EXPORT of jewellery has surged from a mere $42 million to $922 million over five years ending June 2012, and is likely to hit $1 billion mark pretty soon.
A 230 per cent increase in gold prices during the same period was not enough to give jewellery exports this big push. What else then? Perhaps, the most important factor contributing to exports surge is that jewellery-makers were able to buy gold ornaments from households at cheap rates. After melting down such ornaments, they obtained enough gold to make trendy jewellery and export it. This seems to be a plausible explanation also because the ratio of gold imports to jewellery exports has been on the decline; imports slipped below 19 per cent in FY12 from as high as 500 per cent in FY07 (see table).
Foreign exchange earnings rose rapidly on the back of a one-window export support facility that had become operational in April 2007—just two months before the beginning of FY08. The Pakistan Gems & Jewellery Development Company (PGJDC), a public-private sector joint project, has set up gold hall marking and assaying facilities in Karachi and Lahore and is training hundreds of goldsmiths in latest designing.
PGJDC officials say it plans to introduce diamond cutting technology and techniques in the northern part of the country that are populated by mines of precious stones.
Simultaneously, the company organises annual exhibitions which fetch millions of dollars in spot selling and tens of millions of dollars in export orders.
But apart from that, the rise of gold as a better hedge against asset market volatility particularly after the global financial crisis has also played its part in boosting bullion trade, ultimately benefiting exports.
“In the last five years jewellery makers have seen much more activity on both buying and selling counters than any time in the past,” says a Karachi-based exporter. A decline in household incomes after the economic slowdown since mid 2000s induced selling of old jewellery while, gold as a store of value, attracted buyers.
“Those who had bought gold bars in late 2000s began selling them when gold prices rose further in 2011 and 2012. This created such a big supply line for us that many of us stopped importing gold for jewellery- making,” he said explaining why gold imports are down though jewellery exports are growing. Exporters also say that many of them now get better per unit price for their exclusively designed jewellery.
Pakistan is currently exporting plain and gems-studded jewellery to an increasing number of countries including India that itself is a big exporter of the finest jewellery in the world. “Things are changing. Now young men in twenties and even computer-savvy teenagers are involved in online designing of jewellery.
We tell them our requirements and they come up with trendy designs that really do sell in the world,” according to a Karachi-based exporter who has developed a new line of bridal jewellery mixing up ethnic Sindhi design with that of Rajihstani design popular in Indian cities. “I’ve exported millions of dollars worth of this jewellery to India, Bangladesh and Dubai and the demand is on.”
New markets keep popping up on the map of jewellery exports. The list is long. “America, Britain, Germany, Spain, Ireland, Italy, Switzerland, France, Japan, China, Hong Kong, Malaysia, Thailand, Indonesia, Central Asian States, Egypt, and South Africa; you name any country and we’re selling jewellery there,” says an official of Trade Development Authority of Pakistan (TDAP). In the West the demand is driven primarily by Pakistani diaspora.
“But in Arab, Asian and African markets our buyers include native people as well because our exporters have been able to design products according to their liking.”
Exporters say the use of silver, bronze and wood in gold ornaments is popular among Chinese, African and Western buyers and they are trying to catch up with this trend to maximise their returns on jewellery exports. “Arabs, Indians and Bangladeshi prefer plain jewellery or jewellery studded with precious stones. We cater to this class of buyers as well. But margins increase when we sell to Egyptians or Chinese or Spaniards kind of ornaments in which gold is used as a base metal but silver, bronze and wood is also used.”
The Gold Art Promotion Council, a private sector lobby group, is working on plans to make holding of overseas exhibitions of jewellery a permanent annual feature.
“We’re talking with the Pakistan Gems and Jewellery Development Company and TDAP and have also lined up dozens of exporters who are ready to participate in such exhibitions,” a Council member informed Dawn.
To sustain this demand, there is a need to continue innovation in designing. Instead of relying on just domestic talent, Pakistan can offer online designing jobs to jewellery makers of the entire region.
“Once the designing is approved, we can export more to even those countries whose craftsmen design for us because their designs would not only confirm to our requirements but almost reflect the trends and taste of their own countries,” says a legendary jewellery designer who is known in the industry as Chand Karigar. Exporters say a big chunk of earnings comes from the products that are used by members of both sexes. “In China, for example, rings and bracelets and Cross and miniatures of various animals considered lucky, are widely used by both men and women. That’s a big market and is currently catered to mostly by local suppliers.
But as prices of locally made products are soaring not so well-to-do Chinese don’t mind wearing lucky rings and bracelets and Cross and other stuff made outside China. India has begun to capture this segment of the buyers.
We too can do it.” A representative of jewellers’ association in Karachi Haji Haroon says potential for exports is so huge that with some initial investment in gold hall marking and assaying and in trendy designing Pakistan can double export earnings to $2 billion within next three years.
“Our domestic buyers now prefer cheaper Chinese artificial jewellery as majority of them can’t afford gold jewellery. It’s right time for us to focus more on exports.”