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Hong Kong
By Mary Kavanagh
In 2014, overall retail sales in Hong Kong fell for the first time since the devastating outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003 — declining by .2 percent in value. This compares to an 11 percent growth in retail value year on year in 2013. Retail sales in December 2014 dropped by 3.9 percent in value and 1.3 percent in volume year on year following four months of consecutive growth. The greatest decline in sales was in the jewelry, watches and clocks and valuable gifts category, which fell by 16.3 percent in value and 16.1 percent in volume, compared to a 2.1 percent decline in November. The Hong Kong government attributed the decline to “the slackening in visitor spending.” Caroline Mak of the Hong Kong Retail Management Association (HKRMA) attributed the decrease to the Beijing government’s crackdown on graft and a drop in non-Chinese tourists. The majority of HKRMA’s members said, “the overall sales performance for 2014 was in line with their expectations.” However, some member companies experienced a drop in sales that was “beyond their expectations,” the association said in a statement. HKRMA also forecast sales growth of 4 percent to 5 percent for 2015.
The Year of the Sheep officially kicked off on February 19, five days after Valentine’s Day. Overall sales expectations for the Chinese New Year period were slightly down and lower than 2014. A spokesperson for Chow Sang Sang, a leading jewelry retailer in Hong Kong, reported that “Valentine’s Day sales are hard to measure because they are mixed up with Chinese New Year sales,” adding that the company is conservative in its expectations for sales in the coming months. Alon Garty of wholesaler Windiam Asia and retailer Van Eyck Fine Jewelry said he noticed a huge slowdown in the wholesale market starting in November 2014 and accelerating in December through January. “Sales have been going down for everyone in the mass jewelry market,” Garty said. Windiam, which sells loose diamonds to retailers in Hong Kong and across Asia Pacific, he said, has found it difficult to compete on margin for smaller goods, such as pointers and carat size, with the numerous Indian wholesalers in Hong Kong. Although Windiam continues to offer these goods to its customers as a service, Garty said it focuses primarily on fancy colors and shapes and larger stones because “that market is still there.”
Supply of stones and rough on the Hong Kong market in the run-up to Christmas outweighed demand. According to Vinny Yiu of wholesaler and jewelry manufacturer Brilliant Trading Company Ltd. (BTC), the Indian market was at a standstill in the weeks leading up to Christmas. That prompted Indian dealers to ship their goods to Hong Kong, rather than Israel, Belgium or New York, to take advantage of Hong Kong’s low tax, its fast payment policies and its better banking options. “There were plenty of Gemological Institute of America (GIA)–certified round diamonds for sale on the Hong Kong market, in particular stones in the VS-SI range,” said Yiu. On the other hand, there was a shortage of stones in the 15-point to 20-point range in SI to VVS and J-plus color. BTC, like many others, stopped cutting in this size as there was no profit to be made. Consumer demand for unique fine jewelry is strong. Expanding from his wholesale base with Windiam Asia, Garty said he started Van Eyck Fine Jewelry in May 2014 to address a niche market. “We wanted to create something different,” he said. “People are looking for something that friends and colleagues don’t have. We blend art and jewelry in all our pieces.” Colored diamonds are featured in Van Eyck’s debut collection, “Birds of Papua,” which supports an organization protecting rare birds in Papua, New Guinea. The collection consists of 25 rings, with only ten pieces of each design produced to ensure exclusivity. The rings are priced from $20,000 to $200,000. In Hong Kong, the jewelry is sold only at the Van Eyck showroom and exclusive invitation-only events. “People want a special experience,” said Garty, “and they appreciate beautiful things they haven’t seen before.”
Approximately 4,000 exhibitors are expected to gather in Hong Kong for the second edition of the Hong Kong International Diamond, Gem & Pearl Show from March 2 to 6, 2015, at the AsiaWorld-Expo, and the 32nd edition of the Hong Kong International Jewellery Show from March 4 to 8, 2015, at the Hong Kong Convention & Exhibition Centre. Yiu of BTC expressed concern that the show was coming too soon after the Chinese New Year. Since most jewelry offices and factories in China won’t be back at work until March 2, they won’t have time to review sales before the show to better plan their purchases.Article from the Rapaport Magazine - March 2015. To subscribe click here.
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