Since Corona Virus is the talk of the hour, we decided to analyse the impact of this emergency on the jewelry industry. Based on interviews and discussions with business professionals directly involved in the retail and wholesale sector, we came up with following ways the virus has hit our industry. We would like to hear your thoughts too.



No buying/selling in China and Hongkong

Indian exporters of loose stones and jewelry are not in good shape. As we all are aware, China and Hongkong are 2 such countries which have major role to play in the Indian precious metal, diamond and gemstone industry and unfortunately, they are also the origin of the virus. Naturally the disturbance in the exports and imports from Hongkong and China has caused disruptions not only in the annual business cycles but has driven several businesses into big losses or even closure. The diamond industry of Surat, which exports their cut and polished stones to Hongkong is likely to incur an estimated loss of Rs. 8000 crores. Just as the gold prices got some relief from the U.S-China Trade war, the spread of the virus crashed global markets and demands. As we were closing the Chinese New Year, Indian markets were expecting to see a rise in demand for gold and diamond jewelry in the Chinese markets via Hongkong, but now exporters are left with huge stocks. Though the domestic producers do not seem to be affected by the spread of the virus as the Indian sub-continent is far from danger.


Cancellation of Exhibitions and Trade fairs

Corona Virus has devastated the MICE (Meetings, Incentives, Conferences, Events) Industry. Several domestic and international trade fairs across a variety of industries have been indefinitely postponed/cancelled. Organizers, exhibitors and visitors are afraid that they might come in contact of the virus while in transit or from other visitors. Our industry is highly global; and therefore, quarantine measures taken by governments have disturbed the flow of raw materials, finished goods and even humans across borders. Jewellery exhibitions namely - Hong Kong International Jewellery Show and International Gem and Jewellery Show (Jaipur) are on verge of cancellation if the situation does not come under control. Business tourism, once thought to be recession free has come down to its knees. Planners of biggest international conferences and concerts to the smallest community gatherings are required to make the tough decisions of whether to carry on as planned, airline, event management, travel agents, hotels and other inter-dependent industries have had to process huge refunds to clients in the face of the situation that our planet is facing.


Fluctuations in Gold Prices

One of the grave issues that the jewelry industry is facing is the instability in gold prices. The disturbance in the buying and selling schedule of China and Hongkong has caused huge stock pile-ups, reduced retail demand and volatility in the gold prices. From manufacturers to end consumers, everyone is aware of how the prices have shot up from 33,000 to 43,000 in less than a year. This news is making it to the headlines every time it hits a new high. It is a crucial phase for our industry and firms with financial strength and credit facility will survive. Jewelry firms of all scales, are buying and selling with very tight hands and only to trusted clients. Any signs of default are taken seriously. Ones who have not understood the direct and indirect effect of the gold fluctuations on their business are facing serious issues. Since gold is not bought on credit, jewelry manufacturers are constantly stuck between receiving gold payments or buying it. Jewelry businesses who rely on loans from banks and financial institutions for their gold purchase, are having to fix their prices with banks much sooner. Since considerable fluctuations are taking place every hour, jewelers are risking inventory loss or selling at a discount, if the prices fall after they fix the price with the bank. With mixed speculations in the market, people are hoping for relief from the volatility in the gold prices.


Worsening investor mood and capital markets

Since the advent of the digital Eco-system, major financial markets of the world have become increasingly inter-connected. The banking sector has grown rapidly which now defines the certainty and stability of nations. But since the case of Corona virus has grappled the world, all financial indicators are showing negative growth. The domino effect which started from China, is reaching different corners of the globe despite the containment measures being taken by governments. Firms across categories are asking their employees to work from home. Nevertheless, manufacturing is highly prone to the economic effect of the virus because production is an activity which cannot be carried out from home. It involves usage of machinery by humans and delivering physical goods. Due to this high vulnerability of manufacturing sector, the already difficult mood of investors and banks towards jewelry firms in India is worsening. Since production units are being closed for indefinite periods, jewelry manufacturing industry which is highly run on credit from financial institutions are facing a tough time in convincing their investors.