Hanoi (VNA) ജ– The country’s biggest gold bar trader, Saigon Jewellery Joint Stock Company (SJC), recorded more than 18 trillion VND (806 million USD) in sales in 2015, but its gross profit margin was only 0.57 percent, much lower than the margin of competitor Phu Nhuan Jewellery (PNJ) at 15 percent.

PNJ reported sales of 7.7 trillion VND – about half of SJC’s sales - but it gained a gross profit of 1.17 trillion VND last year. While SJC’s main revenue still came from gold bar trading, experienced gold traders said gold bar trading often yields low profits compared to trading gold jewellery and gem products. Traders said the gross profit margin of gold bars was between 0.1 percent and 0.5 percent. Therefore, to those traders, it was not surprising to see SJC earn such a low profit. The best time for gold bar trading was in 2011 when gold reached its peak at 1,900 USD per ounce. SJC, which dominated the gold bar market, reported sales totalling more than 111 trillion VND. At that time, gold bars were considered a valuable commodity that could be traded for the best profit or be saved in the bank for a good interest rate. After prices fell, gold was often traded at about 1,200 USD per ounce on the global market. The State Bank of Vietnam intervened in the gold market in 2012 with the issuance of Decree No 24, which banned widespread gold bar trading in the country except for gold firms and credit institutions licenced by the central bank. With the aim of controlling the market, which had been largely manipulated by speculators for years, the intervention introduced a State monopoly on gold bar production and gold material imports and exports, and also put an end to the practice of saving gold at banks. It has re-organised a disordered gold market and helped match the local prices of gold with global ones to prevent investors from benefitting by trading gold bars at different prices. As a result, many local people do not want to invest in gold anymore and have found other investment channels, such as real estate investment, bank savings and the stock market. Over the last four years, SJC revenue has continued to drop from 111 trillion VND in 2011 to 16 trillion VND in 2014. However, last year, the firm saw growth of 12.5 percent from 2014 and was able to recover revenue. Meanwhile, Phu Nhuan Jewellery JSC has found success by specialising in gold jewellery and gem products that are handmade or made-to-order. In PNJ’s revenue structure, gold bars accounted for 20 percent, equivalent to 1.55 trillion VND. The gross profit of the segment only accounted for 1 percent of the firm’s total gross profit. PNJ could produce 4 million products each year. Currently, it sells between 2.7 million to 3 million products to the local market. With a retail chain of nearly 200 shops across the country, PNJ also plans to open another 25 shops to serve the growing demand for gold jewellery. In the first quarter, PNJ reached 2.3 trillion VND, an increase of 9.03 percent over last term, and gross profit hit 421 billion VND, an increase of 42.9 percent. It also forecast 8.8 trillion VND in revenue and 1.3 trillion in profits this year.-VNA