jewellery industry in sri lanka
DESCRIPTION
This presentation shows a thorough analysis of global jewellery market and Sri Lankan jewellery industry. This will be highly beneficial for a small & medium enterprise to decide whether to go international or not, being in the Sri Lankan jewellery market.TRANSCRIPT
JEWELLERY INDUSTRY IN SRI LANKA
Ashen kumarasenaHusnun Nazeeyl
Kavindu HapuarachchiBhanuka Gunatilleke
Prabath Ariyapala
Top Importers and Exporters
CURRENT STATE OF THE INDUSTRY
Global Jewellery Industry
Industry Size
As of 2012 global jewellery industry was worth $275 billion
87% were fine jewellery and 13% costume jewellery
Fine jewellery – highest ever growth rate (46% during the last 5
years)
Gold and Diamonds accounts for more than 75% of fine jewellery
Platinum and Palladium are becoming popular in recent years
Jewellery Value Chain
3 key value additions (Sourcing, Fabrication and Retailing)
Sourcing
Gold and Diamonds together accounts for more than 75% of global fine
jewellery
Majority of the Diamond supply (Nearly 90%) comes from 7 countries
(Botswana, Russia, Angola, South Africa, Canada, Australia, and Dem. Rep.
of Congo).
Gold too is supplied by 7 countries, more than half of the gold comes from
South Africa, USA, Australia, China, Russia, Peru and Indonesia. The rest
from nearly 60 countries
Gold is also sourced from scrap recovery and through central bank sales
Sourcing - Diamonds
Sourcing - Gold
Fabrication
Fine Jewellery 87% Costume Jewellery 13% Fine Jewellery – Plain Metal and Gem Studded Traditionally Italy, USA, Thailand, China/Hong Kong have been the leading
players in fabrication of fine jewellery However India and Turkey have become significant in fabrication; India has
even overtaken Italy to become the world’s leading gold jewellery exporter. India, China and USA, the current leading fabricators in the world also have
other advantages, such as having a large domestic market, skilled labour etc. Price fluctuations of precious metal has led the search for alternatives.
Palladium has been the best option so far.
Fabrication
Retailing
US has always been the biggest jewellery market
Asia, regionally, is the biggest market (India and China
contributing more than half)
Traditionally there was no branding, but more recently
branded jewellery is increasingly becoming popular
Retailing
Special Characteristics
Controlled supply of precious metal and stones.
Large part of world’s Gold and Diamond production is split
between just 11 countries
Controlling the price using supply
Carat Differences
Us and Europe 9 – 18 carats (Gold)
Asia 22 – 24 Carats
Special Characteristics
Illegal Activities
Money laundering, illegal trade and human exploitations
Blood Diamonds
Evading tax and money laundering
Human rights violations, mainly when mining
Trade Terms
Hallmarking Marking the carat value Performed by an independent assay office Widely used in US, Europe and China, but at only a small level in
India
KPCS - The Kimberley Process Certification Scheme Agreement between producer, trader countries and leading
players to confirm the origins of the diamonds, Backed by United Nations
To prevent Blood Diamonds Not 100% successful, but significantly increased transparency in
the industry
Trade Terms
Ethical Mining
Encourages responsible mining practices
No Dirty Gold initiative by not only social groups, but also including leading brands and large retailers
It aims to reduce the environmental impacts ensure healthy and safe working condition for workmen reduce negative impact on communities such as, forced
displacement, child labour, public health, prostitution etc(KPMG, 2006)
Sri Lankan Economy
Agriculture Industries Tourism Exports
Reasons for the development of economy
Jewellery industry
The start and Early stage Employment 3 basic segments Reasons for the low progress Steps taken to promote jewellery industry
Current state Industry growth perspective?
negative or positive or static!!!
Price increase and attractiveness.
Main demanded products?Locally – foreign
Firm size diversity and its effectiveness.
Revenue of the industry.
Special characteristics
Geographical diversity.
Flexibility.
Competition.
Chain reaction.
Use for religious activities.
BARRIERS IN JEWELLERY INDUSTRY• Tariffs• Specified license and certifications• Start-up costs• Distribution Challenges• Inventory costs• Existing players in the market• Investment risk and losses• Insurance costs• Need of highly skilled employees• Different rules and regulations in different countries
Growth prospects in the international market
Total of 100 countries 14 consistent buyers Currently generates 47,220,894 US $ 95% of the total revenue
Selection of a country
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
Total Revenue
Total Revenue
Top three countries selected
12%
16%
23%
50%
Revenue by percentage
germanySwitzer-land
•Switzerland•United States•Germany
Why?
Switzerland United States Germany
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
1,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000
10,000,000
Revenue from Jewellery exports to USA
USA
Reven
ue in
US
$
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Revenue from Jewellery exports to Germany
germany
Revenue in U
S $
2000
2002
2004
2006
2008
2010
2012
05,000,000
10,000,00015,000,00020,000,00025,000,00030,000,00035,000,000
Revenue from Jewellery exports to Switzerland
switzerland
Revenue in U
S $
Regression analysis
Revenue = 7676816.523+0.823 total value of the exports to Switzerland + 1.310 total value of exports to USA
R value 0.861a Adjusted R value 0.720 F value of 85.736
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.
95.0% Confidence Interval
for B
B Std. Error Beta Lower Bound Upper Bound
1 (Constant) 7676816.523 984911.209 7.794 .000 5648353.916 9705279.130
total value of the exports
to switzerland
.823 .106 .793 7.790 .000 .605 1.040
total value of exports to
USA
1.310 .387 .344 3.383 .002 .512 2.107
a. Dependent Variable: Revenue
United States economy
History Pre-colonial stage Population growth and Immigration 1787 constitution Discovery of gold (1848) Major downfalls
Present Growth rate (annual- 2.7) (Q4- 3.2) GDP BOP Investments
Macroeconomic policies Monetary policy Fiscal policy
Jewellery industry of United States
33 billion dollar industry Industry growth 67,622 businesses 172,889 employees Fragmented Market share Recovery
Porter's five forces
Bargaining power of the customers- Threat of new entrants Rivalry Threat of substitutes Bargaining power of the suppliers
PEST analysis
Political factors Economical factors Social factors Technological factors
Product Analysis
Diamonds Precious stones (other than diamonds) and semi-
precious stones Synthetic or reconstructed precious or semi-precious
stones Articles of jewellery Imitation jewellery
Modes of entry
Introduction Best possible mode- Exporting Advantages Disadvantages Limitations in other modes
International Business Strategy
what is a strategy? Cross cultural assessment Distribution channel Risk assessment Strategic time Market intelligence
Recommendations Incentives on high tech machinery Separate department Training and development programs Branding
I.e. Sri-Lankan blue sapphire Emphasize on collecting and providing more data
CONCLUSION
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