The country has a long list of plus points which make it a major jewellery center. These include its 5,000 year-old Anatolian cultural and historical heritage and a history of jewellery making, particularly gold
and silver jewellery
, but nowadays also including diamond and colored gemstone jewellery
In addition to its relatively cheap labour costs and large manufacturing base, it also has an increasing number of designers who have strengthened Turkey’s role as a jewellery making center. It is one of the largest manufacturers of gold jewellery in the world, according to the World Gold Council, and a leading global exporter of such products.
Although Turkey broke through the $1 billion mark in jewellery exports in 2005, and reached $1.51 billion in 2008, exports fell back to $979 million in 2009. Most of the products are gold jewellery. The United Arab Emirates alone accounted for 19 percent of Turkey's exports in 2009, followed by the United States, Germany, Russia, Kazakhstan, Azerbaijan-Nakhchivan, Libya and Lithuania.
Turkey is estimated to have more than 40,000 jewellery-related firms employing 250,000 workers making a wide range of jewellery, from goods sold on U.S. shopping channels and at Wal-Mart to high-end jewellery selling for hundreds of thousands of dollars per item.
As for the diamond industry in the country, the Istanbul Gold and Diamond Exchange was accepted as a member of the World Federation of Diamond Bourses in 2008 and the bourse began operating in April 2011. Trading in rough and polished diamonds
was opened to the exchange’s existing members –banks, foreign exchange dealers, and large jewellery firms. The size of the country's diamond trade has been estimated at around $1 billion annually.
Turkey's jewellery industry received a huge boost with government decisions taken in the early 1980s to liberalize the gold trade and foreign exchange, according to the Turkish Jewelers Association (TAJ). Then, in the 1990s, the import and export of gold was further liberalized. Restructuring of the gold industry took place via the opening of the Istanbul Gold Exchange in 1995 which enabled orderly trading in gold and transparency.
As a result of the opening of the exchange, prices are in line with their international counterparts, and imported gold has to be of set standards. Although Istanbul is the main jewellery production centre, gold jewellery manufacturing also takes place in the capital of Ankara and the city of Izmir, along with some towns in Eastern Anatolia.
The TAJ promotes the export of Turkish jewellery, advances the interests of the Turkish jewellery sector internationally, and supports the activities of the Turkish jewellery export sector. The Turkish jewellery industry receives powerful support from the government channeled via the TAJ which includes on its board of directors both the owners of large jewelry firms and government officials, a TAJ spokesperson said. Thus, the association serves as a bridge between jewellers and politicians and proposes changes to the law to create an improved investment climate for both domestic and foreign firms.
Turkey serves around 80 countries in the region as a distribution hub and type of jewellery one-stop store for countries in the Mediterranean area, South East Europe, Russia and Commonwealth of Independent States, the Middle East, Black Sea and Caucasia. Turkey serves as a gateway not only for the Turkish manufacturing industry, but also for jewellery and loose stones from all over the world, said Ali Bulut, CEO of the trade shows group at CNR Holding.
He said these countries were those within a three-hour flight time from Istanbul, and had a combined population of more than one billion people. In addition to being a jewellery manufacturer, the country’s important geographical location bridging East and West, Asia and Europe, makes it an important distribution and re-export centre. It is estimated by professional industry bodies that when including informal and tourists sales, jewellery sales total more than 150 tons in weight.
With a population of more than 70 million and in excess of 14 million tourists to the country annually, Turkey is clearly an important country with great potential for jewellery sales. Its economy has posted a powerful performance in recent years. Turkish Finance Minister Ali Babacan this week said the economy expanded by 8.9 percent in 2010, and by 11 percent in the first quarter of this year. However, he expects growth to fall back to 5 percent or less next year. That would, nonetheless, be a strong showing given the anaemic growth seen in the United States and the European Union countries.
Gold demand in Turkey rose seven percent to 17.4 tons, and reached a record high figure in the second quarter of 2011, according to report by the World Gold Council. Meanwhile, investment demand for gold in Turkey registered the strongest rate of growth in any market globally. “Demand almost doubled to 13.6 tons, equal to a 144-percent rise in value to 1 billion Turkish liras ($560 million),” the report said.
Turkey, together with India and China, together account for almost 60 percent of global jewellery demand. The World Gold Council said that the three countries generated a combined growth for gold of 16 percent when compared with the same period a year earlier, despite a low demand in other countries, particularly in the West. Turkey has the capacity to produce 400 tons of gold and 200 tons of silver annually, however this capacity is not fully utilized.
However, the rising price of gold is having a severe impact on the country's jewellery sellers, said Mustafa Bulcent who runs a small store in Istanbul's famous bazaar. "I would say that sales are down by two-thirds in the last few months. “Even everyday jewellery can be regarded as a something of a luxury. People are not happy to buy the typical gold chains, bracelets and necklaces so much. They tell me that prices are too high and they are waiting for them to fall, but I say that prices are only rising and that they are also a good investment."