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Hong Kong
By Mary Kavanagh
Hong Kong experienced its third warmest December and its second warmest Christmas Eve on record in 2016. Unsurprisingly, these favorable weather conditions were not good for winter clothing retailers. Harder to predict was the potential impact on the jewelry sector, where industry veterans were holding out for some positive movement in the market. Christmas is typically a good time for jewelry sales, but there has been nothing typical about the industry in the city for many months, including holiday periods. Although there was a significant increase in the number of visitors from Mainland China over the four-day Christmas holiday period — up 18 percent compared to the same period in 2015 — retailers reported that December sales were down in 2015 because Mainland visitors were spending less. Chow Sang Sang, one of Hong Kong’s largest jewelry retail chains, reported that holiday sales were down more than 10 percent compared with 2015. A salesman at a branch of Prince Jewellery & Watch company in Causeway Bay reported that sales over the holiday period seemed to have declined over the past two to three years. Big department stores such as Sogo and Times Square in Causeway Bay were offering discounts of up to 80 percent on a range of goods. David Nazer of Haywards, a bespoke jeweler specializing in engagement rings and diamond jewelry for expatriate clients, said December was “okay,” better than an average month, but not as good as in 2015. “We would have expected to see a higher number of engagements in December,” he said. “Christmas is not as big here as in Europe or the U.K.,” he added. Nazer has seen an increase in business over the past year from local clients who are increasingly interested in custom-made jewelry.
The glimmer of hope offered to retailers following the narrower declines in retail sales value in September and October — minus 4 percent and minus 2.9 percent respectively — was dashed by the reverse in trend in November, when sales fell for the twenty-first consecutive month, with a decline of 5.5 percent in value and 5.6 percent in volume. Sales of jewelry watches and valuable gifts fell by 14.4 percent in value. Yiu Si-wing, a lawmaker in the tourism sector, attributed the decline in spending by Mainland visitors to the recent depreciation of the yuan and their more careful approach to how they spend their cash. “They are now spending their own money. Their mind-set has totally changed from the days when luxuries were bought for gift-giving,” he said. A spokesperson for the government also attributed the larger decrease in sales in November to reduced tourist spending on big-ticket items, and said, “The performance of retail sales will depend on whether inbound tourism would improve and whether the various external uncertainties would affect local consumer sentiment.”
The first day of Chinese New Year 2017, the Year of the Rooster, kicked off on January 28, not long after the Christmas holiday season. Another typical time for gifting, it remains to be seen if jewelry sales will see a positive impact this year. Chow Tai Fook, the largest retail chain by market value globally, said it is not their practice to comment on Christmas sales or to forecast sales performance for Chinese New Year, yet indicated a slight improvement in market conditions. “We are seeing stabilizing fundamentals in Mainland China, Hong Kong and Macau. Our collection-based jewelry products and franchised products, which are rich in design elements, continue to be popular among customers,” a spokesperson for the company said. Business appears to be quiet for diamond suppliers. Time will tell if the Chinese New Year can help them shift stock. Nazer said more and more suppliers called him over the past months looking for business and appear to be a lot less particular about reference checks. In the past, a supplier would be very quick to do a reference check on a new prospective client. “It’s much easier now to open up to a broader range of suppliers,” he said. Article from the Rapaport Magazine - February 2017. To subscribe click here.
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