Navigating Trade Winds: O...

Navigating Trade Winds: Opportunities Beyond the US-China Trade War

A Strategic Analysis for Jewelry Businesses: Risks, Alternatives, and Growth Strategies.

Slide 1: The Shifting Sands: US-China Trade War Impact

Analyzing the current state and future implications for the jewelry industry.

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Section 301 Impact: Since 2018, US Section 301 has significantly impacted global supply chains, affecting Hong Kong's jewelry exports due to tariffs on China-made products.
Honeymoon Period Ends: Jewelry made in Hong Kong enjoyed a tariff-free period until January 2025, but new tariffs began on February 4, 2025, impacting re-export strategies.
Supply Chain Reorganization: Manufacturers are relocating production to countries like Thailand and India to avoid tariffs, leading to a decline in Hong Kong's re-export volume.
Market Adaptations: Hong Kong companies are focusing on high-end customized jewelry and exploring emerging markets like ASEAN to mitigate the impact of US tariffs.

Exploring the benefits and risks of shifting production to Thailand.

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Avoiding Tariffs: Moving production to Thailand can circumvent the 34% tariff imposed on Chinese goods, especially for items under $800 potentially qualifying for duty-free entry.
Leveraging Incentives: Thailand's Eastern Economic Corridor (EEC) offers tax breaks and infrastructure support, reducing setup costs for foreign investors.
Diversifying Supply Chains: Reducing reliance on China mitigates risks from geopolitical tensions. Thailand's location provides access to regional markets such as ASEAN.
Cost Efficiency: Thailand offers competitive labor costs compared to China, specifically in electronics and automotive sectors, while maintaining infrastructure.

Assessing the potential impact of US tariffs on Thailand's economic growth.

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Growth Reduction: Thailand's finance minister projects a potential 1% reduction in economic growth due to the imposition of U.S. tariffs on its goods.
Export Maintenance: The Thai government intends to import more U.S. goods, remove tariffs on select U.S. products, and eliminate non-tariff barriers to maintain exports.
Strategic Response: Thailand is actively adjusting its trade policies to counterbalance the negative effects of U.S. tariffs and sustain its export economy.
Headline Adjustment: A correction was made to a news headline emphasizing the impact of US tariffs 'by' a certain percentage, clarifying the scope of the economic impact.

Detailed breakdown of initial and ongoing operational costs in Thailand.

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Initial Investment: Setting up a company requires registration fees (6,000-10,000 THB) and minimum capital (2-3 million THB), varying based on foreign employee numbers.
Operational Expenses: Monthly costs include salaries (avg. 35,000 THB/employee), accounting (5,000-15,000 THB), social security (750 THB/employee) & utilities.
Taxation Overview: Corporate income tax is 20% on net profits (above 3 million THB), VAT is 7% (exceeding 1.8 million THB/year), with dividend withholding at 10%.
Compliance Challenges: Navigating complex visa, work permit, and tax filing requirements requires expertise, with penalties applying for late VAT submissions.

Analyzing recent trends and industry features in Hong Kong's jewellery exports.

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Export Overview: A review of Hong Kong's jewellery export data from 2021 to 2023 to understand recent performance trends.
Industry Features: An examination of the key characteristics and dynamics of Hong Kong's jewellery industry during this period.
Performance Trends: Analyzing trends in export volumes, values, and destinations to assess the industry's overall health and competitiveness.
Market Dynamics: Understanding the market forces affecting Hong Kong's jewellery exports, including consumer preferences and regulatory changes.

Supplementary insights into US trade dynamics relevant to the jewelry industry.

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Trade Insights: Additional information on US trade policies and their potential impacts on the jewelry sector.
Product specifics: Supplementary information that concerns details of US trade on product.
Relevant information: Relevant information on recent events about US trade.
Dynamic market: Changes in the trade market that can impact the jewelry sector.

Considering alternative manufacturing locations and strategic opportunities.

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Thailand: Evaluate Thailand's current situation on trade business with US.
Oman: Consider Oman's current situation on trade business with US.
Singapore: Consider Singapore's current situation on trade business with US.
Dubai, UAE: Consider Dubai's current situation on trade business with US.

Exploring future trends and innovations in the jewelry industry

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Innovation in Jewelry: The jewelry sector is seeing innovation across multiple sections.
Innovation in Design: The innovation in jewelry designs are booming with technology.
New market trends: Emerging market trends are making ways for jewelers to boom.
Future is bright: The future is shining as we evolve for jewelry and new innovations.

Leveraging strategies to minimize costs and maximize ROI in new markets.

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EOR Utilization: Using an Employer of Record (EOR) can avoid entity setup costs (~70% savings) by outsourcing payroll, compliance, and HR functions.
BOI Incentives: Companies in promoted sectors (e.g., tech, manufacturing) can enjoy tax holidays and reduced import duties through BOI incentives.
Shared Offices: Renting virtual offices for 50,000 THB/year offers a cost-effective alternative to leasing physical spaces, reducing overhead costs.
Streamline Operations: Review and streamline processes to reduce costs, enhance efficiency, and boost competitiveness in the new market.

We appreciate your time and consideration.

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Gratitude: Thank you for your attention throughout this presentation.
Next Steps: We are ready to discuss the next steps.
Collaboration: We look forward to the possibility of future collaboration and partnership.
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