Price Stability Questionable

The tenth edition of the China International Gold, Jewellery & Gem Fair in Shenzhen, organized by UBM, was held from February 10 to 13 with approximately 350 exhibitors from 14 countries and regions. Since the fair had a relatively small presence in loose diamonds, those buyers from Mainland China and Shenzhen interested in loose goods attended the much larger Hong Kong International Jewellery Fair from February 16 to 20.

Organized by the Hong Kong Trade Development Council (HKTDC), the show featured 3,100 exhibitors from 48 countries, and several diamond pavilions. Many diamond trade members feel the Hong Kong fair provides a more accurate indication of market confidence and price trends. Although there was a prevailing mood of caution, many of the Chinese visitors engaged in heated negotiation before making purchases, but they had not placed major orders for several months and needed the goods. According to those diamond exhibitors who thought the show exceeded their expectations, visitors from Mainland China were among their most important buyers.

VALENTINE’S DAY
As the most important retail jewelry opportunity between the Chinese New Year and the May 1 Labor Day, Valentine’s Day is becoming more popular among young people in China, and with retailers who use the opportunity to promote sales. Some diamond retailers launched promotional campaigns February 1, designating the entire month of February as the month for lovers. In Shanghai alone, 2,800 couples took out marriage certificates on Valentine’s Day, a record so far in the Year of the Dragon. Jewelry pieces set with small diamonds are a popular Valentine’s Day gift.

PROTECTING INTELLECTUAL PROPERTY
Fine Pearl Jewelry Co. Ltd., a well-known pearl jewelry company in China, recently issued a statement condemning and reserving the right to take legal action against firms that use their trademark illegally. The company also called on other trade members to self-regulate and join together in efforts to protect their brand names.

Laofengxiang Jewellers, another famous retail chain, involved the local business administration authority, as well as the local police, in actions it took against a retailer who stamped counterfeit Laofengxiang logos on its jewelry pieces. In other intellectual property actions, Hong Kong–based Aaron Shum Jewelry Ltd. sued a retailer who imitated the design of its branded Coronet Solitaire jewelry line, which the company has registered worldwide. After winning the lawsuit, Aaron Shum said that “the purpose is not to seek compensation, but to send a message that our group is determined to protect our intellectual properties. The design of our Coronet Solitaire jewelry line has been copied without authorization too many times in China. The court ruling will serve as a warning that we will aggressively fight illegal imitations in the future.”

Many famous brand names have experienced similar problems in China with competitors using their trademarks or designs illegally. The infringing on intellectual property rights creates unfair competition and also confuses consumers with low-cost look-alikes. Currently, it is still quite difficult and complicated to get intellectual property protection through legal channels in China, the cost of pursuing lawsuits is considerable and the penalties assessed for violations are modest.

However, more and more companies are standing up to fight infringement. As Shum pointed out, in light of the fact that the country is promoting innovation and is transitioning from its theme of “made in China” to “created in China,” his company’s legal victory reflected the increased attention being paid to intellectual property protection and increased respect for other people’s creations.

LUXURY SHOPPING OVERSEAS
According to the World Luxury Association (WLA), Chinese consumers spent a record $7.2 billion overseas in luxury shopping during the Chinese New Year holiday season, January 1 to February 1, an increase of 28.57 percent over $5.6 billion in 2011.

The shopping regions include Europe, North America, Hong Kong, Macau and Taiwan. Europe collected 46 percent of the purchases, and 35 percent was spent in Hong Kong, Macau and Taiwan, largely on jewelry and leather items.

THE MARKETPLACE

• Diamond wholesalers reopened after the Chinese New Year with continuing caution, while the retailers and wholesale dealers refrained from stocking up in large quantity. But still, Chinese buyers were among the most important buyers at the February Hong Kong show.

• There was a big increase in sales of gold jewelry and gold products during the Chinese New Year, with stable sales in diamonds.
  
  
• There is much less demand for .30-carat diamonds and increasing popularity of .70-carat and 1-carat sizes.

Article from the Rapaport Magazine - March 2012. To subscribe click here.