INFORMATION CENTER ISSUE 1 / 2012
The Gem and Jewelry Institute of Thailand (Public Organization)
Thai gem and jewelry export value grew only 5.57 percent while the import value soared 97.84 percent with unwrought or semi-manufactured gold as the main product for both export and import. If unwrought or semi-manufactured gold is not included, the increase in export value would be as much as 24.15 percent from the previous year. However, the export value in 2012 may have a lower growth than in 2011 due to the threat of economic slowdown and possibly a new round of recession. In 2011, Thailand’s gem and jewelry export value under Customs Tariff Schedule Chapter 71* increased by 5.57 percent, from 11,652.06 million US dollars to 12,301.06 million US dollars. As the fourth major category in export products, gem and jewelry accounted for 5.38 percent of Thailand’s total export value. However, deducted by 47.94 percent share from unwrought gold export, the remaining value would be 6,403.71 million US dollars, up 24.15 percent from the previous year.
Meanwhile, gem and jewelry import value jumped 97.84 percent from 10,437.82 million US dollars to 20,650.47 million US dollars. Considering trade balance only in gem and jewelry category, it is found that in 2011 Thailand faced a trade deficit of 8,349.41 million US dollars as illustrated in Figure 1.
Figure 1: Thailand’s Gem and Jewelry Import-Export Value in 2002-2011 US$ Million 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000 Import Value Export Value Trade Balance
2002 2,080.92 2,166.92 86.00
2003 2,180.95 2,514.63 333.68
2004 2,945.93 2,630.19 -315.74
2005 4,080.74 3,227.56 -853.18
2006 3,995.49 3,605.92 -389.57
2007 4,223.40 5,381.39 1,157.99
2008 9,398.72 8,270.07 -1,128.65
2009 5,998.49 9,761.40 3,762.91
2010 10,437.82 11,652.06 1,214.24
2011 20,650.47 12,301.06 -8,349.41
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization) Thailand’s Gem and Jewelry Import-Export Performance in 2011
Export Performance In 2011, unwrought or semi-manufactured gold was the category with the highest export value at 5,897.35 million US dollars, despite 9.19 percent decline in growth rate compared to 2010. A plunge of gold export value in the second and the fourth quarters at 53.97 and 49.62 percent year-on-year sent the overall gold export value to the negative territory, although in the first and the third quarters, the export value grew as much as 4 times and 82.67 percent respectively. The export of other main products, including jewelry, diamonds, colored stones and costume jewelry is explained in details as follows: Jewelry held the second position in terms of export value after unwrought or semi-manufactured gold, accounting for 30.02 percent of overall gem and jewelry export value, with the growth rate of 18.27 percent. Details of each product in this category are as follow: • Gold Jewelry grew 21.52 percent from the previous year as a result from a rise in export to major markets like the United States and Hong Kong, at 8.84 and 32.24 percent respectively, as well as export to the high-potential market like India, with the growth rate of 1.20 times. Since India had more demand in gold jewelry import, especially in the first and the second quarters, of which the import value expanded over 3.77 and 5.85 times respectively, to cater for rising consumption in the wedding season from April to May and from December to January each year. In the meantime, export to UAE as the fourth major market increased by 16.35 percent while export to Italy, the fifth major market, dropped 11.73 percent. The public debt crisis in Europe, as well as higher
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Thailand’s Gem and Jewelry Import-Export Performance in 2011
gold price, diminished Italy’s import demand since the country is a major consumer of gold jewelry and also re-exports it to the European market. • Silver Jewelry export value grew 18.05 percent. Export to the United States as the top market leaped 26.44 percent while export to other following markets like Denmark, Germany, Australia and the United Kingdom increased by 2.41, 16.47, 3.74 and 3.56 percent respectively. • Platinum Jewelry achieved 32.72 percent growth, the highest in jewelry category, although the export value was still relatively small. This strong growth was a result from the export to main markets like Japan, which accounted for almost 60 percent of the total export value, and reached 51.57 percent growth. As for other increasingly important markets among the top five, which were Hong Kong, the United Kingdom and Italy, the growth rates were at 41.49 percent, 24.42 percent and 1.43 times respectively. In contrast, the export value to the United States, the second major market, dropped by 18.06 percent. Diamond was the third major export product, accounting for 11.88 percent of the overall gem and jewelry export value and having a high growth of 33.14 percent. Polished diamond was the main export product in this category, growing 38.19 percent from the previous year. The major markets included Hong Kong, Belgium, Israel, India and the United States, of which the export value increased by 42.14, 33.48, 11.83, 74.20 and 92.62 percent respectively.
Colored Stone accounted for 4.91 percent of increased by 37.85 and 5.74 times respectively, and overall gem and jewelry export value, with 27.79 the fifth export market, Switzerland, had a slight percent growth. This category can be divided into growth at only 0.05 percent. following products: It should be noted that colored stone export to • Polished Precious Stone (ruby, sapphire and China was growing significantly in terms of value, emerald) grew 44.47 percent from the previous with the growth rate of polished precious and year. Almost half of exported polished precious semi-precious stones at over 2.46 times and 5.74 stones were sapphire, growing as much as 52.16 times respectively, indicating increasing consumption percent, while ruby gained 37 percent share and demand for colored stones in the Chinese market. 39.93 percent growth. The increase in export value This is a good sign and a crucial opportunity for was a result from export to major markets like Hong Thai entrepreneurs to start developing strategies for Kong, which contributed almost half of the total their business expansion into China. export value, as well as the United States, India, Switzerland and Japan; these top five export Costume Jewelry was the fifth export product, markets achieved strong growth rates of 51.35, accounting for 2.88 percent of total gem and jewelry 14.58, 15.25, 29.59 and 49.69 percent respectively. export value, with 22.82 percent growth compared to the previous year. Liechtenstein was the top • Polished Semi-Precious Stone expanded 11.66 market, gaining the share of over 45 percent and percent due to a decline in export value to major the growth rate of 37.19 percent, while the export markets such as Hong Kong and the United States value to the United States, Germany and the United at 2.82 and 5.97 percent respectively. Meanwhile, Kingdom grew 56.48 percent, 2.01 times and 37.33 the export to India and China as the third and the percent respectively. However, the export to France, fourth major markets with growing significance which was the fourth major market, moved down by 1.07 percent. Tale 1: Thailands Gem and Jewelry Export Value rom January to Deemer 2010 and 2011
2.1 Silver jewelry
2.2 Gold jewelry
2.4 Others
3.1 Rough Diamond
3.2 Polished Diamond
2.3 Platinum jewelry
3.3 Others
Thailand’s Gem and Jewelry Import-Export Performance in 2011
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Tale 1: Thailands Gem and Jewelry Export Value rom January to Deemer 2010 and 2011 (ont.)
4.1 Rough Stone
4.2 Polished Precious Stone
4.3 Polished Semi-Precious Stone
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)
Thailands first two gem and jewelry export markets in terms of value in 2011 were Switzerland and Hong Kong with the share of 31.67 and 20.20 percent respectively. The export value to Switzerland increased by 13.01 percent, with unwrought or semimanufactured gold accounting for nearly all export products. The export to Hong Kong dropped by 3.87 percent due to declining export of unwrought gold, which was the main product at the share of 47 percent. As for other main product categories, polished diamond and jewelry (especially gold jewelry) both had equal shares at around 19 percent and were growing in terms of export value. The United States was the third major export market for gem and jewelry, with 10.90 percent share and 22.41 percent growth. Over 80 percent of the export products were silver jewelry and gold jewelry, growing by 26.44 and 8.84 percent respectively. Australia held the fourth position in the list of major export markets, accounting for 6.14 percent, but the growth rate in this market decreased as
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Thailand’s Gem and Jewelry Import-Export Performance in 2011
much as 50.51 percent, due to a decline in unwrought or semi-manufactured gold export. However, the export of jewelry, which was one of the main products, still maintained its strength by growing at 3.74 percent for silver jewelry and 6.03 percent for gold jewelry. Thailands fifth export market was India gaining the share of 3.59 percent and the growth of 87.04 percent in terms of export value, being supported by the export of main products such as gold jewelry and polished diamond, which grew by 1.20 times and 75.78 percent respectively. Other important markets which still maintained steady growth include Belgium Japan Denmark Germany and the United Kingdom at the rate of 34.90, 11.35, 0.29, 22.72 and 20.41 percent respectively. The main product for Belgium was polished diamond, while for Japan, the main products were jewelry, including gold, silver and platinum jewelry, as well as unwrought or semi-manufactured gold. As for Denmark, Germany and the United Kingdom, silver jewelry and gold jewelry were at the top of the list.
Figure 2: Thailand Gem and Jewelry Export Markets in 2011 Hong Kong 20.20%
Switzerland 31.67%
United States 10.90%
Australia 6.14%
Others 14.33% United Kingdom Germany Denmark Japan 2.22% 2.33% 2.63% 2.84%
Belgium 3.15%
India 3.59%
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)
Considering Thai gem and jewelry export value (excluding gold) during 2008-2011 as in Table 2, it is found that the export value was on the rise in every region, especially in emerging markets like China and India, of which the shares rapidly increased with the growth rate of over 1.76 times and 80.39 percent. Main export products to China were polished precious and semi-precious stones, as well as gold and silver jewelry, while for India main products with strong growth rates were gold jewelry and polished diamonds. In spite of comparatively small share, the export value from ASEAN countries achieved a high growth rate of 68.94 percent, being mainly driven by a rise in gold and silver jewelry export to Singapore, Malaysia, Brunei Darussalam and Indonesia.
Hong Kong was another export market gaining a high share and a growth rate of 36.02 percent from rising export in main products like polished diamond, gold jewelry and silver jewelry. In recent years, the share of Thailand gem and jewelry export (excluding gold) to the existing/main markets, such as the United States, the European Union and Japan declined from 55.59 percent in 2008 to 50.50 percent in 2011, due to the economic slowdown in these markets. On the other hand, emerging markets, such as China, India, Russia and the Commonwealth of Independent States, the Middle East, the ASEAN, and the Pacific Island countries gained increasing shares and steady growth in terms of export value, and should be considered as high potential markets with increasing importance.
Thailand’s Gem and Jewelry Import-Export Performance in 2011
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Tale 2: Thailands Gem and Jewelry Export Value (Exluding Gold) y Market Regions in 2008-2011
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization) Note: * Important countries in Others category include Switzerland, Liechtenstein and South Africa.
Import erormane Gem and jewelry import in 2011 was valued at 20,650.47 million US dollars, up 97.84 percent from the previous year, with unwrought or semimanuatured gold as the highest-value product, growing 1.09 times. This was partly due to a dramatic increase of gold import in the second and the fourth quarters at 3.29 and 2.89 times year-on-year. Although gold price in the global market was rising unpredictably all through the previous year, unwrought or semi-manufactured gold was still in demand in the domestic market. Investors have shifted their attention towards gold as reliable asset due to their
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Thailand’s Gem and Jewelry Import-Export Performance in 2011
concern over global economic crisis under the looming threat of recession. As a result, the import of unwrought or semi-manufactured gold was steadily increasing. The next import product was diamonds with a high growth of 1.39 times, most of which were polished diamond, growing by over 1.43 times. Other main import products included silver jewelry and olored stones with the increase of 31.43, 32.23 and 14.94 percent respectively in terms of import value. Over 95 percent of import products were raw materials.
Tale : Thailands Gem and Jewelry Import Value rom January to Deemer 2010 and 2011
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)
The most important source for gem and jewelry import was Switzerland with 36.40 percent share and 84.39 percent growth in import value. Other major sources with high import value included Australia the United States Japan and Hong Kong
accounting for 13.68, 9.16, 8.68 and 5.07 percent, and growing at 76.01 percent, 4.46 times, 1.85 times and 72 percent respectively in terms of value. Products from these top five sources were mostly unwrought or semi-manufactured gold.
Thailand’s Gem and Jewelry Import-Export Performance in 2011
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Figure : Thailands Gem and Jewelry Import Soures in 2011 Switzerland 36.40%
Australia 13.68%
United States 9.16%
Others 12.50% China 2.33%
Japan 8.68% United Arab Thailand India Emirates 2.54% 3.25% 2.49%
South Africa 3.90%
Hong Kong 5.07%
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)
Conlusion Thailands gem and jewelry export in 2011 increased only by 5.57 percent. However, if unwrought or semi-manufactured gold is excluded, the growth of export value would be 24.15 percent, and if both unwrought or semi-manufactured gold and Thailands
products sent back from international trade fairs are excluded, the growth of net export value would be 25.29 percent as shown in Table 4. This is a proof of real potential in Thailands gem and jewelry export, which has consistently maintained a strong growth.
Tale : Thailands Gem and Jewelry et Export Value rom January to Deemer 2010 and 2011
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)
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Thailand’s Gem and Jewelry Import-Export Performance in 2011
Although Thailand net export value of gem and jewelry (excluding gold) in 2011 achieved a good expansion rate, this was partly caused by the rise in product price per unit, which followed the trend of increasing price in raw materials. This can be seen in the fluctuation of gold price, moving in the high level all through the year. In December, the gold price was at 1,652.31 US dollars per ounce, up 21.82 percent from January the same year. Meanwhile, the prices of other gem and precious metal materials for jewelry production were also on the rise; for example, silver price was at 30.41 US dollars per ounce in December, up 7.07 percent from January 2011, while diamond price increased over 15-20 percent from January 2011. As for colored stones, blue sapphire price increased around 35 percent, yellow sapphire 50 percent and fancy sapphire 10-15 percent from the previous year. The price hike in these raw
materials was also a driving factor for the overall increase of gem and jewelry export value. Moreover, considering the relationship between volume and value of main product export as shown in Table 5, it is found that in 2011 the growth rate of gold export volume decreased by almost 1 time compared to the previous year while the export value just slightly decreased. This is different from silver, of which the export volume had a small growth while the export value grew to more than double. As for gold and silver jewelry, the export volume was in decline while the export value was on the rise. This is the result from Thai entrepreneur new strategies to address the increasing cost of raw materials by reducing the amount of precious metal used in each jewelry piece, or shifting to low-cost alternative materials and focusing on modern designs instead.
Table 5: Export Volume and Value of Thailand Main Products in Gem and Jewelry Category, January-December 2010 and 2011
Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)
Due to the situation in current global economy, Thailand gem and jewelry industry is facing several which produces indirect effects on Thai economy, negative factors as follow:
Thailand’s Gem and Jewelry Import-Export Performance in 2011
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Baht currency fluctuation Although now baht currency is depreciating at the range of 31.0031.90 baht to US dollars (www.bot.or.th), it is still stronger than the currencies of Vietnam and especially India, which is Thailands major competitor in the main markets. Commercial banks predict that in 2012 baht currency will still have high fluctuation, moving in the range of 29.50-33.00 baht, as a result from prolonged economic problems in the United States and the European Union. Apart from its consequence on Thailands competitiveness in terms of product pricing, the conversion rate will directly affect the exporters turnover, and probably the raw material cost from imported gem and precious metal. Increasing price of gem and precious metal These raw materials, especially gold and silver, tend to move erratically in the high range. In January 2012, gold price moved up to 1,656.12 US dollars per ounce while silver price increased to 30.77 US dollars per ounce. The main factor is the global economic problem, as seen in the unrecovered US economic crisis, the EU public debt crisis, as well as inflation in many countries around the world. Low policy interest rate, global demand in gold for investment and for the jewelry sector, as well as Indias and Chinas increasing demand in gold consumption, are supporting analysts predictions that in 2012 gold price may step up to over 2,000 US dollars per ounce. Therefore, if the raw material price is still fluctuating and rising continually, it will affect the global demand for jewelry consumption, and finally to Thailands gem and jewelry export value.
European Union, and Japan, all of which have suffered from economic slowdown in recent years, leaving effects on consumers purchasing power and changing consumption patterns in gem and jewelry category. Although currently the US economy is growing at a better rate, it remains unconfirmed whether this slow progress is a sustainable recovery. The United States has just announced the minimum interest rate at 0-0.25 percent until the end of 2014, and is ready to stimulate its economy by implementing the third quantitative easing (QE3). The World Bank predicts that the US economic growth in 2012 will be at around 2.2 percent, slightly higher than the previous year. Meanwhile, the EU public debt crisis is still unsolved and accompanied by a threat of Europes new round of recession. Since the debt problem is spreading into other major economies like Spain, Italy and France, of which the credit rating has been cut down, it is expected that European economy will shrink by around 0.7 percent in 2012. The only exception is Japan, which is steadily recovering after the earthquake and the tsunami, and is expected grow by around 1.9 percent. These situations are still risk factors for Thailands gem and jewelry export.
Economic slowdown in emerging markets, including China, India, Brazil and Russia. Recently, entrepreneurs around the world were seeking new opportunities in these emerging markets to compensate for stagnant trading value from the existing ones, leading to a high level of competition. However, due to the prolonged global economic slowdown, the stability of these emerging markets, especially China, tends to drop down gradually, Unstable economic recovery of major in spite of the projected 8.4 percent growth for trading partners, including the United States, the Chinese economy in 2012, compared to 9.2 percent growth in the previous year.
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Thailand’s Gem and Jewelry Import-Export Performance in 2011
Similarly, Brazil economy has slowed down since last year, and is expected to grow only by 3.5 percent in 2012, while India is also facing a slow economic growth. As a result, gem and jewelry consumption demand may be weakened in emerging markets in line with their economic situations. To reduce effects from the above factors, Thai entrepreneurs should implement proactive marketing in 2012. Apart from emerging markets, they should also focus on penetrating other high potential markets, such as ASEAN market and Australian market, taking advantages from reduced import duty in all product items according to the Free Trade Agreement. Another interesting market is the Middle East countries, of which consumers still have high
purchasing power and gem and jewelry demand. At the same time, entrepreneurs need to maintain good relationship with trading partners in major existing markets. They should also adapt their strategies by focusing on adding product value, concentrating on quality standard and new creative designs to respond consumer demand in each market, as well as considering factors which influence consumers buying decisions like corporate social and environmental responsibility and fair trade. Above all, they should prevent the risk from conversion rate by implementing forward contracts, as well as choosing suitable strategies in production cost management. These approaches will be much helpful for Thai gem and jewelry industry to maintain its strong, sustainable growth in the future.
* Customs Tariff Schedule Chapter 71 for
Thailand’s Gem and Jewelry Import-Export Performance in 2011
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Thailand’s Gem and Jewelry Import-Export Performance in 2011