Vietnam’s top jeweller PNJ looks abroad as it deals with diamond, gold smuggling scandal at home

VIETNAM’S largest jewellery retailer Phu Nhuan Jewelry (PNJ) is pressing ahead with plans to manufacture jewellery for global brands, even as a diamond controversy at home puts consumer trust, one of its most precious assets, under pressure.

Phan Quoc Cong, chief executive officer of PNJ, said the company’s first step abroad would not necessarily be to sell under its own name.

“In the first phase, we would be serving big international brands which want to manufacture in Vietnam,” he told The Business Times on Wednesday (Jul 8), on the sidelines of Maybank’s Invest Asean event at The Fullerton Hotel in Singapore.

PNJ operates the largest jewellery retail network in the country, with more than 430 stores nationwide. It has two manufacturing facilities with annual capacity of about four million products.

Cong added that the jeweller is building a new factory as part of a drive to meet international standards and expand its product mix.

“We can have more product-line capability for the market, especially for the younger generation,” he said, noting that younger consumers are more open to lower-gold-content jewellery for daily wear, and that traditional Vietnamese buyers tend to favour gold jewellery as a store of value.

In April, chairperson Cao Thi Ngoc Dung told shareholders that PNJ had been planning a new factory for the past three years, specifically to serve export categories, especially non-gold artistic jewellery.

But she said the project was stalled because legal procedures were still to be completed.

Singapore is also emerging as a test bed for PNJ’s broader international ambitions. Cong said the company is starting to work with companies and consultants in the city-state. PNJ’s premium brand, CAO Fine Jewellery, which focuses on craftsmanship, design and higher-end customers, could be part of that effort.

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“We see Singapore as an international market where, if we want something new, we can quickly test the product, test the market before going out to others,” he said.

Confidence test for asset-like diamonds

The export plan gives PNJ a longer-term growth story at a difficult moment. The Ho Chi Minh City-listed jeweller is dealing with a crisis tied to P-Lab, its wholly owned testing unit, now that the former head of the lab has been named in an investigation into an alleged cross-border gold and diamond smuggling ring.

Police said last week that the network, allegedly run by Indian nationals through a Hong Kong-based company, had brought about 200 kg of gold and more than 28,000 diamonds into Vietnam since 2024.

Investigators have said that new P-Lab certificates were issued to help legitimise the smuggled diamonds, which have been put up for sale in a market where grading papers are central to pricing and customer trust.

PNJ shares fell by the daily limit for three straight sessions after the news, wiping about 20 per cent off its stock and erasing roughly 7.7 trillion dong (US$292.8 million) in market value. The counter rebounded by 2.36 per cent on Jul 8.

The company is trying to draw a line between the lab and its core jewellery business. Cong said P-Lab provides quality certificates, not certificates of origin. He added that PNJ’s own supply chain is separate from the lab and that it sources directly from international suppliers.

Still, the scandal hit just as Vietnam’s wider diamond market was already facing a confidence test.

In May, Vietnamese tycoon Nguyen Phuong Hang, who is based overseas but remains one of Vietnam’s key social-media influencers, used livestreams to question the transparency of diamonds sold by well-known jewellery shops in Ho Chi Minh City, where she has been a major customer.

Her comments triggered a wave of concern among local diamond buyers, prompting them to seek independent inspections or resell their stones.

Many had treated diamonds as liquid, asset-like products backed by retailers’ buyback promises, much like gold bullion.

Following the P-Lab investigation news, PNJ dealt with an initial increase in customers selling diamonds back under its buyback policy, although the pressure eased after several days.

SSI Research described the episode as a matter of trust and corporate governance rather than just an earnings risk, and noted that PNJ’s ability to restore investor and consumer confidence would depend on what the probe turns up.

Still, it said, short-term risks to liquidity and operations appear manageable. Diamond-related products are estimated to account for about a third of PNJ’s jewellery revenue.

“Any prolonged deterioration in consumer trust could affect revenue growth in the coming years,” Nguyen Tran Phuong Nga, SSI’s equity research analyst, wrote in a note on Jul 6.

In the current environment, SSI said it believed that investors are now likely to scrutinise factors related to earnings quality, corporate governance and internal controls.

“This is a big lesson for us on strengthening corporate governance,” Cong acknowledged in the interview with BT.

Gold remains the brighter spot

Previous local restrictions on importing gold had kept Vietnam’s domestic gold price above that of the global market, weakening PNJ’s competitiveness in gold jewellery exports, Cong said.

“Things can change because of the recent regulations,” he added, referring to a new rule that could enable the firm’s broader access to imported gold materials.

The decree, approved last August, officially removed the state monopoly over gold-bar production and gold import quotas. In April, the State Bank of Vietnam said 11 businesses and credit institutions had submitted applications to be on the programme, but did not name the 11.

Maybank analysts pointed out in a Jul 6 report that the new rule is expected to alleviate raw gold supply bottlenecks, while tighter regulations on informal gold trading and tax compliance should narrow the competitive advantage of unbranded and informal players in Vietnam.

“We see significant room for leading branded retailers such as PNJ to continue gaining market share,” they said, adding that about 12,000 traditional jewellery stores still account for around 70 per cent of the local market.

Some analysts also expect PNJ to become a contract manufacturer for certain banks licensed to produce gold bars, as eligible lenders are likely to lack their own manufacturing facilities and, hence, have outsourcing demand.

Record targets remain intact

Despite the latest controversy, PNJ remains steadfast in its 2026 business targets. The company is targeting 37 per cent top-line growth and 21 per cent bottom-line expansion, aiming for a record revenue of 48.66 trillion dong and net profit of 3.41 trillion dong.

It said preliminary figures showed that revenue and net profit for the first half still grew by double digits.

The company still expects the second half to benefit from Vietnam’s wedding season, festivals and year-end shopping demand.

Data from the Observatory of Economic Complexity showed that Vietnam imported US$2.21 billion in precious stones, metals and pearls in 2024, including US$1.34 billion of gold and US$274 million of diamonds.

Exports in the category reached US$872 million, led by jewellery at US$411 million, but still far below those of regional peers such as Singapore, Thailand and Indonesia.