In its new five-year plan for the development of its gold and
precious metals jewelry industry, the Guangdong Province government identified
the geographic areas that will serve as the country’s centers for jewelry,
colored gemstones, jade, diamonds, semiprecious stones, pearls and stone
cutting. The plan calls for the cities of Shenzhen and Dongguan and the
districts of Panyu and Huadu to continue their development as the nation’s
manufacturing center for jewelry and colored gemstones. At the same time, the
Yangmei district of Jieyang, the Liwan district of Guangzhou, the Pingzhou
district of Foshan and the Sihui district of Zhaoqing will be further developed
as a jade manufacturing center. In diamonds, the Conghua district of Guangzhou,
Panyu and Zhuhai will pick up their pace of development as cutting centers. The
Ketang district of Shanwei will serve as the manufacturing center for
semiprecious stones and Zhanjiang as the pearl center.
Lofty Goals
Guangdong’s goal is to raise the annual production value for
jewelry and gemstones to $39 billion by 2015, and the volume of total
investment and trading to $125 billion, representing 15 percent annual growth.
At present, the province accounts for approximately 30 percent of global
production value in gold and precious metals jewelry. In 2010, this southern
province of China processed around 350 tons of gold, accounting for over 70
percent of the national total. The province also processed 600 to 800 tons of
silver, 6,000 tons of jade and 50,000 tons of colored gemstones and
semiprecious stones. The province has become the biggest production base of
gold and jewelry in China, where sales of gold and jewelry are increasing 20
percent year on year. According to the plan, Guangdong Province will invest at
least $1.6 billion to support 19 development projects for gold and precious
metals jewelry.
The Shenzhen branch of the Guangdong Development Bank has formed a strategic partnership with Shuibei International Jewelry Trading Center. Under
that partnership, the bank will offer
$156 million in credit and other financial services to the Shuibei
District, which houses hundreds of renowned jewelry enterprises that represent
70 percent of Shenzhen’s jewelry market.
Retail Up
According to China’s National Bureau of Statistics (NBS), the
total retail sales of consumer goods in the country in July 2011 reached $225
million, a 17.2 percent increase year on year. From January through July 2011,
retail sales of consumer goods totaled almost $1.6 trillion, up 16.8 percent
year on year. In a survey of all businesses with annual retail sales over
$782,000, gold, silver and jewelry sales reached $2 billion in July, up 45
percent. The January through July sales in
gold, silver and jewelry for those same businesses reached $16.4
billion, an increase of 49.4 percent, making it the fastest-growing segment for
all commodities. China’s Department of Finance also revealed that government
revenue from the consumer tax on jewelry rose 53.5 percent during the first
half of 2011.
While China’s overall
economy is healthy and stable, global
financial factors continue to cause
uncertainty. In July 2011, the country’s consumer price index (CPI) went
up by 6.5 percent year on year, with prices up by 6.2 percent in cities and 7.1
percent in rural areas. Economic concerns further fuel the sale of gold and
gold jewelry to the Chinese, who see the appeal of gold as both jewelry and as
investment.
Chinese Valentine
The Qixi Festival, literally “The Night of Sevens,” falls on
the seventh day of the seventh lunar month on the Chinese calendar. Legend has
it that a young cowherd fell in love with a
weaver girl, who happened to be the seventh daughter of the goddess.
They lived happily for a short period after they were married without the
knowledge of the goddess, but were eventually forced to separate from each
other. The legend continues that once a year, on the seventh day of the seventh
lunar month, all the magpies in the world
fly up into heaven to form a bridge over the Milky Way, allowing the
couple to meet for one night. The magpie bridge symbolizes the connection
between lovers. Young girls traditionally demonstrate their domestic arts on this day and make wishes for a good
husband.
Many of the traditional activities for The Qixi Festival have been lost and forgotten
over the years but retailers, including jewelers, who see the festival’s
marketing potential as a Chinese Valentine’s Day, have been using it in their
promotional campaigns and that has increased its popularity. This year’s
festival fell on August 6, and many traditional and website retailers promoted
themed jewelry to young lovers. Since the month of August is overall a slow
retail month for jewelry, the promotion did attract attention and increase
sales.
The Marketplace
- The month of August is overall a slow season for retail
jewelry.
- Wholesale also slowed because of three factors: the retail
decline, high prices and the fact that many trading partners in Belgium and Israel
were on vacation.
- The current high price levels, which have discouraged
retailers from purchasing for inventory, show signs of softening.
- Wholesale activity is expected to pick up toward the end
of August as jewelry manufacturers start preparing for the National Day Golden
Week holiday retail season that starts October 1.
Article from the Rapaport Magazine - September 2011. To subscribe click here.