Rapaport Magazine

Hong Kong

By Mary Kavanagh
Engaging Time

“This time in 2012, we were much busier than we are now,” said Sally Ryder of Ryder Diamonds, a designer and manufacturer specializing in custom diamond jewelry designs produced on-site in a Hong Kong workshop. Following a “booming August,” she said, September and October were slow, but “we are seeing things pick up again in November. We tend to find that around the Christmas period there is a pickup for engagement rings.”
   Ryder’s core business is custom-made engagement rings for the expatriate market, but this year, for the first time, she launched a ready-to-wear collection in time for the Christmas season. “I was feeling the market was slowing and we needed to do something different to create sales,” she said. She pointed out that having a ready-to-wear collection makes it easy, particularly for men, to choose a gift they like at the right price. It also avoids the lead times necessary to make custom pieces. “I think Christmas overall should be good,” she said.
   David Nazer, managing director of Haywards, a designer and manufacturer specializing in bespoke engagement rings for the expatriate market, agreed that business is a bit quieter than expected. “We are just starting to ramp up our advertising and marketing activities,” he said, noting that “as a festival, Christmas is less important” in Hong Kong and China than in Europe or the U.S.
   “Hong Kong is an international city and Christmas is a public holiday, but the real driving force for the upturn in sales will be Chinese New Year,” Nazer said, conceding that Hong Kong retailers are lucky to have two major holidays back-to-back. “But I think Chinese New Year will be the benchmark of how successful the diamond season has been.”

Pressure on Diamond Dealers
   Business has been tough for diamond wholesalers over the past few months, according to Nazer, who uses memo goods from suppliers to show his customers rather than buying stock. “The availability of the stones and how long we can keep them before the suppliers chase us is a good indication of how strong the diamond market is in Hong Kong” he said. “Over the past six months, the suppliers have been saying, ‘You don’t have to give them back. Hold on to them.’” Suppliers are being very accommodating because they are so keen to turn over stock, Nazer explained.
   Ryder, who found it difficult to source stock a few months ago, said her dealers have a good supply of stock now. “There has been a turnaround in the market. I would say prices have softened a little because dealers want to make turnover.”

Proposing Without a Ring
   There are two types of clients for engagement rings, according to Nazer: the preproposal client and the postproposal client. “It is becoming increasingly common for men to propose not with a ring, but with a rose or a glass of wine or another romantic substitute and then come in with their fiancés to choose the ring,” he said.
   When the women are involved, they tend to choose fancy shapes. When men come in on their own to buy a ring preproposal, they tend to go for a safe option such as a round. “Normally,” Nazer said, “I would advise against going down the road of buying an emerald cut or oval unless you’re absolutely sure that is what the person would want.”

Economic Slowdown
   The Hong Kong government cut its forecast for full-year economic growth to 3 percent, from the predicted 2.5 percent to 3.5 percent, after the economy slowed in the third quarter for the first time in 18 months, the South China Morning Post reported.
   The economy expanded 2.9 percent from 2012’s third quarter compared to 3.2 percent expansion in the second quarter. A spokesperson for the government said the growth rate was revised downward because of weak overseas markets, but noted that the Mainland economy remains resilient. Exports of goods increased 6.2 percent compared to the third quarter in 2012 and house prices rose 1 percent compared to a year ago. Inflation was up from 3.9 percent in the second quarter to 4.3 percent in the third quarter and private consumption was down to 2.8 percent from 4.2 percent in the second quarter.
   According to the Hong Kong Retail Management Association (HKRMA), “most retailers expect there will be single-digit growth in Christmas sales, while watch and jewelry retailers forecast double-digit sales growth.” The association predicted sales growth for the fourth quarter year to year would be 10 percent to 11 percent. It has adjusted the forecast for the whole year down to 12 percent from a range of 12 percent to 13 percent.
   The slowdown in economic growth is unlikely to help Hong Kong Chief Executive C.Y. Leung, whose disapproval rating reached a record low of 63 percent, according to a recent public opinion poll conducted by Hong Kong University. The drop followed a public outcry over a controversial government decision to grant only two new free-to-air television licenses instead of the expected three and to deny a license to Hong Kong Television Network with no stated reason for the denial.

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

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