Vibrancy in the Thai jewelry market

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Diamrusa Ltd, a Bangkok-based producer of fine jewelry, says Thailand is a “great place” to set up a business in the sector to reach out to the vibrant Asian markets, which are about to supersede the weak economies of US and EU.

Interviewee: Salil Shah, Managing Director, Diamrusa Ltd

Diamrusa Ltd, a high-end jewelry producer that runs a factory in the center of Bangkok with about 200 specialized workers and sells precious items for a price between a few thousand to more than a million US dollars, says times have never been better for the Asian jewelry market as demand shifts from the ailing economies in the US and the European Union to Asia.
“We see decreasing demand in traditional markets such as North America and the European Union,” says Salil Shah, Managing Director of Diamrusa Ltd.
“Especially for the high-end retail market, there is currently a vibrancy nowhere else than in Asia,” he adds.
Especially India and Russia, and to some extent China, are the new target markets for expensive jewelry. Diamrusa runs an office in Mumbai, from where it imports raw materials and to where it ships the finished goods for sale on the subcontinent and beyond.
“With the Middle East, we don’t have a direct business,” says Shah. Jewelry is sold there via brand channels. However, Diamrusa sometimes deals directly with VIPs from the region, such as wealthy families who order directly.
“We certainly would be interested in a direct distribution in the Middle East and to cooperate with investors. We would provide our know-how,” Shah says.
Besides Saudi Arabia, Kuwait and Abu Dhabi are markets for Diamrusa’s top-end jewelry, while Dubai could be more categorized as a low and middle segment market, he says.
However, he adds that he has noticed that the consumer sentiment in the Middle East has changed since the latest financial crisis and due to political unrests.
“The Middle East market has gone through a rollercoaster ride,” he says. “Even Saudi Arabia, normally a target market for high-end jewelry, has changed.”
“It’s no wonder when you look at the price development of precious materials. Gold has gone up from $300 to $1,800 per ounce in the last years, and diamonds also went up significantly. It takes time for the market to adjust,” says Shah.
Though there are already up to 800 jewelry manufacturers in Thailand, Shah sees still chances for new players on the market.  However, investors should consider that specializing on a certain segment would be more reasonable than doing the mainstream jewelry business.
“There are some Thai manufacturers which are switching almost completely to silver to offset the high raw material prices for gold,” Shah says. It would also make sense to enter niche segments with new materials or specialize on the high-end segment. Investors in the jewelry business also need a good distribution network.
“In any case, putting the investment in is only one thing,” Shah says. “Investors also need a good management and the right partner, which is extremely important.”
The situation on the labor market for highly specialized jewelry workers for top products is also getting tight, Shah says. “There is a high demand for such workers and it is very difficult to find some, which is blowing up the wages.” On the other hand, he does not need to be too much concerned about the announced raise of the minimum wage in Thailand, as Diamrusa’s workers are already paid in that bracket due to their exceptional skills. And it is not easy to outsource the work, as, for example, India’s jewelry workers are not having the high skills needed for top products, says Shah. “The patience is not there.”
But he would not exclude that manufacturers in other sectors are considering relocating their factories, especially in labor-intensive assembling, and would head to Vietnam, Myanmar, Indonesia, or even Bangladesh, he says.
Other opportunities for jewelry investors he sees in setting up design studios in Thailand, “if they are able to put together a good team.” For establishing such a kind of “creative business”, investors would also receive government support in the form of incentives.
Currently, there is no value added tax on import of raw material for the manufacturing of export jewelry and no duties on import and export of jewelry in Thailand, and things should remain “free”, says Shah. “People in the business don’t want to have too many restrictions.” This also applies to major export markets such as China: As Mainland China has a rather high taxation on imported jewelry and jewelry is not part of the free trade agreement between Thailand and China, many Thai exporters choose Hong Kong as gateway to this market. Russia, on the other hand, is a “good market, but there is a lot of paperwork to do.”
As Thailand has a free trade agreement with India, allowing jewelry export at very low tax, it can be used as a gateway to the Middle East.
Thailand, he sums up, “is a good place for the jewelry industry and a good place to do business. The level of services is very high, and you get value for your money.”
More trade agreements will only enhance the position of Thailand as a jewelry manufacturing base, Shah says.

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Reading Time: 4 minutes

Diamrusa Ltd, a Bangkok-based producer of fine jewelry, says Thailand is a “great place” to set up a business in the sector to reach out to the vibrant Asian markets, which are about to supersede the weak economies of US and EU.

Reading Time: 4 minutes

Diamrusa Ltd, a Bangkok-based producer of fine jewelry, says Thailand is a “great place” to set up a business in the sector to reach out to the vibrant Asian markets, which are about to supersede the weak economies of US and EU.

Interviewee: Salil Shah, Managing Director, Diamrusa Ltd

Diamrusa Ltd, a high-end jewelry producer that runs a factory in the center of Bangkok with about 200 specialized workers and sells precious items for a price between a few thousand to more than a million US dollars, says times have never been better for the Asian jewelry market as demand shifts from the ailing economies in the US and the European Union to Asia.
“We see decreasing demand in traditional markets such as North America and the European Union,” says Salil Shah, Managing Director of Diamrusa Ltd.
“Especially for the high-end retail market, there is currently a vibrancy nowhere else than in Asia,” he adds.
Especially India and Russia, and to some extent China, are the new target markets for expensive jewelry. Diamrusa runs an office in Mumbai, from where it imports raw materials and to where it ships the finished goods for sale on the subcontinent and beyond.
“With the Middle East, we don’t have a direct business,” says Shah. Jewelry is sold there via brand channels. However, Diamrusa sometimes deals directly with VIPs from the region, such as wealthy families who order directly.
“We certainly would be interested in a direct distribution in the Middle East and to cooperate with investors. We would provide our know-how,” Shah says.
Besides Saudi Arabia, Kuwait and Abu Dhabi are markets for Diamrusa’s top-end jewelry, while Dubai could be more categorized as a low and middle segment market, he says.
However, he adds that he has noticed that the consumer sentiment in the Middle East has changed since the latest financial crisis and due to political unrests.
“The Middle East market has gone through a rollercoaster ride,” he says. “Even Saudi Arabia, normally a target market for high-end jewelry, has changed.”
“It’s no wonder when you look at the price development of precious materials. Gold has gone up from $300 to $1,800 per ounce in the last years, and diamonds also went up significantly. It takes time for the market to adjust,” says Shah.
Though there are already up to 800 jewelry manufacturers in Thailand, Shah sees still chances for new players on the market.  However, investors should consider that specializing on a certain segment would be more reasonable than doing the mainstream jewelry business.
“There are some Thai manufacturers which are switching almost completely to silver to offset the high raw material prices for gold,” Shah says. It would also make sense to enter niche segments with new materials or specialize on the high-end segment. Investors in the jewelry business also need a good distribution network.
“In any case, putting the investment in is only one thing,” Shah says. “Investors also need a good management and the right partner, which is extremely important.”
The situation on the labor market for highly specialized jewelry workers for top products is also getting tight, Shah says. “There is a high demand for such workers and it is very difficult to find some, which is blowing up the wages.” On the other hand, he does not need to be too much concerned about the announced raise of the minimum wage in Thailand, as Diamrusa’s workers are already paid in that bracket due to their exceptional skills. And it is not easy to outsource the work, as, for example, India’s jewelry workers are not having the high skills needed for top products, says Shah. “The patience is not there.”
But he would not exclude that manufacturers in other sectors are considering relocating their factories, especially in labor-intensive assembling, and would head to Vietnam, Myanmar, Indonesia, or even Bangladesh, he says.
Other opportunities for jewelry investors he sees in setting up design studios in Thailand, “if they are able to put together a good team.” For establishing such a kind of “creative business”, investors would also receive government support in the form of incentives.
Currently, there is no value added tax on import of raw material for the manufacturing of export jewelry and no duties on import and export of jewelry in Thailand, and things should remain “free”, says Shah. “People in the business don’t want to have too many restrictions.” This also applies to major export markets such as China: As Mainland China has a rather high taxation on imported jewelry and jewelry is not part of the free trade agreement between Thailand and China, many Thai exporters choose Hong Kong as gateway to this market. Russia, on the other hand, is a “good market, but there is a lot of paperwork to do.”
As Thailand has a free trade agreement with India, allowing jewelry export at very low tax, it can be used as a gateway to the Middle East.
Thailand, he sums up, “is a good place for the jewelry industry and a good place to do business. The level of services is very high, and you get value for your money.”
More trade agreements will only enhance the position of Thailand as a jewelry manufacturing base, Shah says.

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