Gold jewellery companies would welcome more State supervision

Gold trading is known as a high profit business. Not according to the directors of Vietnam’s leading jewellry companies, however. They complain that in the home market they must struggle with disreputable competitors, while abroad they can’t sell as low as Chinese or Thai companies.

Unhealthy competition at home

Nguyen Van Dung at My Linh Ngan Jewellery Company says many gold companies are prone to cheat on the purity of their products. They pass off goods with only 51 or 68 percent gold content as 18 carat.

Cao Thi Ngoc Dung at Phu Nhuan Jewellery Company says the cost of labor in a PNJ is 250,000 dong. Other companies claim to charge only 100,000 dong for the work, which is a scam – in fact, they can cut the price because they’ve cheated on gold content.

Then there’s outright forgery. The Saigon Jewellery Company (SJC) is the nation’s premier goldsmith, proud of its reputation for reliability. Recently it discovered some sixty taels of gold bearing its stamp. The forged bars had gold content of only 95 percent and 96 percent, lower than SJC’s pure gold bars. This meant that customers lost four million dong if they bought a counterfeit tael.

Nguyen Thanh Long of SJC said the counterfeit taels are insignificant compared to the 17 million of taels of SJC gold now circulating in the market. However, though the number is small, the damage to SJC’s prestige could be big.

Dung of Phu Nhuan Jewellery explained that the law only stipulates that gold trading companies must certify and take responsibility for the quality of their products. Regulations don’t clearly point out the minimum requirements for every kind of products. That’s why big enterprises, those which own well known brands and register the quality of their products with the central bank, have been put at a disadvantage. Meanwhile, the companies that commit fraud can enjoy profit and escape punishment.

The leading companies believe that the Vietnam Gold Business Association ought to ask the Ministry of Industry and Trade to set up specifications for gold jewellery, and require every company needs to certify publicly the quality of its products and be held responsible for it.

Fierce competition abroad

Vietnam’s jewellery exports have seen high growth recently. Revenues reacheding $1.3 billion in the first six months of the year, which experts consider a good result. However, gold exporters say the price competition is fierce.

Le Dinh Hung of Cuu Long Jewellery Company says his firm has exported jewellery mainly through border markets and in small quantities of several hundred different products. However, faced by cutthroat cost competition with Chinese and Thai merchants, Cuu Long has lost interest in foreign markets.

Big enterprises such as PNJ and SJC say their export revenue is less than 10 percent of the companies’ total turnover.

Dung from PNJ confessed that though PNJ has been trying to upgrade technologies to reduce its production cost, it still finds it difficult to compete in price with the products from China and Thailand.

Unable to compete in prices, Vietnamese jewellers doubt they can crack big foreign markets. “PNJ once tried to sell in Dubai, and we organized exhibitions in some Asian countries, but our efforts failed,” Dung said.

Meanwhile, Long said the State ought to promote gold trading by setting up policies that manage the market and support deserving enterprises. In that event, he thinks, Vietnam’s jewellery will be able to compete with the products from other countries.- Dau tu

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices