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Hong Kong
By Mary Kavanagh
2015 was unquestionably a tough one for Hong Kong’s diamond industry and it seems doubtful that the Christmas holiday season was sufficiently strong to boost a business that reported declining sales figures month after month. According to Lawrence Ma, chairman of the Diamond Federation of Hong Kong (DFHK), expectations from members in the run up to Christmas were very conservative. “Everybody is suffering; prices have weakened, so everyone is holding onto stock and margins are down,” he said. “The whole industry is going through a very difficult period,” he added.
Retail sales declined in value by 3 percent in October, resulting in an overall decline of 2.7 percent for the first ten months of the year compared to the same period in 2014. Sales in the jewelry, watches, clocks and the valuable gifts category decreased by 17 percent in value in October 2015 compared to the same month in 2014. According to Ma, this decrease reflected a significant drop in sales of gold and watches rather than in sales of diamond jewelry, which he estimated was closer to 3 percent. He also noted that many of the large retail chains in Hong Kong listed on the Hong Kong Stock Exchange were undergoing a consolidation phase involving the closing of stores, so turnover of stock was slower than usual and also negatively impacted business for manufactures and wholesalers. “I think it will take time to work down the stock level,” he said. “Perhaps it will be better this time next year.”
According to one of DFHK’s members, “The end of the year through Christmas and Chinese New Year is traditionally the peak season for jewelry sales in Hong Kong, but expectations this year are low. We hope we will have a moderate increase, but compared to 2014, we are more conservative in our outlook. Consumers are buying smaller pieces of jewelry and also buying less.”
Chow Tai Fook, one of Hong Kong’s largest jewelry retail chains, reported an upturn in sales volume over the Christmas period. “As expected, while we are also having an annual sale in Hong Kong that ties in with the festive shopping season, sales of our gold and gem-set products as driven by volume have improved compared to the previous few months,” a spokesperson for the company reported.
In contrast to mainstream retailers, 2015 marked another year of continued growth for niche jeweler, YEWN jewelry, founded by Dickson Yewn in 2000. Celebrating his fifteenth year in business, Yewn has seen his company grow slowly but steadily over the years, building up a loyal clientele in Hong Kong and across Asia, Europe and the U.S. Yewn focuses on creating high-end contemporary Chinese luxury jewelry, celebrating Chinese heritage with precious gemstones such as diamonds, jadeite and rubies. These pieces are particularly popular among career women in the 50-plus age bracket. Yewn’s other brand, Life of Circle, with a lower price point, appeals to a slightly younger target group between 20 and 45 years old. Yewn said his business is less susceptible to the ups and downs of the market as are mass luxury products. “Whenever the mass market is down, I am up,” he said, noting that people are more cautious about how they spend when market conditions are tough. This typically impacts impulse buying in the mass retail market, but less so for unique pieces,” he added. In spite of the difficult market in China, Yewn plans to open a shop there this year via a Chinese agent. “Even though times are tough, people still care about their culture,” he said. “In spite of the anticorruption campaign, people still have money, but are choosing to spend and invest it differently. Chinese customers are excellent evaluators of quality.”
The government reported a drop of 2.1 percent in the number of visitors to Hong Kong year-on-year over the Christmas period from December 24 to 27. Tourist numbers from Mainland China were down 3.8 percent, while overseas visitors were up by 3 percent, an encouraging sign as the city is keen to attract more international visitors and lessen the city’s dependence on visitors from Mainland China. The number of tour groups of Mainland buyers visiting the city over the holiday period fell by 20 percent to 30 percent compared with the same period in 2014. However, industry insiders reported they were not so concerned about this as tour visitors only represented 8 percent to 10 percent of the overall Mainland tourists and they tend not to spend as much as individual visitors. Mainland visitors continued to choose other travel destinations over Hong Kong, with Japan and Korea continuing to be favorites due to favorable currency conversion rates.Article from the Rapaport Magazine - January 2016. To subscribe click here.
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