Total sales for the major retail and restaurant firms in China reached $128 billion during National Day Golden Week from September 30 through October 7, according to the Ministry of Commerce, a 15 percent increase from the same holiday in 2011. Golden Week included two festivals this year, Mid-Autumn Festival and National Day, both of which are popular times for family gatherings and weddings.
Gold and silver jewelry were in high demand during the holiday due to surging gold prices and consumers’ increased interest in gold as an investment and store of value. The Ministry of Commerce noted that pure gold jewelry pieces were selling quickly at Beijing Guohua Shopping Mall, and gold bars, carat-sized diamond rings and gold ornaments for weddings were popular at Beijing Caibai Department Store. Jewelry retail in Urumqi, the capital city of Xinjiang Province, grew 75 percent and Jiangxi Province reported an increase in the jewelry category of 33.7 percent year on year.
In Shanghai, the second Shanghai Diamond Culture Festival was organized by the Diamond Administration of China (DAC) from the end of September until mid-October to promote consumer confidence in diamond jewelry. Festival events included free examination by local labs to confirm diamonds were natural and not imitations, a diamond jewelry design contest, a jewelry exhibition and the online presentation of more than 20,000 loose diamonds for festival attendees to search, after which they could make appointments to view their selections in showrooms.
Just as in the U.S., festivals and holidays are very important to Chinese retailers. The Chinese New Year Golden Week in January or February, Valentine’s Day on February 14, Labor Day on May 1, National Day Golden Week in October, Christmas and New Year’s are all important sales occasions for retail, including the diamond and jewelry sector, because these dates are very popular times for weddings and engagements. Satisfactory sales during one holiday season often influence the expectations and preparation of inventory for the next one.
Following the October National Day holiday sales season, retailers began to refill inventory in preparation for Christmas and New Year’s. Unlike the aggressive inventory buildup that took place in 2011 when prices were rising fast, retailers are more likely to manage their inventories and place their orders very carefully in the remaining months of 2012. Their caution reflects the current economic instability worldwide, the cooling growth rate of China’s economy and the fact that most of them have less capital on hand compared to 2011. The hard lessons learned from the speculative purchasing in 2011 and the recent appearance in the market of synthetic diamonds passed off as natural also have increased the sense of caution.
Shi Hongyue, vice president of the Gems & Jewelry Trade Association of China (GAC), reported that retail jewelry sales in China, which have maintained double-digit growth for years, grew by 33 percent to $6.33 billion in 2011. He said China is still on track to overtake the U.S. to become the world’s largest consumer market for jewelry by 2020. According to Shi, only one in ten Chinese consumers owns a piece of jewelry but in Japan, every individual owns an average of three to four pieces.
The low per-capita jewelry consumption suggests a lot of potential for the market, especially when China has a growing middle-class population of more than 200 million. On the other hand, retailers feel the short-term market, especially for the year-end holiday season this year, will be influenced by such factors as the macroeconomy, consumers’ sense of security regarding their jobs and financial future and, very importantly, the size of the year-end bonuses they get from their employers.
The Guangxi Province is an emerging jewelry manufacturing and retail hub located in Southern China, a province rich in gemstone minerals, including a tremolite mine discovered in October 2011. It has a unique gemological location close to the Southeast Asian countries and shares a border with Vietnam. The Guangxi Jewelry Association (GJA) has been actively organizing trade members to visit the mining site in an effort to develop the province into a gemstone trading center.
Nanning, the capital city of Guangxi, has attracted international luxury brands and retail jewelry chains, including Chow Sang Sang, Chow Tai Fook, ENZO, Luk Fook and TSL. According to Fan Shuangquan, spokesperson of the ASEAN International Jewelry City, Guangxi’s strategic location makes it an ideal tourism hub and a gateway to the jewelry export market. The jewelry trading center is located in the flourishing Langdong New District in the city of Nanning, and hosts more than 110 jewelry retailers in a 110,000-square-foot space.
Article from the Rapaport Magazine - November 2012. To subscribe click here.