Innovation, technology to drive Italian gold jewellery exports
November 11, 2012 – Innovation, technology and design flair will be key to drive forward Italian gold jewellery exports against a backdrop of soaring gold prices and fierce competition, the executive director of Vicenza Fair said.
Italy now ranks as the world’s third biggest gold jewellery exporter in volume terms after India and the United States, having lost its spot as the world’s number one manufacturer and exporter of mass-produced and crafted gold jewellery.
“The Italian gold jewellery business is a sector that has not given up on growth and is battling against the price increases of its raw materials by investing in innovation, research, design, and the use of new materials and new processing techniques,” Corrado Facco, executive director of Vicenza Fair (Fiera di Vicenza), said in an interview with Jewellery Outlook.
“For a while now the Italian market has been complaining about a decrease in domestic consumption and this has led many jewellery companies and brands to ‘pull their socks up’ and find new trading opportunities, backed by that unique trademark known as ‘Made in Italy.’”
The Vicenza Fair, which promotes trading opportunities for Italian gold jewellery manufacturing, is seeking to boost the export prospects of the sector.
“The market is tough and is definitely not stupid. The Vicenza Fair’s task is to help Italian entrepreneurs in the gold jewellery industry by providing them with the most useful tools to strengthen their business,” Mr Facco said.
“The Vicenza Fair is aiming increasingly at internationalisation. We want to take the companies towards those countries where the demand for fine jewellery offers the greatest opportunities.”
But the Italian goldsmith sector is fighting an uphill battle against punitive import duties imposed by markets such as China, and competition from lower cost producers benefiting from improving design skills and the latest technology.
High gold prices and salaries have inflated Italian jewellery manufacturers’ costs.
Domestic gold jewellery sales have slumped due to the recession in Italy and the soaring price of gold, which hit a record price in euro terms in October 2012.
Sales of gold jewellery in Italy were down 15 percent in volume terms (to 4.8 tonnes) and fell 9 percent in value terms ($246 million) year on year in the second quarter of 2012, figures from the World Gold Council showed.
Steven Tranquilli, director of Italy’s federation of jewellery retailers, Federdettaglianti Orafi, has estimated that gold jewellery retail sales were down 20-25 percent year on year in Italy.
Total revenues of the Italian goldsmith sector in 2011 stood at 6.3 billion euros, down 16 percent from 2007, according to the Italian goldsmiths’ federation, Federorafi.
The Italian industry flourished on the expertise and skills built up by family-owned businesses over generations and the international prestige of ‘Made in Italy’ design and manufacturing. Italy is seen as an international trend-setter in jewellery design.
But now India and the United States have overtaken Italy as exporters in volume terms.
There is also intense competition from lower cost gold jewellery manufacturing origins such as mainland China, Hong Kong, and Thailand.
Indian manufacturers can export gold jewellery to the United States duty-free up to a certain volume, whereas all Italian gold jewellery exports to the United States had to pay duty, according to Federorafi.
Indian and Brazilian manufacturers pay low duties when they export gold jewellery into EU markets.
Manufacturers in India and the United States have benefited from greater economies of scale compared to the fragmented nature of the Italian goldsmiths’ industry.
Improving design skills and technology, and cheaper labour, give manufacturers in developing countries such as India a competitive edge.
Italy’s gold jewellery manufacturing companies are centred in Vicenza, Valenza, Arezzo and Bassano del Grappa. Most production comes from family-run goldsmith workshops with small workforces.
Export-focused Italian gold jewellery manufacturers gather three times a year, in January, May and September, at the VicenzaORO trade fairs in Vicenza, which attract hundreds of retail buyers from around the world searching for the most exciting new designs for their stores.
Gold is currently trading within sight of an 11-month peak of $1,795, which was touched on October 5.
The current environment of relaxed monetary policy in many developed economies, which can fuel fears of inflation, has boosted the investment appeal of gold.
Faced with the tough challenges of the domestic market, Italian gold jewellery manufacturers are turning their attention increasingly to the fastest growing export markets.
According to the latest figures from VicenzaORO, the main destinations for Italian jewellery exports in the first quarter were Switzerland (363 million euros, or 22 percent of the total), the United Arab Emirates (237 million euros, or 14.3 percent), and the United States (142 million euros, or 8.6 percent).
Italy exports about 70 percent of its manufactured gold jewellery, with the remainder sold domestically.
The Italian industry is lobbying the European Union to overcome the challenge of import duties, but VicenzaORO officials have said the high quality of Italian jewellery exports would ensure that they increasingly penetrate fast-growing Asian markets, including China.
According to VicenzaORO, the Vicenza gold jewellery manufacturing district’s exports to China in the first quarter of 2012 jumped by 52.7 percent to 38.2 million euros, propelling the country to second place among export destinations.
At the retail level, Italian luxury jeweller Damiani has seen strong growth in the Chinese and Russian markets where it expects to expand its presence.
The rapid increase of wealth in these countries has boosted demand for branded luxury goods including gold jewellery.
Mumbai-based Gitanjali, one of the world’s largest diamond and jewellery manufacturer-retailers, acquired a handful of Italian luxury jewellery brands during the economic downturn, and now sells their pieces in strategic growth markets.
Gitanjali has opened a store showcasing two of its upscale Italian brands, Stefan Hafner and Nouvelle Bague, in Dalian, China.