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Hong Kong
By Mary Kavanagh
“I’m confident about Hong Kong’s resilience,” said Lawrence Ma, founding president and chairman of the Diamond Federation of Hong Kong, China Ltd. (DFHK) at the September Hong Kong Jewellery & Gem Fair. “Hong Kong is a good and very transparent platform for the diamond trade, from rough through import and export to polishing, jewelry manufacturing and retail, especially for Chinese consumers and the emerging markets,” Ma continued, acknowledging the tough economic environment globally over the past year, and the particularly challenging retail market in Hong Kong. According to Ma, the diamond industry is still doing relatively well and is undergoing “a period of correction” following ten to 12 years of uninterrupted growth. The bridal market in China is strong, with 14 million to 15 million couples expected to marry in 2016, and diamond prices have dropped somewhat to become more affordable. “I am not saying the sky is blue,” he said. “I stress this is a correction, but I think we are seeing an adjustment of the excesses of the past five to six years.” Representatives from the other Hong Kong jewelry and gemstone trade associations were also generally positive in their outlook for the remainder of this year and 2016. Jimé Essink, president and chief executive officer (CEO) of UBM Asia, reiterated the importance of Hong Kong in the international jewelry fair circuit. “Hong Kong remains the place to be,” he said. “It is still where people want to do trade, because of its safe environment and ease of bringing goods in and taking money out. I remain very confident about jewelry shows in Hong Kong as leading platforms in the world.”
Exhibitor expectations for the 33rd edition of the fair were low and overall feedback was that it was “not bad,” “better than expected” and “within expectations.” “Our expectations were not high, so the show is okay,” said a spokesperson for wholesaler and jewelry manufacturer Brilliant Trading Company Ltd. (BTC). “I think if you survey exhibitors, it will show that none came with expectations,” he added, noting that the overall sentiment was better than 2014, and even though they were not getting much new business, they were getting repeat business from existing customers. Alfred Pong, director, Wing Hang Diamond Company, was also satisfied. “The market has been tough over the past year and so we did not expect much, but we had quite a few customers over the first few days,” he said. The fair, featuring the world’s largest diamond pavilion and the region’s biggest gemstone marketplace, was held from September 16 to 22 at two venues in the city — the AsiaWorld-Expo (AWE), for sourcing raw materials, and the Hong Kong Convention & Exhibition Centre (HKCE), for finished jewelry. The fair attracted 3,752 exhibitors from 50 countries and regions. Fair organizer UBM Asia signed up around 60,000 buyers. Essink reported visitor numbers were up 40 percent over 2014 in the first two days. “It is a challenging time for those in the diamond trade,” he said, noting many buyers were checking prices and looking for discounts. “But I expect that for exhibitors, the end result will be better than they expected,” he said. “Overall, we are optimistic, but it’s not booming like it was two or three years ago.” One exhibitor lamented the change in the supplier/buyer relationship. “We don’t get repeat customers as we used to. They are going for the cheapest options and buying based on price. They used to come, look and buy. Now they look everywhere and buy the cheapest.”
Price fluctuations continue to impact consumer confidence. “The list price had dropped five or six times this year already,” said the Brilliant spokesperson, pointing out the negative impact this has on purchasing and stressing the importance for the trade to keep list prices steady. Ankit Suken of Sejal Gems Pvt. Ltd., a diamond trader, reiterated this. “No one wants to stock up because there are too many price fluctuations. Those who bought at the Hong Kong June fair are suffering from the drop in price twice since then and holding goods to see what happens with the price. Prices have dropped around 8 percent,” he said.
There is a trend away from high-end jewelry featuring big diamonds and gemstones and a move toward more affordable fashionable items. Celine Lau, director of jewellery fairs, UBM Asia, said, “The continuous growth in per capita income bodes well for the country’s jewelry consumption. We have observed that the buying habits of young Chinese consumers have changed. They no longer pursue jewelry solely for investment purposes; rather they buy jewelry as part of their wardrobe, so they look for collections that are trendy and suitable for daily use. As a result, a new concept — Light Luxury — would be the main focus in coming years,” she said. The next few months will be telling for the Hong Kong retail market with October’s Golden Week looming, followed by singles day in China in November and the Christmas holidays. Time will tell if consumer confidence will be restored.Article from the Rapaport Magazine - October 2015. To subscribe click here.
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