RAPAPORT... China’s retail sales rose 18.4 percent year on year to $2.35 trillion in 2010, according to the National Bureau of Statistics (NBS), and continued the good trend during the Chinese New Year.
The Golden Week holiday for the Chinese New Year — also called the Spring Festival — began on February 2, the Eve of the Festival, and ended on February 8. Many people extend their vacations until the Lantern Festival on February 17, the 15th day of the new year and the traditional close of the celebration period.
Wholesale businesses are basically closed during this time but retail was booming. According to the Ministry of Commerce, the weeklong holiday produced $61.3 billion sales in retail and restaurant business nationwide, an increase of 19 percent year on year. There was a surge in demand for high-end home appliances and digital products, including LCD High-Definition TVs, energy-saving refrigerators and other consumer electronics. The ministry also attributed some of the increased sales to the 2010 increase in income in rural areas, which surpassed the urban area income increases for the first time in 13 years.
Booming Gold and Jewelry Retail
Gold, platinum, diamonds, gold and silver jewelry, as well as investment products in those metals, were very strong. In Beijing, the gold, silver and jewelry sales of Beijing Caishikou Department Store, the largest diamond and jewelry retailer in Beijing, exceeded $30 million, increasing 95.6 percent during the week-long holiday. The Shanghai Gold Jewelry Industry Association announced that during Golden Week, retail sales of gold and jewelry in Shanghai reached a record high of $75 million, up 38.2 percent from 2010. Experts said that the fine weather was a great gift to the market, encouraging consumers to get out and shop.
Among other factors that contributed to the increased sales was the fact that the price range in most of the shops was comparable, with no great price difference among them. Because there was no “one-shop dominance” situation, many retailers collectively enjoyed great sales. Before the holiday, the stores in Shanghai lowered the pure gold jewelry retail price from $56.42 per gram to $55.81, and many retailers had similar promotions.
In the second-tier city of Nanjing, the Municipal Commercial Bureau reported a 45.9 percent increase in gold and jewelry sales during the weeklong holiday. The flagship store of Baoqing Yinlou Jewelry Store on Taiping South Road was so busy that the staff hardly had time for meals. According to the store manager, almost 176 pounds of gold jewelry and gold product were sold during the first four days of the Chinese New Year, and the staff had to rush to get more stock from the warehouse. During the seven-day-period, the store reached $3 million in sales, a 60 percent increase year on year. The other branch of Baoqing Yinlou Jewelry, located in Nanjing, also reported satisfactory sales in diamonds, and gold rabbit pendants of 2 grams and 5 grams sold out quickly. China Gold, another famous retail chain in China specializing in gold jewelry and gold products, reported that some individual consumers purchased more than 30 gold chains weighing over 15 grams each, and some also purchased gold bars weighing almost nine pounds in total weight.
In Wuhan, gold products to celebrate the Chinese New Year were very popular. According to the China Construction Bank in Wuhan, 10-gram gold dragon coins and 30-gram gold bars sold well. After a 10-gram gold coin ran out of stock in a short time, one consumer placed a single order for 400 of them. Based on the $485.60 sales price of the gold coin, the total order was approximately $194,000.
Rabbits are Golden
Data from other gold and silver collectible stores in Wuhan also showed a 50 percent increase in sales of gold and silver bars during the holiday season, and rabbit-themed products were very popular. Meanwhile, 3-gram and 6-gram gold coins of Chinese zodiacs were also very hot.
Traditionally, Chinese people are fond of pure gold, both as jewelry and as a vehicle to store value, and currently, the main attraction of gold is as an investment tool. With the price of gold up by approximately 40 percent in 2010 and with a higher anticipation of inflation, more people are expected to put at least part of their money in gold.
Meanwhile, the emerging middle class, which has only recently begun to consume high-end goods, puts the jewelry industry in an optimistic mood and gives it a rosy outlook for the coming years.
Estate Jewelry
While jewelry has a long history in China, diamonds are a new addition to the industry. And while estate jewelry has been part of the jewelry industry, it has never played a dominant role. In recent years, more pawnshops have opened in China, which has made estate jewelry more available.
In addition, consumers can find estate jewelry in consignment stores, where it is usually displayed alongside such valuable items as estate watches and collectible cameras. The development of the estate jewelry market and market acceptance of estate jewelry varies from region to region.
The Marketplace
• The wholesale market was quiet but the retail market did very well during the Golden Week holiday for the Chinese New Year from February 2 to 8. Sales for Valentine’s Day were also satisfactory.
• Overall demand remains very good and there are even shortages for rounds in .30 carats to 1.10 carats, D-H, VS, Gemological Institute of America (GIA)-certified diamonds in Triple EX, Double EX and EX cut grade, with none to faint fluorescence. However, there is great price resistance from buyers.
• Sales of gold jewelry, coins, figurines and gold bars are up significantly. Rabbit-themed jewelry is popular.
Article from the Rapaport Magazine - March 2011. To subscribe click here.