Professional Documents
Culture Documents
IDS
Institute of Development Studies
Dianna DaSilva-Glasgow
DECEMBER 2012
University of Guyana
Turkeyen Campus
Guyana
June 2013
DaSilva-Glasgow, Dianna
by
June 2013
This paper should be cited as: DaSilva-Glasgow, Dianna (2013). Global Value Chain
Analysis of the Gold Jewellery Industry: Upgrading Trajectories for Guyana.
Institute of Development Studies, University of Guyana Special Series Working Paper #
6/12 to commemorate the 50th Anniversary of the University of Guyana.
CONTENTS
PAGE
SECTION 1: INTRODUCTION
SECTION 2: METHODOLOGY
16
INDUSTRY
SECTION 5: INDUSTRIAL ORGANIZATION AND GLOBAL GOVERNANCE
27
41
45
61
67
POLICY MECHANISMS
SECTION 10: CONCLUSION
69
70
75
industry)
LIST OF TABLES
Table 1: World Supply of Gold by Source: 2011-2012
Table 2: Gold Production by Country: 2012
Table 3: Gold Jewellery Consumption by Country: 2009-2012)
Table 4: Governance Structures in Global Value Chains
Table 5: Top 10 Gold Producing Companies Globally
Table 6: Leading Jewellery Companies Globally Based on Retail Value in 2011,
USD Billion
Table 7: Leading Luxury Jewelry Designers and Stores Globally
i
DaSilva-Glasgow, Dianna
iii
SECTION 1: INTRODUCTION
This paper undertakes a study of the global value chain for gold jewellery.
The value chain describes the full range of activities that firms and workers
perform to bring a product from its conception to end use and beyond. This
includes activities such as design, production, marketing, distribution and support
to the final consumer. The activities that comprise a value chain can be
contained
within
single
firm
or
divided
among
different
firms
(globalvaluechains.org, 2011).
The global value chain framework (GVC) is used to understand the structure and
capture the dynamics involved in the global gold jewellery value chain. The study is
done with the overarching objective of understanding how small to medium sized
enterprises (SMEs) in Guyana can competitively improve their presence and insertion
into the global market for gold jewellery.
The importance of undertaking such an analysis for Guyana for the gold jewellery
industry is predicated on the fact that gold has become the leading export commodity
for Guyana contributing in excess of 50% of export earnings. However, little value
adding to raw or refined gold takes place domestically. Further, in the local value chain
there is a notable dominance of SMEs at every stage, from gold mining to jewellery
fabrication.
The study employs the step-by-step approach developed by the Duke Universitys
Center for Globalization, Governance and Competitiveness that encapsulates the
following steps: Input/output structure, geographic scope, governance and industrial
organization, institutional framework and upgrading trajectories.
The specific questions that the study seeks to answer mirrors these steps to a large
extent and include:
1. What is the structure of the global value chain for gold jewellery
2. What are the most notable market trends for gold jewellery
1
DaSilva-Glasgow, Dianna
SECTION 2: METHODOLOGY
This paper follows the Global Value Chain methodology as developed by the Duke
University, Centre for Globalization, Governance and Competitiveness. There are four
dimensions associated with this methodology. These include:
1. Input-output structure- that describes the process involved in bringing the raw
material to a finished good and the nature of the interactions among firms
involved in this process.
2. Geographical scope- focused on understanding the global dispersion of the main
entities that play a part in the transformation of the raw material into the finished
product. The geographical scope also focuses on identifying key market trends in
the industry in order to be able to identify market opportunities. Key standards
within the industry are also examined in order to be able to infer obstacles to
expanded trade.
3. Governance structure- that identifies the major players in the chain and explains
how the chain is coordinated and controlled. This is informed by an assessment
of the strategy of the lead firms.
4. Institutional context- that identifies the key stakeholders and their level of
importance and influence over the industry. The focus is specifically on
institutional support for SMEs which are recognized to be dominant in the
Guyanese market. At this stage, an assessment is also done of the general and
industry-specific factors in Guyana that can either support or hinder further
growth and development of the industry. These are categorized as strong, weak
and average.
5. Upgrading1 that shows how players can shift between different stages of the
chain with the aim of improving their economic welfare. This step is informed by a
SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the local
industry. It also draws on the assessment of the enabling factors done in the
previous section.
DaSilva-Glasgow, Dianna
Primarily secondary data is used for the study. Data used includes trade information,
firm and industry level data on employment, revenues, business locations; institutional
data; general macroeconomic and social data. Since the study relied mainly on
secondary data it was necessary to consult various sources such as the Annual reports
of leading firms in the industry, international organizations such as the World Bank,
Global industry associations such as the World Gold Council, International news
publications such as the Economist, industry news magazines such as Jewelrista and
the National Jeweller; and statistical databases such as the United Nations Commodity
Trade Statistics Database and Datamonitor.
In order to assess trends in trade of gold Jewellery, Jewellery is taken to mean item
89731 (articles of jewellery and parts thereof of precious metals) of revision 3 of the
standard industrial classification system. Data is obtained from the UNCOMTRADE
database.
DaSilva-Glasgow, Dianna
Jewelry Design
Research
Market Research
Gold Mining
Gold Extraction
Gold Refining
Jewelry
Marketing and
Gold
Fabrication
Distribution
recycling
Refining Equipment
Branded Boutique
Chains
Authorized Retailers
Department Stores
Discount Merchandisers
Non-store Retailers
Wholesale Distributors
Jewelry Tools
Geo-physical
Research:
-
Mineral Exploration/
Gold Prospecting
Resource
Evaluation
Reserve Definition
Mining Equipment
and Supplies
Chemicals
Chemicals
Gold Trading:
State-Owned
Enterprises
Private Companies
Exploration Equipment
and Supplies
Chemicals
(paste,enamel,
rhodium liquid,
acid)
http://en.wikipedia.org/wiki/Gold_prospecting
7
DaSilva-Glasgow, Dianna
Gold Mining Stage: The main activities at the gold mining stage are mineral
exploration, gold prospecting and mineral extraction.
Gold exploration may involve both large and small firms. However, the size of the
deposits that could be unearthed is an important determinant of the size of firms that
would be involved in extraction. In fact, there is a direct relationship between the size of
firms involved in exploration and the size of deposits they are able to mine. Larger firms
require larger deposits in order to have an internal rate of return. It may be precisely
because of the risks involved in large scale mining that approximately one-quarter of
world output of gold is estimated to originate from artisanal or small-scale mining.
Once resources have been discovered a determination is then made of whether the
deposits exist in commercially viable quantities. This is particularly the purpose of
resource evaluation, in addition to assessing the grade of the deposit. This is followed
by reserve definition where the objective is to undertake a feasibility study, based on
statistical and technical assessments, to determine if the ore deposit could be converted
into an ore reserve with economic potential. At this stage the skills of geologists, geochemists, and mining engineers are required.
Once resources have been discovered in commercially viable quantities, extraction of
the resource is undertaken. Gold extraction involves the use of the chemical mercury
(Sodium Cyanide). Mercury is used primarily to extract small gold particles. Mercuryuse involves numerous health and environmental implications such as damage to the
human brain and fish stocks. Consequently, its use is regulated in many countries.
Globally, the World Health Organization has set exposure limits. Further, 140 countries
have come together to create the Minamata Convention through the United Nations
Environment Programme to prevent emissions of mercury. Signing of this agreement
will commence in October 2013.
Apart, from mercury use, the existence of other elements in gold ore, such as cadmium,
lead, zinc, copper, arsenic and selenium, is also cause for concern. More so since, thirty
tonnes of used ore are dumped as waste for producing one finger ring of gold. 3
Refining Stage: Raw gold extracted is refined before to increase its purity. A process
called gold parting, for instance, involves the removal of silver from gold. This is done
using chlorination using the Miller process and electrolysis using the Wohlwill process.
The Wohlwill process results in higher purity, but is more complex and is only applied in
small-scale operations. Other methods of assaying and purifying smaller amounts of
gold include inquartation as well as cupellation, or refining methods based on the
dissolution of gold in aqua regia.
In some countries, gold refining is done by state-owned enterprises. Refining could also
be done by independent refining companies. For instance, Johnson Matthey Plc is a
company operating in the US and Europe that undertakes gold refining and the
manufacture of gold bars. The company has operations in 30 counties around the world
and employs around 9,000 people. Large companies usually enter into fixed long term
purchasing arrangements with vendors for polished gemstone and precious metals for
the supply of refined metals.
The majority of the gold produced annually is used for Jewellery, about 50% to be more
precise. Other uses of gold include investments (40%) and industry (10%) (for example,
electronics, medicine, food and drink). As a means of investment, gold is used by
central governments to hold foreign exchange reserves as well as for coinage. In 2010,
the central banks of nations held a total of 28,398 metric tons of gold. For the US,
Germany and Italy gold accounts for over 70% of foreign exchange reserves. The
demand for gold for both Jewellery and investments is related to an important chemical
property of gold, that is, its resistance to corrosion, which means that it is long-lasting.
Jewellery Design Stage: Jewellery design entails the creation of design concepts
through detailed technical drawings by a Jewellery designer, a professional trained in
3
http://en.wikipedia.org/wiki/Gold_prospecting
9
DaSilva-Glasgow, Dianna
For large luxury-type jewellers, some degree of outsourcing of the fabrication process is
done. For instance, Tiffany & Co. purchases finished jewellery from about 60
independent manufacturers (Tiffany & Co., 2012). Such arrangements are not-based on
long-term supply arrangements and are based on terms such as product quality
requirements and vendor social responsibility. Branded Jewellers may also have other
companies produce and distribute jewellery using their brand. Further, large global
suppliers of jewellery tend to have subsidiary manufacturing operations in several
countries. For instance, Tiffany & Co. has manufacturing facilities4 in Belgium, South
Africa, Mauritius, Botswana, Namibia and Vietnam (Tiffany & Co., 2012).
The move by companies to outsourcing of components and parts reflects a broader
paradigm shift in the manufacturing sector to lower production costs and improve
productivity. In the jewellery sector, other reasons proffered include: access to a variety
of jewellery-making skills, product quality, the cost of capital investment and support for
alternative capacity (Tiffany & Co., 2012).
Distribution Stage: There are several options to distribute fabricated Jewellery. These
include Branded Boutique Chains (National and International), Authorized Retailers of
Established Brands, Non-Brand Jewellery shops (family-owned or Mom and Pop
Shops), Department Stores, Discount Merchandisers, Whole-sale Distributors and Nonstore Retailers.
Branded boutiques, authorized retailers of established brands and non-brand Jewellery
shops are all Jewellery stores specifically or largely, involved in the retail distribution of
Jewellery and in some instances silverware and timepieces. Such stores do not sell
costume Jewellery or antiques. However they may offer repair services and engraving
in combination with the sale of new Jewellery (Jewelrista 2011).
The various distribution channels are discussed in turn below:
1. Branded Boutiques: Branded boutique chains are Jewellery stores with
subsidiary stores in several locations, either within a country (national) or in
4
DaSilva-Glasgow, Dianna
several countries (internationally) all operating under the same brand name.
Branded boutiques reflect a vertically integrated process where Jewellery are
designed, fabricated and distributed under one brand but different collections are
produced. These tend to be high-cost items operating in the luxury end of the
market. Branded boutique chains may also sell other accessory items such as
handbags, and sunglasses under the same brand, however, Jewellery
represents their most significant activity. Examples include Harry Winston in the
USA and Van Cleef and Arpels in Italy. These companies may not manufacture
for themselves all, the jewellery items distributed. Some companies have
arrangements where the manufacturing and distribution stages are outsourced.
For instance, Tiffany & Co. in 2007 entered into a 20-year license and distribution
agreement with the Swatch Group for the manufacture and distribution of
watches under the Tiffany & Co. brand.
New York: Simpson Jewelers, Carat N Carat, London Jewellers, T&R, Cosmos,
Cellini, Tourneau Time Machine
Arizona: Ed Marshall
California: Beverly Hills, Los Angeles (2 Locations), Miliptas, Rowland Heights, San
Franciso (2 locations), San Gabriel, Santa Clara
Washington: Diplomatic Duty Free Shop
Atlanta: Neiman Marcus
Massachusetts: Royal Jewelers
Las Vegas: Roman Time Jewelers
Florida: Fort Lauderdale (2 locations)
Hawaii: Honolulu
Illinois: Chicago, Oakbrook Terrace
New Jersey: Cosmos
Pennslyvania: Ardmore
Texas: Fortworth, Houston, Midland, San Antonia
Virgina: McLean
http://www.economist.com/node/21554538
http://www.newdevtprojects.com/ilo/iloPdf/jewellerymarket.pdf
7
http://www.economist.com/node/21554538
13
DaSilva-Glasgow, Dianna
8
9
http://www.newdevtprojects.com/ilo/iloPdf/jewellerymarket.pdf
http://www.louloubijoux.com/pages/about-us
10
This is where Business sales executives sell items to Business clients specifically developed for the
market for purposes such as gift giving, employee service and achievement recognition awards, customer
incentives etc. Business clients have the privilege of purchasing at discount prices.
11
According to Jewelrista, this avenue has been growing because it responds to self-purchasing women.
Together television retailers QVC and HSN generate $1.4 billion in Jewellery sales, as.
15
DaSilva-Glasgow, Dianna
Source of Supply
Mine Production
Net Producer hedging
Total mine supply
Recycled gold
Total
It is important to note, that because gold is a natural resource, large scale commercial
extraction is geographically concentrated at the country level as it is dependent on
endowment of the resource. The principal countries that produce gold in the world are:
South Africa, the United States, China, Australia, Russia and Peru. Based on table 2, in
2012 China was the main producer with a total of 370 tonnes kilograms of gold. China
emerged as the number one producer of gold globally in 2007 (with 276,000 tonnes).
Previously, South Africa had been the largest producer of gold since 1905. In 1970 79%
(1,480 tonnes) of world supply of gold came from South Africa. 50% of all the gold ever
produced in the world came from South Africa and that amounts to 165,000 tonnes as
12
It is worth noting that after 18 years as net sellers, collectively central banks are now effectively net
buyers, causing not only a significant decrease in supply but a corresponding, simultaneous increase in
demand (See http://www.numbersleuth.org/worlds-gold/)
at 2009.13 In fact, the Witwatersrand basin in South Africa is believed to be the largest
gold mining region on earth.
Table 2: Gold Production by Country: 2012
Rank
Country/Region
Gold production
(tonnes)
World
2,700
1
China
370
2
Australia
250
3
United States
230
4
Russia
205
5
South Africa
170
6
Peru
165
7
Canada
102
8
Indonesia
95
9
Uzbekistan
90
10
Ghana
89
11
Mexico
87
Rest of the world
Source: U.S. Geological Survey
847
In addition to Jewellery, gold is also used for investment and industry (40% and 10%,
respectively) (World Gold Council 2012). Owing to the global recession and economic
downturns in several countries, the demand for gold for Jewellery fell between 2010 and
2012 from 2,017 tonnes to 1,908 tonnes. Concomitant with this however, was an
increase in the value of jewellery sales from 79.4 US$bn to 102.4 US$bn (World Gold
Council 2012). This reflects increasing prices for gold. Poor economic conditions
globally consequent to weakening US dollar, the European Debt Crisis and unrest in
North Africa and the Middle East were the main driving factors behind the increase in
demand for gold as a form of investment and the resultant increase in price.
KEY EXPORT TRENDS FOR GOLD JEWELLERY
In order to assess trends in trade of gold Jewellery, Jewellery is taken to mean item
89731 (articles of jewellery and parts thereof of precious metals) of revision 3 of the
13
http://www.numbersleuth.org/worlds-gold/
17
DaSilva-Glasgow, Dianna
14
The major destinations for gold from Italy are: The US, China and Switzerland. In 2012, China became
the second by largest export destination for Italian Jewellery with an increse in exports by 52.7%.
19
DaSilva-Glasgow, Dianna
Secondly, is the shift in position of India and the USA to first and second place in 2010.
In 2011 (figure 3), the value of exports of gold Jewellery from India almost doubled from
US$7,834 Mn to US$14,382 Mn allowing India to become the number one exporter of
gold jewellery. Both the USA and India have been able to overtake Italy which was
previously the leading exporter of gold Jewellery. Italys decline is related to several
factors (Brough 2012):
1. High cost base of Italian jewelers due mainly to high salaries and small scales of
operation. Italy produces both mass-produced and crafted gold jewellery. The
country faces increasing competition from low cost competitors such as China,
Hong Kong that relies on improved design skills, access to the latest technology
and cheap labour (Brough 2012).
2. Duty-free access of competing countries in export markets. For instance, India
has duty-fee access to the US market for exports up to a certain volume. India
also faces low duties in the EU market. According to Brough (2012) Italian
exporters also face barriers in the markets of the BRIC countries.
3. High price of gold which is higher than historical levels. Gold is currently being
traded at US$1669 oz.
4. Economic recession in Italy15 (Brough 2012)
5. Unorganized market in Italy16, which is made up mainly of small fragmented
family owned businesses.
Thirdly is the growth in the value of exports of China from US$1,511 Mn in 2000 to
US$4,776 Mn in 2010. In 2011, China became the second largest exporter of gold
Jewellery, overtaking the US, with a value of US$10,079. This seems to support a
KPMG study that predicts that by 2015, the market shares of China and India would
15
As a result of the economic recession, sales of gold Jewellery in Italy fell by 9% in value terms in 2012
according to the World Gold Council, while volume declined by 15% compared to 2011. During Italy's
economic downturn, India-based Gitanjali purchased a number of Italian luxury jewellery brands.
Subsequently, the world's largest diamond and jewellery manufacturer-retailers opened a store in Dalian,
China, for the Italian brands Stefan Hafner and Nouvelle Bague.
16
http://www.ibtimes.co.uk/articles/401180/20121103/gold-world-council-damiani-italy-india.htm
have risen to 13% from the 2007 level of 8-9% while the US share will drop to 25%
from 30.8% in 2007 (World Gold Council 2012).
Fourthly, most of the leading exporters are developed countries which means that even
though the manufacuting capacity of developing countries suchas China is expanding,
manufacturing still remains dominated by developed countries.
KEY IMPORT TRENDS FOR GOLD JEWELLERY
21
DaSilva-Glasgow, Dianna
17
18
DaSilva-Glasgow, Dianna
442.37
376.96
150.28
75.16
77.75
60.12
67.60
56.68
41.00
31.75
745.70
428.00
128.61
74.07
72.95
67.50
63.37
53.43
32.75
27.35
69
14
-14
-1
-6
12
-6
-6
-20
-14
24.10
21.97
-10
21.85
18.83
15.08
7.33
1508.70
251.6
18.50
15.87
14.36
6.28
1805.60
254.0
-15
-16
-5
-14
20
1
2011
618.3
549.6
115.5
70.1
51.7
76.7
50.1
33.8
30.2
22.6
27.6
19
16.6
12.5
13
3.6
1711
261.1
World Total
1760.3
2059.6
17
1972.1
Source: SOURCE: World Gold Council Gold Demand Trends Report, Full Year 2010,
World Gold Council 2013
http://www.forexyard.com/en/news/Gold-jewellery-consumption-by-country-2011-0228T130619Z-FACTBOX
http://www.gold.org/investment/research/regular_reports/gold_demand_trends/
http://www.numbersleuth.org/worlds-gold/
The second is that growth in consumption is taking place mainly in the EastIndia and China are the fastest growing markets in the world
Countries in the East accounted for approximately 70% of the worlds gold jewellery in
2010 (see table 3 above). India and China are at the forefront of this growth. However,
Indias consumption in 2010 was almost double that of China. Growth in the Indian
market is likely to be sustained as accoridng to a study by the World Gold Council 75%
of Indian women say they are constantly searching for new designs. Jewellery sales in
the Indian market are estimated to reach US$37 billion in 2015 (World Gold Council
2011).
The World Gold Counil (2010) highlights one fundamental difference between the
chinese market and other markets and that is that Chinese consumers prefer higher
levels of purity. More than 80% of gold jewellery in China is made from 24 pure carat
gold.
There are several driving forces behind the growth of the Indian and Chinese markets.
these include:
1. The symbolism of gold. Gold is considered a symbol of power, strength and love.
Gold is the number one choice of wedding jewlery. Over 50% of gold Jewellery
bought in India are bought for weddings. According to the World Gold Council19
(2013) over 75% of all urban Chinese women own more one significant piece of
gold Jewellery partially because of the use of gold Jewellery in the wedding
ceremony.
2. Expanding economic growth. Both China and India are among the fastest growing
economies in the world. According to the Economist (2012), it is also a tradition in
India to launder undeclared income by converting it to gold which could also
contribute to the high demand for gold in India.
3. Culture. Gold Jewellery is an important aspect of Indian culture and mythology.
Gold Jewellery is passed on from one generation to another and is a popular
wedding gift given to daughters. According to the world Gold Council20 during the
festival of Dhanteras, the most auspicious day in the calendar just before Diwali,
there is a usually surge in sales of gold Jewellery.
4. Consumer perception. In addition to culture, consumer perception is an important
driving force for the increased demand of gold in both India and China. The World
Gold Council reports that Chinese women have indicated that wearing gold makes
them feel good.21 Both India and China have in recent times, been targeted for
branded Jewellery. According to Brough (2012) with declining sales domestically
some Italian jewelers are looking towards markets in emerging economies, such as
19
http://www.gold.org/jewellery/markets/india/
Ibid
21
http://www.gold.org/jewellery/markets/china/
20
25
DaSilva-Glasgow, Dianna
Chinese and Russia, to boost sales. For instance, Italian Jeweller Damiani has
opened eight boutiques in China with plans to open another five.
Market
Low
Modular
High
High
High
Low
High
Low
High
High
High
Low
Low
Complexity of Transactions
Hierarchy
High
Degree of coordination
and power asymmetry
Low
High
The Gold jewellery chain could be classified as a producer-driven chain given the fact
that most of the operations of jewellery manufactures are vertically integrated from the
design stage to the distribution segments of the chain. This means that jewellery
companies exert greater control over the design and price of jewellery than do
consumers. They also play a dominant role in the distribution of fabricated jewellery and
the control of the chain generally. With respect to governance, several structures are
27
DaSilva-Glasgow, Dianna
evident at various stages of the gold Jewellery value chain. This supports work by Dolan
and Humphrey (2004) and Gereffit, Lee et al. (2009) (see Gereffi and Fernandez-Stark
2011) that GVCs are characterized by multiple an interacting governance structures.
Figure 6 captures the various governance structures evident in the gold jewellery chain
with explanations on the choice of structure at each stage.
Relational
Design
Research
Gold Mining
Market
Fabrication
Distribution
Hierarchical
Research, gold mining and gold refining are governed by the market
This is because the information involved in transactions at these stages is simple.
Further, transactions are driven by price, with minimal scope for firms to dominate how
transactions occur. This is clearly evident when the nature of gold production and
trading is assessed. Table 5 shows the dominant gold producing firms globally. In 2012,
Canadian Barrick gold was the leading producer of gold, with operations in seven
countries. Producers of gold do not require input from purchasing companies in order
for production to occur. Producers and refiners of gold also have no impact over the
price at which gold is traded as the price is fixed. The fixed price is then used as a
benchmark price for the sale of refined gold. The system used to fix prices is called the
London Fix22 and occurs twice daily (at 10 am and 3 pm)23. Fixed prices are reported in
US dollars, Sterling and Euros and per troy ounce. The London fixing emerged way
back in 1919 when the Bank of England signed an agreement with seven South African
mining houses to have their gold refined in London and sold through N.M. Rothschild at
an agreed price. Presently, several other options exist for the trading of gold and the
setting of the price of gold, though the London Fix is still the benchmark used. Gold is
traded on several stock exchanges both in physical form and through derivatives,
through what are known as exchange-traded funds (ETFs) such as SPDR Gold Shares,
Gold Bullion Securities(London), Gold Bullion Securities (Australia), NewGold
Debentures, iShares Comes Gold Trust, ZKB Gold ETF, GoldIST, ETF Securtiies
Physical Gold etc (World Gold Council 2012). In 2011, about 2,100 metric tons of gold
appeared in exchange-traded funds (ETFs), 1,240 metric tons of which were in SPDR
Gold Shares (World Gold Council 2013).
In ability of producers and traders to influence directly the price at which gold is traded
means that purchasers of gold can easily switch from one supplier to another.
22
The banks currently involved in the fix are Bank of Nova Scotia- Scotia Mocatta, Barclays Bank,
Deutsche Bank, HSBC Bank US and Societe Generale.
23
Previously the price was fixed only at 10am however; in 1968 N.M. Rothschild introduced the 3pm fix to
coincide with the opening of the US market. This latter fix is considered the more important of the two.
29
DaSilva-Glasgow, Dianna
Name
Base
Operations Globally
2012 rev
(bil.USD)
2012 Profit
(mil.USD)
2012 cap
bil USD
14.3 (2011)
4,500
49.0
Feb.10
5.4
1,900
10.4
Barrick Gold
Canada
Goldcorp
Canada
Newmont
Mining
United
States
Newcrest
mining
Australia
Anglogold
Ashanti
South
Africa
Yamana Gold
Canada
Kinross Gold
Canada
Gold Fields
Eldorado Gold
South
Africa
Canada
10
Polyus Gold
Russia
2011 FY
production
tonnes
217.7
Reserves
Moz
Total
Resource
Moz
226.92
Cash Cost
2011 year
US$ total/oz
460
39.0 Feb.7
71.29
400
29.09
Mar.02
145-150
2011 est
46.3
60.1
Feb'11
85.0
81.59
534
142.67
591
4.4
1000
26.0
Feb.14
71.44 (2011
NC 49.95
77.0
$692
74.9
205.45
Newcrest
119.2
264.30
5.9
1300
16.7
Feb.28
122.75
2.2
500
3.9
(2100)
5.2
900
1.1
300
13.0
Feb.27
11.5
Jan.20
11.26
Jan.21
13.0
Feb.27
10.59
25.98
19.4
46.35
463
74.0 (2011)
59.17
92.06
596
98.80
78.9
270.28
795
18.69
18.67
20.2
405
74.1
211.92
617
Russia, Republic of
1.7
300
39.7-42.5
Kazakhstan, Romania and
2011 est
Kyrgyzstan
Source: http://goldinvestingnews.com/investing-in-gold/top-10-gold-producers, http://en.wikipedia.org/wiki/Largest_gold_companies
138.5
728
31
DaSilva-Glasgow, Dianna
http://en.bulgari.com/about/about_bulgari.jsp?cat=cat00105#homeAB.jsp?cat=cat00105
its efforts as it was able to produce and assemble in-house the Bulgari BVL 465 Caliber.
Table 9 shows other examples of recent investments by leading jewelers companies,
which includes mergers and acquisitions and joint venture arrangements. These are
more dominant at the manufacturing stage and also encompass use of brand names.
These reflect attempts by firms to consolidate their operations in a bid to increase their
share of the global market. However, these investments would also lead to further
concentration and dominance of firms in the value chain.
Jewelers can also exert some degree of control downstream over the production of
diamonds. Gold jewellery is often produced in combination with other metals and
gemstones such as diamonds. Jewelers such as Bulgari, use the Kimberley process
international certification scheme to select suppliers of diamonds. Most of these
suppliers
are
members
of
the World
Diamond
Council,
which
encourages
implementation of the Kimberley Process. All suppliers of diamonds must produce a five
year warranty stating that they do not sell conflict diamonds before they can secure
buyers. 25.
Following internationally-set standard is another way of companies gaining a
competitive edge in the global jewellery value chain. Some of the leading jewelers are
members of the Responsible Jewellery Council (RJC). The RJC is a not-for-profit
organization that focuses on the quality and human, social and environmental ethics of
the diamond, goldsmithing and platinoids value chain26. Bulgari is a RJC member.
Richemont, the group company under which Van Cleefs and Arpels and Cartier falls, is
also a member of the RJC.
There are also ISO relevant standards that producers must comply with in their
operations.
Examples
(Jewellery-Ring-sizes-Definition,
(Jewellery-Fineness
of
include:
measurement
precious
metal
and
ISO
8653:1986
designation);
alloys);
and
ISO/AWI
ISO
9202
10713:1992
25
26
http://en.bulgari.com/about/about_bulgari.jsp?cat=cat00105#homeAB.jsp?cat=cat00105
http://www.responsiblejewellery.com/
33
DaSilva-Glasgow, Dianna
Jewelers also control the distribution of their jewellery through self-operated boutiques
chains nationally and internationally to maintain their brand. For instance, Tiffany & Co.
has 275 stores globally. Table 8 shows leading players in the various distribution
channels for gold jewellery. In India, the major national chains include Tata Group and
Gitanjali Gems Ltd. In China leading national Chains include the Pranda Group but
China is also home to international chains such as Piaget, Harry Winston, Graff and
Tiffany & Co. In the US leading national chains include Zale Corporation and Kay
Jewellers; international chains include Tiffany & Co. and Piaget.
Table 6: Leading Jewellery Companies Globally Based on Retail Value in 2011, USD Billion
Company
Headquarters
Retail
Number of
value
Stores
1. Chow Tai Fook Jewellery Group Ltd.
China
4.6
1000
Switzerland
4.5
United States
3.9
275
United Kingdom
3.4
1443
China
3.3
China
2.7
7. Zale Corp.
United States
1.8
8. Pandora A/S
Denmark
1.7
France
1.5
3204
10. Swarovski AG
Austria
1.3
1218
1778
35
DaSilva-Glasgow, Dianna
Country of
Origin
1. Buccellati
Italy
2. Tiffany &
Co
USA
3. Piaget
Switzerland
4. Cartier27
France
5. Chopard
Switzerland
6. Bulgari28
Itlay
Number of Locations
Globally
US, Canada, France, Paris, Italy, United Kingdom, Russia,
Japan, Australia
Canada, Mexico, Brazil, USA, Japan, China, Korea, Taiwan,
Australia, Singapore, Macau and Malaysia, United Kingdom,
Germany, Italy, France, Spain, Switzerland, Austria,
Belgium, the Czech Republic, Ireland, Netherlands, the
United Arab Emirates
Switzerland USA, Canada, Japan, China
Number
of
Stores
275
Number of
Employees
9,900
25,000
(group)
300
120
1,750
Examples of Collections
Gouverneur Dragon
and Phoenix www.piaget.com
Sortilges, Cartier, Naturellement
collection Trinity Collection
Quartz, L.U.C, Casmir, La Vie en
Rose, Pushkin, Copacabana, and
Chopardissimo
BVLGARI
27
28
Major Players
US
Branded
Boutique
chain
Retailers
China
Independent
(Authorized)
Retailers
National Chains
Cosmos
Zale Corp. and Kay
Jewelers, Finlay
Jewelers
International
Chains
Signet Jewellers
Discount
Merchandisers
Department
Stores
NonStore
Retailers
India
Online shopping
TV home
stations
Italy
Bulgari,
Buccellati
totaram.com, meenajewelers.com,
aumkaarfashions.com, amritasingh.com
Coin,
LaRinascente
QVC/CNR
QVC, for
you, HSE24
37
DaSilva-Glasgow, Dianna
Others
Source: Various
ACNTV, Jewellery
television ,Americas
Auction network,
Home Shopping
Network, Liquidation
channel (Jewellery
channel)
Mail-order, armed
forces retailers, pawn
shops
Travel
catalogues
Table 9: Recent Investments by Leading Jewellery Companies, affecting the Governance of the Value Chain
Company Name
A.J Jewellery29
Gitanjali Group
Stage of the
Value Chain
Distribution
Nature of Investment
Mergers and Acquisitions
Merger with Italian Jewellery institution
British jewellery distribution company Alfred Terry
Gitanjali Group
Manufacturing
Bulgari
Manufacturing
Joint Ventures
Bulgari
Design (Brand)
Gitanjali Group
Design (Brand)
Bulgari
Manufacturing
(Component)
Crova in 2004
in August 2008, bought 60 per cent of its commercial and brandrelated operations.
'Nakshatra', the premium brand of jewellery promoted by
Diamond Trading Company (DTC)
2005; Italian leather-goods company Pacini, renaming it Bulgari
Accessories
Richemont
Manufacturing
(Component)
Manufacturing
and
Distribution
Signet
Source: Company Websites
29
30
http://www.ajjew.com/newsite/en/node/15
Under the agreement, Tiffany and its affiliated companies may only purchase Tiffany & Co. brand watches from the Swatch Group.
39
DaSilva-Glasgow, Dianna
Jewelry Design
Research
Gold Mining
Gold Refining
Jewelry
Marketing and
Gold
Fabrication
Distribution
Recycling
In recent years there has been a gold rush owing to favourable prices globally gold
(Thomas 2011). This has seen gold mining, in particular, increasing significantly. For
instance, between 2008 and 2010 the value of gold output expanded by 23%.
Concurrently, exports of gold have expanded so much so that gold is now the number 1
exported commodity from Guyana. Figure 8 reveals a spike in the value of gold exports
starting from 2005.
41
DaSilva-Glasgow, Dianna
Rank
1
HS4
7108
Gold
Value
$440,822,299
1006
Rice
$183,665,932
15.99%
2606
Aluminium ores
$149,061,412
12.98%
1701
$102,120,914
8.89%
306
Crustaceans
$35,149,291
3.06%
2208
$26,700,964
2.32%
4407
$25,753,010
2.24%
7102
Diamonds
$12,577,128
1.09%
1703
Molasses
$11,178,033
0.97%
10
4409
$10,206,224
0.89%
11
303
$9,858,230
0.86%
Percent
38.38%
43
DaSilva-Glasgow, Dianna
12
304 Fish fillet or meat
$9,254,788
0.81%
$9,088,934
0.79%
$8,660,944
0.75%
$7,980,233
0.69%
$7,614,697
0.66%
$7,258,403
0.63%
$5,905,814
0.51%
13
305
14
4403
15
7204
16
302
17
4404
18
4412
19
4406
$4,351,725
0.38%
20
7113
$3,927,925
0.34%
Source: Datamonitor
Guyanas main export markets for gold jewellery are in the Asia, North America, Europe
and the CARICOM. In 2011, the top ranking markets for exports from Guyana were the
United Aram Emirates , Surinae and the Bahamas.
Table 11: Export Markets for Gold Jewellery, 2008-2011
Partner
Suriname
106
Barbados
$23,379
87
USA
7,683
25
Trinidad and
Tobago
Canada
221
98
5,894
United Arab
Emirates
Belgium
3,027,270
2,703,386
894,761
Bahamas
World
193
7,910
3,928,047
Notes: *89731 SITC Rev 3- Jewellery of precious metals
19,555
$2,746,320
45
DaSilva-Glasgow, Dianna
Jewelry Design
Gold Mining
Gold Board
Gold Dealers
(Government-
& Traders
Jewelry Design
tools (moulds,
casting etc)
Owned)
Pawn
shops
Laboratory
Non-store/non-
Jewelry
preparatory Services
licensed traders
Fabrication
Jewelry
Distribution
Channeks
Specialist
stores
Jewelry
chain
retailers
Informal
Buyers
The following observations are noteworthy regarding the value chain for gold jewellery
in Guyana:
When the number of firms in the value chain are assessed, there is a
disproportionately large amount of mining companies compared to jewelers
which points to the fact that there is insufficient manufacturing of the primary
resource extracted. The main operators in the mining industry are: Omai Gold
Mines Limited, Correia Mining Company ltd, Forage Orbit Inc and Major Miners
Inc. (See table 12 for main players in the industry).
Gold refining and trading takes place through a semi-autonomous government
agency. All raw Gold extracted in the mining industry must be declared to the
Guyana Gold Board. The Guyana Gold Board is the sole entity authorized to buy
and sell raw Gold in Guyana (at the London fix). Specifically, its functions are:
1. To carry on the business of trading in gold
2. To secure at all times an adequate supply of gold and to ensure its
equitable distribution at fair prices
3. To purchase all gold produced in Guyana
4. To sell all gold in Guyana and to sell gold out of Guyana
5. To engage in other related commercial or industrial activities...
There also exists an informal (unlicensed) sector that undertakes gold trading.
The difference between Goldsmiths and jewelers in the local context is principally
that Goldsmiths are metalworkers who tend to work only with gold whereas
jewelers are a little higher in the value chain and craft Jewellery from both gold
and other gem stones. Many jewelers work with Goldsmiths. All goldsmiths and
jewelers must be licensed to operate. The main goldsmiths and jewelers in the
industry include: Kings Jewellery World which dominates the industry, L.
Seepersaud Maraj and Sons, Gaskin and Jackson Jewelers, Topaz and Steves
Jewellery.
47
DaSilva-Glasgow, Dianna
Many of the jewelers in Guyana rely on a system called casting for the design of
Jewellery, which is essentially crafted by hand. Casting requires the use of
moulds which are tools used to pre-design Jewellery. There are two sources of
moulds. Locally, some jewelers make their own moulds containing original
designs. Moulds are initially made from silver (which has to be imported) and
then are reproduced using rubber and wax. However, the alternative is to import
moulds manufactured in countries such as China, which apparently is the
preferred option among jewelers. Other Jewellery design tools are also imported
mainly from the United States. Most of the jewelers self-import the tools required
for Jewellery manufacturing. However, there is one jeweler (Scotts Jewellery
tools and variety stores) that is also involved in the importation and distribution of
Jewellery tools. This jeweler works with goldsmiths on a contractural basis for the
design and fabrication of Jewellery. However, all tools and equipment are
supplied by them.
There are essentially two levels on which Jewellery is distributed. Firstly,
jewelers also operate Jewellery stores and retail Jewellery as their own exquisite
designs. Secondly, some jewelers have chain stores or several stores around
the country and supply their various branches with Jewellery. Most of the
jewelers sell only to local customers and benefit from repeat customers to build
their clientele base. There are also sales to tourists which is essentially the
primary means of getting indigenous Guyanese designs exposed to the
international market. The other two channels depicted in the framework represent
channels of purchasing jewellery from consumers.
Table 12: Main Players in the Gold Jewellery Manufacturing Sector In Guyana
Main Players In The Gold Jewellery Manufacturing Segment In
Guyana
Position in
chain
Gold Mining
the
value
Gold Dealers/Traders
Company name
Guyana Goldfields
Omai Gold Mines Limited.
Correia Mining Company Limited
Forage Orbit Incorporated
Guyana Goldfields Inc
Major Miners inc.
SKS Mineral Trading
Pure Diamond Inc.
Steves Jewellery
STAKEHOLDER ANALYSIS
Table 13 summarizes the key stakeholders having an impact on the performance of
firms in the local gold jewellery industry. These encompass governmental ministries,
semi-autonomous agencies, private entities and industry associations.
All governmental organizations play an important role in the industry and have power
and influence to shape how the development of the industry unfolds as they shape the
environment under which firms must operate. These organizations address issues
related to the environment, compliance with labour regulations, small businesses,
energy, trade, tax, investment and standards.
Industry associations such as the private sector commission, the Guyana Manufacturers
and Services Association and the Georgetown Chamber of Commerce are important to
the development of the gold industry in Guyana as they perform general functions that
would benefit all manufacturers such as policy advocacy and training. While these
organizations are important their level of power and influence over the industry is
restricted by the limited participation of gold jewellery firms in these organizations. Only
three jewellery manufacturers are members of the Guyana Manufacturers and Services
Association.
At the gold mining stage, the organizations involved in the regulatory management of
the industry are not only highly important to the industry but can exert significant power
and influence over the development of the sector through their impact of the supply of
raw gold. The Guyana Geology and Mines Commission for instance is an important
regulatory agency in the mining industry. All mining equipment must be registered and
licensed by the company to operate. Additionally, Gold refining is done by the state49
DaSilva-Glasgow, Dianna
owned, Guyana Gold Board. This is also the only government-directed agency
responsible for the buying and selling of raw gold in Guyana. This company has an
impact over the purity of gold
Power &
Influence
over sector
development
Medium
Medium
High
High
High
High
Medium
High
High
High
Medium
Low
Medium
High
High
High
High
However, in spite of positive growth rates over the last couple of years, Guyanas macro
performance still requires further improvement in order to support business
development. On the global competitiveness index Guyana has a rank of 109 for
macroeconomic conditions with a score of 4.02. This is less than its overall score, which
51
DaSilva-Glasgow, Dianna
is 114. Poverty though it has reduced is still somewhere around 38% based on the
latest estimates by the Bureau of Statistics.
Labour market size:
The size of the labour market in Guyana is conducive to expanding the gold jewellery
industry locally and improving Guyanas participation in the global gold jewellery value
chain. The countrys working age population (persons 15- 65 years who are capable of
being engaged in productive activities) is approximately 60% of the total population and
has marginally increased since 1980 in response to total population trends. The labour
force participation rate (ratio of the labour force to the working age population) however,
remains low, falling from around 60% in 1992 to about 54% in 2008. Labour force is
defined as the number of persons of working age who are gainfully employed or are
seeking to become gainfully employed. This indicates that a significant proportion of the
countrys working age population (40%) is economically inactive (see table 14). The most
recent estimate of the unemployment rate in Guyana places it at 11%.
In addition, the country has a high migration rate among persons who have received
tertiary education. The latest estimate by the World Bank suggests that 86% of the
countrys university graduates migrate to developed countries. This high level of migration
is related to the poor capacity of the country to absorb all the graduates that are produced.
Therefore labour is available to work with reasonable skills set. Undoubtedly, industry
specific training would be required as this is currently lacking.
Table 14: Activity Status by Gender: 1992/93 and 1999
Activity Status by Gender
Activity Status
All Guyana
Male
Female
1992/93
1999
1992/93
1999
1992/93
1999
Labour Force Participation Rate
60
57
81
76
39
39
Inactive
40
43
19
24
61
61
Working (% of Labour Force)
88
91
92
94
82
86
Unemployed (% of Labour Force)
12
9
8
6
18
14
Source: Guyana Survey of Living Conditions, 1999
Social Conditions
Social conditions in Guyana have improved in tandem with improved economic
performance. For instance, there are has been significant reductions in the male and
female labour force participation rates, From 81% and 39% respectively in 1993 to
about 81% and 61%, respectively in 2010.
Additionally, Guyana has a literacy rate of 98% for females and 99.1% for males. The
country ranks highly on the Education Index of the United Nations Human Development
Report. Guyana is ranked at number 37 which is behind only Cuba and Barbados in the
Caribbean and Argentina in South America.
Unfortunately in Guyana there are no training institutions providing skills development
related to Jewellery manufacturing thus jewelers rely on the apprenticeship system
where young goldsmiths/jewelers are trained by senior goldsmiths/jewelers.
Ease of Doing Business (Institutional Conditions)
Guyanas institutions need to improve in order to allow for greater impact on business
development. Institutions as considered in this context include tax, labour education and
other agencies that have an impact on industry growth and development. These can be
assessed by examining the World Banks doing business index. 31
Guyanas rank in the World Bank ease of doing business index was 114 out of 184
Countries. This was below the average rank of 97 for the Latin American and Caribbean
region and, when compared to CARICOM states, was higher than only Suriname (164)
and Haiti (174) (See figure 12).
31
http://www.doingbusiness.org/data/exploreeconomies/guyana/
53
DaSilva-Glasgow, Dianna
Table 15 shows the variables measured for the ease of doing business index and gives
an indication of the institutions in Guyana where the greatest need for improvements
exist. Guyanas ranks are better for dealing with construction permits and enforcing
contracts and worse for getting credit and electricity, resolving insolvency and paying
taxes. Guyanas ranking on the ease of paying taxes (118) are even lower than its
overall ranking (114) and is lower than the average (114) for the Latin American and
Caribbean region and higher than only Haiti (123) and Jamaica (163). Therefore the
institutions with the greatest need for reform in how they perform administratively are;
financial, tax and electricity agencies.
Table 15: Guyana, Ease of Doing Business Rank by Criteria
Topic Rankings
DB 2013 Rank
DB 2012 Rank
Change in Rank
Starting a Business
89
80
-9
Dealing with Construction Permits
29
25
-4
Getting Electricity
148
142
-6
Registering Property
114
106
-8
Getting Credit
167
165
-2
Protecting Investors
82
79
-3
Paying Taxes
118
113
-5
Trading Across Borders
84
81
-3
Enforcing Contracts
75
74
-1
Resolving Insolvency
138
141
3
48
35%
taxable profit
22.8
12
48
8%
gross salaries
8.8
equity
1.2
0.5% and
0.75%
various rates
1.1
1
1
20%
various rates
Vehicle
registration tax
Stamp duty
G$30,000
assessed
property value
capital gains
fuel
consumption
fixed fee
12
167
G$ 1 per G$
1,000
16%
transaction
value
value added
35
263
1
1
0.3
0
0
small
amount
not
included
36.1
Available infrastructure:
Infrastructure is one of the basic requirements for improving competitiveness. On the
global competitiveness index Guyana has a rank of 109 for infrastructure with a score of
2.91 which is lower than its overall score is 107 signalling that infrastructure is not of
sufficient quality to support effective business development
55
DaSilva-Glasgow, Dianna
33
Ibid
34
Score
Average
Strong
Average
Weak
Weak
Average
Average
Average
DaSilva-Glasgow, Dianna
B.
http://www.wipo.int/wipolex/en/profile.jsp?code=GY
Further, figure 13 show that gold output, following a slump in 2005 when Guyana
experienced significant floods, has been steadily increasing. In 2011, output in troy
ounces was 363,083. It is also worthwhile to note that much of the raw gold produced in
Guyana is exported rather than retained domestically for value adding. In fact, in 2011,
export volumes rose by 14.9% to 347,850 troy ounces from 302,654 troy ounces in
2010. Export volumes in 2011 represented approximately 96% of total gold output for
the year.
36
http://data.worldbank.org/country/guyana
59
DaSilva-Glasgow, Dianna
There is general support for business development through the provision of various
incentives including tax holidays, waivers of customs duties, export tax allowance.
SMEs are not excluded from accessing these benefits.
Summary: as reflected in table 18, overall conditions within the industry can have an
average impact on further growth of the industry.
Table 18: Summary of Industry Specific Factors
Industry specific factors
Intellectual property protection
Availability of qualified human capital
Labour costs and regulation
Infrastructure
Policy incentives
Institutionalization
Participation in global networks
Overall
Score
Weak
Weak
Strong
Average
Average
Average
Average
Average
entails acquiring new functions (or abandoning existing functions) to increase the overall skill
content of the activities (Gereffi and Fernandez-Stark 2011)
38
where firms move into new but often related industries (Gereffi and Fernandez-Stark 2011)
61
DaSilva-Glasgow, Dianna
therefore at these stages that the greatest scope for improvement exists. In this regard,
the options for upgrading are:
1. Product upgrading. Product upgrading, as defined by Humphrey and Schmitz
(2002) (in Gereffi and Stark 2011), describes a situation where firms move into
more sophisticated product lines. Jewellery exports in Guyana can upgrade in
this regard by focusing on the production of jewellery with higher caratages.
There is certainly a demand for such products in the fast growing Chinese
market. According to the World Gold Council more than 80% of gold jewellery in
China is made from pure 24 carat gold. This fact has led the World Gold Council
to launch K-gold which a branded expression of 18 carat gold from which new
designs and concepts can emerge to take advantage of demand patterns in
China. Guyana has the advantage of access to gold and other precious metals,
the majority of which are still exported in the primary state.
For small firms the main challenge of upgrading along this line is competitively
accessing and penetrating markets. Price is not so much a challenge, though its
importance is not disputable as global competition in the jewellery market is
based more on quality and design capacity. However, it is necessary to consider
that the strategy of many of the lead firms globally is that of vertical integration
which gives them more price flexibility and dominance in the global jewellery
industry. Another challenge is the lack of opportunities for the training of
emerging goldsmiths locally, which may be important to increasing design
capacity.
2. Market entry upgrading Most of the gold jewellery produced is consumed
domestically. There are fast growing export markets in China and India. These
markets are only now becoming targets of the high-end luxury segments. There
is therefore scope for further penetration of these markets with low-end products.
However, it is important to note that the possibilities of upgrading in this regard,
particularly as it relates to targeting these markets are very small for two main
reasons. Firstly, China is increasing mass production of low cost jewellery items,
even substitute items in the costume jewellery segment, with the use of newer
technologies, which means that exporters would find it difficult to compete with
Chinese-made products. Further, presently, most of the jewellery tools used
domestically are imported from China. Secondly, China has been imposing
punitive import duties on jewellery items, which are supposedly being done to
protect domestic manufacturers.39
3. End market upgrading. Firms can seek to access new end markets such as
improving their presence in the Caribbean and South American markets or
adopting a niche marketing strategy of targeting the Diaspora in markets such
the USA, Canada and Europe. The US for instance is the third largest consumer
market for gold jewellery and according to the National Jeweler magazine, is a
market where the majority of jewellery retailing occurs through non-brand
Jewellery shops that account for 79% of Jewellery-only retailers in the US. There
is therefore significant scope for SME involvement in this type of product
upgrading.
The Caribbean market, in spite of its smallness is not yet saturated with
Guyanese-made jewellery. This is evident when export volumes for 2008 to 2011
are examined (see table 11). Export values are very minuscule. For instance, in
2010 only US$98 worth of jewellery was exported to Trinidad and Tobago, the
only CARICOM country to which jewellery was exported for that year. There is
therefore scope for large Guyanese Jewellers such as Kings Jewellery World to
increase their presence in the Caribbean by opening brand shops in the
territories of several CARICOM countries particularly since the CSME allows for
cross border establishment of businesses.
There are further advantages of getting into markets with a large Diaspora such
as the US and the Caribbean market; the first is geographical proximity and the
39
http://www.bullionstreet.com/news/india-us-become-top-gold-Jewellery-exporters/3282
63
DaSilva-Glasgow, Dianna
Examples
include
formulating
arrangements
with
discount
40
http://www.ibtimes.co.uk/articles/401180/20121103/gold-world-council-damiani-italy-india.htm
65
DaSilva-Glasgow, Dianna
Table 19: Upgrading Opportunities for Guyana in the Gold Jewellery Value Chain
Participation
Upgrading trajectories
Scope for SMEs to Enter
in the GVC
Gold Mining
Consolidation of position
SMEs already dominate and will therefore not
by attracting more firms
find it difficult to enter
Product upgrading
Global competition is based more on quality
and less on price which requires economies of
scale
Process upgrading
Access to labour
Access to Finance
Ability to establish
linkages
Ability to coordinate
industry
domestically
Access to labour
Access to Finance
67
DaSilva-Glasgow, Dianna
Increased
participation in trade
fairs
Jewellery
association
Training by
technical institutions
[
Figure 14- Recommended Upgrading Strategies for Guyana
non-brand
SMEs
can
penetrate
world
markets.
Nevertheless,
recognizing the fact that the jewellery market is fragmented with leading firms operating
mainly in the high-end segment, there is scope for Guyanese firms to increase exports
in the low-end segment. Prospects of increased exports are greater when consideration
is given to targeting certain end markets such as the Caribbean or CARICOM market
where Guyana benefits from preferential access but has not saturated with Guyanesemade jewellery. Further, scope exists for targeting Diasporic segments of markets in
Developed countries.
The realization of these strategies necessitate the implementation of certain policy
mechanisms to address critical weaknesses in the industry such as access to finance
by SMEs and the availability of skilled labour.
69
DaSilva-Glasgow, Dianna
2012)
http://in.reuters.com/article/2012/11/02/precious-italy-jewellery-india-us-
idINDEE8A108G20121102
7. Economist News Magazine. Jewellers in India Chains of gold Indias
conglomerates
muscle
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http://www.goldfields.co.za/
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73
DaSilva-Glasgow, Dianna
www.bulgari.com
www.mikimotoamerica.com
www.harrywinston.com
www.buccellati.com
www.vancleef-arpels.com
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es
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http://www.signetjewelers.com/sj/pages/operations
http://investors.gitanjaligroup.com/phoenix.zhtml?c=196729&p=irol-reportsannual
Opportunities
Rising world prices for gold
Abundance of labour
Infrastructure
Preferential
access
to
CARICOM market- exploitation
of low-end market locally
Increased
targeting
of
Guyanese Diaspora in key
markets
Increased
targeting
of
emerging markets such as
China where demand is based
more on caratage
Branding by leading companies
locally such as Kings Jewellery
World
Threats
Increased competitiveness of India
where production is also of handcrafted of Jewellery and high in
caratage.
Most of the worlds Jewellery,
including Jewellery of luxury brands
such as Buccellati is handmade.
75