With the rise of a burgeoning middle class in the world’s most populous country, Chinese citizens are spending more on weddings and adopting more Western practices in traditional ceremonies. Hollywood has certainly played a role in this cultural shift, as has China’s own celebrity culture, where high-profile weddings mixing Chinese and Western traditions can cost millions of dollars.
Tracking this “explosive growth” in the middle class, research firm McKinsey & Company has predicted that by 2022, more than 75% of China’s urban consumers will earn between $9,000 and $34,000 — up from only 4% in 2000 and 68% in 2012. People in this demographic also spend less than 50% of their income on necessities, and “display distinctive consumer behavior,” according to a 2013 report by the group.
The combination of this middle-class economic boom and the increase in Western influences has transformed the wedding-services industry, which reached approximately $24.6 billion in 2016 and showed an annual growth rate of 3.9%, according to research group IBISWorld. This trend has opened up huge opportunities for the diamond jewelry industry as well.
Approximately 48% of brides in China acquired diamond jewelry for their weddings in 2012, compared with only 1% in 1994, according to De Beers’ 2014 Insight Report. They also paid more for it than other segments did: The average spend on bridal jewelry was $1,700, compared with $1,500 on pieces for already-married women, and $1,000 for singles. In terms of carat weight, the bridal category had the highest average carats per piece.
Of course, consumers vary widely in what they’re willing to pay.
Chow Tai Fook — China’s largest jeweler, with more than 2,200 retail outlets — says its bridal customers usually spend between $600 and $2,550, while US-based e-tailer Blue Nile has reported anaverage spend of about $3,000 in its Chinese market.
Despite these strong numbers, many in the diamond and jewelry industry see untapped potential in the bridal market as diamond engagement rings become more popular with millennials. In 2012, far fewer Chinese brides were acquiring jewelry than their US and Japanese counterparts, and the amounts they were spending were lower as well. But this means there’s room to grow, many believe — and De Beers’ Insight Report from 2016 considers millennials a key component of that growth.
“Bridal continues to be the dominant share of the Chinese diamond market,” says Nancy Liu, chief operating officer of De Beers diamond brand Forevermark. “There are about 20 million people getting married per annum in China, which fuels the huge bridal market. The fast-growing, high-income middle class and the millennials have become the main forces in increased diamond consumption. Millennials are the core generation for bridal diamond jewelry, and the segment most resilient to economic volatility.”
Blue Nile, the largest US online diamond and diamond-jewelry retailer, first entered China in 2012, and the region has quickly become the company’s second-largest market.
“It’s far lower than where the US is today, but there’s a lot of long-term potential, and it’s one of the fastest-growing diamond markets in the world,” says Jon Sainsbury, Blue Nile’s chief revenue officer.
Jewelry preferences in China differ in some ways from those in the US and other Western markets, Sainsbury notes. For example, hand sizes — and therefore ring sizes — are generally smaller in China, and mountings are lighter to accommodate this. Diamonds are also smaller, as Chinese customers are willing to sacrifice size for quality. Whereas US consumers will go for a larger diamond in H or I color, their counterparts in China will value smaller stones with F and G color and VS to VVS clarity, frequently requesting an ideal cut.
Among Chow Tai Fook customers, most diamonds run in the 0.2- to 0.4-carat range, and the simple solitaire is by far the most popular style, according to a company spokesperson.
Cultural differences also come into play. In China, the engagement ring isn’t a surprise purchase like it often is in the West, but something the bride, groom and even other family members may purchase together, Sainsbury explains.
One thing Chinese consumers do share with the US bridal market is a desire for white metals — especially platinum — and round diamonds, he reports. He attributes this to promotions by the large industry players, particularly De Beers and Platinum Guild International. “It’s very much Western style,” he says.
The desire for diamond jewelry has been predominantly centered in tier-one cities, according to Sainsbury, but it is expanding throughout the country as the wealth spreads. Style trends, too, tend to begin in urban markets and influence the rest of the country from there.
Blue Nile’s approach to marketing and gaining a presence in China is similar to its strategy for other markets, Sainsbury says. However, there are several significant differences there as well.
For one thing, social media influencers have much more sway in China than in Western areas, making this a particularly important marketing channel. Blue Nile works to utilize these influencers to a degree, and often partners with social media outlets.
Another opportunity that Chinese wedding culture provides is “wedding fairs,” Sainsbury continues. These events take place in convention-center-type venues, and vendors from every part of the wedding industry present their products and services to newlyweds. Blue Nile hosts a branded pop-up store at these fairs.
“It’s a full-service wedding experience,” he says. “Jewelry, dresses, wedding venues, reception venues, honeymoon locations. About 30,000 to 60,000 people enter over the course of the weekend, and 3,000 to 5,000 customers will come into my storefront. We’ll close some sales, and there are good transactional prospects, but it’s really good from a marketing and brand perspective as well.”
While the potential is vast, a market as big and diverse as China also poses challenges. For example, while millennials in China, like elsewhere, are more willing to eschew tradition and go for the Western-influenced styles the industry has to offer, they also bring a new set of demands that retailers must work to meet.
Millennials “value trustworthiness, brand experience, craftsmanship and the unique story behind the jewelry,” the Chow Tai Fook spokesperson explains. “Jewelry retailers thus have to capitalize on the escalating demand for authenticity and transparency.”
To that end, the company launched the Chow Tai Fook T Mark diamond brand, which allows customers to follow their diamond’s path from the mine through the design and manufacturing process to its final setting. The company further diversified its bridal offerings specifically for the Chinese market with a branded jewelry line called Soinlove.
In 2014, the retailer acquired US diamond jewelry brand Hearts On Fire, and has been incorporating the brand’s designer-focused products into its stores to capture “a more sophisticated group of Chinese customers who are willing to pay a premium for exquisite craftsmanship and design,” the spokesperson says.
Another challenge in China is economic instability. In 2015, sudden volatility in the country’s stock market led to an economic slowdown and weaker consumer sentiment. This caused a 14% decline in polished-diamond imports, bringing them to $6.69 billion. In 2016, polished imports increased 4.9% to $7.02 billion.
De Beers expects this trend to continue. “The gradual adjustment of China’s economy away from investment-led growth to consumer-driven growth is still under way, and volatility in Chinese demand can be expected in the short term,” the diamond producer said in its recent report.
However, most people invested in China expect that the continued growth of the middle class and the willingness of millennials to adopt Western practices in traditional Chinese wedding ceremonies will continue to create demand for diamond bridal jewelry.
“Among Chinese millennials, diamond jewelry is the most desired fine-jewelry item to own, with 52% placing it at number one, compared with 43% for older generations,” says Forevermark’s Liu. “In the future, it is likely that an increasing proportion of the wider, more affluent population will follow in the footsteps of the elites, and marriages will continue to grow.”
Image: Chow Tai Fook introduced its new Soinlove brand to expand its share of the wedding market in mainland ChinaArticle from the Rapaport Magazine - September 2017. To subscribe click here.