Gems & Pearls:News
Thais Try To Combat Slump
The gemstone and jewelry business is a global enterprise the
effects of an economic downturn in Thailand will eventually influence business
in the United States
As imports, exports and domestic demand shrink, the Thai jewelry industry
looks to government aid while promoting its services in hopes of solving
its problems. This has resulted in more competitive prices for U.S. buyers
of loose gems and diamonds.
This year, imports of goods into Thailand, including rough gems, are expected
to fall 20% to 25% from last year. For the colored gemstone trade, a bastion
of Thailand's jewelry industry, a shortage of raw material now will mean
shortages of cut goods in the near future. There's more bad news: diamond
exports have dropped 44% in dollar value from 1997, roughly paralleling
the plunge in the value of Thailand's currency, the baht.
During a recent visit to Bangkok, Professional Jeweler investigated the
problems the Thais must solve before they can regain their high global supply
rates in gemstones and jewelry.
Anemic demand for polished gems and diamonds by Thai consumers usually
big customers for their nation's glittering product is exacerbated
by low demand from regional consuming countries, principally Hong Kong and
Japan. As a result, jewelry production is suffering factories reportedly
are working at only 65% capacity.
Thailand is trying to confront the challenges. Prime Minister Chuan Leekpai
has reiterated support of the industry through government programs to improve
technology and training. In July, a delegation from the Thai Gems and Jewelry
Trade Association and the Thai Department of Exports and Promotions mounted
an 11-day tour to the world's major gemstone sources to secure supplies
and agreements for the industry.
Effect on Americans
There is a silver lining for U.S. consumers of gems and jewelry from Thailand.
The baht devaluation resulted in more competitive prices for Thai products,
including faceted loose gems and diamonds. Labor and overhead costs pegged
to the baht remain stagnant through the crisis, resulting in gem and jewelry
prices competitive with giants such as India and China.
Because of the relative health of the U.S. market, Thais like other
luxury goods exporters are flocking to the U.S. to sell their stocks.
This has created a strong buyer's market U.S. retailers can take advantage
of in the next year or so.
But be vigilant. Because the gem and jewelry industry has become a player
in the global economy, the fortunes of different markets will have effects
on jewelers in the U.S. too. Asia's economic woes continue to affect the
U.S. economy, contributing to a serious trade imbalance. This imbalance
has already cut down on general domestic manufacturing for export to Asia.
A full-scale manufacturing downturn in the U.S. could lead to a weakened
economy and lower demand for jewelry here also.
by Robert Weldon, G.G.
Copyright © 1998 by Bond Communications.