry.

            “The first two years, we lost money because we didn’t produce good quality products,” Mr. Charnarong says. “The third year, we began to see success in the local market. The demand was much bigger than the supply. Once we overcame the technical problems, the market was just waiting to welcome us.”

            After a few years, Lotus ventured into exporting. Eventually, 40 percent of its production was sent to the Middle East and Europe.

            Mr. Charnarong wanted to raise the export level to 70 percent. “We were having a lot of problems with local sales—bad credit terms and debt. The company was seven years old and everybody knew us, but we weren’t making much money. I thought we should export more. Even though you don’t build a high profile as an exporter, you get more profit. I lost the war, however, and had to resign.”

            He decided to start his own factory, Angel-Ace, tem years ago and make it 100 percent export. “I started with B2.5 million paid up registered capital. We had 80 workers and we rented a factory.”

            Today, Mr. Charnarong has 200 workers, producing 1,000 different designs which wholesale from US$1-$8 each. The retail mark-up averages about seven times the wholesale price. He will not reveal exact production figures. “I have one complicated necklace design that we can only produce at the rate of 100 per day. Then there are some earrings which we can make at the rate of 5,000 pair per day. So our production for various pieces ranges from 5,000-50,000 per month, depending on the design.”

            The designs change often, a minimum for twice a year, to keep pace with fashion trends. “Fine jewelry has value in itself, for the gold and gems, but costume jewelry is only a fashion,” Mr. Charnarong explains.

            Mr. Charnarong’s latest goal is to invest in the trend of high-end, brand name costume jewelry, packaged around a marketing plan. He is working on the designs for the new line now, which he plans to launch this year. “It will be called Angeli Domini because people like Italian design,” he says. “It will have a classic but unique look, with the pieces ranging from US$10-$50. It will be costume jewelry, but it won’t look like costume jewelry.”

            The market for such lines is strong in both Europe and the US, he says, but Mr. Charnarong is creating the Angeli Domini line more for his personal satisfaction. “I need some challenge to keep me young,” he explains.

            “In costume jewelry, you cannot make tons of money,” Mr. Charnarong concludes, “But you cannot be a poor man either, because the marketing is so easy. The demand is there.”