Transparency in the management of gold and jewelry.

(Baonghean) - Circular No. 22/2013/TT-BKHCN of the Ministry of Science and Technology, which regulates "Measurement management in gold trading and quality management of gold jewelry and handicrafts circulating in the market," has been implemented nationwide. However, after more than 5 months of implementation, many businesses and shops in Nghe An province are still not complying with the regulations.

Effective from June 1, 2014, Circular 22 is considered a solution to protect consumer rights. According to the circular, the import, export, production, and sale of gold jewelry and handicrafts must comply with many strict regulations regarding measurement, quality standards, and product content. Gold jewelry products for sale must bear quality standards, origin, design, and size information on labels and be publicly displayed. However, in reality, many products still lack labels declaring standards, do not specifically state the name and address of the establishment, gold purity, or code; if attached, it's usually just a small piece of paper stating the weight and processing price, buying and selling prices… Ms. Nguyen Thi Hien (a postal worker in Cua Lo) has an 18K 6.5 gold ring that she has worn for a long time and wants to sell it to buy a different model. However, at Kim Thanh Huy gold shop (on Tran Phu Street - Vinh City), after testing the gold's purity and density, the shop owner said he could only buy it for 1,500,000 VND because the gold was of poor quality. Showing a sample, the owner said the ring, stamped as 18K, should be equivalent to 7.5 karats, but it was only assessed at 5.5 karats. The same product, when taken to Tat Nam gold shop (on Tue Tinh Street), was only offered 1,350,000 VND "to be melted down." Feeling pressured and not wanting to sell immediately, Ms. Thao took the ring to another gold shop on Nguyen Sy Sach Street, where the gold purity was upgraded to 6 karats, but the purchase price was only 1,250,000 VND. "Ultimately, I don't know the true age of the ring I'm wearing. It's stamped 18K, but when I sell it, each place gives a different gold purity, and the buying price offered by different shops also varies significantly," said Ms. Le Thi Thao, expressing her frustration.

Customers buy gold jewelry at Kim Thanh Huy gold shop (Vinh City).

Mr. Nguyen Hoang Nam, a jeweler with over 20 years of experience (on Cao Thang Street - Vinh City), shared the following information: “The gold purity of jewelry on the market is often inaccurate, so gold from one shop is often rejected by another because it's not pure enough. Even if you buy and sell directly with a receipt, customers still suffer losses on both sides. The reason is that when buying, customers have to pay a high fee for setting the stones and crafting the jewelry. When selling, gold shops don't factor in these costs; they just inspect the item, weigh it, and then determine the price. If you agree, they sell. According to the standard convention, 18K gold is 7.5 purity. It's impossible to distinguish the purity with the naked eye because processing units can color-plate lower-purity gold to make it look like 18K gold. There are many reasons why gold might not be pure enough, including the initial raw material being of poor quality; during the crafting process, many other metals are mixed in, which also contributes to reducing the gold's purity...” Currently, the production of gold jewelry and handicrafts depends on individual businesses and does not adhere to mandatory standards requiring products to have a gold content of 14k, 18k, 22k, or 24k. Meanwhile, gold jewelry and handicrafts come in a wide variety of designs and styles. Therefore, by applying different measurement methods, businesses can easily exploit loopholes for profit. Simply inflating the gold purity by 0.5% can defraud consumers of several hundred thousand dong per product. Furthermore, most people buy gold jewelry for personal use or as gifts, often waiting a long time before selling it, making it difficult to verify the quality and thus vulnerable to gold purity fraud.

In reality, for many years, the market has had almost no common standards for gold jewelry products. Furthermore, most gold shops source their goods from wholesalers or manufacture them themselves. Therefore, the gold purity of the products is determined by the shop owners themselves. In implementing this regulation, some large businesses such as Phu Nguyen Hai Gold and Silver Company, Kim Thanh Huy (in Vinh City), Nhu Trinh (in Dien Chau)... have basically labeled their products with declared standards and indicated the gold purity according to regulations; the application of the new regulations in the circular has not significantly affected their business operations. However, most small-scale gold jewelry and handicraft businesses are confused and have many concerns about applying the circular.

The owner of a gold and silver shop on Nguyen Sy Sach Street said: “Previously, the allowable error in gold content was 1 to 3%, but now, according to the Circular, the error is only 0.1% to 0.3%. Therefore, the shop has a large quantity of products with errors that do not meet the new regulations, and we still haven't figured out how to deal with the remaining stock. Sellers like us still haven't fully grasped the regulations of the Circular, especially regarding determining gold purity, which types of scales are suitable, and which suppliers offer quality products. Furthermore, the regulation requiring businesses to equip themselves with 4-decimal place scales (determining gold weight with a reading accuracy of 0.0001g) is not entirely reasonable. The average difference in weight for 1 chỉ (unit of weight) of 75% gold jewelry (18K gold, priced at approximately 2.4 million VND) when using a 3-decimal place scale (with a reading accuracy of 0.0001g) is significant. "For scales with 0.001g and 4 decimal places, the price difference between 0.001g and 0.0001g of gold is approximately 1,000 - 2,000 VND. However, equipping a scale with 4 decimal places is much more expensive than the 3 decimal places scales currently used by most businesses, so we find this unreasonable."

According to statistics from the Department of Standards, Metrology, and Quality, there are currently over 100 businesses and workshops dealing in gold jewelry and handicrafts in the province. The goods are imported from major brands such as PNJ, SJC, DOJI, and others. In addition, gold jewelry and handicrafts are also purchased through exchanges among the public and imported from abroad via "hand-carrying"... Before the circular came into effect, the Department organized training sessions, provided guidance, and distributed documents on the content of Circular 22 and related legal documents to gold businesses and establishments. In early July 2014, fulfilling its function of state management in metrology and quality, the Department established an inspection team to check the implementation of Circular 22 at 78 businesses and workshops dealing in gold jewelry and handicrafts throughout the province. According to Mr. Phan Ngoc Quang, Head of the Nghe An Provincial Department of Standards, Metrology, and Quality: Previously, the market for gold jewelry and handicrafts nationwide, and particularly in Nghe An province, operated quite freely, with each business and unit having its own inconsistent standards. At the time of the inspection, most businesses and shop owners were still unfamiliar with and unprepared to comply with the circular; they had not yet published the applicable standards, affixed codes, symbols, gold content, and weight on each product, and provided sufficient information on labels for consumers to know and choose. Many businesses were still using outdated and unsuitable measuring instruments to determine the weight of gold in buying and selling transactions. To further support businesses producing and trading these items in complying with the law on measurement and quality, the department will continue to provide guidance and professional support to help businesses understand their responsibilities and seriously implement the circular.

Circular 22/2013 stipulates that gold and jewelry must conform to quality and measurement standards; products must be stamped with a code indicating the gold content and must not contain harmful substances before being allowed to circulate on the market. Businesses producing and trading gold jewelry and handicrafts that do not meet the standards may have their business license revoked and be fined up to five times the total value of the violating products, or up to 2 billion VND if they violate measurement standards… However, to date, despite inspections by relevant authorities, no announcements have been made regarding gold businesses that have violated and been penalized according to the above regulations. Therefore, in the future, relevant departments and agencies need to have better coordination mechanisms in disseminating and publicizing the law, and at the same time, need to improve coordination in managing, inspecting, and supervising activities related to the production and trading of gold jewelry and handicrafts. It is especially important to provide transparent information to the public about establishments that violate regulations, thereby contributing to protecting the legitimate interests of consumers and legitimate businesses.

Text and photos:Ngoc Anh