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China
By Julius Zheng
Encouraged by the dazzling single-day internet sales record achieved on China’s Singles Day in November, online retailers launched similar promotions for December 12, also known as 12/12, or the Double 12. Various ecommerce websites, including Tmall.com, Taobao.com and 360buy.com, participated in the Double 12 promotions. The sites took different promotional approaches, some of them offering discounts but many emphasizing brands and service. Taobao.com, the biggest winner, announced that 120 million buyers, approximately one-tenth of China’s population, bought a total of $700.8 million of merchandise from its website on December 12. As of the evening of November 30, Alibaba Group, operator of
Taobao and Tmall, the country’s largest ecommerce platforms, announced that the two sites had already exceeded $160 billion — equivalent to the milestone Chinese figure of 1 trillion yuan — in 2012 trading volume.
That $160 billion total amounted to 5.4 percent of China’s total national consumption of $2.9 trillion for the entire year of 2011.
Under pressure from the aggressive marketing by online retailers, traditional retailers of general merchandise reacted by offering their own sales discounts, launching their own websites, extending business hours
in their brick-and-mortar stores and offering delivery services, either free
or at very low cost. The year-end holiday shopping promotion kicked off in the beginning of December. A Shanghai department store chain — Hong Kong New World Department Stores — even launched “nonclosing” 24/7 shopping hours
at its stores over a three-day period, along with a free iPhone 5 if the consumer purchased a specified amount — approximately $1,900 —
in certain product categories. During the promotion, hundreds of iPhones were given away in the chain’s ten stores, boosting sales in many categories, including jewelry.
The China Jewelry Annual Conference, organized by the
Gems & Jewelry Trade Association of China (GAC), the National
Gems & Technology Administrative Centre (NGTC) and the Shanghai Diamond Exchange (SDE), was held on December 11 in Beijing, one day before the important Beijing Jewelry Show. Approximately 1,000 trade members attended the conference, which included a series of speeches by prominent members of the industry. Xu Deming, chairman of GAC, noted that 2012 has been a difficult
year for China, as it has for the rest of the world. Economic growth
slowed, while the consumption of jewelry cooled to some extent, and so did profits. He said the jewelry industry also faced problems of excessive production capacity and an overbuilt retail market, with too many outlets, resulting in fierce competition. Xu told the conference he believes jewelry trade in China will continue to grow in 2013 because of the government’s plans to stimulate the economy, along with domestic consumption. He also pointed out that smart jewelers in China should deal with challenges in a smart way. Xu used an example from the period after the 2008 global financial crisis, when some Chinese jewelers designed a series of “lucky turning bead” jewelry, which became very popular for the next two years. Jewelers also developed a series of gold and silver bars to market as investment products. And while the prices stalled for tourmaline, jadeite and white nephrite jade, Xu noted that the market for pearls, quartz and agate improved. He concluded that the market in China is shifting and multifaceted, and those who discover and grasp new opportunities will succeed and grow.
Lin Qiang, president of SDE, told the conference the wedding market will remain the backbone of the diamond market, and the emerging middle class will account for the majority of customers. In the first-tier cities like Beijing and Shanghai, eight out of ten couples already are willing to buy diamond rings. In recent years, Lin said the diamond jewelry market has been developing at an average annual growth rate between 15 percent to 20 percent. Many foreign diamond suppliers and diamond jewelers have established operations in China, reflected by the increase in SDE, which has added more than 100 members in the past three years, most of them foreign-based. Lin said he believes that due to the expectation that the China economy will continue to grow in the next ten years, as will the size of the middle class, the diamond market in China still has strong potential.Article from the Rapaport Magazine - January 2013. To subscribe click here.
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