Gold, silver and jewelry sales during the first ten months of
2011 jumped 46 percent above 2010 numbers for the same period to reach $23.8
billion. It was the most rapid growth among all consumer goods categories for
that period, according to a recent report from the National Bureau of
Statistics of China. The same November 9, 2011, report said that gold, silver
and jewelry retail sales in China reached $2.5 billion during October, representing a 32.3 percent monthly growth rate
year on year.
The growth rate of the category in September, August and July was 38.5 percent, 44 percent and 45
percent, respectively. China’s total retail sales from January to October 2011
increased by 17 percent year on year to $2.3 trillion.
Diamond Market Cautious
While surging gold jewelry sales undoubtedly are the most important contributing factor in the
category’s increased jewelry sales in recent months, the diamond market is
still struggling with uncertainties. Diamond sales, along with prices, experienced dramatic fluctuations in China
during the first 11 months of 2011.
In the first half of the
year, prices rose fast — especially during and after the March Hong
Kong show — and sales were booming.
This was partially due to the strong retail demand, because consumers
started buying when they saw the prices rising, and partially due to the
speculative buying by wholesalers. In the second stage, during the June Hong
Kong show, prices rose to an alarmingly high
level and Chinese dealers and retailers hesitated to buy because they
questioned how long the prices could be sustained.
Sad but true, the prices did drop in the third stage, following the June
show, and dropped even further when the bad global economic news came in. Right
now, wholesale buyers are somewhat relieved that
prices seem to have stabilized — with only a small increase since the
end of October — and they hope this fourth stage of price stability can be
sustained until the mist clears from the market and business settles down.
Hoping for Stability
Diamond buying is still
very cautious, with the purchase of
stock for the Christmas and New Year season somewhat delayed as buyers continue to monitor prices. Compared to
the sluggish October, wholesale sales have improved. Trade members hope that
prices will stabilize further in December, along with the market itself.
Although the growth rate
of the Chinese economy has slowed, along with the stock and real estate
markets, the country remains an emerging market with more and more young people
getting married and ready to buy their first diamond.
A Historic Singles Day
November 11 — with its
duplication of the number 11 — is portrayed and widely celebrated in
China as Guang Gun Jie, translated as Bare Stick Day, which is Chinese slang for bachelor, or Singles Day. It
was originally an unofficial festival for
the singles to party and amuse themselves. However, the repeating of number 11 also means “one-hearted and one companion
— or spouse — for one whole life.” November 11, 2011, or 11.11.11 in numerical
writing, is celebrated as “Singles Day of the Century.” Because the date occurs only once every
millennium, many single persons in China choose to say goodbye to their single
lives on that day, resulting in a sharp increase in proposals, marriage
certificate registrations, wedding ceremonies and matchmaking. A small number
of Chinese even choose to get divorced on November 11 and return to their
single lives.
Promoted by retail shops
and numerous business-to-consumer
(B2C) websites that saw the commercial potential of the day this year, November
11 became a consumption day. Taobao Mall — Tmall.com — China’s largest B2C
online marketplace, processed orders
worth $519.4 million during its Singles
Day sale on Nov 11, 2011. The website sold
slightly less than $150 million worth
of goods on the same day in 2010, an amount
it achieved in just ten hours this year.
Savvy jewelers kicked off
promotions for the day in an effort to boost sales during the
traditionally bleak November retail period. As a result, some jewelers reported
sales for the day that were as good as on Valentine’s Day. A similar sales
strategy was used for Thanksgiving. Even though it is a Western holiday that is not religious or traditional in China, it has been promoted in recent years as
a good gift-giving day and customer appreciation day — and retailers offer
attractive discounts on purchases.
The Marketplace
• Polished diamond prices in China have stabilized, with
only a small increase since the end of October.
• Wholesale trading has improved slightly compared with a
sluggish October, but buyers remain cautious, making only limited purchases of
absolutely necessary goods. Many buyers are asking for goods on memo and
consignment.
• Dealers are hoping that the recent price stability will
hold until the end of the year to help restore confidence in the market and
achieve satisfactory sales for Christmas and the Western New Year.
Article from the Rapaport Magazine - December 2011. To subscribe click here.