RAPAPORT... Diamonds most appealing gem at Hong Kong Show.
A sense of optimism brightened the 24th annual Hong Kong International Jewellery Show, which was extended from four to five days. The show, organized by the Hong Kong Trade Development Council (HKTDC) in cooperation with four of Hong Kong’s leading industry organizations, was the largest to date, hosting a record 2,181 exhibitors from 41 different countries.
Buyers were challenged to walk through 66,000 square meters (710,000 square feet) of space divided over several different levels of the convention center. On view was a large selection of products, which ranged from finished jewelry, loose diamonds, gemstones and pearls to findings, packaging and display equipment. Large, central halls were filled with top Chinese manufacturers; smaller halls on adjoining floors contained 21 international pavilions and two newly created sections, one for jade jewelry, a second devoted to antique and vintage jewelry.
Attendance was strong, reported show organizers, with an estimated 31,004 total visitors over the five-day period. Adding one day to the show’s run was done at exhibitor request, said Anne Chick, senior exhibitions manager for the HKTDC. But that doesn’t mean that the council harbored unrealistic expectations that the added day would yield considerably more buyers. “We don’t expect a huge increase in buyers, but rather a larger spread,” noted Chick. Her expectations were borne out by closing figures, which indicated an increase of just over 1,700 buyers.
Hong Kong is the world’s fourth-largest exporter of fine jewelry after Italy, the U.S. and India. If 2006 was any indication, Chinese suppliers have reason to be buoyant. “In 2006, Hong Kong exports rose 14 percent over the year before, for a total of $3.7 billion,” said Charles Chan, group chairman of Continental Holdings Ltd., and president of the HKTDC Advisory Committee. Sales to the U.S. rose 7 percent and sales to the European Union (EU), 15 percent. Exports to Italy alone rose 47 percent in 2006.
According to a survey by Oracle Added Value, a market research firm that polled both exhibitors and visitors during the show, the 2007 outlook for Chinese manufacturers is highly optimistic. Respondents indicated they expect exports to Asia-Pacific markets to increase significantly over the next year, and that sales to the U.S. will grow even beyond 2006 levels. Exports to the EU, however, are expected to stabilize.
DIAMONDS, DIAMONDS EVERYWHERE
Among the highlights of the show were diamonds and diamond jewelry, rated by survey respondents as being “the most appealing precious stone,” followed by pearls. Gold’s escalating price was not seen as a deterrent, but rather a plus that will keep consumers buying. While many manufacturers predict a return to yellow gold, however, the stands were dominated by white-on-white designs.
Supporting Hong Kong’s “Pearl of the Orient” designation were two major pearl auctions — the Paspaley South Sea Pearl Auction and the Robert Wan Tahiti Pearl Auction — held concurrently with the show. Also noteworthy was the first rough diamond auction conducted by Russian diamond giant ALROSA.
Among the highlights of the show was an entire floor devoted to pearls and pearl jewelry. Prices and quality of Chinese freshwater pearls continue to rise and it’s no longer unusual to find high-luster pearls in sizes upward of 10 millimeters. Diamonds, of course, were on every buyer’s list. Among the most notable trends were some additional fancy cuts, as well as more illusion settings that employ several small diamonds to resemble a larger stone. Included in the latter are Continental’s Quattour, Aaron Shum’s Coronet, as well as multiple stone designs from Queen’s Heart, Fourever and Karp.
Perhaps the most notable change apparent to regular show attendees was the move by many top Chinese manufacturers to create separate collections aimed at different audiences. For example, the growing Mainland Chinese customers want high-karat gold and diamonds, often of small sizes but of good clarity and color. Middle Eastern buyers demand larger designs, often in formal ensembles of necklace, earrings, ring and bracelet.
Generally, Americans like their diamonds in bolder total-weight pieces, often choosing microsettings, pavé and invisible settings, as well as combinations of diamonds and colored gemstones, such as sapphires. Europeans buyers opt for slightly scaled-down designs with classic floral and openwork patterns.
Gemstone jewelry, while well-represented, took a lesser position than diamonds. Many of the large, rainbow designs of past years were refashioned into more contemporary floral designs, featuring a number of different colors in each piece. Jewelry of carved jade and gemstones is the specialty of many Chinese manufacturers.
In addition to 24-karat gold and jade, Chinese consumers are clearly in love with diamonds. According to Bronia Yip, managing director of Goldiaq Creation: “Chinese buyers want diamonds of 30 points and above. They like simple designs, not for engagement rings, but for fashion. The preferred qualities are SI to VS or better.”
The Chinese market for diamonds is huge, says Kenichi Higano, director of Hope Polishing Works, Ltd., Mumbai, and his company is expecting a lot of growth from it. There is a big difference in China between the high, middle and low markets, but the middle market is trading up, he notes. In terms of goods, Hong Kong and China have similar preferences for diamonds, and buyers at this show were looking for diamonds above 1 carat in VVS clarity, G-H-I color.
RETAIL SECTOR SOARINGGenerally, Hong Kong’s retail sector, including shops and restaurants, came off a banner year in 2006, and all expectations are for a strong 2007. “Right now, the atmosphere is good,” said HKTDC’s Chick. This is due to a number of factors, including a strong stock market, record highs in real estate and the lowest unemployment rate in a decade. The jewelry sector, in particular, has benefited from these pluses.
Another possible negative has been averted for local Hong Kong citizens. A proposed sales tax that was to have been levied on all products in Hong Kong, from foodstuffs to clothes and jewelry, has been shelved, due to a revenue surplus reported by the government.
When the proposal was first launched, the industry’s four major trade groups swung into action to lobby the government to stop, but the discovery of the revenue, followed by the expectations of additional surpluses, have pushed the planned tax off for another three to four years.
In addition to creating collections specifically aimed at different audiences, Chinese manufacturers are endeavoring to burnish their reputation as design originators rather than copyists. Several design events were held prior to the show and winning pieces were prominently displayed.
Responding to past accusations of design piracy and knockoffs, both the HKTDC and the government have taken steps to resolve the problems. For example, the Hong Kong government has recently inaugurated Fast Action Scheme to handle complaints of copies and trademark infringements. At the show, the HKTDC had its own program to deal with copyists. When complaints are lodged, both parties are required to show evidence of design originality, to be judged by a team of industry professionals and lawyers. If a manufacturer’s piece is judged to be a copy, the company is requested to remove the merchandise from its showcase. If it refuses to comply, it can be banned from the show.
In addition to design integrity, branding and quality assurance are also hot-button issues for many Chinese manufacturers. The Diamond Trading Company’s (DTC) Forevermark is growing in scope and increasing its market share in China. Similarly, the industry is working on a soon-to-be-created quality mark for jade, intended to guarantee authenticity and to boost buyer confidence.
Article from the Rapaport Magazine - April 2007. To subscribe click here.