RAPAPORT... Buyers were generally very choosy and highly price-conscious at the 27th annual Hong Kong International Jewellery Show, held March 5 to 9. On Friday, the show’s opening day, and again on Sunday, March 7, the diamond hall was packed with shoppers. But, say suppliers, most attendees came bearing specific shopping lists, with a strategy to shop all the stands, looking for the best buys before making commitments.
This year’s Hong Kong show opened its doors to a record number of exhibitors — 2,651 manufacturers from 44 countries and regions — an increase of 13 percent over 2009. According to the Hong Kong Trade Development Council (HKTDC), the show’s organizer, there was also a record number of buyers. In attendance were more than 32,000 visitors from many different countries, led by China, India, Russia and Korea. The American presence, according to the HKTDC, has grown by double digits, but many exhibitors said they saw fewer American buyers than in years past.
Global Perspective
Billy Lau, chairman of the Hong Kong Jewellery & Jade Manufacturers Association, said that he saw more buyers from emerging markets such as Russia, South Africa and the Middle East. “We also saw many buyers from leading Mainland enterprises. They were at the fair to source gold and platinum jewelry and other products. The high price of gold has boosted demand for alternatives, including rose gold and silver products. Black diamonds and brown diamonds also received good response from buyers,” he noted.
At King’s Mark, Hong Kong, known for its wide-ranging collection of diamonds, gold and gemstones, Anna Li, principal, said she saw some American buyers, but not a lot. The majority of clients were from Russia, the U.K., Australia and South America. What did they want? “They are still price-conscious, but all want better quality,” she said.
Greg Kesten, Jack Reiss, New York, noted that he didn’t see as many Americans as in 2009; most of his visitors were Indians and Chinese looking for clean rounds rather than cushion cuts, his company’s specialty. In terms of price points, Kesten said, “People have come down market a bit, but they are concerned about clarity.” In general, Indian buyers sought H to I, VVS, while Hong Kong and Korean buyers were on the lookout for D to F, SI1 stones. Although “the company stand was very busy,” Kesten said, and by the third day of the show there were sales, the volume of business was not as high as the company would have liked. He expressed hope that the September Hong Kong show would produce more sales.
Giyora Babayoff, principal at Iris Babayoff Diamonds Ltd., Israel, said the Hong Kong show was a good one for her company, which specializes in 1-carat to 10-carat diamonds. Most of her customers were Chinese, Indian and Thai and she labeled them as “price-conscious.” Despite an inventory of multiple shapes and sizes, she said round brilliant diamonds remain number one in sales.
Cora International enjoyed a very busy show with lots of traffic, but as Nareg Arslaian, general manager, put it, “Offers are coming, but profits are hard to make.” Most customers were from Asia, and Americans were few in number, he said. In demand were fancy colors, led by yellow, pink and blue. In general, shoppers were “looking for price mostly,” but sales of fancy colors were definitely on the rise over 2009.
“Colored diamonds are rarer and appeal to people with a bit of wealth,” commented Mellissa Richards, sales, Rachminov Diamonds 1891 Asia Ltd., Hong Kong. The company offers a range of fancy color loose diamonds. She estimated 60 percent to 70 percent of her company’s stock was in yellow, the balance made up of pink, blue and green. Rachminov sells to a cross-section of retailers and designers. Overall, Richards said, prices have been climbing steadily and business with China is “booming” as consumers there start to recognize the beauty and rarity of these diamonds. Unlike white diamonds, however, the round brilliant is not the most popular cut in fancy colors, she said, because a stronger depth of color is needed for a round to stand out.
Focus on Asia
Hong Kong maintains its place as the world’s fourth-largest exporter of fine jewelry, following Italy, the U.S. and India, but its numbers slipped considerably in 2009. Exports to the U.S., its major market, totaled $3.7 billion, a decrease of 27 percent from the previous year, while exports to Europe and Japan also fell, by more than 20 percent each. The major bright spot was sales to Mainland China, which rose by 68 percent.
Right now, sales of fine jewelry to the Chinese Mainland account for 7 percent of Hong Kong’s total exports. Of special interest is the steady increase in diamond sales. According to the Shanghai Diamond Exchange (SDE), China’s import of diamonds set a new high in 2009, with a value of $699 million, a 30 percent increase from 2008. These numbers make China second only to the U.S. in diamond consumption, a fact not lost on many Hong Kong manufacturers.
Chris Ng, marketing director for Solitaire Fine Jewelry, said that before the economic crisis, his company sold 100 percent of its jewelry to U.S. buyers, but when the financial problems hit, he rethought the collection and aimed it at the Chinese market. Solitaire Fine Jewelry, like many other companies, aims to capture a larger market through a mix of unique and classical designs in a variety of materials and price points.
To the stylish young customer, Ng offers “fabulous creatures,” brooches and pendants depicting animal and mythical figures, made of sterling silver and cubic zirconia. For sophisticated Chinese tastes, there is a collection of gold-and-diamond minisculptures, with moving arms and legs, inspired by Chinese warriors. For an upper-level, yet more mainstream, audience, there is a collection of pavé diamond earrings, bracelets, necklaces and rings in 18-karat white gold.
Some Shortages Noted
At K. Girdharlal, Hong Kong, a major Indian sightholder, Rushabh Shah, sales executive, said that “The market has picked up quite well. India and China are quite stable.” Noting a slight drop in sales across the board, he said there are still shortages in bigger sizes of 1 carat and above.
Due to those shortages, coupled with strong demand, “One carat and above is an interesting game,” observed Shrowen Shah, sales director of Asian Star Co. Ltd., India, a division of DDC, a large supplier of diamonds from 1-pointers to 2 to 3 carats. “Everyone has the small sizes.” In general, his European customers want better quality and better color.
“Diamond prices bottomed out in March 2009, but by May, prices had stabilized. By September, there was some upward pressure. Generally, smaller sizes were not produced up to demand and it will take time to regain momentum,” said Lawrence Ma, executive director of Lee Heng Diamond Co, Ltd., and chairman of the HKTDC jewelry advisory committee.
While there were shortages reported in certain sizes and qualities, some buyers experienced great difficulty when looking for a specific stone. One buyer said she had approached numerous suppliers looking for a 3.25-carat to 4-carat diamond in E to F color. She said many laughed outright when she asked for it, but she was triumphant when she finally secured one for her client.
Finished Jewelry Offered
While the pipeline is slowly opening for smaller sizes, a number of sightholders said they have kept their edge by offering finished jewelry as an adjunct to sales of loose stones. Among them was Asian Star. The company’s branded collection, Passion Jewels, originally developed for the European market, is now aimed at many markets throughout the world, using a different brand name in each. The collection consists of rings, earrings, necklaces and pendants in white diamonds or white and black combinations. According to Shah, Asian Star’s overall business has picked up a bit since the sharp downturn in 2009, with Passion Jewels doing well. Overall, he says, China is booming; the U.S. and Europe remain slow, but are beginning to pick up.
KGK Jewellery Group, a division of DTC, Hong Kong, went the finished jewelry route for this show, although this large sightholder sells loose diamonds as well. Best-selling categories include 50-pointers to 90-pointers in VS to SI clarity, said Sunil Kanchhal, general manager. Two collections of finished jewelry were targeted for specific markets. Aimed at Hong Kong’s more sophisticated clientele, the Entice collection offers diamond and 18-karat gold pieces. For the Chinese Mainland, there are more popular-priced items, ranging from $100 to $3,000, featuring pearls and colored gemstones accented with diamonds.
Colored diamond specialist Manak Jewels, San Francisco, showed its collection of finished jewelry in the show’s new Hall of Fame, an area dedicated to international brands. According to sales representative Sumeet Sethi, the company offers a range of goods from small melee to 10 carats. Fancy shapes include rose cuts, briolettes, old mine and cushion cuts, and the new trend of raw diamonds. Overall, he said, prices are up 30 percent to 50 percent in 2010 from the previous year and, due to the worldwide recession, production has slowed and there are not enough cut goods available now.
Sluggish international economies, sharply lower export numbers coupled with labor shortages, rising wages and internal overhead costs have all combined to make the beginning of 2010 a challenging one for Chinese manufacturers, but a golden opportunity for buyers. As evidenced at the Hong Kong show, those approaching these manufacturers with targeted plans and an eye for salable merchandise have the potential to turn the Year of the Tiger into a successful one.
Article from the Rapaport Magazine - April 2010. To subscribe click here.