June- Global Value Chain Analysis Gold Jewellery

DECEMBER 2012

IDS Institute of Development Studies

University of Guyana

Turkeyen Campus

Guyana

Working Paper

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June 2013

Dianna DaSilva-Glasgow

DaSilva-Glasgow, Dianna

Global Value Chain Analysis of the Gold Jewellery Industry: Upgrading

Trajectories for Guyana

by

Dianna DaSilva- Glasgow*

*Dianna DaSilva-Glasgow is a Researcher 2 at the Institute of Development Studies

and a Lecturer in the Department of Economics, Faculty of Social Sciences, University

of Guyana

IDS/UG 50th

Anniversary Working Paper Series- Working Paper 6/12

3

Published by the Institute of Development Studies,

University of Guyana,

Turkeyen, Georgetown,

Guyana, South America

www.idsguyana.org

June 2013

ISSN 1019- 1305

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.

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CONTENTS PAGE

SECTION 1: INTRODUCTION 1

SECTION 2: METHODOLOGY 3

SECTION 3: INPUT-OUTPUT STRUCTURE OF THE GLOBAL VALUE CHAIN

FOR GOLD JEWELRY

5

SECTION 4: KEY MARKET TRENDS IN THE GLOBAL GOLD JEWELLERY

INDUSTRY

16

SECTION 5: INDUSTRIAL ORGANIZATION AND GLOBAL GOVERNANCE

STRUCTURE OF THE GOLD JEWELRY INDUSTRY

27

SECTION 6: GUYANA’S CURRENT PARTICIPATION IN THE GLOBAL GOLD

JEWELRY VALUE CHAIN

41

SECTION 7: INSTITUTIONAL FRAMEWORK FOR GOVERNANCE OF THE

LOCAL VALUE CHAIN

45

SECTION 8: UPGRADING IN THE GLOBAL VALUE CHAIN 61

SECTION 9: RECOMMENDED UPGRADING STRATEGIES AND ASSOCIATED

POLICY MECHANISMS

67

SECTION 10: CONCLUSION 69

SECTION 11: KEY INFORMATION SOURCES 70

SECTION 12: APPENDIX (SWOT analysis of the Guyanese gold jewellery

industry)

75

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


Table 8: Leading Players in the Distribution of Gold Jewellery, by Category

Table 9: Recent Investments by Leading Jewellery Companies, affecting the

Governance of the Value Chain

Table 10: Top 10 Exports from Guyana, 2010

Table 11: Export Markets for Gold Jewellery, 2008-2011

Table 12: Main Players in the Gold Jewellery Manufacturing Sector In Guyana

Table 13: Key Stakeholders in the Gold Jewellery Industry in Guyana

Table 14: Activity Status by Gender: 1992/93 and 1999

Table 15: Guyana, Ease of Doing Business Rank by Criteria

Table 16: Guyana, Burden of Compliance with Taxes and Mandatory Contributions

Table 17: Summary of General Enabling Factors for Industry Development

Table 18: Summary of Industry Specific Factors

Table 19: Upgrading Opportunities for Guyana in the Gold Jewelry Value Chain

LIST OF FIGURES

Figure 1: Input-Output Structure of the Gold Jewellery Value Chain

Figure 2: Trends in Exports of Gold Jewelry, 2000-2010

Figure 3: Top 20 Exporters of gold jewelry, 2011

Figure 4: Trends in Imports of Gold Jewellery, 2000- 2010

Figure 5: Top 20 Importers of Gold, 2010

Figure 6: Governance Structures in the Gold Jewellery Value Chain

Figure 7: Guyana’s Participation in the Gold Jewellery Value Chain

Figure 8: Domestic Exports (US$Mn), 1990-2011


Figure 10: Guyana’s Value chain for Gold Jewellery Manufacturing

Figure 11: Growth Rate of Real GDP, Guyana: 2000-2012

Figure 12: Guyana, Ease of Doing Business Rank, 2012

Figure 13: Output of Gold: 2000-2011

Figure 14: Recommended Upgrading Strategies for Guyana

LIST OF APPENDICES

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Appendix 1- SWOT Analysis of the Guyanese Gold Jewellery Industry

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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 a 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 University’s

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


3. How is the value chain governed?

4. Where does Guyana fit in the Global Value Chain for Gold Jewellery

5. What is the structure and institutional framework for management of the Guyana’s

value chain?

6. What are the prospects of Guyana improving its participation in the gold jewellery

value chain?

7. What policy mechanisms are necessary to realize improved participation of Guyana

in the gold jewellery value chain?

The paper has twelve sections that are focused on answering the key research

questions. Section 2 describes the methodological approach of the paper; section 3

identified and describes the input-output structure of the global value chain for gold

Jewellery; section 4 examines key market trends in the global gold jewellery industry;

section 5 gives an overview of industrial organization and global governance structure

of the gold Jewellery industry; section 6 examines those aspects of the global chain

where Guyana currently participates; section 7 looks at the local value chain; the key

stakeholders having an impact on the gold industry and the key enabling conditions

generally and more specific to the industry that may affect the development of the

industry; section 8 examines the prospects for SMEs in Guyana to upgrade their

participation in the global value chain; section 9 recommended upgrading strategies

that are feasible for SMEs to follow and the associated policy mechanisms that are

necessary to realize these strategies; section 10 gives a brief conclusion; section 11

gives the key information sources consulted for the study and section 12 (appendix)

gives the SWOT analysis of the Guyanese gold jewellery industry that was used to

inform previous sections of the paper.

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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.

1 See Gereffi (1999) and Humphrey and Schmidt (2002)


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.

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SECTION 3: INPUT-OUTPUT STRUCTURE OF THE GLOBAL VALUE

CHAIN FOR GOLD JEWELLERY

Figure 1 shows the input-output structure of the global value chain for gold jewellery.

Based on the figure the Gold Jewellery value chain in simple stages encompasses

research, gold mining; gold refining and trading, Jewellery fabrication and design,

distribution and gold recycling.


Gold Mining

Mining Equipment

and Supplies

Jewelry

Fabrication

Marketing and

Distribution

- Branded Boutique

Chains

- Authorized Retailers

- Department Stores

- Discount Merchandisers

- ‘Mom and Pop shops

- Non-store Retailers

- Wholesale Distributors

Geo-physical Research:

- Mineral Exploration/ Gold Prospecting

- Resource Evaluation

- Reserve Definition

Gold

recycling

Gold Extraction Jewelry Tools

Jewelry Design

Gold Refining

Refining Equipment

Chemicals

Chemicals

Gold Trading:

State-Owned

Enterprises

Private Companies

Research

Exploration Equipment

and Supplies

Market Research

Chemicals

(paste,enamel,

rhodium liquid,

acid)

Research and Development

Figure 1: Input-Output Structure of the Gold Jewellery Value Chain

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Description of the global value chain for gold jewellery

Research Stage: Research is one of the first activities firms undertake before getting

involved in gold mining. There are two types of research that firms undertake,

geophysical and market research. The combined focus of both types of research is

the extraction and commercial exploitation of gold resources.

The specific focus of geophysical research is to determine if deposits of gold exist in

commercially viable quantities. The main activities involved in this type of research are

mineral exploration or prospecting, resource evaluation and reserve definition. Mineral

prospecting is a simplified form of mineral exploration and in effect, involves a search

for commercially viable deposits of ores. Prospecting and mineral exploration are similar

activities and often the terms are used interchangeably. However, mineral exploration is

a more organized and scale-intensive exercise. Prospecting/exploration can involve

both large and small firms; however, the use of the term prospecting often characterizes

more small-scale exploration. In some countries people work independently as

prospectors, some illegally. In some countries, such as the USA, gold prospecting (and

mining) is also done for recreational purposes. For instance, the Gold Prospectors

Association of America (GPAA) has mining claims across the country that members can

work for a yearly fee.

Market research is done to determine if discovered resources will be worth mining

based on commodity prices and demand trends. Small deposits will not be mined by

large firms as the economic returns will be small and the risks are great.2 Research also

focuses on assessing the risks involved in mining the resources; these include political

risks, particularly of foreign firms in developed countries, social and environmental risks,

market risks such as changes in land tenure and resistance from locals. Such research

is usually outsourced to consultancy firms.

2 http://en.wikipedia.org/wiki/Gold_prospecting


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, geo-

chemists, 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. Mercury-

use 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.

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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


the architectural and functional knowledge of fabrication techniques, composition,

wearability and market trends. In most instances, Jewellery could be designed and

fabricated by the same entity.

The options for designing jewellery are: (1) Employed goldsmiths and gemologists; (2)

Independent designers; and (3) Customers.

Jewellery stores can design jewellery in-house through certified gemologists employed

with the company or goldsmiths trained through the apprenticeship system, which is the

practice of small Jewellers. Jewellery design could also be outsourced to independent

jewelers. Customer designing is also facilitated by some stores where customers work

with store designers to create their own one-of-kind piece. According to the National

Jeweler (2008), in the US, stores that offer custom designing may also some also offer

other services such as free insurance appraisals, personalized after-sale service (like

free cleaning and maintenance work).

Jewellery Fabrication Stage: Jewellery fabrication is the first transformation of gold

bullion into a semi-finished or finished product (World Gold Council 2012). Pure gold is

often not used to make Jewellery because of its softness. It is usually alloyed with base

metals. Copper is the most common base metal used. Other metals used include

aluminum, iron, nickel, zinc, silver or paladium. The word carat however, is used to refer

to the amount of gold a Jewellery item consists of.

An important activity in fabrication is component sourcing. Component here refers to

diamonds and other gemstones that may be used with gold jewellery. For watchmaking,

components that are often sourced from other companies include bands and dials.

Given that Jewellery fabrication is a skill-intensive exercise the tools used are important

and varied and include; drills, lathes and moulds. These are tools used for Jewellery

classified as “handmade”. Other tools may also be used but these must be guided by

the human hand in order for the Jewellery made to be classified as “handmade”.

“Machine made” Jewellery makes use of punch presses, CNC machinery and casting.

Jewellery fabrication takes place in-house for most jewellery makers.

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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 Non-

store 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 The first three facilities are leased.


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.

2. Authorized Retailers: The difference between branded boutique chains and

authorized retailers lies in the intellectual property rights of Jewellery items

distributed. Authorized retailers may not fabricate jewellery. However, they may

be licensed by branded Jewellers to distribute jewellery items produced by the

brand owners but under their own company name. They may also provide

maintenance services on behalf of the brand owners. For instance, Piaget, a

Swiss company has several authorized retailers in the US and Canada (see Box

1) that retail Piaget Jewellery.

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3. Non-brand Jewellery Shops: These refer mainly to small family Jewellers,

‘mom and pop’ stores whose key strengths in the jewellery market are that (1) all

jewellery items are meticulously hand-crafted;5 and (2) they offer a range of

pricing options that are within the reach of the pockets of middle to low income

earners. These are popular in Italy and India. In India, 96% of the total players in

the industry are small family-owned businesses. There are over 2.5 million

Jewellery shops in India; 450,000 goldsmiths and 100,000 gold jewelers. 6 These

‘mom and pop’ shops do not offer branded Jewellery and may sell only jewellery

unlike the high-end section of the market that tends to also sell other forms of

accessories. In India the craftsmen involved in this segment tend to be illiterate

and rely on the apprenticeship system to learn their trade7. According to the

National Jeweler magazine, non-brand Jewellery shops account for 79% of

Jewellery-only retailers in the US.

5 http://www.economist.com/node/21554538

6 http://www.newdevtprojects.com/ilo/iloPdf/jewellerymarket.pdf 7 http://www.economist.com/node/21554538

Box 1: Authorized Retailers for Piaget in the USA and Canada

- 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

Authorized Retailers in Canada: Richmond, Toronto, Vancouver (2 locations), Montreal


4. Department Stores: Department stores are generally involved in the retail

distribution of clothing and accessories, including Jewellery. Department stores

may also sell costume Jewellery. Examples of department stores in India include:

Debenhams, Lifestyle Stores, Pantaloon Retail (India) Limited, Reliance Trends,

Shoppers’ Stop and Star Bazaar.

5. Discount Merchandisers: Discount merchandisers sell jewellery on the basis of

a medium to low-price strategy. Such retailers are global-trotters seeking out low

cost options for securing jewellery. Examples of discount merchandisers in the

US include: Wal-Mart, Kmart, Target and Costco, which are among the top 20

Jewellery retailers in the US. According to the National Jeweller (2007) Wal-Mart,

in 2007 was the nation's number one Jewellery retailer with estimated Jewellery

and watch sales of $2.8 billion. India is gaining prominence as an international

destination for sourcing jewellery with companies such as Wal-Mart and JC

Penny procuring jewellery from India8.

6. Wholesale Distributors: Wholesale distributors act as intermediaries between

Jewellers and retailers. This is not a very large distribution outlet in the gold

jewellery market but an important one nonetheless. It is an outlet, jewellers

operating in the middle to low-end side of the market may rely on. For instance,

LouLouBijoux in the US is the exclusive wholesale distributor in the US and

Canada, of the Brin D’Amour collection of jewellery produced by French designer

Sandra Doquin.9 Italian company Buccellati also operates a wholesale outlet for

its jewellery and watches.

8 http://www.newdevtprojects.com/ilo/iloPdf/jewellerymarket.pdf

9 http://www.louloubijoux.com/pages/about-us

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7. Non-store retailers: Non-store retail avenues include mail-order catalogs, direct

response marketers, Business-to-Business sales10, direct sales, television11 and

internet sales. Non-store retailers and discount merchandisers represent a

paradigm shift away from traditional means of distributing Jewellery. Non-store

retailing is the second largest retail distribution channel in the US, accounting for

11% of total industry sales and displaying rapid growth (Jewelrista 2011).

According to Jewelrista (2011), one in six engagement rings is purchased online

in the US. Mail-orders sales are facilitated through advertising on television

programmes and in magazines.

Many brand retailers also offer online sales through their various subsidiaries

around the world. For instance, Tiffany & Co. operates e-commerce websites in

13 countries. Sales through this channel accounts for 6% of worldwide net sales

for the company.

It is important to underscore that firms may also invest in research and development to

inform the design of jewellery items and the selection of distribution outlets.

Gold Recycling Stage: Gold recycling entails not only the recycling of gold Jewellery

but all products produced by gold. Recycled gold constitutes a source of supply of gold

(as depicted by the broken arrows in the figure). Globally, apart from mine production,

recycling accounts for around a third of all current supply of gold (World Gold Council

2012).

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.


SECTION 4: KEY MARKET TRENDS IN THE GLOBAL GOLD

JEWELLERY INDUSTRY

Supply and Demand for Raw Gold

Gold is the primary input into gold Jewellery. 50% of gold produced in the world is used

for Jewellery fabrication. The source of gold is both new mine production as we all

recycled gold. Central banks can also contribute to the supply of gold by selling some of

their reserves.12 Table 1 shows the source of gold supply for 2011 and 2012. Mine

production accounted for 63% of gold supply and grew by 2% between 2011 and 2012.

Table 1: World Supply of Gold by Source: 2011-2012

Total Gold Supply in the World (Tonnes)

Source of Supply 2011 2012 % change Mine Production 2835.6 2847.7 Net Producer hedging 11.3 -20.0 Total mine supply 2846.9 2827.7 2 Recycled gold 1668.5 1625.6 -5 Total 4515.4 4453.3

Source: World Gold Council, 2013

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/)

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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 847

Source: U.S. Geological Survey

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/


standard industrial classification system. Data is obtained from the UNCOMTRADE

database.

Figure 2: Trends in Exports of Gold Jewellery, 2000-2010

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Figure 3: Top 20 Exporters of gold Jewellery, 2011

Several trends are observable from the figures:

Firstly, export data was assessed for three years for figure 2; 2000, 2005 and 2010. In

2010 the top five exporters of gold Jewellery were India, USA, Italy14, Switzerland and

China.

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%.


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. Italy’s 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

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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

Figure 4: Trends in Imports of Gold Jewellery, 2000- 2010


Figure 5: Top 20 Importers of Gold, 2010

From the figures the following key trends are observable:

Firstly, The composition of the top five importers of Jewellery for 2000, 2005 and 2010

remained the same; the United Kingdom, China, Hong Kong, United Arab Emirates,

USA and Switzerland.

Secondly, Switzerland and China, Hong Kong are among the fastest growing import

markets for gold Jewellery. In 2010, Switzerland became the largest import market but

shifted to second place behind China in 2011.

Thirdly, the main importers are developed countries which reflects the nature of this

commodity, a luxury commodity for which consumption will increase as income

increases as there is a high income elasticity of demand.

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KEY TRENDS IN JEWELLERY CONSUMPTION

“Jewellery consumption is equal to fabrication plus/minus jewellery imports/exports

plus/minus stocking/de-stocking by distributors and manufacturer”

(World Gold Council 2012)

There are two trends worth noting where gold Jewellery consumption is concerned:

The first is that the largest consumer markets for gold Jewellery are: India, China

and the USA.

The three markets together accounted for 63% (1302.3 Metric tonnes) of total

consumption of gold Jewellery in 2012. India consumed 745.7 metric tonnes of gold

Jewellery in 2010; China 428 metric tonnes and the US 129 metric tonnes according to

the World Gold Council (See table 3). Between 2009 and 2010, consumption of gold

Jewellery increased by 69% most of this gold comes from India. The stock of gold held

by India represents some 11% of the global stock and is worth more than $950 billion17

The gold Jewellery industry in the US is a $30 bn industry employing about 169,281

persons (IBIS 2012). The vibrancy of the gold market in the US is linked to the

perception of gold as one of the must-have gift items. According to the World Gold

Council18the US market is domianted by gifting with over 50% of the total value of gold

jewellery at retail created by pieces over $1,000. Neverthelss, gold jewellery only

accounts for 10% of total Jewellery stores sales. Diamonds are in the lead with 45%

and colored gemstone Jewellery (rubied, sapphires, emeralds, etc.) with 8%. While the

US remains one of the largest consumer markets, growth has been negative since 2007

(IBIS 2012). Between 2009 and 2010, the decline in consumption was 14% (see table

3). Undoubtedly, this is linked to the economic recession that the country is currently

engulfed in. Since Jewellery is a luxury good dependent on consumers’ disposable

income, during periods of recession sales will fall as consumer spending declines.

17

All the World’s Gold http://www.numbersleuth.org/worlds-gold/ 18

http://www.gold.org/jewellery/markets/us/


Table 3: Gold Jewellery Consumption by Country: 2009-2012) Gold Jewellery consumption by country (in metric tonnes)

Country 2009 2010 % change 2011

India 442.37 745.70 69 618.3

Greater China 376.96 428.00 14 549.6

United States 150.28 128.61 -14 115.5

Turkey 75.16 74.07 -1 70.1

Saudi Arabia 77.75 72.95 -6 51.7

Russia 60.12 67.50 12 76.7

United Arab Emirates 67.60 63.37 -6 50.1

Egypt 56.68 53.43 -6 33.8

Indonesia 41.00 32.75 -20 30.2

United Kingdom 31.75 27.35 -14 22.6

Italy 27.6

Other Persian Gulf Countries

24.10 21.97 -10 19

Japan 21.85 18.50 -15 16.6

South Korea 18.83 15.87 -16 12.5

Vietnam 15.08 14.36 -5 13

Thailand 7.33 6.28 -14 3.6

Total 1508.70 1805.60 20 1711

Other Countries 251.6 254.0 1 261.1

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-2011-02-28T130619Z-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 East-

India and China are the fastest growing markets in the world

Countries in the East accounted for approximately 70% of the world’s gold jewellery in

2010 (see table 3 above). India and China are at the forefront of this growth. However,

India’s 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).

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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/ 20

Ibid 21

http://www.gold.org/jewellery/markets/china/


Chinese and Russia, to boost sales. For instance, Italian Jeweller Damiani has

opened eight boutiques in China with plans to open another five.

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SECTION 5: INDUSTRIAL ORGANIZATION AND GLOBAL

GOVERNANCE STRUCTURE OF THE GOLD JEWELLERY INDUSTRY

Governance within the context of value chains is defined by Gereffi (1994, p.97) (in

Gereffi and Stark 2011) as “authority and power relationships that determine how

financial, material and human resources are allocated and flow within a chain”. Value

chains can be classified either as producer-driven or consumer-driven to reflect where

the balance of power lies. There are five types of governance structures; markets,

modular, relational, captive and hierarchy (Gereffi and Fernandez-Stark 2011). These

governance structures are influenced by the inter-play of three variables: (1) the

complexity of the information between actors in the chain; (2) how the

information for production can be codified; (3) and the level of supplier

competence (Frederick & Gereffi, 2009; Gereffi et al. 2005) (in Gereffi 2007).

The impact of these variables on the determination of governance structures within a

value chain are depicted in table 4.

Table 4: Governance Structures in Global Value Chains

Governance Types

Market Modular Relational Captive Hierarchy Complexity of Transactions Low High High High High

Ability to codify transactions High High Low High Low

Competence of the Supplier base High High High Low Low

Degree of coordination and power asymmetry Low High Adapted from: Gereffi 2007

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


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.

Market Hierarchical

Relational

Gold Mining

Design

Distribution Gold Refining & Trading Research Fabrication

Figure 6: Governance Structures in the Gold Jewellery Value Chain

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

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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.


Table 5: Top 10 Gold Producing Companies Globally

Rank Name Base Operations Globally 2012 rev (bil.USD)

2012 Profit (mil.USD)

2012 cap bil USD

2011 FY production

tonnes

Reserves Moz

Total Resource

Moz

Cash Cost 2011 year

US$ total/oz 1 Barrick Gold Canada Peru, Chile, Argentina,

Australia, Dominican Republic, USA, Canada

14.3 (2011) 4,500 49.0 Feb.10

217.7 138.5 226.92 460

2 Goldcorp Canada 5.4 1,900 39.0 Feb.7 71.29 46.3 60.1

Feb'11

81.59 534

3 Newmont Mining

United States

States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico

10.4 400 29.09 Mar.02

145-150 2011 est

85.0 142.67 591

4 Newcrest mining

Australia Australia, Ivory Coast, Indonesia, Papau New Guinea

4.4 1000 26.0 Feb.14

71.44 (2011 NC 49.95

77.0 205.45 Newcrest

119.2

$692

5 Anglogold Ashanti

South Africa

U.S., Tanzania, South Africa, Namibia, Mali, Guinea, Ghana, Brazil, Australia and Argentina

5.9 1300 16.7 Feb.28

122.75 74.9 264.30 728

6 Yamana Gold Canada Canada, Brazil, Argentina, Chile, Mexico and Colombia

2.2 500 13.0 Feb.27

25.98 19.4 46.35 463

7 Kinross Gold Canada Canada, Brazil, Chile, Ecuador, Russia and the U.S

3.9 (2100) 11.5 Jan.20

74.0 (2011)

59.17 92.06

596

8 Gold Fields South Africa

South Africa, Ghana, Australia and Peru

5.2 900 11.26 Jan.21

98.80 78.9 270.28 795

9 Eldorado Gold Canada 1.1 300 13.0 Feb.27

18.69 18.67 20.2 405

10 Polyus Gold Russia Russia, Republic of Kazakhstan, Romania and Kyrgyzstan

1.7 300 10.59 39.7-42.5 2011 est

74.1 211.92 617

Source: http://goldinvestingnews.com/investing-in-gold/top-10-gold-producers, http://en.wikipedia.org/wiki/Largest_gold_companies

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Jewellery design by independent or contracted designers is

relational governance.

The options for designing jewellery are: (1) Employed goldsmiths and gemologists; (2)

Independent designers; and (3) Customers.

Jewellery design through the use of independent or contracted designers is relational.

This is because Jewellery design involves the use of skills and technologies not easily

learned but that requires time and training to acquire. Jewellery designs are usually

done by certified gemologists or goldsmiths trained through the apprenticeship system,

which is the practice of small jewelers. Large companies may also outsource the design

of jewellery to independent jewelers as companies seek out exceptional designers upon

whom new collections could be developed. For this reason, Jewellery companies tend

to offer differential products or unique pieces based on quality (caratage), brand,

signature collections, combination with other precious metals and gems. However,

given the nature of the Jewellery market there may be interactions between designers

and Jewellery companies and companies may also seek to take into consideration

customer feedback regarding designs and caratage and further, requests for custom-

made pieces. Therefore, there must be a level of trust between designers and

companies. Particularly, since relational linkages take time to build. Jewellery

companies often use licensing arrangements to secure Jewellery designers and as a

way of solidifying linkages. These arrangements are usually long-term for branded

boutiques that sell based on brand. For instance, since 1974, Tiffany and Co. has been

the sole licensee for the intellectual property rights necessary to make and sell

Jewellery and other products designed by Elsa Peretti and bearing her trademarks.

Given the features of this market, especially the high-end, luxury aspect, the costs and

difficulties required to switch to a new partners tend to be high. Some companies build

entire collections on the designs of a few designers.


Jewellery design, fabrication and distribution done by firms with

vertically integrated operations is hierarchical governance.

The majority of the firms operating in the gold jewellery industry have vertically

integrated operations that extend from design to distribution. This is true of both large

and small firms alike.

Table 6 shows the leading jewellery companies globally based on retail value; ehile

table 7 shows examples of some of the leading jewellery companies operating in the

high-end segment of the global jewellery market. Vertical integration is an expressly

stated production strategy of several of the leading jewellery companies such as Bulgari

and Tiffany & Co. For example, the Italian company, Bulgari, which is one of the leading

jewellery companies globally, has a production strategy that is based on vertical

integration of the entire production process, from research and development to the

finished product.

Jewellery pieces are designed and fabricated in-house through goldsmiths and

gemologists, with some companies allowing for customer input. This coordination over

the design and fabrication of jewellery occurs because firms derive their competitive

edge on their ability to come up with unique designs and high quality pieces that sets

them apart. This means that designs cannot be easily codified but jewelers must rely on

select designers who can deliver the combinations of quality and style that companies

require.

Vertical integration is also used as a strategy to improve scale and the competitiveness

of companies globally. For instance, in 2002, as part of a strategy to become one of the

leading watch makers in the world, Bulgari acquired, Italian jewellery manufacturer

Crova. In 2005, the company bought Swiss watch making companies Cadrans Design,

a producer of dials for high-end watches, and Prestige D'Or, a leader in the production

of steel and precious metal watchstraps24. In 2009, the company realized the results of

24

http://en.bulgari.com/about/about_bulgari.jsp?cat=cat00105#homeAB.jsp?cat=cat00105

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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 include: ISO 8653:1986

(Jewellery-Ring-sizes-Definition, measurement and designation); ISO/AWI 9202

(Jewellery-Fineness of precious metal alloys); and ISO 10713:1992

(Jewellery-Gold alloy coatings).

25

http://en.bulgari.com/about/about_bulgari.jsp?cat=cat00105#homeAB.jsp?cat=cat00105 26

http://www.responsiblejewellery.com/


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.

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Table 6: Leading Jewellery Companies Globally Based on Retail Value in 2011, USD Billion Company Headquarters Retail

value Number of Stores

1. Chow Tai Fook Jewellery Group Ltd. China 4.6 1000

2. Compagnie Financière Richemont Switzerland 4.5

3. Tiffany & Co. United States 3.9 275

4. Signet Jewelers Ltd. United Kingdom 3.4 1443

5. Shanghai Lao Feng Xiang Co. Ltd. China 3.3

6. Shanghai Yuyuan Tourist Mart Co. Ltd. China 2.7

7. Zale Corp. United States 1.8 1778

8. Pandora A/S Denmark 1.7

9. LVMH Moët Hennessy Louis Vuitton SA France 1.5 3204

10. Swarovski AG Austria 1.3 1218

11. Gitanjali Group India 2.0 4164

Source: Euromonitor International http://www.jckonline.com/2012/12/31/around-world-in-Jewellery-sales


Table 7: Leading Luxury Jewellery Designers and Stores Globally

Companies Country of Origin

Number of Locations

Globally

Number of

Stores

Number of Employees

Examples of Collections

1. Buccellati Italy US, Canada, France, Paris, Italy, United Kingdom, Russia, Japan, Australia

Crepe De Chine, Magnolia, Macri, Classica, Etoilee, Ondine, Signatura

2. Tiffany & Co

USA 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

275 9,900 Woven Collection, Keys Collection

3. Piaget Switzerland Switzerland USA, Canada, Japan, China 25,000 (group)

Gouverneur Dragon

and Phoenix www.piaget.com 4. Cartier

27 France Switzerland, France, Germany, Italy and Spain, China/Hong

Kong, Japan, USA, Canada 300 Sortilèges, Cartier, Naturellement

collection Trinity Collection

5. Chopard Switzerland Switzerland, Japan, USA, Singapore 120 1,750 Quartz, L.U.C, Casmir, La Vie en Rose, Pushkin, Copacabana, and Chopardissimo

6. Bulgari28

Itlay US, France, Switzerland, Japan, Qatar, Australia, Singapore, South Korea

295 3,815 BVLGARI

http://jewelrista.com/blog/2011/08/03/the-world%E2%80%99s-top-10-Jewellery-designers/, http://www.buccellati.com/en/start.html, http://www.parkviewgreen.com/eng/shop/watches-Jewellery/chopard/, http://investinginafrica.net/wp-content/uploads/2012/10/Richemont-2012-Annual-Report.pdf

27

Cartier is a Maison of Richemont group of companies 28

Production sites in Italy and Switzerland, 41 companies

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Table 8: Leading Players in the Distribution of Gold Jewellery, by Category

Distribution Categories Major Players US India China Italy

Branded

Boutique

chain

Retailers

Independent (Authorized) Retailers

Cosmos

National Chains Zale Corp. and Kay Jewelers, Finlay Jewelers

Tata Group (Tanishq and Gold Plus brands), Gitanji Gems Ltd. (Gili brand), Reliance Industries, Shree Ganesh Jewellery House Limited

Pranda Group, 3D- Gold Jewellery Holdings ltd., Luk Fook Jewellery, and Shanghai Lao Feng Xiang

International Chains

Signet Jewellers

Tiffany & Co.Piaget

Damas Jewellery, Swarovski Piaget, Harry Winston, Graff, Tiffany & Co.,

Bulgari, Buccellati

Discount Merchandisers

Wal-Mart, K-Mart, Target, San’s Club, Costco

Big Bazaar, Reliance, Ambanis, K Rahejas, Bharti AirTel,

Department Stores

Boscov’s, Federated, JC Penny, Sears Roebuck, Macy’s

Debenhams, Lifestyle Stores, Pantaloon Retail (India) Limited, Reliance Trends, Shoppers' Stop, Star Bazaar

Mainland; Dashang Group, Isetan and Mitsukoshi Department Stores

Hong Kong; Harvey Nichols, Lane Crawford, Seibu Department Stores, Daimaru, Takashimay, Parco

Coin, LaRinascente

Non-Store Retailers

Online shopping Bidz.com, Blue Nile, eBay, Amazon, Ice.com, Overstock.com, JewelleryTelevision.com www.zales.com, , www.pagoda.com and www.peoplesjewellers.com. www.tiffany.com

totaram.com, meenajewelers.com, aumkaarfashions.com, amritasingh.com

ctfeshop.com.

TV home stations

QVC, ShopNBC, Shop-At-Home,

STAR CJ Alive, HomeShop 18 QVC/CNR QVC, “for you”, HSE24


ACNTV, Jewellery television ,America’s Auction network, Home Shopping Network, Liquidation channel (Jewellery channel)

Others Mail-order, armed forces retailers, pawn shops

Travel catalogues

Source: Various

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Table 9: Recent Investments by Leading Jewellery Companies, affecting the Governance of the Value Chain

Nature of Investment

Company Name Stage of the Value Chain

Mergers and Acquisitions Joint Ventures

A.J Jewellery29

Distribution Merger with Italian Jewellery institution

Gitanjali Group British jewellery distribution company Alfred Terry Gitanjali Gems Ltd Joint Venture with Damas (50-50), 2003

Gitanjali Group Manufacturing Italian jewellers, Stefan Hafner, Porrati and Nouvelle Bague Chinese jewellery maker Grown Aim

Bulgari Manufacturing 2005, Swiss watchmaking companies: Cadrans Design (dials for high-end watches), and Prestige d’Or, (metal and precious metals watchstraps). In 2000 high-end watchmaking brands Daniel Roth and Gérald Genta (high-end watchmaking brands). Crova in 2004

Bulgari Design (Brand) in August 2008, bought 60 per cent of its commercial and brand-related operations.

Gitanjali Group Design (Brand) 'Nakshatra', the premium brand of jewellery promoted by Diamond Trading Company (DTC)

Bulgari Manufacturing (Component)

2005; Italian leather-goods company Pacini, renaming it Bulgari Accessories 2007; Swiss watchmaking companies Finger, (cases for high-end complicated watches); and Leschot, (watchmaking machinery)

Richemont Manufacturing (Component)

component manufacturing facilities of Geneva-based Roger Dubuis in 2007

Polo Ralph Lauren The collection of luxury watches

Tiffany & Co. Manufacturing and Distribution

Incorporation of Swiss company by the Swatch Group for the design, engineering, manufacturing, marketing, distribution and service of TIFFANY & CO. brand watches.

30

Signet Signet acquired Ultra Stores, Inc. (“Ultra”) on October 29, 2012

Source: Company Websites

29

http://www.ajjew.com/newsite/en/node/15 30

Under the agreement, Tiffany and its affiliated companies may only purchase Tiffany & Co. brand watches from the Swatch Group.


Distribution of gold jewellery reflects a mixture of relational and

hierarchical governance

Leading jewelers operating in the high-end segment of the market use several channels

to distribute jewellery produced. Some of these channels reflect the relational

governance structure, such as the use of authorized retailers. Authorized retailers are

independent suppliers in that they are operating under their own duly constituted

company, however, companies whose jewellery they are retailing can exert some

degree of control through the authorization process. To become authorized, retailers

must demonstrate the ability to supply the product in an environment that the brand

owner supports. Bulgari for instance, in selecting its retailers for watch distribution

requires that the retailer must be able to offer impeccable customer service.

There is mutual dependence under this arrangement as independent suppliers make

profits from becoming authorized retailers while jewellery companies enjoy the benefit of

increased marketing of their products. Retailers are also selected to allow brands to be

ideally positioned in strategic markets. Especially since the competitive landscape is

characterized by fragmentation (in the US for instance, the largest 50 companies

generate about 40% of revenue) and demand that is driven more by quality and design

than price. Therefore, effective marketing (visibility of the product) becomes important.

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SECTION 6: GUYANA’S CURRENT PARTICIPATION IN THE GLOBAL

GOLD JEWELLERY VALUE CHAIN

The figure 7 identifies where Guyana is present in the global value chain. These are at

the mining, refining and fabrication stages. However, the country’s presence is more

significant at the mining stage. Gold mining is an important economic activity in Guyana

as the country possesses rich deposits of gold and other mineral resources such as,

diamonds, manganese and rare earth elements (Thomas 2011).

Gold Mining Jewelry

Fabrication

Marketing and

Distribution

Gold

Recycling

Jewelry Design

Gold Refining Research

Figure 7: Guyana’s Participation in the Gold Jewellery Value Chain

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.


Figure 8: Domestic Exports (US$ Mn), 1990-2011

The gold industry in Guyana has somewhat of an enclave structure with small artisanal

gold miners alongside large scale foreign investors, however, small scale mining

dominates. The rush for gold has seen an expansion in both industries. Figure 9, shows

that between 2005 and 2010, the small and medium scale sector expanded from 49.6%

to 76.6%. The number of mining licenses given out to large scale miners increased by

50% in 2011. In 2011, two new large scale mining companies were added to the

industry, E.T.K incorporated and Guyana Goldfields Inc. Guyana Goldfields estimates

that one of its mining areas has the potential for about 6.88 million ounces of gold

(measured and inferred) (Thomas 2011).

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Comparatively, gold jewellery fabrication and design is economically smaller than gold

mining. The export of gold jewellery is also significantly lower in value when compared

to exports of raw gold. This reflects a significant manufacturing void in the economic

structure of the country as most of the country’s exports are primary products. This is

reflected in table 10 which shows the top 10 merchandise exports from Guyana in 2010

based on data obtained from Datamonitor. Whereas in 2010 the value of gold exports

was US$ 440 Mn exports of gold jewellery was only US$3.9 Mn.

Table 10: Top 10 Exports from Guyana, 2010

Top 10 Exports from Guyana, 2010

Rank HS4 Name Value Percent

1 7108 Gold $440,822,299 38.38%

2 1006 Rice $183,665,932 15.99%

3 2606 Aluminium ores $149,061,412 12.98%

4 1701 Raw sugar, cane $102,120,914 8.89%

5 306 Crustaceans $35,149,291 3.06%

6 2208 Alcoholic preps for beverages $26,700,964 2.32%

7 4407 Wood sawn or chipped of a thickness exceeding 6 mm

$25,753,010 2.24%

8 7102 Diamonds $12,577,128 1.09%

9 1703 Molasses $11,178,033 0.97%

10 4409 Wood continuously shaped along any of its edges $10,206,224 0.89%

11 303 Frozen fish, excluding fillets $9,858,230 0.86%


12 304 Fish fillet or meat $9,254,788 0.81%

13 305 Fish flours, meals & pellets for human consumption $9,088,934 0.79%

14 4403 Wood in the rough $8,660,944 0.75%

15 7204 Ferrous waste and scrap $7,980,233 0.69%

16 302 Fish, excluding fillets $7,614,697 0.66%

17 4404 Hoopwood; split poles; piles, pickets and stakes of wood

$7,258,403 0.63%

18 4412 Plywood, veneered panels and similar laminated wood

$5,905,814 0.51%

19 4406 Railway cross-ties of wood $4,351,725 0.38%

20 7113 Jewellery of precious metal $3,927,925 0.34%

Source: Datamonitor

Guyana’s 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

Destinations for Exports of Gold Jewellery* (2008-2011) US$ Mn

Partner 2008 2009 2010 2011

Suriname 106 - - $23,379

Barbados 87 - - -

USA - 7,683 25 -

Trinidad and Tobago

- 221 98 -

Canada - 7 5,894 -

United Arab Emirates

- - 3,027,270 2,703,386

Belgium - - 894,761 -

Bahamas - - 19,555

World 193 7,910 3,928,047 $2,746,320

Notes: *89731 SITC Rev 3- Jewellery of precious metals

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SECTION 7: INSTITUTIONAL FRAMEWORK FOR GOVERNANCE

OF THE LOCAL VALUE CHAIN

The institutional framework focuses on the local conditions and policies impacting the

value chain (Gereffi and Fernandez-Stark 2011). These conditions can act either as

catalysts or barriers to the effective upgrading of a country’s participation in the global

value chain. The institutional framework in this aspect of the paper will focus on; a

stakeholder analysis and identification of the key factors impacting the growth and

development of gold jewellery industry in Guyana. However, this must be preceded by

an examination of the local value chain.

.


GUYANA’S VALUE CHAIN FOR GOLD JEWELLERY

Gold Mining Gold Board

(Government-

Owned)

Gold Dealers

& Traders

Jewelry

Fabrication

Jewelry Design

Distribution

Channeks

Jewelry

chain

retailers

Jewelry

Specialist

stores

Non-store/non-

licensed traders

Laboratory

preparatory Services

Jewelry Design

tools (moulds,

casting etc)

Pawn

shops

Informal

Buyers

Figure 10- Guyana’s Value chain for Gold Jewellery Manufacturing

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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 Steve’s

Jewellery.


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 (Scott’s 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 the value chain

Company name

Gold Mining Guyana Goldfields Omai Gold Mines Limited. Correia Mining Company Limited Forage Orbit Incorporated Guyana Goldfields Inc Major Miners inc.

Gold Dealers/Traders SKS Mineral Trading Pure Diamond Inc. Steve’s Jewellery

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Goldsmiths/Jewellers King's Jewellery World L. Seepersaud Maraj and Sons Gaskin and Jackson Jewelers Topaz Steve’s Jewellery Royal Jewel House

Jewellery Design Tools R. Seeram's Jewellery Support Services Energy Agency

Wartsila Operations Guyana Inc. Guyana Energy Agency

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 state-


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

Table 13: Key Stakeholders in the Gold Jewellery Industry in Guyana

Stakeholder Description Key Interest Level of Importance

in the industry

Power & Influence

over sector development

Small Business Unit Enabling Environment

Promoting the development of small businesses

Medium Medium

Ministry of Natural Resources and the Environment

Natural Resource Management

Sustainable management of the natural resources of Guyana

Medium Medium

Ministry of Foreign Trade Foreign Trade Securing trade concessions High High Ministry of Labour Labour

Regulations Enforcement of compliance with ILO Core labour regulations.

High High

Environmental Protection Agency

Environmental Regulations

Enforcing compliance with environmental regulations

High High

Guyana Energy Agency Energy Regulating the generation, supply and use of energy in Guyana

High High

Guyana Power &Light Energy Regulating the generation, supply and use of energy in Guyana

High Medium

Guyana Revenue Authority

Tax Authorities Compliance with tax, trade and border laws

High High

Guyana Office for Investment

Business Development

Trade and Investment facilitation High High

National Bureau of Standards

Standardization Enforce compliance with quality Standards

High High

Guyana Manufacturers & Services Association

Industry Associations

Supporting manufacturers through technical assistance, policy advocacy

High Medium

Georgetown Chamber of Commerce & Industry


Promoting and protecting the interests of members by fostering ethical practices in commerce and trade a

Medium Low

Private Sector Commission


Advocating for the development of the private sector

Medium Medium

Commercial Banks Financing Providing a range of financial instruments

High High

Guyana Gold Board Regulatory Purchase and refining of raw gold High High

Guyana Gold and Diamond Miners Association

Industry Association

To promote the interests of miners High High

Guyana Geology and Mines Commission

Regulatory Regulating the exploration and mining of mineral products in Guyana.

High High

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FACTORS AFFECTING INDSUTRY DEVELOPMENT

A. GENERAL FACTORS

Economic conditions:

Though, Guyana has not reached a level of political stability equivalent to what obtains

in its sister CARICOM countries, economically Guyana has made significant strides

towards economic stability. Under the World Bank criteria, Guyana is now classified as

a lower middle-income country. Consequent to increasing growth rates, macroeconomic

performance has improved. Figure 11 captures growth rates for Guyana from 2000 to

2012. Growth in Guyana has increased marginally over the years. Negative growth

rates were experienced in 2000, 2003 and 2005 (year of the big flood). For 2006, 2007

and 2011 growth rates were above 5%.

Figure 11- Growth Rate of Real GDP, Guyana: 2000-2012

However, in spite of positive growth rates over the last couple of years, Guyana’s 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


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 Guyana’s participation in the global gold jewellery value

chain. The country’s 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

country’s 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

country’s 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

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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 Nation’s 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)

Guyana’s 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 Bank’s doing business index. 31

Guyana’s 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/


Figure 12- Guyana, Ease of Doing Business Rang, 2012

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. Guyana’s ranks are better for dealing with construction permits and enforcing

contracts and worse for getting credit and electricity, resolving insolvency and paying

taxes. Guyana’s 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

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Corporate tax regulations:

One of the challenges to the competitiveness of businesses operating in Guyana is the

level of corporate taxes firms are required to pay. Generally, there are about 9 taxes or

mandatory contributions firms must pay in Guyana. For example (see table 16);

corporate income tax at a rate of 35%; employer paid- social security contributions at

the rate of 8%; property tax (to central and local authorities) at a rate of 0.5%; capital

gains tax at a rate of 20% and value-added tax at a rate of 16%. These tax payments

amount to about 36% of the profits of firms. These taxes are not only an economic

burden to firms but also an administrative burden as about 263 hours of time that could

have otherwise been used productively must be spent filing taxes.

Table 16: Guyana, Burden of Compliance with Taxes and Mandatory Contributions Tax or mandatory contribution

Payments (number)

Time (hours)

Statutory tax rate

Tax base Total tax rate (% profit)

Notes on TTR

Corporate income tax

5 48 35% taxable profit 22.8

Employer paid - Social security contributions

12 48 8% gross salaries 8.8

Property tax central authority

1 0.5% and 0.75%

equity 1.2

Property tax local authority

1 various rates assessed property value

1.1

Capital gains tax 1 20% capital gains 1 Fuel tax 1 various rates fuel

consumption 1

Vehicle registration tax

1 G$30,000 fixed fee 0.3

Stamp duty 1 G$ 1 per G$ 1,000

transaction value

0 small amount

Value added tax (VAT)

12 167 16% value added 0 not included

Totals: 35 263 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


Effective policies that support the development of SMEs:

Guyana has in recent times embarked on the formulation of a number of policies to

support the development of SMEs. These policies recognize the importance of SMEs to

business development in Guyana, which was estimated at about 30% of GDP. In the

Latin American region SMEs are said to account for nearly 99% of business and 67% of

employment32. The key challenge facing SMEs in Guyana is access to finance. In the

doing business Index Guyana receives its lowest rank (167) for ease of accessing credit

which is almost two times worse than the average for the Latin America and Caribbean

region (87) and is in fact the worse in the region.

The following are some of the policy initiatives that are in place or that being pursued:

1. Passing of the Small Business Act (March 2004) from which will be established a

Small Business Council, Small Business Bureau and Development Fund to

provide financial and other forms of support to improve the productivity and

competitiveness of small businesses.

2. Small Business Development Finance Trust

3. Guyana Small Business Association (GSBA),

4. Linden Economic Advancement Programme,

5. the Institute of Private Enterprise Development,

6. Women of worth

7. National Competitiveness Council, the small business representative

Apart from these initiatives, other wider development initiatives being pursued will also

support the development of SMEs. These include:

1. The National Development Strategy

2. The National Competitiveness Strategy33

3. The Low Carbon Development Strategy (LCDS) will support business

development on a low-carbon model and allow for improved access to financing

through the following mechanisms: 32

National Competitiveness Strategy. http://www.competitiveness.org.gy/index.php?start=1 33

Ibid

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a. A Credit Guarantee Fund (CGF) to meet shortfalls in the collateral

requirements of small businesses seeking loans through the commercial

banking system as long as these are for ventures that are in low carbon

sectors.

b. An Interest Payment Support Facility will help the MSE pay off a

percentage of its interest obligations on the loan

c. A Grant Scheme- to assist vulnerable persons to access financing for their

existing or potential business venture.

d. A Skills Voucher Scheme for technical training in business management,

marketing, accounting and financial management.

4. The Guyana Youth Business Trust (GYBT) is an NGO that provides financing

opportunities for young people (aged 18-35yrs) interested in becoming

entrepreneurs but who cannot access conventional financing.

5. Recently, the government has announced plans to launch a Credit bureau34 by

the end of 2013

Summary: As depicted in table 17, overall, social, economic and political conditions will

have an average impact on industry growth and development.

Table 17: Summary of General Enabling Factors for Industry Development General enabling factors Score Political and economic stability Average Labour market size Strong Social Conditions Average Cost and ease of doing business (Institutional Conditions)

Weak

Corporate tax regulations Weak Available infrastructure Average Effective policies that support the development of SMEs (access to finance)

Average

Overall Average

34

Guyana Times April 6, 2013 Credit bureau34

to be up by year-endwww.guyanatimesgy.com


B. INDUSTRY SPECIFIC FACTORS

Intellectual property protection:

Unlike, other CARICOM States, Guyana has failed to enact and ensure compliance with

intellectual property laws as there is no articulated intellectual property rights policy in

the country, which is key to creative industries of which gold jewellery is one. Further,

many of the laws currently on the books are outdated. This is the case for the main IP

laws enacted by the Legislature such as the Tradesmarks Act (1973); the Patents and

Designs Act (1973) and the Copyright Act (1956) 35.

Convention Establishing the World Intellectual Property Organization (October 25,

1994); the Paris Convention for the Protection of Industrial Property (October 25, 1994);

the Berne Convention for the Protection of Literary and Artistic Works (October 25,

1994); the World Trade Organization (WTO) - Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS Agreement) (1994) (January 1, 1995)

Availability of qualified human capital:

While Guyana performs well where education is concerned, within the gold jewellery

industry availability of qualified human capital is poor as there are no training institutions

providing skills development related specifically to Jewellery design and fabrication.

Jewelers tend to rely on the apprenticeship system. Some jewelers have staff that have

received external training such as through the Gemological Institute of America. The

leading jewelers around the word utilize the skills of trained gemologists and therefore

partially derive their competitive edge from skills in designing jewellery. In India, where

Jewellery fabrication is not done by skilled human resources, the cost advantage comes

from scale. Guyana has neither advantages.

The availability of key inputs:

Gold is the main input used in the production of gold jewellery. Access to gold presents

no challenge in the Guyanese market as it is one of the main outputs of the country.

35

http://www.wipo.int/wipolex/en/profile.jsp?code=GY

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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.

Figure 13- Output of Gold: 2000-2011

Labour costs and regulation:

Guyana is competitive where wages are concerned. Average per capita income in

Guyana is US$3,00036 which is lower than in all of the other CARICOM states except

Haiti. However wages have been increasing in Guyana. This is evident by movements

in monthly minimum wages of the public sector, the largest employer in Guyana. In

2000 the minimum wage stood at US$102.8. It has risen and now stands at US$171.

Policy incentives:

36

http://data.worldbank.org/country/guyana


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 Score Intellectual property protection Weak Availability of qualified human capital Weak Labour costs and regulation Strong Infrastructure Average Policy incentives Average Institutionalization Average Participation in global networks Average Overall Average

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SECTION 8: UPGRADING IN THE GLOBAL VALUE CHAIN

Upgrading is an assessment of the global economy from the ‘bottom-up’ perspective

(Gereffi and Stark 2011). It focuses on the strategies used by countries and other

stakeholders to improve their positions in the global economy in order to improve the

benefits of participating in the global economy. There are four types of upgrading

(Humphrey & Schmitz, 2002 in Gereffi and Stark (2011)): (1) product upgrading; (2)

Process upgrading; (3) functional upgrading37; (4) Chain or inter-sectoral upgrading38.

Specifically to Guyana’s participation in the global value chain, the upgrading

trajectories can be differentiated based on the stages of the value chain (see table 19).

At the mining stage, Guyana should focus on consolidation of its position as an

exporter of raw and refined gold. Though the majority of god output is based on

artisan or small mining, the country has attracted a number of foreign companies that

are also involved in exploration. The best upgrading trajectory for Guyana therefore is to

consolidate its participation in the chain by seeking to expand, on a sustainable basis

bearing in mind the environmental and health implications, gold mining, particularly by

large scale miners. This of course would require that proper incentives are in place to

attract foreign investment. However, given the dominance of SMEs in the industry there

should be focus on safeguarding their growth in the industry especially home-grown

SMEs. Presently, the SMEs sector of the industry has a significant presence of Brazilian

and Venezuelan nationals. In addition, firms should focus more on tapping into the fast

growing markets for gold given that price is fixed internationally. In this regard, the US

may the most feasible market for Guyanese firms given its Geographic proximity and

the fact that gold is a bulky product for which transport costs would increase over long

distances.

Guyana’s participation in the global value chain is weakest at the design and fabrication

stages and at these stages greater value is created from the raw product, gold. It is

37

“…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)


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,

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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 King’s 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


second is preferential access. Preferential access is one of the main reasons

India has been able to increase its share of the global gold jewellery market,

overtaking Italy. Indian Jewellery makers, unlike the Italians can export a certain

volume to the United States without paying any import duties. Guyanese firms

benefit from preferential access to the Caribbean market through the Caribbean

Single Market arrangement and to the US and Canadian markets through the

Caribbean Basin Initiative and CARIBCAN, respectively.

There is the additional option of seeking to exploit some of the emerging

distribution channels in the US, which are outperforming the traditional retails

channels. Examples include formulating arrangements with discount

merchandisers such as Wal-Mart or television retailers. The challenge with this

option where SMEs are concerned however is that since the strategy of discount

merchandisers is more on price; SMEs would have to operate at a fairly large

scale to be competitive. Further, the jewellery industry is Guyana is fragmented

with no agency with direct responsibility for coordinating the sector’s

development apart from the Guyana Manufacturers and Services Association.

Other countries such as Italy and India have jewellery manufacturers

Associations or Councils. Emphasis will therefore have to be placed on

coordinating the industry so that common challenges are addressed.

4. Process upgrading. According to Gereffi and Stark (2011) process upgrading

“transforms inputs into outputs more efficiently by reorganizing the production

system or introducing superior technology.” Most of the jewellery made by

jewellers in Guyana is hand-made using moulds and other tools either self-

manufactured or imported from China and the US. In fact, most of the world’s

Jewellery, including Jewellery of luxury brands such as Buccellati is handmade.

As a strategy to improve productivity, SMEs can seek to utilize more

sophisticated machine techniques and move towards machine-made Jewellery.

This should allow for finishing and quality to be improved.

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Notwithstanding the benefits of such a strategy there is one important fact to

consider that led to Italy sliding as the leading manufacturer of Jewellery globally

and that is, manufacturing costs. As indicated in the previous section Guyana

does poorly where infrastructure for jewellery manufacturing is concerned and

that is primarily because of high energy costs. Guyana will have to compete with

producers in China and India that have the benefit of economies of scale in

exporting jewellery.40 To upgrade in this regard, a critical consideration for SMEs

would be access to finance to increase investment in more sophisticated

machines.

The feasibility of this upgrading trajectory is also questionable when one

considers that Guyana is a labour abundant country with an unemployment rate

of about 11%. There is therefore a need to create labour-intensive jobs.

40

http://www.ibtimes.co.uk/articles/401180/20121103/gold-world-council-damiani-italy-india.htm


Table 19: Upgrading Opportunities for Guyana in the Gold Jewellery Value Chain

Participation in the GVC

Upgrading trajectories Scope for SMEs to Enter Possibilities for Upgrading Key Conditions for upgrading

Gold Mining Consolidation of position by attracting more firms

SMEs already dominate and will therefore not find it difficult to enter

Increased market access Policy incentives Market access

Jew

elle

ry F

abrication a

nd D

esig

n

Product upgrading Global competition is based more on quality and less on price which requires economies of scale

Focusing on producing Jewellery with greater caratage.

- Access to Finance - Ability to establish

linkages - Access to skilled

labour

Market entry upgrading There are fast growing export markets in China and India that 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.

Very small given mass production in China and punitive import duties.

- Access to Finance - Access to markets

End market upgrading Scope for SME involvement where market niches are targeted by focusing mainly on the Caribbean market or targeting the Diaspora in the US market.

Taking full advantage of preferential trade policies between Guyana and the US and Caribbean markets and exploitation emerging distribution channels in the US

- Access to labour - Access to Finance - Ability to establish

linkages - Ability to coordinate

industry domestically

Process upgrading Incorporation of technology to improve productivity. Most jewellery is hand-made machine made jewellery can be pursued.

- Access to labour - Access to Finance

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SECTION 9: RECOMMENDED UPGRADING STRATEGIES AND

ASSOCIATED POLICY MECHANISMS

Given the upgrading trajectories identified in the foregoing section and the

associated conditions for upgrading, the most probable strategy for upgrading that

SMEs should follow is a strategy of improving designs, production and branding of

jewellery made in Guyana, using sophisticated machinery and production

techniques. However, hand-crafted and machine-made jewellery can be produced

for niche markets; including the Caribbean market and Diasporic markets. At the

design stage firms can emphasize the creation of collections of jewellery items that

reflect the culture of Guyana and the wider Caribbean. Further, firms can seek third

party certification to increase confidence in the quality of jewellery items produced.

To realize such a strategy it may be necessary to pursue the following

recommendations (see figure 14):

1. Increased facilitation by the office for Investment, of participation of SMEs in

trade fairs in the Caribbean and elsewhere in order to allow firms to be able to

form and solidify business linkages.

2. Increase the capacity of technical institutions such as the Government Technical

Institute and the Guyana Industrial Training Centre to provide training in

gemology to increase the skill level of goldsmiths and jewelers in the industry

which would create the multiplier effect of increasing the design capacity of

jewelers. Increasing design capacity can be an important source of competitive

strength as was proven with Gitanjali Gems out of India.

3. Push for implementation of current policy proposals aimed at increasing access

to finance of SMEs as discussed in a previous section of the paper.

4. Create a jewellery association to increase coordination of the industry locally.

This would allow for more advocacy on behalf of the industry and for common

challenges to be addressed.


[

Figure 14- Recommended Upgrading Strategies for Guyana

Jewellery

association

Policy proposals for increasing access to finance

Training by technical institutions

Increased participation in trade fairs

Design-Production-Branding for Niche markets

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SECTION 10: CONCLUSION

This paper examined the global value chain for gold jewellery in order to ascertain the

prospects of Guyanese jewelers increasing their presence on the global market through

increased exports of jewellery. An assessment of the governance of the value chain

reveals a producer-drive chain characterized by hierarchical governance primarily

because the manufacturing and distribution strategies of leading firms is based on

vertical integration. This fact can impact how effectively Guyanese Jewellers that are

predominantly 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 Guyanese-

made 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.


SECTION 11: KEY INFORMATION SOURCES

1. All the World’s Gold http://www.numbersleuth.org/worlds-gold/

2. Bank of Guyana Annual Report 2011

3. Bringing the Gold Market to Investors. http://www.spdrgoldshares.com

4. Bullion Street. India, US become top Gold jewelry exporters (November 5th 2011)

http://www.bullionstreet.com/news/india-us-become-top-gold-jewelry-exporters/3282

5. Dave Brown. Top 10 Gold Producers. http://goldinvestingnews.com/investing-in-

gold/top-10-gold-producers

6. David Brough. India, U.S. trump Italy as top gold jewellery exporters. (November

2, 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 India’s

conglomerates muscle in on local gold sellers. (May 12th 2012)

http://www.economist.com/node/21554538

8. Expanding Coverage to the 16 Largest Gold Miners in the World. (April 26,

2009). http://www.goldstockstrategist.com/2009/04/expanding-coverage-to-16-

largest-gold.html

9. Jewelrista- Jewelry Design Magazine. 2011. The Word’s Top 10 Jewelry

Designers: http://jewelrista.com/blog/2011/08/03/the-world%E2%80%99s-top-10-

jewelry-designers/

10. Jewelers Information Source

http://www.jewelersinformationsource.com/tag/distribution-channel/

11. Gereffi, Gary & Fernandez-Stark, Karina. 2011. GLOBAL VALUE CHAIN Analysis: A

Primer. Center on Globalization, Governance & Competitiveness (CGGC) Duke

University

12. Gereffi, Gary 2007. The Gold Jewelry Value Chain in the District of Valenza, Italy.

Duke University, Durham Centre for Globalization, Governance and

Competitiveness

13. Gitanjai Gems Ltd. Annual Report 2012.

http://investors.gitanjaligroup.com/phoenix.zhtml?c=196729&p=irol-reportsannual

14. Gold Prospectors Association of America. http://www.goldprospectors.org/

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15. Guyana Geology and Mines Commission. The Mineral Industry in Guyana-

Summary

16. Guyana Office for Investment. 2006. Guyana Investment Guide.

www.goinvest.gov.gy

17. Guyana Times. Credit bureau1 to be up by year-endwww.guyanatimesgy.com

(April 6, 2013)

18. HML Modemarketing. 2010. Distribution Channels http://hml-

modemarketing.de/53.0.html?&L=1

19. IBIS World. Jewelry Stores in the US Market Research Report (December 2012)

http://www.ibisworld.com/industry/default.aspx?indid=1075

20. Indian Law Office – Higher Standards making a difference for you.

http://www.newdevtprojects.com/ilo/iloPdf/jewellerymarket.pdf

21. Industry IQ- Media Marketing Inc. (2008)

22. Industry IQ. Jewelry Stores- Industry Overview. www.industryiq.biz

23. Jerin Matthew. International Business Times Gold. India and US Overtake Italy

as Top Gold Exporters. (November 3, 2012).

Ahttp://www.ibtimes.co.uk/articles/401180/20121103/gold-world-council-damiani-

italy-india.htm

24. Jewellery. http://en.wikipedia.org/wiki/Jewellery

25. Largest gold companies. http://en.wikipedia.org/wiki/Largest_gold_companies

26. Liezel Hill. Gold mine costs up 4.1% in Q3. Mining Weekly Report (26th November

2010). http://www.miningweekly.com/article/gold-mine-costs-up-41-in-q3-report-

2010-11-26

27. National Competitiveness Strategy Unit. Government of Guyana.

ttp://www.competitiveness.org.gy/index.php?start=1

28. Responsible Jewellery Council. http://www.responsiblejewellery.com/

29. Reuters. FACTBOX-The top 10 gold companies based on production.

(September 2008). http://uk.reuters.com/article/2008/09/08/gold-conference-

idUKN0845219520080908

30. Shopping channel. http://en.wikipedia.org/wiki/Shopping_channel

31. Shree Ganesh Jewellery House Limited. Annual Report, 2009-10


32. Thomas, 2011. Guyana Economic Performance and Outlook (The recent

Scramble for Natural Resources). Institute of Development Studies, University of

Guyana. http://idsguyana.org/articles/professor-clive-thomas/new-menu/113-

guyana-economic-performance-and-outlook-the-recent-scramble-for-natural-

resources.html

33. Thomas Chaize (Dr.) Energy and Mining Newsletter. Gold production in the world

(2009). http://www.dani2989.com/gold/goldprod0509gb.htm

34. The Gem & Jewellery Export Promotion Council (GJEPC) Government of India.

Gems and Jewellery http://www.indiainbusiness.nic.in/industry-

infrastructure/service-sectors/retailing2.htm

35. Tiffany & Co. Annual Report 2012

36. United National Development Programme. 2012. Country programme document

for Guyana (2012-2016)

37. United Nations Commodity Trade Statistics Database. http://comtrade.un.org/db/

38. U.S. Geological Survey, Mineral Commodity Summaries, January 2013

http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2013-gold.pdf

39. U.S. Gold Refining (Primary) Companies.

http://www.manta.com/mb_35_E815305L_000/gold_refining_primaryWorld Gold

Council. 2013b. Bringing the Gold Market to Investors

http://www.spdrgoldshares.com/

40. World Gold Council. Investment. http://www.gold.org/investment/

41. World Gold Council. 2010. China Gold Report (Year of the Tiger)

42. World Gold Council. 2011. India Heart of Gold; Strategic Outlook

43. World Gold Council. Annual Report 2012

44. World Gold Production. http://www.goldsheetlinks.com/production2.htm

45. World Gold Council. 2010. India Heart of Gold Revival

46. World Intellectual Property Organization. Guyana.

http://www.wipo.int/wipolex/en/profile.jsp?code=GY

47. World Bank. 2013. Economy Profile Guyana. Doing Business 2013- Smarter

Regulations for Small and Medium-Sized Enterprises.

http://www.doingbusiness.org/data/exploreeconomies/guyana/

48. World Gold Council. India. http://www.gold.org/jewellery/markets/india/

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49. World Gold Council. China http://www.gold.org/jewellery/markets/china/

50. World Gold Council. USA http://www.gold.org/jewellery/markets/us/

51. World Gold Council Gold Demand Trends Report, Full Year 2010,

http://www.gold.org/investment/research/regular_reports/gold_demand_trends/

Company Websites

http://www.goldcorp.com/English/Investor-Resources/Reports-and-Filings/Annual-

http://www.barrick.com/operations/default.aspx

http://www.goldfields.co.za/

http://www.yamana.com/

http://www.anglogoldashanti.com/default.htm

http://www.kinross.com/about-kinross.aspx

http://www.buccellati.com/en/start.html

http://www.parkviewgreen.com/eng/shop/watches-jewelry/chopard/

http://www.buccellati.com/en/start.html

http://investinginafrica.net/wp-content/uploads/2012/10/Richemont-2012-Annual-

Report.pdf

www.graffdiamonds.com

http://www.ajjew.com/newsite/node/6

www.piaget.com

http://www.3d-gold.com/hk/en/

www.chopard.com


www.bulgari.com

www.mikimotoamerica.com

www.harrywinston.com

www.buccellati.com

www.vancleef-arpels.com

http://www.brand.swarovski.com/Content.Node/home.en.html#/en/aboutus/factsfigur

es

http://www.zalecorp.com/history.aspx

http://www.chowtaifook.com/en/ourstory

http://www.lvmh.com/investor-relations/documentation/reports

http://www.signetjewelers.com/sj/pages/operations

http://investors.gitanjaligroup.com/phoenix.zhtml?c=196729&p=irol-reportsannual

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SECTION 12: Appendix SWOT Analysis of the Guyanese Gold Jewellery Industry

Strengths Weaknesses Opportunities Threats

Access to precious metals and gems (diamonds) locally (mining and quarrying accounts for 50.2% of exports)

Industry is dominated by SMEs Rising world prices for gold Increased competitiveness of India where production is also of hand-crafted of Jewellery and high in caratage.

Increased Foreign Investment in gold mining

Fragmented Mainly primary production Most of the world’s Jewellery, including Jewellery of luxury brands such as Buccellati is handmade.

Abundance of labour Infrastructure Preferential access to CARICOM market- exploitation of low-end market locally

Strategic access to North American, South American and Caribbean markets

Limited training opportunities locally for emerging goldsmiths

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 King’s Jewellery World

Documents

June- Global Value Chain Analysis Gold Jewellery