Blue Sapphire, among one of the big three precious coloured gemstones, is a variety of the mineral conundrum consisting of Aluminium Oxide. Sri Lanka (or Ceylon), also referred as the Gems Island, is not only the steadiest producer of Blue Sapphires, but the mines here are the oldest in the world and their exports have been in existence for more than 2500 years. Though the Classic Ceylon Blue Sapphires are the most valued, owing to its locality of origin and various mythological legends, that influences its prices and demand, its demand in the global value chain has been declining over the recent years due to emergence of new world suppliers.
Sapphire production in Sri Lanka has evolved over the years and has started to adapt to a younger generation. Sri Lanka blends traditional practices with modern technologies and has a true mine-to-market industry. An industry that accounts for over 50% of the Sri Lankan Gem exports, there is a need to modify its business strategy for Sapphires to restore its world class position in the world. The government is currently highly prioritising the Gem and Jewellery Industry in view of the fact that it has the highest potential to increase its forex earnings and enhance incomes. To link the potential of this industry, identification of the key players and analysis of research and development opportunities along with the available government policies is essential.
The existing literature talks about two different methods of promoting Blue Sapphires from Ceylon. While both these processes talk about pushing Sri Lanka to earn top recognition worldwide in the Blue Sapphire industry, there is a gap between the two approaches.
The first group of people believe that Sri Lanka can waive better in the industry if it converts it blue sapphire industry into blue sapphire design jewellery industry, leading to a significant increase in earnings. It is basically adding value to the blue stones by getting them designed by world’s top design houses and produced by Sri Lankan manufacturers. The only problem is little knowledge of foreign market designs, and little resources for designing. The Sri Lankan blue sapphire industry requires assistance to procure suitable designs from outside (e.g. Hong Kong) until domestic capabilities are developed.
Another set of people argue that simplifying the import process and removing tariff barriers can help improve the industry. This also attracts foreign buyers to the country. Latest addition to high demand of blue sapphire is China, who have revitalised gem trading in Sri Lanka. With more trade friendly policies Ceylon Blue Sapphires can become more competitive in the global market. Reduction of VAT from 20% to 5% has helped this industry in the past.
The analysis of the Ceylon Sapphire Branding Strategy requires a study of the policy briefs of the Sri Lankan Export Development Board, which has identified the Gems and Jewellery sector as an important sector for the development of exports and have initiated a number of strategic supply and market development programmes, and targets to enhance the sapphire export in the coming years. Another source of information is the detailed study of National Gem and Jewellery Authority’s branding of these Sapphire as “Ceylon Sapphires. This institution also regulates the mining licenses in Sri Lanka. Gem dealers in Sri lanka founded the International Coloured Gemstone Association, which is currently the apex body in the gems industry. Since they play a leading role in promoting international gem trade from Sri Lanka, Blue Sapphires’ branding has been included in their policies.
The current strategies that could be found is divided into two broad aspects, i.e. The Hub Strategy and The Brand Strategy. The Hub Strategy aims to develop Colombo as an international hub for Blue Sapphires, though Sri Lanka lacks facilities that are essential to create a hub, proper investment in infrastructure to make it a commercial zone, along with technological upgradation can be beneficial. Country branding strategy has been noteworthy worldwide, be it the Belgian chocolate or the Swiss cheese; the old name of Ceylon effects the consumer’s consciousness and brings an effective brand name in existence. The Brand Strategy is to develop Ceylon’s Blue Sapphire as a brand in the international market so that it avoids the competition from the mass-producing countries like Madagascar. It will eventually place Sri Lanka as an important jewellery production centre in the world.
While the industry does faces major threats from the new marketing strategies of other developed countries and due to shortage of finance to meet working capital requirements, it does have the capacity to build a highly comprehensive blue sapphire industry hub in Sri Lanka. There is a high potential for employment generation and expansion in the world market due to the country’s image as a fine gem producer and the best source for fine Sapphires, business friendly government, existing connections in the world trade of gems and easily trainable manpower.
By: Simran Sinha
