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Rumors Fly as Thaigem Closes in Bangkok
by Morgan Beard ·  Editor-in-Chief

It's closing time outside Thaigem.com in Chanthaburi, Thailand, and founder Don Kogen is watching some of his nearly 1,000 employees file out of the eight-story jewelry factory and gem wholesale center.

In October, he closed his Bangkok operation, and the rumor mill started spinning stories that the six-year-old Internet upstart had failed and CEO Kogen had fled with $10 million, creditors hot on his heels.

In Chanthaburi, the company's original headquarters and still the head of the operation, the place looks anything but closed. In fact it's the city's biggest single employer.

"The rumors are in Bangkok, not here," Kogen responds. "Why would I steal $10 million? I have more than that in inventory. And I invested $4 million in the factory. Why am I going to walk away?"

Thaigem is not even in trouble, Kogen adds. Closing the two-year-old Bangkok office will help them to expand their operation.

The Bangkok store opened in January 2002. When it closed on October 30, it had 250 employees and was profitable. Kogen made the decision to close the office because the costs were too high, and as part of a general reorganization of the company.

"I know we were making a profit in Bangkok, but it was the hidden costs and the de-focusing," he explains. "There was no center of control. Thaigem decided we wanted to go back to our roots."

Those roots are selling over the Internet at unbeatable prices. "I'm an internet guy," Kogen says.

The day-to-day costs of running the Bangkok office, and the fact they had inventory in six locations -- three in Bangkok and three in Chanthaburi -- pushed their insurance premiums through the roof, up 300 percent. So Kogen brought all the inventory back to one location in Chanthaburi and consolidated into one building.

"Managing the movement of inventory was a large headache, and there was the security issues. We had to sell at a higher price to make a profit at all," he continues. That led to losing wholesale clients, which is the market they gear toward.

Kogen won't call the Bangkok move a mistake, and it was making money on paper, but the cost were too high for the overall operation, so he cut those costs. "Since we lowered our expenses, we can lower our price and that means increasing value to customers," he says.

As for the rumors, Kogen is philosophical. "I feel if you have time to sit around and talk bad about someone else, you need to re-evaluate your own situation."

Some Bangkok gem dealers have complained about Thaigem and their "mass selling" on the Internet. Some said it wouldn't last. But the Don of Internet gem selling says he's not running, but returning to basics, and he's excited about the future. "Watch out -- a lot will happen this year."

November/December 2004 • Style: From a Past Life • Selling: The Fashionable Brain • Bonus: Peruvian History & Culture • Bonus: Asian Fashion Psychology • News & Updates • In This Issue