Mr. Boonkij Jitngamplang, President of Thai Gem and Jewelry Traders Association
How Thai Silver Jewelry Rises to Its Success
Referring to Thai gem and jewelry industry, beside "gemstones" which have received worldwide recognition, "silver jewelry" is another product category with pleasing popularity among customers around the world. "Mr. Boonkij Jitngamplang," President of Thai Gem and Jewelry Traders Association and President of Benson Jewelry Co., Ltd., told us about development of Thai silver jewelry industry of which satisfying growth rates have been clearly witnessed from the past until now. And the industry has a promising future ahead as silver jewelry is affordable for average consumers.
The 80’s: Booming of Thai Silver Jewelry
Mr. Boonkij said that Thai silver jewelry’s importance became more apparent since 1981 when Thailand started exporting countless volume of silver jewelry products.
Thai silver jewelry products were sold like hot cakes. Exporters during the time were shops in Silom, Surawong, and Mahesak. Key manufacturers were in Thon Buri, Ban Mor, and other provinces
such as Nakhon Si Thammarat and Chiang Mai. European countries were the primary markets for Thai silver jewelry.
"Consumers in the UK, Germany, and Switzerland liked to wear silver jewelry because of its durability. Furthermore, the temperatures in the countries were more suitable than that of Thailand hence silver jewelry would not easily become tarnished. European consumers preferred buying items that could be used for a lifetime. They liked products that are handmade and durable. American consumers preferred gold because they saw silver jewelry as fashion jewelry. Additionally, gold prices were not high, only a little over 4,000 baht."
However, after gold prices constantly increased and popularity of silver jewelry among African American consumers rose, "the US" became a silver jewelry export market with high purchasing demand.
During the time, there were only few countries producing silver jewelry. "Thailand" was among them with a distinctive point of being a producer of good quality products at accessible prices.
"The first silver jewelry producing country which successfully penetrated the US market was Mexico, the country with border connecting to the US. It also initiated silver jewelry export to the US. Mexico produced silver jewelry pieces with strong uniqueness and traditional manufacturing techniques. For example, a Thai craftsman can produce a pair of earrings weighted 10 grams, a Mexican craftsman will make the same kind of earrings weighted 20-25 grams because he could not make the earrings as thin as Thai craftsman."
Thailand started exporting silver jewelry to the US since the 1970’s but the product’s export increased greatly during the 1980’s. Thailand was the only Asian country which manufactured silver jewelry for export. Although, Hong Kong manufactured silver jewelry products, the country focused on manufacturing gold jewelry set with diamond and other gemstones because of high wage rates. China and India did not have capacity to produce silver jewelry.
"The US market was so large that it was beyond anybody’s imagination," Mr. Boonkij emphasized on countless opportunities of the US market with gleaming eyes. He talked about his experience in doing business around over 30 years ago, "When I started my own business in January 1983, I received the first order from the US for products around 50 kilograms which was a lot during the time. My company needed 6 months for the first product lot. During the time, Thailand had no more than 5 large silver jewelry manufacturing factories. After that, during 3-4 years of doing business, silver jewelry manufacturing immensely expanded. Products, even without quality certification, were continuously sold out. That was how the demand during the 80’s was like. It was the booming period of Thailand’s silver jewelry business."
From OEM to ODM and OBM
During the 80’s when silver jewelry soared to become Thailand’s major export product under the gem and jewelry category, Thai entrepreneurs were merely original equipment manufacturers.
They were not capable of creating their own designs of jewelry pieces. On the contrary, at present, Thai entrepreneurs have shown their capability in design and gained worldwide recognition.
"Originally, when Thailand began exporting silver jewelry products, we manufactured silver jewelry according to orders, only a few involved gemstone setting. Our customers took their designs to be produced in Thailand. We could produce the same designs with less weights costing a lot less. Thus, customers ordered silver jewelry products from Thailand in a huge volume, a million pieces per month. The peak period of silver jewelry was during 1985-1995. More people entered the business. Thailand’s import duty for raw materials was at 35% and there was also 7% VAT. Nevertheless, the industry still earned smashing sales because there were no competitors. At present, the import duty has been reduced to 0% but the products have hardly earned profit because we have been facing many competitors such as Turkey, China, and India, which are able to produce silver jewelry. Now, Mexico is capable of producing silver jewelry products with quality identical to that of Thailand and the country also holds advantages in privileges from FTA or Free Trade Agreement with the US."
Competition in the market has become more intense, Thai silver jewelry entrepreneurs have developed their capacity from being original equipment manufacturers (OEM) to original design manufacturers (ODM). Some entrepreneurs have become original brand manufacturer (OBM) since they can produce their products, build their own brands, and sell products under the brands.
"Nowadays, customers allow Thai entrepreneurs to design products from them. They approve of Thai craftsmen and designers because Thai people have accumulated experiences in the field for a long time," Mr. Boonkij explained.
Strength- Challenges of Thai Silver Jewelry
Mr. Boonkij also pointed out strengths which helped Thai silver jewelry industry grow favorably through many past decades and be able to maintain favor of customers in key markets despite their internal crises
such as financial crises in the US and European countries. Thai entrepreneurs are able to compete very well in the global arena because they can find appropriate group of customers
and are ready to present quality products matching customers’ demand.
Regarding the present silver jewelry markets, Mr. Boonkij said that Thailand concentrates on customers of upper middle markets which do not appeal to China. The country pays more interest in gold jewelry. Concerning silver jewelry, it focuses on low-end markets. India aims at lower middle markets. Italy concentrates on high-end markets.
"Though, we have been challenged by China, India, Turkey and even Italy, Thai products have a distinctive standpoint. Global silver jewelry market has a gap which Thailand can perfectly fulfil but other countries have yet to achieve." Mr. Boonkij said.
"Thailand’s key customers are upper middle markets. We produce high quality silver jewelry similar to that of high-end markets. Our products are exquisitely made despite more automatic systems have been applied in jewelry manufacturing. However, we have to admit that manufacturing needs Feeling Touch. Machines, robots, and craftsmanship may yield similar works but give different feelings. Thai people are very skillful in the field because we have long-spanning artistic cultures. I tries to make Thai people maintain them and draw more of younger generations into the industry."
Mr. Boonkij also elaborated challenges that Thai silver jewelry have to encounter, especially issues concerning trading obstacles and the industry’s personnel, which are worrying. They should be hastily settled to help the industry strongly and sustainably thrive in the future.
As for trading obstacles, though, Thailand has revised many laws and regulations and they have been highly efficient during the past years, other countries around the world have also reformed their trade regulations to raise their competitiveness. Thus, what Thailand has done may not be enough, particularly in the era which Thailand has set the goal of moving from a manufacturer employing large number of labors to a trading nation.
"If Thailand wants to be a trading nation with high competitiveness, regulations helping international business comparable to developed countries are needed. Although, during the past 30-40 years, Thailand has changed many regulations, the country is unable to cope with the pace of changes in the global markets. Other countries can adjust quicker than Thailand. Our speed is 10 steps behind them. Some countries were 10 years behind us but they are now less than a step behind us."
Moreover, regarding personnel issues in skilled workforce and next generation of entrepreneurs, number of those who would carry on businesses are likely to decrease constantly, despite the fact that the gem and jewelry industry is Thailand’s key industry as gem and jewelry products are the third most important export product. They are one of a few products with high local content among Thailand’s top ten products. Though, the industry depends on imported raw materials, it employs large number of labors. Additionally, the industry also has remarkably high internal value added and involves many related businesses such as insurance, export, and logistic services.
"People in the gem and jewelry industry have good living condition. Unskilled labors are paid at least 15,000 baht per month. Skilled labors are invaluable. Workers who can create jewelry molds are paid with a minimum monthly wage of 50,000-60,000 baht. Labors with exceptional skills can earn 100,000 baht a month. The problem is there has been a shortage of these workforce. The existing labors are constantly retiring while new generations have little desire to work in factories." Mr. Boonkij described about the skilled labor issue and talked about business owners that "At present, business owners who were successful during the 80’s-90’s are in their late fifties to mid-sixties, they will retire in a few years. The succeeding generations who are in their late thirties are not interested in doing the business because they can earn profit quicker with other kinds of business such as stock trading or online trading. These issues are the industry’s challenges."
The Future of Thai Silver Jewelry
In spite of facing challenges like other products within the gem and jewelry industry, export markets of “silver jewelry” progressed well recently.
They were stable and able to grow in some years. Such conditions indicated solid foundation of Thai silver jewelry.
The important factor which will push Thai silver jewelry business to advance is building an environment encouraging international business activities.
"Silver jewelry market is still the best segment of the gem and jewelry industry. There is no export-oriented gold manufacturer in Thailand that does not produce silver jewelry. This is the reason why silver jewelry sales have been going well," Mr. Boonkij emphasized.
"Importantly, silver jewelry products are sold at accessible price points. Some people may say that jewelry is not a necessary item for living. In fact, people around the world, especially women, wear jewelry. No matter how rich or poor they are, people have to wear at least a piece of jewelry."
Since there is demand for jewelry in every corner of the world, Mr. Boonkij suggested that the government has to help entrepreneurs to be able to proceed international business activities seamlessly in order to compete with other countries.
"Producing budget-friendly and attractive products with good quality is no longer a formula of success for entrepreneurs. Nowadays, we have to produce affordable and alluring products with innovations. Primarily, our country has to have ease of doing business, simpler trade procedures for business activities," Mr. Boonkij pointed the path to success in the modern world.