Smuggled China gold in Vietnam

Shoppers choose gold jewelley at a store in Ha Noi. Chinese gold holds10 per cent of the market in southern Viet Nam and 20 per cent in the north. - VNS Photo Truong Vi

Most of this gold has been smuggled into the country without any quality control, they added.

Chinese goldsmiths produce two kinds of jewellery. The expensive variety is exported to Europe and the cheaper variety is sold in Asian markets, Nguyen Van Dung, chairman of the HCM City Association of Fine Arts, Gold Jewellery and Gemstone, quoted by Infonet.vn.

"If the purchase of Chinese gold grows, Viet Nam may turn into a dumping ground of low-quality gold jewellery," Dung said.

The average person can hardly differentiate Chinese gold from locally made gold, chairman of the Viet Nam Gold Trading Association (VGTA) Nguyen Thanh Long told Infonet.vn.

The HCM City Association of Fine Arts, Gold Jewellery and Gemstone reported that merchants from Hong Kong, mainland China and Malaysia visit the city and invite Vietnamese gold companies to visit gold production lines in China.

The merchants prepare easy contracts, under which the products are to be delivered within a week. If the Vietnamese partners are unable to sell the jewellery, the contracts allow them to return it to China without bearing any labour costs.

The owner of Kim Ngoc Gold Shop in Hoa Binh market, HCM City, said that even unbranded 9999 gold bars are entering the domestic market. The local gold brands are embossed on these bars.

Experts said that Chinese gold and the current policy of gold imports could push local gold companies into trouble.

Pursuant to the Decree 24/2012/NDCP on gold market management, the central bank has monopoly on gold imports to help stabilise the exchange rate, and control inflation to ensure the supply and demand of foreign currencies and the macroeconomic stability.

Gold bars are available for banks and authorised gold bullion trading companies. Medium and small jewellery manufacturers don't have qualified sources of gold; they have to buy recycled gold to continue production.

"Many gold jewellery companies are defunct or in the process of closing down," said Dung.

Cao Thi Ngoc Dung, General Director of Phu Nhuan Jewellery Joint Stock Company (PNJ), suggested that the State Bank of Viet Nam should let qualified gold companies access bank credit to continue production.

Agreeing with this, Dung added that while giving credit, the central bank may set up a strict supervisory system to avoid dodging of the law.

Yesterday afternoon, the Sai Gon Jewellery Company (SJC) listed gold prices between VND36.8 million and VND36.92 million, or between US$1,672 and $1.678, per tael on its website, marginally up from the range of VND36.87 million to VND36.95 million on Wednesday.