Vietnam's government issued specific ingredient requirement for gold jewelry after gold shops and traders began cutting corners to attract customers with low prices.
The new instructions, issued by the Ministry of Science and Technology will take effect this June and mandate that jewelry designated "pure gold" (24k) must be no less than 99.9 percent pure.
Alloys with a 20k product rating are required to measure more than 83.3 percent gold; 18k products must measure 75 percent pure at minimum, with a 0.1-0.3 percent margin of error.
Nguyen Thanh Long, chairman of Vietnam Gold Traders Association, said the big companies have been expecting the order as many small businesses have begun lowering gold purity standards to reduce prices.
One gold expert cited an example of a VND100,000 bracelet that should have cost VND250,000. The item was advertised as 75 percent pure, but test results showed it only 68 percent gold.
Insiders said a 5 percent skim on a piece of jewelry can earn a trader at least VND175,000 -- a fact that has reinforced an unwritten rule in the business: customers can only sell a product back to a company or a shop they bought it from because traders don’t trust each other's products.
Gold jewelry shops and retailers say they worry that millions of products in their stock will violate the new rules.
Nguyen Van Dung, chairman of the Ho Chi Minh City Jewelers Association, said millions of pieces of gold jewelry currently in circulation will fail to meet the new requirements.
“So there needs to be instructions on how to deal with the remaining products as well. Cooking them up to make new products will be very costly,” Dung said.
The head of another sales department at a gold trading business complained that most 24k necklaces have clasps made of only 96 percent or 97 percent pure gold.
Dung said several members in the association have asked for the new rules to be pushed back until next year to give them time to clear existing stocks.
Nguyen Thi Cuc, deputy director of the city’s leading jewelry trading company Phu Nhuan (PNJ), said the ministry should provide instructions on what to do about current stocks. However, she added, the new quality standards should roll out as planned to spur healthy competition.
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