Thailand's Gem and Jewelry Import-Export Performance in 2012

2012 Information Center, The Gem and Jewelry Institute of Thailand (Public Organization)

Thailands Gem and Jewelry Import-Export Performance in 2012 hailand’s overall em and ewelry eport value increased by  percent while the import value dropped by  percent, havin unwrouht or semi-manuactured old as the main product both in eport and import  unwrouht or semi-manuactured old is not included, the increase in em and ewelry eport value will be at only  percent rom the previous year owever, in  the eport value is epected to row in a lower rate than  due to neative actors in the lobal economy under the threat o urther economic slowdown and baht currency appreciation In 2012, Thailand’s gem and jewelry export value under Customs Tariff Schedule Chapter 71* increased by 6.88 percent from 12,301.06 million US dollars to 13,147.55 million US dollars, being the third product category and accounting for 5.73 percent of Thailand’s overall export. However, if the 50.49 percent share of unwrought gold export is deducted, the remaining export value of gem and jewelry would be 6,509.93 million US dollars, up 1.66 percent from the previous year.

On the other hand, the import value in this category decreased as much as 33.18 percent from 20,649.38 million US dollars to 13,797 million US dollars.

Regarding the trade balance in gem and jewelry category, it is found that in 2012 Thailand had a trade deficit of 649.45 million US dollars, which was 92.22 percent lower than the record level deficit of 8,348.32 million US dollars in 2011, as shown in Figure 1.

Figure 1: Thailand’s Gem and Jewelry Import-Export Value in 2003-2012 USS Mil. 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000 Import Value Export Value Trade Balance

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 20,649.38 12,301.06 -8,348.32

2012 13,797.00 13,147.55 -649.45

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 2012

Export Performance In 2012, unwrought or semi-manufactured gold had the highest export value at 6,637.62 million US dollars, growing 12.55 percent from 2011. This is the result from gold price rebound to over 1,700 US dollars per ounce (www.kitco.com) in September 2012. Thai entrepreneurs immediately sold unwrought gold to make profit from price difference, leading to the growth of over 1.30 times in gold export value during the third quarter compared to the same period the previous year. In contrast, the first, the second and the fourth quarters saw decreases in export value at 15.24 percent, 34.69 percent and 36.61 percent respectively. Overall, the 2012 gold export value moved in the positive territory. Other major export products, including jewelry, diamonds, colored stones and costume jewelry, are explained in details as follows: Jewelry was at the second position in terms of export value after unwrought or semi-manufactured gold, accounting for 28.65 percent of the overall gem and jewelry export value with the growth rate of 2.02 percent. Each product in this category is explained in details as follows:

Gold Jewelry grew 4.97 percent from the previous year as a result from the increase in export value to the main markets including Hong Kong, the United Arab Emirates and Italy at the rate of 28.42 percent, 38.72 percent and 0.83 percent respectively. Although the export value to the second and the fourth important markets, which were the United States and India, decreased by 15.39 percent and 10.72 percent respectively due to the economic slowdown in both countries combined with fluctuation in gold price.

markets, the new ones with a potential to compensate the declined performance of the existing markets.

For example, the United Kingdom and Japan, at the sixth and ninth position, generated the growth of 21.79 percent and 22.87 percent respectively. This was the result from demand in some demographic groups which still had high purchasing power in spite of considerable effects from the global crisis to domestic economies. Apart from domestic consumption, the United Kingdom also imported Thai gold jewelry for value addition and re-export to other countries. Meanwhile, the Middle East country like Lebanon was an emerging market which contributed steadily increasing export value, stepping into the 13th position of Thailand’s export market and having the growth rate of 3.66 times. Canada was at the 14th position, with 38.39 percent growth. As for ASEAN countries, Singapore and Malaysia had high growth rates of 97.46 percent and 41.32 percent respectively, moving up to the ranks of the 16th and the 17th. The exported products to both markets were for domestic consumption and re-exportation to other markets.

Silver Jewelry moved down by 1.36 percent.

The export value to the United States, which was the main market with the highest share of almost 45 percent of the total export value, grew 0.95 percent.

Germany, as the second major export market, had an increase of over 1.16 times in terms of export value, while export to Denmark, Australia and the United Kingdom, which were in the top five, decreased by 56.48 percent, 9.95 percent and 21.32 percent respectively.

Platinum Jewelry achieved the growth rate of 23.66 percent, which was the highest in jewelry category In spite of the decline in main markets like the in spite of its relatively low export value at the United States and India, Thailand’s export of gold moment. This resulted from 41.58 percent growth jewelry still maintained high growth in other major in the export to Japan, as the main market which

2

Thailand’s Gem and Jewelry Import-Export Performance in 2012

contributed around 68 percent of Thailand’s platinum jewelry export value. Moreover, the increasingly important markets like Kuwait at the fourth position, and the United Kingdom at the fifth position, stepped up with high growth of 6.34 times and 7.01 percent respectively. However, the export value from the second and the third major markets, which were the United States and Hong Kong, moved down by 22.18 percent and 14.17 percent respectively.

Diamond is the third important export product, accounting for 11.35 percent and growing at 2.12 percent. Polished diamond was the main export product in this category, growing at 6.79 percent in terms of value compared to the previous year. Main markets for Thailand’s diamond export included Hong Kong, Belgium and Japan, with the growth rates of 7.62 percent, 1.98 percent and 61.58 percent respectively. However, export value to Israel and India, as the third and the fourth major markets, dropped by 10.18 percent and 5.83 percent respectively.

Colored Stone accounted for 4.65 percent of Thailand’s total gem and jewelry export value, with the growth of 1.14 percent. Details in each product are as follows:

Polished Precious Stone (Ruby, Sapphire and Emerald) grew by 9.89 percent from the previous year. Almost 46 percent of export products in this category were sapphires, with the growth rate of 4.16 percent. Ruby accounted for 36 percent and grew 5.27 percent from the previous year. The increase in export value resulted from the growth in Hong Kong, as the main market which accounted for almost half of the overall export value, as well as other major markets, such as the United States, Switzerland and China, with the growth rates of 10.06 percent, 25.66 percent, 1.91 percent and 23.47

percent respectively. Nevertheless, the export value to India, which was the fourth major market, decreased by 24.59 percent.

The export value to the United Arab Emirates, as the sixth major market, steadily increased from the beginning of the year, with the growth rate of over 5.93 times. This is an evidence of the UAE’s increasing potential in precious stone consumption, as well as its role as the trading center of colored stones in the Middle East. For Thai entrepreneurs, this is a good opportunity for business expansion by developing strategies to fully respond to consumers’ demand in this market.

Polished Semi-Precious Stones faced a decline of 13.53 percent since the export to the United States, India and China, which were among the top five of Thailand’s export markets dropped by 13.22 percent, 41.55 percent and 12.04 percent respectively in terms of value. On the other hand, the export value to Hong Kong, which maintained a high share of 52 percent, and Japan, which was at the fifth position, had the growth rates of 5.15 percent and 3.23 percent respectively.

Costume Jewelry was the fifth major product category, accounting for 2.85 percent of Thailand’s overall gem and jewelry export and achieved the growth of 5.93 percent compared to the previous year. This is the result from growth in the top five markets, including the United States, France and the new market like Singapore, at the rate of 5.55 percent, 64.29 percent and 1.57 times respectively.

However, the export to Liechtenstein, as the main market with the highest share of over 41 percent, and Germany as the fourth important market, declined in terms of value by 3.36 percent and 19.08 percent.

Thailand’s Gem and Jewelry Import-Export Performance in 2012

3

Table 1: Thailand’s Gem and Jewelry Export Value from January to December 2011 and 2012    

 

 

 

 

 

 

     











 











2.1 Silver jewelry











2.2 Gold jewelry





















2.4 Others











 











3.1 Rough Diamond











3.2 Polished Diamond





















  











4.1 Rough Stone











4.2 Polished Precious Stone











4.3 Polished Semi-Precious Stone











  











  











 























2.3 Platinum jewelry

3.3 Others

 



The top two export markets for Thai gem and jewelry products in terms of value in 2012 were Switzerland and Hong Kong, with the shares of 33.11 percent and 21.66 percent, and the growth rates of 11.75 percent and 14.66 percent respectively.

Almost all export products for Switzerland were unwrought or semi-manufactured gold, growing at the rate of 11.79 percent. As for Hong Kong, around half of export products were unwrought or semi-manufactured gold, while around 21 percent were jewelry, especially gold jewelry, and another 18 percent were polished diamonds; all categories achieved growth at the rates of 16.33 percent, 25.83 percent and 7.61 percent respectively.

4

Thailand’s Gem and Jewelry Import-Export Performance in 2012

The United States was the third major export market for Thai gem and jewelry industry, accounting for 9.71 percent, but also declining at 4.81 percent.

Over 80 percent of the export products were silver jewelry, with 0.95 percent growth, and gold jewelry, of which the export dropped by 15.39 percent.

Australia was the fourth major export market, with 7.03 percent share and 22.44 percent growth, resulting from the export of unwrought or semi- manufactured gold, which accounted for 82 percent and grew as much as 34.90 percent. Another important product was jewelry, with around 17 percent share; almost all were silver and gold jewelry, of which the export value dropped 9.95 percent and 19.73 percent respectively.

Thailand’s fifth export market was Germany, having the share of 3.29 percent and the growth of 50.96 percent in terms of export value, being supported by the export of silver jewelry as the main product, growing over 1.16 times.

Other important markets which still maintained steady growth included Belgium, Japan and the United Arab Emirates, at the rate of 0.96 percent, 8.51 percent and 26.51 percent respectively. Almost all export products for Belgium were polished diamond, of which the export value increased around 5 percent. As for Japan, most export products were jewelry, including gold jewelry, platinum jewelry and silver jewelry, as well as polished diamond, with increases in export value at around 23 percent, 42 percent, 2 percent and 62 percent respectively. Main products for the United Arab Emirates were gold jewelry, with a high growth rate of 39 percent, and polished diamond with a 2 percent increase in the export value compared to the previous year.

Meanwhile, the export value from India and the United Kingdom as the seventh and the tenth markets decreased by 12.24 percent and 17.60 percent respectively, probably as a result from the

slow economic recovery of the United States and the European public debt crisis, which indirectly affected India’s economic growth facing a slowdown in 2012, and also the United Kingdom economy, which had received a lower growth rate since the previous year. This situation undermined consumers’ confidence and purchasing demand, as well as reduced entrepreneurs’ demand in importing semifinished products for re-export. As for the export to India, main products, including gold jewelry, polished diamonds, polished precious and semi-precious stones had declining export value at around 11 percent, 5 percent, 25 percent and 42 percent respectively. On the other hand, export products which gained an increase despite of their relatively low export value, were silver jewelry and platinum jewelry, growing at 0.71 percent and 23 times respectively. For the United Kingdom, the declining export value was caused by the performance of other major export products, including silver jewelry, costume jewelry, precious stones and semi-precious stones, which moved down by 21 percent, 6 percent, 14 percent and 35 percent respectively, although the top products like gold jewelry and polished diamond grew as much as 22 percent and 63 percent respectively.

Figure 2: Thailands Gem and Jewelry Export Markets in 2012 Hong Kong 21.66%

Switzerland 33.11%

United States 9.71%

Australia 7.03%

Others 12.33% United Kingdom United Arab Japan 1.71% Emirates 2.88% 2.33%

India 2.95%

Belgium 2.98%

Germany 3.29%

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 2012

5

Considering Thai gem and jewelry export value (excluding gold) to different markets/regions between 2009-2012 as shown in Table 2, it is found that in 2012, only Japan, Hong Kong, the Middle East and ASEAN countries still maintained growth at the rate of 21.18 percent, 13.19 percent, 7.98 percent and 35.05 percent respectively. On the other hand, the export value to other markets including the United States, the European Union, China, India, Russia and the Commonwealth of Independent States, as well as Pacific Island countries, decreased by 4.78 percent, 3.29 percent, 13.73 percent, 14.82 percent, 5.75 percent and 11.56 percent respectively.

The export value to Japan was gaining more share and continuous growth thanks to its steady economic recovery, which helped improve consumers’ purchasing power. The export of main products such as gold jewelry, platinum jewelry and silver jewelry, as well as polished diamond was growing in terms of value.

Meanwhile, export to the ASEAN market was in a moderate value, but with increasing share and growth rate. The main factor was the export to Singapore which grew over 81 percent, with the main products including gold jewelry, silver jewelry and costume jewelry. Other following markets were Malaysia and Indonesia, which grew at around 18

percent and 84 percent respectively. The main export products for Malaysia were gold jewelry and silver jewelry, which had strong growth rates. For Indonesia, most export products were silver jewelry, gold jewelry and silver, which were on the rise.

The export to the Middle East countries was gaining more percentage and more export value from the export of main products including gold jewelry and polished diamonds to the United Arab Emirates, the export of polished diamonds to Israel, as well as the export of gold jewelry to Lebanon, all of which achieved strong growth.

However, in recent years, the export to existing/ main markets, such as the United States, the European Union and Japan, had a declining share from 53.80 percent in 2009 to 48.69 percent in 2012, due to economic crisis 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 an increase at the combined share of 20.80 percent, up from 19.26 percent in 2009.

Although this percentage was just around half of the share dominated by the existing markets, these emerging ones have good growth opportunity and should be considered as increasingly important, high-potential markets.

Table 2: Thailand’s Gem and Jewelry Export Value (Excluding Gold) by Markets/Regions in 2009-2012 



      



         











    













    



















   

















   

 



























   















  

















  

















   

  















 

























   

       



     

 

 



      



Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization) Note: * Countries in “Others” category include Switzerland, Liechtenstein, South Africa, etc.

6

Thailand’s Gem and Jewelry Import-Export Performance in 2012

Import Performance Gem and jewelry import in 2012 was valued at 13,797 million US dollars, down 33.18 percent from the previous year, with unwrought or semimanufactured gold having the highest import value at the share of 77.86 percent, but also with a decline of 34.76 percent. This is because the import in the third and the fourth quarters dropped as much as 76.53 percent and 45.50 percent respectively, in spite of the growth in the first and the second quarters at 13.86 percent and 20.91 percent year-on-year.

More gold was imported during the first half of the year when its price was falling, to make profit from

price difference in the second half of the year when the price moved up.

The following import product was diamond with a sharp decline of 42.77 percent since most were polished diamonds, of which the import dropped 38.25 percent. Other important products included jewelry, which grew by 1.09 percent, as well as silver and colored stones, with a decrease of 31.32 percent and 7.75 percent respectively. Over 93 percent of import products were raw materials.

Table 3: Thailand’s Gem and Jewelry Import Value from January to December 2011 and 2012    

 

 

 

 

 

 





















  











  































  











  











  











 











 











  





















   











   









































       

   

  

      



Thailand’s Gem and Jewelry Import-Export Performance in 2012

7

The most important source for gem and jewelry import was Switzerland, with 42.36 percent share and a decline of 22.24 percent in import value. The following major source in terms of import value was South Africa, with 9.43 percent share and as much as 61.41 percent growth. Other major sources included Japan, Australia and Hong Kong, accounting for 8.41 percent, 7.03 percent and 5.59 percent of

Thailand’s import, but the value dropped by 35.31 percent, 65.66 percent and 26.27 percent respectively.

Almost all products from the top four sources were unwrought or semi-manufactured gold, while half of import products from Hong Kong were unwrought or semi-manufactured gold, and around 21 percent were polished diamonds.

Figure 3: Thailand’s Gem and Jewelry Import Sources in 2012 Switzerland 42.36%

South Africa 9.43% Japan 8.41%

Australia 7.03% Hong Kong 5.59%

Others 9.35% China 2.06% South Korea 3.51%

India 3.55%

Thailand 3.94%

United States 4.77%

Source: The Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)

Conclusion Thailand’s gem and jewelry export value increased by 6.88 percent in 2012. However, if unwrought or semi-manufactured gold is excluded, the growth of export value would be 1.66 percent, and if both the export of unwrought or semi-manufactured gold and the value of display products sent back from international trade fairs are excluded, the growth of net export value would be 1.48 percent as shown

8

Thailand’s Gem and Jewelry Import-Export Performance in 2012

in Table 4. This is an evidence of real potential in Thailand’s gem and jewelry export, which was still capable of growing, but at a lower rate compared to the export value excluding unwrought or semimanufactured gold and the net export value of 2011, which grew at around 24 percent and 25 percent respectively.

Table 4: Thailand’s Gem and Jewelry Net Export Value from January to December 2011 and 2012    

          

 

 

 

 

 

 



















































                      



Although Thailand’s net import value of gem and jewelry in 2012 was still growing, partly due to the increase of product price per unit, in line with the upward trend in prices of raw materials for jewelry making, including gold, silver, diamonds and colored stones. Considering the relationship between the volume and the value of major jewelry export as shown in Table 5, it is found that gold jewelry and silver jewelry export declined as much as 32.63 percent and 29.81 percent respectively in terms of volume, but the export value of gold jewelry still grew at the rate of 4.97 percent, while the export value of silver jewelry just slightly dropped at 1.36 percent. Meanwhile, gold price per ounce moved up by 6.20 percent, and silver price dropped 11.30 percent. It can be inferred

that economic slowdown combined with the upward trend in raw material price affected gem and jewelry consumption demand in the global market. As a result, the total volume of export product decreased by around 30 percent. At the same time, the market preference in jewelry has also changed to smallsized, light-weighted and openwork designs using a lower amount of precious metal content. The attention has also been shifted from big, chunky designs with a large amount of precious metal, to more affordable alternatives; for example the use of brass in jewelry.

Moreover, jewelry products were value-added with polished diamonds or colored stones, resulting in the increase in price per unit, as well as the overall export value of jewelry.

Table 5: Export Volume and Value of Thailand’s Main Products in Jewelry Category, from January to December 2011 and 2012



                            

 





  

  

 





  

 



 

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 2012

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Risks in the Global Economy : Recently the International Monetary Fund reduced the expected growth of the global economy in 2013 to 3.6 percent, from the previous estimate at 3.9 percent. Similarly, the Organisation for Economic Co-operation and Development (OECD) also cut down the estimated growth of global economy in 2013 to 3.4 percent, from the previous expected level at 4.2 percent.

The economies of the two major markets, the United States and the European Union, still have no clear signs of recovery. The United States needs to promptly solve its fiscal conflicts on the issues of public debt and the federal budget as the most serious threats that might lead to a new round of recession. The OECD expects that in 2013 the US economy will grow by around 2 percent, the level which can give just enough support to the country’s economy, but is not considered as a strong recovery to significantly benefit the global economy as a whole.

Baht Currency Fluctuation and Appreciation : Now the baht currency is appreciating to less than 30 baht to US dollar, the strongest appreciation in 16 months, moving between 29.70-29.95 baht to US dollars (www.bot.or.th). On January 30, 2013, baht currency was at 29.77 baht to US dollars, with an appreciation rate of 2.29 percent from the beginning of the month, due to fund inflow from foreign investors.

Even though Thai baht appreciation is in accordance with many other currencies in Asia (except Malaysia, Singapore, South Korea, Hong Kong, Taiwan and Japan, where the currencies are depreciating), the appreciation of baht currency is in a stronger rate than many countries in this region, including the Philippines, Indonesia, Vietnam, and especially India and China, both of which are major competitors of Thailand. Commercial banks expect that in 2013 the baht currency will highly fluctuate at the range of around 29.00-31.00 baht, due to unsolved economic problems in the United States and the European Union. This will not only influence Thailand’s competitiveness, but also have direct results towards exporters’ turnover, as well as the possible impact upon the prices of gem and precious metal which are imported to be used as raw materials.

As the European Union is facing economic recession caused by reduction of fiscal budget in many countries to control the budget deficit at not more than 3 percent of the country’s economic growth, the OECD forecasts that the Eurozone economy will face a recession at -0.1 percent in 2013 after the rate of -0.4 percent in 2012. Then in 2014, the EU economy will return to the positive territory with 1.3 percent growth rate. This will not only directly affect Thailand’s gem and jewelry export value in 2013, but also bring consequences to other manufacturing countries which import intermediate products from Thailand for value addition before re-exporting to the United States and the European Union.

Higher Fluctuation in the Price of Precious Metal : Gold and silver price has a tendency of high fluctuation in 2013 with problems in the world’s economy as driving factors. Investors are shifting their attentions towards gold investment to protect themselves from inflation and currency depreciation, resulting from the attempt to stimulate economy by large central banks, such as the Federal Reserve (FED), the European Central Bank (ECB) and the People’s Bank of China (PBOC). This approach in relieving their monetary policies will possibly be continued all through 2013. China also increasingly relieves its monetary policy due to the economic slowdown.

Thailand’s gem and jewelry export is still facing challenges from many risk factors in 2013, including uncertainties in the global economy, baht currency appreciation and increasing fluctuation in the price of precious metal, as detailed below:

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Thailand’s Gem and Jewelry Import-Export Performance in 2012

Now the price of precious metal is highly fluctuating, especially gold price in January 2013, when it moved down to the average price of 1,670.95 US dollars per ounce, while the average price of silver moved down to 31.11 US dollars per ounce compared to the end of last year. This is in accordance with other trends in the global economy.

Recently, the Hongkong and Shanghai Banking Corporation (HSBC) reduced the estimated average gold price in 2013 to 1,760 US dollars per ounce, from the previous estimate at 1,850 US dollars per ounce. Analysts from leading institutions expect that the gold price in 2013 may climb up to the highest level at 1,900-1,950 US dollars per ounce, while silver price may move up to 40-44 US dollars per ounce.

Therefore, the prices of these raw materials which are more fluctuating may affect jewelry consumption demand in the global market, as well as Thailand’s gem and jewelry export value.

The unresolved Eurozone public debt crisis and the slow recovery of the US economy has affected the consumption demand for gem and jewelry in the global market, and resulted in an inevitable decline in Thailand’s export value of this product category to the United States and Europe. However, there are some hidden opportunities in this crisis. The decrease in export value does not happen in every market; the export to Japan, many countries in the

Middle East and the ASEAN market still maintains growth. The BRIC region, an emerging market where consumers gain continually increasing purchase power in line with its economic development, is also an important market not to be overlooked.

Therefore, to alleviate negative effects from various challenges and risks in 2013, Thai entrepreneurs should implement proactive marketing strategies, find ways to penetrate into other markets that have strong growth potential as mentioned above, and take advantages from the Free Trade Agreement for lower import duty in all product items. At the same time, they need to maintain good relationship with trading partners in existing major markets. More importantly, they should adjust their strategies by focusing on value addition to their products, concentrating on quality standard and new creative designs to respond customers’ 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, it is important for entrepreneurs to prevent the risk from conversion rate with the use of forward contracts, and choose suitable strategies in production cost management. These approaches will be beneficial for Thai gem and jewelry industry to maintain its strong, sustainable growth in the future.

* Customs Tariff Schedule Chapter 71 is on “Natural or cultured pearls, precious or semi-precious stones, precious metals, metal clad with precious metal and article thereof; imitation jewelry; coin”

Thailand’s Gem and Jewelry Import-Export Performance in 2012

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                                                                                                                                                        

                –                                                                                                    

12

Thailand’s Gem and Jewelry Import-Export Performance in 2012