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Hong Kong
By Mary Kavanagh
Chinese New Year promises to be better for diamond sales than Christmas, according to Bee Ng, chief executive officer (CEO) of Bee’s Diamonds and Bee’s International Group Ltd. “Compared to 2012, Christmas sales were about the same, but nothing special,” he said, pointing out that Christmas is not as important a holiday in Hong Kong for gift-giving as it is in the U.S. or Europe. Chinese New Year, on the other hand, is a major occasion and business leading up to the January 31 holiday was “better this year than in 2013,” Ng said. Dov Tannenbaum, partner at Leo Schachter Diamonds East Ltd., said the company experienced some growth in Christmas sales compared to 2012, but business was “not booming” nor was it the high-double-digit growth seen in previous years. Nonetheless, “the mood was good and the feeling we got from the retailers we work with is that people were coming in and buying,” Tannenbaum said. With the Chinese New Year coming so soon after Christmas this year, followed quickly by Valentine’s Day, “you have retailers buying right up to Chinese New Year and for the few weeks afterward,” Tannenbaum said, adding that he is generally optimistic about the outlook for the diamond business in 2014. A spokesperson for Yokee Diamonds Group Ltd., a diamond wholesaler, was less enthusiastic about the holiday season. “Christmas sales were just okay. The previous year was better,” she said. “Diamond sales have slowed since winter started. The local market is quiet, too.”
Customers are shopping for VS to SI goods. “The demand seems to be in a narrow area of the market,” Tannenbaum said, noting that VS to SI stones are highly sought after, whereas demand for VVS stones has fallen off. “Diamonds in the 30-point to 50-point size range are very popular, with 30 points currently the peak of the market,” he said. There also has been some growth in demand for fancy colors and fancy shapes. “We are seeing a slowdown in the area of the larger and more expensive goods,” Tannenbaum added. “On the flip side, we are seeing a very healthy demand from the everyday Chinese customer or couple who is going into stores and buying diamonds for their engagement or wedding.” Ng agreed that “the market is looking for VS to SI stones” although many dealers are having problems sourcing the right goods at the right price points. He also has seen growth in sales of large DIF stones in fancy yellow and fancy pink to Chinese clients and foresees a trend in buying stones with “good color.” According to Ng, “the Hong Kong domestic market is not as good as it has been. 2011 and 2012 were tough years.” Business was “okay” in 2013, he said, and “we hope 2014 will be even better.” Overall, he was positive about the outlook for the year ahead and sales opportunities in China in particular.
A government report published in mid-January predicted that Mainland tourist numbers to Hong Kong would double to 100 million by 2023 and hit 70 million by 2017, up from 54.3 million in 2013. Hong Kong is a major shopping destination for Mainland visitors, who buy two-thirds of their luxury items overseas. However, the government report gave rise to concerns from locals about the city’s ability to cope with so many tourists. Many said the city was already very crowded and the infrastructure under strain from daily struggles to get trains, restaurant and hotel bookings and service in shops, South China Morning Post reported.
President Xi Jinping’s anticorruption campaign will intensify in 2014, and economic analysts have raised concerns about the impact of the campaign on extravagant spending by officials in the Mainland’s luxury goods sector. The campaign’s impact on sales in 2013 was felt by luxury watchmakers after officials cracked down on the gifting of luxury items. In the 11 months through November 2013, Swiss watch exports to Hong Kong and the Mainland were down 6 percent and 15 percent, respectively, according to South China Morning Post. In his policy address in mid-January, Chief Executive C. Y. Leung unveiled initiatives that will cost taxpayers almost $1.3 billion a year. His speech focused on plans to boost land supply for housing purposes, alleviate poverty and enhance Hong Kong’s long-term economic competitiveness. A report commissioned by the government in September 2013 found that one in five residents — about 1.3 million people — live below the poverty line and that the gap in wealth between rich and poor is the highest since records began to be kept in 1971, Bloomberg reported. In spite of the measures to address the poverty problem, a poll by the University of Hong Kong found that the address was less well received than Leung’s maiden speech a year ago. Leung has been trailing his two predecessors in the popularity ratings since coming into office 18 months ago.Article from the Rapaport Magazine - February 2014. To subscribe click here.
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