Current Situation of Thailands Gem and Jewelry Industry
Gem and jewelry has been among Thailand’s top ten export products for a long time. In 2015, Thailand’s export value of gem and jewelry products was USD 10,993.35 million. It was the third most important export product following automotive products & parts and computer-related components respectively, accounting for 5.13 percent of the country’s gross exports. It also created an employment to nearly 1 million workers along the supply chain. The product categories in which Thailand has high competitiveness in the global market are polished precious stones and gemset jewelry.
Colored Stone Industry
Thailand is one of the world’s major centers of colored stone manufacturing and trading, and also the most important market of gem corundums, particularly Ruby and Blue Sapphire – the most famous colored stones around the world. Colored stone industry has generated several million US dollars of revenue each year. Although now previously abundant resources of high quality colored stones are nearly exhausted, and a large amount of raw materials need to be imported from overseas, Thailand still maintains its reputation with knowledge from local wisdom, high-level skill in gemstone enhancement so called “Heat Treatment” and gemstone cutting, which help adding value to the products, as well as give the country competitive edges over its competitors. In addition, its large trading markets attract buyers from around the world, making such a huge volume of transactions that can be said most high quality colored stones in the global market have once been circulated in Thailand.
In 2015, colored stone was the fourth most important export product of the gem and jewelry category with the export value of USD 1,041.69 million, a 9.48 percent share of the total export value. While the export value increased 13.64 percent from the previous year, it was a growth at a lower rate. This was partly due to the vulnerable economic recovery of countries such as the US, the EU and Japan. China and India’s economic growth also fell short of expectations. Hence, most consumers held back spending on luxury goods, which include gem and jewelry. This led to declines in the product’s import demand from major trading partners. A per-commodity analysis of this product category indicates that polished precious stone was the dominant export product in 2015. With the export value of USD 628.33 million, the product earned an over 60 percent share of colored stone’s aggregate export value. Polished semi-precious stone and rough stone came in the second and third place with a 35 and 4 percent share respectively.
As for the aspect of the industry’s global competitiveness, despite the fact that Thai manufacturers are almost completely dependent on imported rough stones, internationally recognized polishing skills and gemstone enhancement expertise of Thai craftsmen as well as the government’s support through tariff measures, which boost raw material inflows, have led Thailand to claim the position as one of the world’s key colored stone manufacturing and trading centers. According to Global Trade Atlas statistics, Thailand was the world’s fourth largest polished precious stone exporter in 2015. With consistent growth rates in its export value, Thailand earned an approximate share of 12 percent following Hong Kong, the US and Switzerland respectively. It was also the world’s third largest exporter of polished semi-precious stone with around 15 percent share, preceded by Hong Kong and China respectively.
Thailand is one of the world’s largest suppliers of high-quality jewelry. However, since most Thai companies are original equipment manufacturers (OEMs) with moderate scale of capacity, Thailand largely serves as a supporting unit in this industry. Its reputation as gem and jewelry manufacturer might not be comparable to China and India in global statistics. However, in terms of gemset jewelry manufacturing with outstanding designs and exquisite craftsmanship, as well as excellent after-sales service, Thailand has always been internationally recognized at the forefront.
Jewelry industry was the highest export earner among other finished-goods-producing industries under the gem and jewelry category with a 33.63 percent share. In 2015, Thailand’s export value of jewelry was at USD 3,697.42 million, a 4.02 percent drop from the previous year. The drop was due to frail global economy and continuing economic slowdown in trading partner countries. Gold jewelry preserved its position as the most important export, earning 50 percent share of Thailand’s jewelry export value while silver jewelry took a 42.88 percent share.
Gold Jewelry was the dominant export product of jewelry as it shared a half of jewelry’s total export value. In 2015, export value shrank by 2.66 percent following a 1.96 percent decline in 2014. Hong Kong remained the most important export market with a 29.23 percent share. Thai gold jewelry exports earned an 8.25 percent growth. Following Hong Kong was the US and the UAE with a 21.06 and 9.23 percent share respectively. The exports to the markets gained an increase of 1.86 and 0.95 percent respectively. Gold jewelry exports to the three markets contributed to nearly 60 percent of Thai gold jewelry’s aggregate export value.
Silver Jewelry took a 42.88 percent share of jewelry’s total export value. Its exports declined 6.38 percent. The US, with a 36.16 percent share, remained the most important export market for Thai silver jewelry. The export value to the market fell 10.58 percent. Germany was the second most important market with a 27.48 percent share. The exports to the market grew 3.09 percent. The third most important export market was Australia, which earned a 6.04 percent share and a 0.36 percent growth. The export market with a notable growth of over 1.61 times was China, which was ranked at the sixth place. The export value of Thai silver jewelry to the market totaled USD 37.01 million.
As for the aspect of global competitiveness, it is widely known that Thailand is the world’s leading manufacturer and exporter of genuine jewelry. Success factors include workers’ skills and craftsmanship, as well as Thai entrepreneurs’ excellent management, resulting in variety of designs and consistency in product quality. Furthermore, today Thai entrepreneurs are developing and adding more value to their products. From their original status as Original Equipment Manufacturing (OEM) businesses, they are gradually shifting into Original Brand Manufacturing (OBM), as seen in considerably strong presence of Thai gold and silver jewelry brands in the global market. This helps support the industry to continuously grow and earn more revenue. According to Global Trade Atlas statistics, Thailand has been the world’s largest silver jewelry exporter for over a decade, with the market share of around 20 percent. In 2015 Thailand’s silver jewelry export value was at USD 1,560.89 million next to India, whereas its export value of gold jewelry was at USD 2,065.83 million as the world’s twelfth largest exporter.
Various policies to support and promote Thailand’s gem and jewelry manufacturing and trading have been continuously implemented. In the upstream sector, duty exemption is granted for the import of raw materials, including various kinds of precious metal, diamond, pearl and synthetic gemstone, to relieve Thai entrepreneurs of tax burden, resulting in their cost advantage and increased competitiveness. As for the downstream, jewelry products are also given tax benefits through special trading channel in Bangkok Gems & Jewelry Fair, held biannually in February and September, where import duty for jewelry is exempted from its usual rate of 20 percent. Apart from such beneficial policies, industry-related organizations both in public and private sectors work hard and with a close collaboration so as to propel Thailand’s gem and jewelry industry achieve a sustainable growth and attain its vision to be truly World Gem and Jewerly Hub in 2020.
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