Vietnam’s jewelers struggle to penetrate ASEAN market

Cao Thi Ngoc Dung, general director of the Phu Nhuan Jewelry Company (PNJ), said the world jewelry market had a bad year, and PNJ’s export turnover fell.from products to ASEAN countries.

Bui Quang Tin, a lecturer of the HCM City Banking University, said the annual export turnover of hundreds of millions of dollars in recent years was too modest compared with export turnover of US$3 billion in 2011. 

Meanwhile, it is estimated that about 50% of the figure went to foreign invested enterprises’ pockets.

Vietnam’s jewelers have to compete with strong rivals in the region such as Thailand and Indonesia, as companies can enjoy the preferential export tariff of zero percent.

“Their financial capability is good, while Vietnamese jewelry companies are small. There are about 10,000 Vietnamese businesses in the field, but the number of capable businesses is so small that it can be counted on one’s fingers,” Tin said.

While Vietnam’s jewelry exports remain modest, other countries have been increasing exports. Thailand exports US$3 billion worth of jewelry a year, and its products have begun penetrating the Vietnamese market. 

Thai, Taiwanese and Hong Kong enterprises are seen participating in the domestic jewelry trade fairs to learn business opportunities.

Vietnamese companies complain that they cannot increase exports because of too many barriers.

According to the Vietnam Gold Business Association, the export tariff on jewelry with gold content of 95% and more has increased from zero percent to two percent since 2015. 

The tax rate makes Vietnam's products less competitive than those from China, Thailand and India which can enjoy a tax rate of zero percent, have plentiful domestic material sources, cheap labor costs and modern production lines.

Meanwhile, Vietnamese companies have to use imported gold materials, precious stones and other materials, while input material prices fluctuate.

However, Dung from PNJ believes that there is no need to worry about the competition in the domestic market. 

Vietnamese companies now can make jewelry with modern machines. Besides, Thailand mostly makes 22K jewelry, while Vietnamese favor 18K products. Imports will also be taxed 10 percent in VAT, which will make products more expensive.

It is still too early to say how the ASEAN Economic Community (AEC) has affected Vietnam's economy. In the last eight months, since the AEC took shape, Vietnam has encountered many difficulties. The import/export turnover to/from ASEAN market decreased in the last seven months, according to General Statics Office (GSO).