PEST ANALYSIS:

Political Factors
Current law and order situation of the country is not favorable especially in the
tribal areas of NWFP. This affects the performance of the gems and jewelry
sector since it has created many security problem.
Non existence of hallmarking results in Pakistans increasing loss of export, self
independence and less acceptability of Pakistani products both in the local and
global markets
This sector has a huge untapped potential that is being wasted because of the
negligence of the government as there is an absence of a specific gem-related
mining policy, dearth of creativity, lack of global market knowledge and export
methodology are heavily hurting the entire sector.
The practice of smuggling gold to other bullion markets has existed for long time
and there is not much being done about it, despite the knowledge of the lost
official revenue.
Lack of documented trading
No price regulation policies by government, because prices largely driven by
international forces
The political instability also lead people to reduce demand for the luxury item
and invest in more solid
Though gold refining uses lead, which is poisoning in itself, no health or
environment related policy has yet been established.
 Establishment of the Pakistan gems and jewellery development company
through public/private ownership as an initiative to organize the lucrative industry.
This has led to an increase in the countrys exports, according to an article
published in The News.
According to the laws of the State Bank export of jewelry to India is not allowed
at all

Economical Factors
With the rising prices of gold jewellery buyers have started purchasing less of it.
Recession has affected the jewellery sector in terms of its demand. With less
purchasing power people buy less jewellery, given its income elasticity.
Import of gold and silver is subject to State Bank's authorization
Higher living costs have also led people to sell their old jewellery, to capitalize on
the increasing market trend
Socio Cultural Factors
Jewellery forms one of the most valued heritage symbols for women of Pakistan,
and subcontinent largely. It holds high cultural significance, especially in terms of
dowry for women in the subcontinent.
Jewellery is mainly a luxury item that is purchased mostly by women of all age-
groups in Pakistan.
Because of a decline in the purchasing power, people no longer purchase gold
jewellery in the same amount that they used to at a point.
Where before women used to wear gold jewellery in heavy amounts to flaunt
their marital status after marriage, todays women prefer trendy and light
jewellery.
Because this fashion need is often unfulfilled in gold jewellery, supplemented by
the fact that gold prices are not sky rocketing and the security constraints in the
country dense, a shift towards silver jewellery has been seen.
Development of the countrys own fashion industry has also accounted for a shift
in trends to lighter jewellery
Silver jewellery often gold-plated, allows women to purchase varying designs at
cheaper costs. The same is the case with artificial jewellery. Gold jewellery is
now only purchased during the wedding season, and that too has seen a shift
towards lower carats. This is largely for purposes of dowry, and gifts
Increased exposure of Pakistani women to global trends has also led to an
increased demand of jewellery articles
Higher exposure to Indian fashion has also led to an increased demand for
Indian-style jewellery

Technological factors
Local jewellers use casting machines for making bangles, chains and nose rings,
etc.
 Machines are imported mainly from Italy (finest jewellery market of the world,
as stated by Mr. Saeed). Also imported from Germany, USA and France. Import
of these machines if of high costs. Transportation takes from 4 days to one week.
Locally machines available from Gujranwala, Lahore and other cities of Punjab.
These machines re also of high quality, and relative cheaper. The old methods
and techniques used in the industry create a lot of wastage of precious stones
and metal, for example a lot of precious stones go to waste due to old excavation
methodology
Pakistan is to adopt hallmarking production in the sector very soon.
Jewellery that is produced through CAD/CAM, using software matrixes are of
superior quality and presentation, and more in demand for export
Use of technology saves costs, time and wastage. It increases efficiency and
productivity of the sector.
Introduction and mainstream use of technology will reduce costs of production
by large numbers for the industry. In addition, it will also help Pakistan meet
international standards, and build economies of scale in production for
international markets.

SWOT ANALYSIS OF JEWELLERY

INDUSTRY
STRENGTHS
Availability of skilled artisans for the making of handmade jewellery
Gems, an important raw materials are easily available locally
High competition in the industry tries to fuel efficiency and improve productivity
 Promotion of gold consumption. (gold considered as foreign currency, higher the
consumption, higher the FOREX of the country!)
Global popularity for bangle production
Recognition of the sector in international markets.
WEAKNESSES
Traders are reluctant to adapt new techniques and methods of production
Availability and use of modern technology is limited.
High rate of illiteracy
Limited innovation
Unorganised structure of the industry
Lack of documentation
Use of register-based inventory system
Lack of member-registration in recognized associations
Limited marketing techniques applied
High operating costs
Low or no conformity to international standards
Absence of wide-scale use of hallmarking
Lack of value-addition facilities: this leads locl jewellers to purchase Pakistani
exported rough stones from india at higher costs because india has a developed
value addition industry, renowned for its processing and polishing traits.
OPPORTUNITIES
Training centres established by PGJDC
Encouragement given to traders to participate in exhibitions and fairs to increase
their visibility.
Hall marking initiative
Exploring new markets internationally
Presence of a lot of untapped resources

THREATS
Provincial Disputes that hinder exploration of resources
Smuggling
High inflation
Political instability
Poor law and order situation
Rise in international gold and oil prices
Limited availability of credit and financial schemes
Power crisis
Lag between policy making and implementation
Lengthy and cumbersome procedures of import and export (including the
additional duties imposed!)
High competition from India, and emerging countries like Bangladesh and
Srilanka.
 LATEST TRENDS

a) Recent fluctuations in the stock market, reduced Interest rates made investment attractive on
jewellery.

b) The gems and jewellery industry occupies an important position in the Indian economy.

c) It is a leading foreign exchange earner, as well as one of the fastest growing industries in the
country.

d) The Indian gems and jewellery industry is competitive in the world market due to its low cost
of production and the availability of skilled labor.

e) The industry has set up a worldwide distribution network, of more than 3,000 offices for the
promotion and marketing of Indian diamonds.

f) India is the diamond polishing capital of the world specially the states of Gujarat and
Maharashtra.

g) 100% FDI is permitted in gems and jewellery sector.

h) The growth of Branded Jewellery is eminent in the coming days.

Till now, Indian households in villages used to buy gold from their nearby jeweler who used to
be an acquaintance also in most circumstances because the shop owners used to know almost
everybody in the village. But, things are changing fast in India with the onset of reforms. Now,
Indians, the biggest buyers of yellow metal in the world, are increasingly aware of the quality of
gold and they now started looking for the branded jewellery.

This change in trend in Indias urban and rural areas has lured several big names in global
jewellery trade like Cartier to India. Branded gold, diamond and silver jewellery showrooms are
opening up across Indian cities and village towns.

Till now, Indians used to buy gold from the traditional jewellery shop owner whom they trust.
But, with GenNext Indians having enough disposable income want a change from that and they
are opting for brightly lit showrooms with marble floors, glass display cases and professional
salespeople, preferably at a company whose brand name implies social status and wealth.

Tatas Tanishq opened their first outlet in 1994 and now has 117 showrooms across the country.
Avenue Montaigne, Indias largest branded jewellery retail outlet, suggests the shift towards
brands reflects social changes, but also new ways of viewing gold. In India, the precious metal is
traditionally given to brides at the time of marriage as a store of wealth providing financial
security.

Some of the most famous companies in Western jewellery such as DeBeers, Tiffany and Cartier
have also moved into India since 1997 when overseas banks and bullion suppliers were allowed
to import gold. They are drawn by the enormous size of the market, rising incomes and the
fracturing relationship between buyers and traditional family jewelers. About 15,000 tones of
gold are privately held in India. Demand remains strong despite new records being set for the
price of the metal on an almost daily basis.
Premium international brand Cartier launched their plush showroom in New Delhi in 2008 and
also operates through a strong dealer network to sell their jewellery and watches in India.
Share of branded jewellery in Indias total market was growing at a pace of 20-30 per cent
annually.

The number of gold retailers in the country has increased by 40 per cent since the year 2000,
with 150 domestic and over 65 international established brands. Reliance has opened 14
jewellery stores in 13 Indian cities since 2007 and has announced that it will launch showrooms
in various other cities and towns across the country.

Source: http://www.commodityonline.com/news/Branded-gold-jewellery-shops-lure-Indians-
23837-3-1.html

RECOMMENDATIONS
The government should take steps to complete import-of-gold transactions
in one day, so that raw gold does not wait in cargo idle. This will help the
industry improve its productivity, and help it meet export orders on time
without delay.
A separate room for checking of gold imports- away from the general import
section- so that security risks are relatively reduced for the industry.
The government should have follow-up steps taken after designing and
establishing a policy to check if it is being implemented o not. Postimplementation
steps of assessing the changes brought by policy
implementation should also be developed so that the industry can flourish
and gain momentum locally and internationally
Gold-refining facilities use lead in the process which is poisoning: these
facilities should be subjected with health standards and at the same time,
should be away from the commercial area to safeguard the heath of
inhabitants.
Provide security measures for local jewellers who are trading to ease their
operations
Government support through bank loan and credit facilities will also aid the
sector in advancing and acquiring expensive technology to aid production,
otherwise not possible
Simplify export procedures to meet time-bound orders, otherwise, India, our
major competitor will lick most of our customers away, given the relaxed
import/export policies they are subjected to in order to boost the industry
Quicken the production process of an industrial and free-export-zone,
proposed by the name of Dazzle Park. This will provide the following
benefits:
- Fresh air provision
- Access to natural light
- Shock and fool proof electrical wiring
- Lower the costs
- Allow a sharing of infra structure, which will enable the industry to achieve
economies of scale, by reducing costs and increasing productivity.
- Will be similar to mass-production sites
Improve the marketing strategies implemented in the sector through
introducing the concept of branded Pakistani jewellery to improve its worldwide-
recognition and demand
Computer-based inventory system should replace the register-based
inventory system widely followed in the mainstream market. This will allow
jewellers to keep better track of costs and the items for sale. In case of a
security threat, a readily available loss of costs and expenses will allow a
quick recovery of the same.
Speeding up the process of hallmarking and assaying will help the industry
improve its quality standards, and conform to international standards,
thereby adding to the international demand and a simu8latenoes increase
in local exports.
Increase participation in world-exhibitions and a providence of other
avenues to open the gateway to the global market, so that production of a
variety of designs and trends is introduced
Government support through bank loan and credit facilities will also aid the
sector in advancing and acquiring expensive technology to aid production,
otherwise not possible
Introduction of professional and proper training centre and educational
institutions that offer jewellery designing and use of related technology as a
recognized course.
Development of value-addition facilities internally will help the industry
lower its costs, which accumulate because local traders tend to buy
Pakistani exported/smuggled jewels at a higher cost after they have been
processed and polished from India.
Promotion of e-trade as a means of exploring and expanding into foreign
markets