VietNamNet Bridge – Foreign jewelry firms are believed to lie in wait at the border gate, getting ready to enter the Vietnamese market once the country opens the gold market by 2018, when the import tariff would be cut to zero percent.

Vietnamese businesses still have five more years to prepare themselves for the competition with foreign businesses to come to Vietnam after it opens the gold market. However, they still feel worried as they would have to compete with very strong rivals.

According to the Vietnam Gold Business Association, with the $3.5 billion worth of turnover and the annual growth rate of 25 percent, the gold market has been very attractive in the eyes of foreign investors.

In developed countries, gold jewelries have been mostly exported, while Vietnam still cannot find the outlets for its jewelry products. Every year, Hong Kong exports $3 billion worth of gold jewelries, while the figure is no more than $500 million for Vietnam.

The inner problems of the Vietnamese gold jewelry market have been settled yet, while foreign investors are attempting to jump into the market. Five groups of businesses from France, Brazil, Hong Kong, Thailand and Malaysia have come to HCM City to explore the Vietnamese market so far this year.

Observers have noted the presence of a lot of foreign businesses at the 2013 International Jewelry Trade Fair. A report showed that 30 enterprises from Hong Kong, Thailand, India and Italia came there to look for business opportunities.

Nguyen Van Dung, Chair of the HCM City Jewelry Association, said the foreign enterprises came to Vietnam not to look for distributors, but for the partners who can team up with them to set up the companies which make gold jewelry products. Through the joint ventures, they would set up representative offices, or production workshops in Vietnam.

In the immediate time, the foreign businesses would bring their products to display at shopping centers and supermarkets.

In fact, a lot of foreign jewelry brands have appeared at shopping malls and supermarkets in Vietnam already. The products are believed to penetrate the domestic market across the border gates, i.e. they are brought to Vietnam by the travelers entering the country.

Meanwhile, analysts say Vietnamese enterprises are facing big difficulties because they have not made appropriate investments in the production and they cannot control the input material sources, therefore, they cannot compete with foreign companies in prices.

Due to the current strict regulations, a lot of jewelry companies have to collect materials from unofficial supply sources at high prices (VND4 million per tael higher than the world’s price on average). They also cannot borrow money from banks to make jewelries.  

Therefore, though having been warned that foreign firms may crush them when they come to Vietnam, the enterprises still cannot do anything to defend themselves.

Anticipating the big difficulties, a lot of jewelry companies have left the market. 70 percent of the total 3,000 enterprises has dissolved or stopped production.

Vietnamese enterprises would not only face big difficulties in the home market, but would also find it difficult to export their products due to the high export tariff of up to 10 percent. Meanwhile, Thailand, India and China impose zero percent on jewelry exports.

Nam Phong