RAPAPORT... Shenzhen, the city adjacent to Hong Kong, remains indisputably the biggest jewelry manufacturing, processing and trading center in Mainland China. The jewelry industry is among the top six traditional industries in the city and one of four government-supported industries in the Luohu District.
With more than 2,100 jewelry companies and 120,000 workers, Shenzhen manufactures more than 70 percent of jewelry products in China and the value of its jewelry processing and manufacturing totals approximately $7 billion annually. As the self-described “hub of jewelry in China,” Shenzhen hosts 26 enterprises that have been named a “China Top Brand,” the highest of several government designations recognizing quality and excellence. In addition, seven companies have been named a “China Famous Brand,” six firms hold a “Guangdong Top Brand” label and approximately 100 have been awarded “China Famous Jewellery Brand” honors. All together, the honored Shenzhen companies represent approximately half of the jewelry companies that have received the designations in all of China.
2009 Shenzhen Fair“Golden September and Silver October” is a common saying in the jewelry and diamond trade of China. Since the biggest retail showdown toward the end of the year is the National Day Golden Week holiday from October 1 to 8, when a lot of people will be getting married, the wholesale volume in the month of September becomes vital for the year’s totals. Generally, all wholesalers were quietly busy in September, filling orders.
The 2009 Shenzhen International Jewellery Fair is a very important part of that September trading. As the biggest and most influential jewelry trade show in Mainland China, it features more than 1,000 exhibitors from about 25 countries and approximately 2,500 booths in 565,000 square feet of exhibition area. This tenth annual version of the show, which ran from September 13 to 17, was a good place for buyers and sellers from all parts of China to meet, say hello and rub shoulders. On the show floor, it is very common to overhear people asking on their cell phones, “Are you here at the Shenzhen show?” The show’s emphasis was on domestic sales this year, since international demand has decreased due to the global economic situation.
Although the show is Mainland China’s biggest and most influential, there were still mixed comments from diamond exhibitors. Those who have been participating for several years in a row, such as Dalumi Diamond, a member of the Shanghai Diamond Exchange (SDE), work well in advance of the show setting up appointments. As a result, they usually have a stream of existing clients coming to their booths to view diamonds and pick up stones ordered previously. Some of the newer diamond exhibitors admitted it was not so easy to develop their clientele. They also cited the fact that it is difficult to identify the trade members because the show is open to the general public and trade customers are mixed in with consumers.
New Opportunities in ChongqingWhile the traditional markets like Shanghai, Beijing and Shenzhen continue to grow, other cities are getting increased attention. Chengdu has become a very important market, and Tianjin is regarded as having great potential, while the big cities in northern and northeastern China are promising as well.
A government project to invest approximately $146 billion to urbanize the municipality of Chongqing by 2012 is designed to result in a rapid rise in the urban population and in its economics, as well as provide new opportunities for the jewelry market. Li Yuanyi, secretary-general of the Chongqing Jewellery Trade Association, is confident that the development will stimulate the local economy and encourage the population, including those in the rural areas, to spend. The population of 30 million Chongqing is expected to provide fertile soil for the retail market to grow. “As Chongqing’s economy gathers momentum, competition in the jewelry sector will intensify further, among not only domestic companies, but also international jewelry brands,” said Liu Ganyin, director of Chongqing Jewellery Trade Association.
Gold Demand SwellsChina produced 172.87 tons of gold during the seven months of January to July 2009, an increase of 13.4 percent. It is estimated that the country’s 2009 output will be close to 300 tons, assuring that it will continue to rank as number one in gold production in the world. While world gold demand for the second quarter of 2009 declined by 22 percent year on year, demand within China increased by 6 percent, and investment demand for gold soared by 47 percent. Because the average gold-consuming volume of the Chinese is still far below the Asian average as well as the world average, there is still a lot of room to grow. Another analysis indicates that the 2009 platinum jewelry sales in China could reach 1.4 million ounces, a 70 percent increase.
The Marketplace- Demand is great for rounds in 0.15 to 0.69 carats, G+, VS and in 0.15 to 0.69 carats, I-J, VVS.
- Demand remains good for rounds in 0.30 to 1.10 carats, D-H, VS, Gemological Institute of America (GIA)-certified diamonds in triple EX, double EX and EX cut grade with none to faint fluorescence. I-J, VVS sells better outside the Shanghai market.
- Demand for parcel goods for jewelry manufacturing is good. Meanwhile, bigger stones over 2 carats up to 5 carats have a decent market share.
Article from the Rapaport Magazine - October 2009. To subscribe click here.