Rapaport Magazine

Hong Kong

By Mary Kavanagh
Price Fluctuations Impact Show

The diamond jewelry sector has shown signs of picking up in the past few months, according to Lawrence Ma, founding president and chairman of the Diamond Federation of Hong Kong. He was speaking at a press conference at the September Hong Kong Jewellery & Gem Fair. “We are feeling stronger demand from the U.S. market, and the Asian markets have also been doing quite well,” Ma said. The inventory level of most retailers in China was low in recent weeks and he expected them to replenish their stocks. “All in all, we are expecting good and healthy demand.”

Sluggish Demand
   Exhibitors of diamond goods at the world’s largest jewelry fair were generally less enthusiastic about the show. Although UBM Asia, the show organizer, said this year’s event was the largest ever, with a 3 percent increase in the number of exhibitors from 2012, those at the fair described it as “slower than expected,” “average” or “so-so” compared to previous years. Exhibitors also commented on both the lack of new customers and the lack of visitors from the U.S. and Europe. Others said business was “okay” in spite of the smaller crowds.
   “We thought this show would be a lot better,” said Ken Lo, director, Eternity Manufacturing Ltd., which focuses on high-end goods, mostly diamonds, for the Asian market and semifinished jewelry for export, primarily to the U.S. “I did not see many American buyers and thought one of the reasons for this might be because the show clashed with the Yom Kippur Jewish holiday,” he said. “But it is supposed to be the start of the buying season for the end of year, so this is the last opportunity for them to stock up.”
   Rakesh Gajera, chief executive officer (CEO) of Laxmi Diamonds, also noted the lack of visitors from the U.S. and Europe, saying he didn’t get “a single business card” from those two areas at the show. Most of his visitors at the show came from India and China, followed by Cambodia, Vietnam and Korea. Yet, he was positive about business for the coming months. “Business is now picking up as the holiday season is arriving and September is better than the past few months,” Gajera said, adding his company is very strong in TTLB goods, which were selling well at the show.

Price Instability
   Price fluctuations have led to a lack of consumer confidence. People are buying less because the continual ups and downs in diamond prices have made consumers scared to invest, according to Bee Ng, CEO, Bee’s Diamonds and Bee’s International Group Ltd. “We need consumers to feel confident that diamonds are a safe and good investment,” he said.
   Gajera reiterated the need for price stability. “Our industry strongly needs stability in price. If there is no stability in pricing, consumer confidence is low,” he said. People are filling orders but not buying any extra. When prices fluctuate, consumers become confused and they feel as if they don’t know what is going on so they hold off on buying. Recent rumors that prices will go down have affected consumer spending because “they think if one mining company does this, others will follow suit,” Gajera said.
   Speaking on the second day of the show, Payal Shah, founder and CEO of Hong Kong–based L’Dezen Jewellery, was upbeat about business. “My specialty is handmade jewelry,” said Shah, who started her own company in 2011 and has seen demand growing ever since. “The diamonds we use are all fancy shape, fancy color, slices or rose cuts. I wanted to specialize in big, beautiful, lightweight earrings and rings,” she said, adding that she uses minimal gold and openwork in her designs.
   Shah was nominated for this year’s Jewelry News Asia award for Young Entrepreneur of the Year. “The September show in Hong Kong is a great, open gate to the international market,” she said “If you look around, you will see people from United Arab Emirates, Italy, India and China. So it is a great place to test different ideas.” Her investment in a bigger, more visible stand this year paid off. “This show is great. We are getting a lot of new clients and a lot of old ones coming in to add to their collections,” she said.

Crackdown on Gifts
   Demand for luxury goods from Mainland customers has dwindled. “The new Chinese government has clamped down on corruption so the very high-end goods in jewelry and watches are not selling because officials are not allowed to accept gifts,” said Lo. This crackdown has also negatively impacted sales of luxury mooncakes — traditional pastries given as gifts to family, friends and employees during the Mid-Autumn Festival. In recent years, lavish varieties of mooncake have been very popular, such as gold-encrusted cakes stuffed with shark’s fin, gold flakes or abalone. The South China Morning Post reported that the Communist Party has urged people to report cases of officials spending public funds on gifts, banquets, travel and luxury goods during the Mid-Autumn Festival and the National Day holiday, which falls in early October.

Article from the Rapaport Magazine - October 2013. To subscribe click here.

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