Gold Division Settles "Outlet" Crisis in Local Market

Hani Milad, Head of the General Division for Gold and Jewelry said that the Division held a meeting with major manufacturers and dealers to discuss the crisis that resulted from implementing the factory “outlet” policy in the local markets.

The factory “outlet” policy aims at reducing the size of the stock of stagnant gold sales, through offering reduced prices and discounts to recover the cost of manufacturing.

Milad added that the meeting resulted in canceling the application of the policy in the markets for any of the gold manufacturing companies, as it was agreed with the companies to cancel the offers submitted, in a manner that preserves all the rights of all parties to the profession, putting the public interest above self interests.

On his part, Mamdouh Abdullah, a member of the Board of Directors of the Gold Division and said that some gold manufacturers sell part of the old stagnant jewelry at discounts to reduce losses, instead of melting the yellow metal and re-model it again, as they bear the manufacturing costs, stamp duties and value-added tax (VAT).

Abdullah added that some of the jewelry is not popular in the market and requires a long time to be sold, and offering them to citizens with reduced prices provides for companies the cost of manufacturing and enables them to get rid of their stagnant stock; it also gives them the opportunity to recover the cost of manufacturing and provides them with raw gold to run in new products.

In turn, Hani Baqi, chairperson of Margaret Gold Company said that the recent offering of jewelry in outlet prices led to crises within the market, as it hurts retailers that bought the same items at higher prices.

Baqi stressed the need to legalize the prices of outlets to reduce the damage to corporate customers from wholesale and retail traders, adding that the wrong application may lead to the reluctance of merchants to deal with companies.

He pointed out that the application of such policy is only compatible with companies that have their own retail outlets, and do not distribute their products to stores.

In a related context, Saeed Selima, a member of the Board of Directors of the Gold pision said that the outlet policy is a good idea, yet, needs coordination between companies, wholesalers and retailers to avoid complications in the market, pointing out that manufacturers should protect their customers from dealers.

Contributed by: Taarek Refaat