DAMMAM, 10 August 2003 — Despite the worldwide boom in the bullion market, the gold trade in the Eastern Province is facing tough time, with many jewelers in the gold souks of Dammam and Alkhobar reporting low sales, high overheads and declining profits.
The declare themselves baffled as the summer is usually the peak period for marriages, when there is great demand for gold. “It’s as if people have stopped buying jewelry for their weddings,” said a desperate Ibrahim Al-Husain, a jeweler in Dammam. “We have never witnessed such low sales before,” he added.
Hassan Ali Al-Hassan, a jeweler in Alkhobar reported a decline in sales particularly to expatriates. “During the summer vacation we have always recorded high sales as many expatriates go home on holiday and buy gifts,” he said adding few did so this year.
Another major concern of the gold market in Dammam and Alkhobar is Saudization, which has increased their overheads drastically and affected their sales in a “very negative manner.”
Early this year the government made it mandatory for all gold jewelers to replace their expatriate staff with Saudis. There were pleas from the bullion market to defer the decision but without any success.
Many jewelers replaced their expat staff overnight while others continued with their foreign employees. As a result of complaints, the authorities conducted several raids and defaulters were penalized.
This led the jewelers to evolve their own mechanism and they now say that their new system is working and bringing results.
These jewelers post their expat salesmen outside the shop and when any customers enter the shop these salesmen attend them, though but not from behind the counter.
It appears that customers are also comfortable with this new system and prefer to deal with expats.
Ibrahim Al-Husain admits that he will soon have to replace all expat staff, but “it has to be gradual so that the Saudi staff is properly trained by the expatriates,” he said.
Some jewelers who have Saudized all the positions say that this process has cost them “a fortune.”
They say that they are paying almost double what they were paying to their expatriate staff.
“And on top of that their performance is not all that productive,” said Hassan. This may be one reason many jewelers have moved from the Eastern Province to Dubai. However, the authorities say that those who moved are not Saudis but expatriates who were running proxy businesses here.
“It was these proxy businesses that forced us to implement complete Saudization, and it certainly paid dividends,” a member of the Eastern Province Chamber of Commerce and Industry told Arab News.
