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อัพเดท: 27 ก.พ. 2017 04.49 น. บทความนี้มีผู้ชม: 602 ครั้ง

Vietnam’s jewelry manufacturing industry has been operated by local manufacturers to primarily fulfill domestic demand. However, during the past decade many local manufacturers started to invest in large-scale factories. Additionally, they carried out domestic and international marketing as well as ventured more in export markets. Though, Vietnam’s export of jewelry products was not great in value, accelerated development of manufacturing process and product quality to conform to international standards has been propelling the country’s jewelry industry forward. Before long, jewelry from Vietnam will snatch more share in the global market.
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A Decade of Journey of Vietnam Jewelry Manufacturing Industry

 
Vietnam’s jewelry manufacturing industry has been operated by local manufacturers to primarily fulfill domestic demand. However, during the past decade many local manufacturers started to invest in large-scale factories. Additionally, they carried out domestic and international marketing as well as ventured more in export markets. Though, Vietnam’s export of jewelry products was not great in value, accelerated development of manufacturing process and product quality to conform to international standards has been propelling the country’s jewelry industry forward. Before long, jewelry from Vietnam will snatch more share in the global market.
 
Progressive Development while Facing a Critical Hurdle from Government’s Regulation 
 
Originally, jewelry production of local Vietnamese manufacturers was a cottage industry, which was a small family business. Gold and silver jewelry pieces were produced to meet the demand of local consumers. The jewelry designs available were simple, which were in demand among Vietnamese consumers aiming for saving and speculation as they paid less interest in designs. There were also jewelry pieces with designs of traditional motifs varying by localities, for instance, lotus, rose, sunflower, leaves, and fruits. Some of them may be set with large colored stones. Most of the products were medium to small in size and designs were slightly intricate.
 
Later on many manufacturers started to modernize their product designs to satisfy demand of the new generations influenced by Western apparel. Popularity of foreign fashion products also flourished. However, the manufacturers were still in need of competent production technology development. The quality of their products was either inconsistent or substandard.  Moreover, they were lack of business management skills and had no brand of their own. With the country’s rapid and constant economic growth, its populations earned more income, contributing to their increasing eagerness to spend money on products. As Vietnamese consumers’ jewelry consumption remained low, major jewelry manufacturers noticed market opportunity and threw in huge investment funds for production development by establishing industrial manufacturing plants. Such investments have been able to obtain advantages from economy of scale in production. Furthermore, joint ventures of some manufacturers and foreign gem and jewelry entrepreneurs have brought about transferring of production technologies and skills. Some Vietnamese entrepreneurs have been operating businesses from upstream to downstream, that is, colored stone mining, gemstone cutting, jewelry manufacturing and selling the products domestically as well as exporting. Additionally, having their products manufactured and designed under their own brands has been helping to build brand recognition and loyalty among consumers. In order to distribute products to every province, a market expansion strategy has also been carried out by promptly setting up retail store branches nationwide. Prominent gem and jewelry firms, which have gained high market share in Vietnam’s gem and jewelry market, are Doji Gold and Gems Group; Phu Nhuan Jewelry Joint-Stock Company (PNJ), a private company; and Saigon Jewelry Company Limited (SJC), a state enterprise manufacturing and selling gold ingots and jewelry. SJC has currently been the only firm holding the exclusive right in Vietnam gold bullion business.
 
According to the data from GFMS Limited, Vietnam’s gold jewelry production volume from 2006 to 2015 was relatively unpredictable. Since 2008 the country’s gold jewelry manufacturing volume distinctly decreased due to Vietnam’s economic slowdown following the global economy and extremely volatile gold price in the global market. Consequently, the manufacturers decreased their production rate according to the market demand. On contrary, demand for gold bars from Vietnamese consumers grew for hedging purpose as Vietnamese dong weakened and for speculation from rising gold price. Gold bar hoarding craze, which increased gold import, coupling with Vietnamese preference of storing gold over cash greatly inflicted Vietnam’s financial stability. As a result, in 2012 the government issued the Decree No. 24/2012/ND-CP governing gold bullion manufacturing restriction, and unwrought gold importation and exportation. The regulation increased restrictiveness on inspection of gold jewelry and gold-related product manufacturing, purchasing and selling. The decree added restrictions to business operation of gold jewelry manufacturers in Vietnam and decreased bargaining power in production costs. Hence, many small Vietnamese gold jewelry manufacturers constantly ceased their business.1
 
In 2013 Vietnam gold jewelry production volume started to grow once again and continuously increased until 2015. This was due to decreasing gold price, which revived demand for gold jewelry among Vietnamese consumers. Moreover, behavioral changes of Vietnamese consumers also played a part. Formerly, they bought gold bars for saving. These days, they have been increasingly fond of buying gold ornaments. The change was in line with the data from World Gold Council, which indicated a 33.5% drop in demand of gold bars and coins in Vietnam in 2014 and a 15.3% decrease in 2015. On the other hand, demand for gold jewelry grew by 4.1% in 2014 and 23.1% in 2015. However, gold jewelry production in Vietnam since 2013 onward failed to reach 20-25 tons as it had been before. This was a result of the government’s strict control on gold importation under the Decree No. 24/2012/ND-CP, which stipulates that Vietnamese gold jewelry manufacturers must apply for permission and an import quota of unwrought gold from State Bank of Vietnam. It is considered a primary obstacle for Vietnamese gold jewelry manufacturers’ business operation nowadays.
 
During the past decade, Vietnam’s silver production grew constantly in line with Vietnamese consumers’ demand. It was also benefitted from gold price, which remained high. Silver jewelry products, which were more affordable, better fulfilled consumers’ demand during the unstable economic situation in the country.
 
Relatively Low Export Value 
 
Vietnam export value of products under the category of gemstones, precious metals and parts thereof2 was around 600-700 million US dollars annually. Except for 2009-2011 when the export value of the category surged as gold price increased and drove the export value of gold jewelry up. Vietnam’s export value of products under the category of gemstones, precious metals and parts thereof was not high when compared with that of other ASEAN countries such as Thailand and Singapore. Since local manufacturers have mainly focused on producing for domestic demand, export production has not been high. In addition, Vietnamese manufacturers have been facing many export obstacles preventing them from competing in the global market. One of the obstacles has been the government’s measures controlling unwrought gold, which pose limitation of the manufacturers’ raw materials and raise gold price in Vietnam higher than the global market. Furthermore, the government has also imposed high export duty of 10%. 
 
Vietnam’s top two export markets for gemstones, precious metals and parts were Switzerland and the US. The markets gained a total share of over 74%. During the past decade, most of the exports from Vietnam to Switzerland included gold jewelry, goldsmiths’ and silversmiths’ wares as well as their parts. Its key product exported to the US was polished diamonds, which were exported by the US entrepreneurs with manufacturing bases in Vietnam such as Tiffany&Co. The second and third most important products to the US were costume jewelry and gold jewelry (some of the products were exported by major manufacturers relocating their production bases from Thailand to Vietnam). Following the countries were Japan, the UAE and Belgium with a share of 6, 5 and 4% respectively. Thailand came in the twelfth place with a share of only 0.3%. 
 
A Bright Future…from Diversified Advantages 
               
During the past decade, Vietnam’s jewelry industry has been constantly developed primarily from the drive of large local entrepreneurs who have also been aspiring to step forward into the international level. Nowadays, Vietnamese jewelry entrepreneurs have been accelerating into export markets more intensely than they had by participating in leading international gem and jewelry fairs such as Hong Kong Jewellery & Gem Fair. They showcased products with appealing and symbolic designs representing Vietnamese identities such as jewelry with lotus motif, Vietnam’s national flower. They have also been publicizing through international media, which will broaden recognition of Vietnamese jewelry and eventually bring about more share in the global market. Vietnamese entrepreneurs have been reinforcing production capacity by investing in advanced machinery and equipment from leading countries, for instance, Italy and Germany. Consequently, production processing has become more efficient and yielded jewelry products with quality on par with those imported ones.
 
Vietnam has various advantages such as a great diversity of colored stones deposits scattered across every region of the country, especially semiprecious stones of acceptable quality and reasonable price, as well as a high number of low-wage workers. The government’s policy also welcomes foreign investment and is likely to adjust investment laws allowing more benefit to foreign investors. Vietnam has been granted a customs duty privilege or GSP from developed countries, for instance, the EU and Japan, hence the duty rate for Vietnam’s gem and jewelry products imported to these countries is 0%. In addition, Vietnam may set up trade liberalization with other countries to lessen duty rate of export, for example, Trans-Pacific Strategic Economic Partnership Agreement (TPP) with other countries including the US (currently has been under ongoing negotiations). Thus, Vietnam is an attractive investment destination wherein international entrepreneurs seek opportunity to expand their businesses by establishing a joint venture with local entrepreneurs or directly establishing a factory in a special economic zone or an industrial zone.
 
Furthermore, with quickly growing number of middle-class and high-income consumers, Vietnam’s gem and jewelry market possesses high potential and is most likely to flourish. Vietnam is also a promising market, in which entrepreneurs around the world may find chance to penetrate the gem and jewlelry market and expand customer base as well as broaden business expansion opportunity in the long runs.  
 
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1 Foreign manufacturers establishing production bases in Vietnam are allowed by the Vietnamese government to import unwrought gold solely for jewelry production and must export all products manufactured. They are required to apply for a certificate of investment and a certificate of business registration from related governmental offices stating that the business is gold jewelry buying and selling. After that they have to submit all complete documents to apply for a business license and a certificate from State Bank of Vietnam.
 
2 according to the term used by General Department of Vietnam Customs for Vietnam’s export statistics collection 

 


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