The diamond market in Hong Kong was “quiet and weak with not
much trading activity” in the first quarter to the end of June, according to an
executive committee member of the Diamond Federation of Hong Kong. This
sentiment was shared by a wholesaler who noted that even though July is
traditionally a quiet time, it felt as though summer had come early this year,
with the market “taking a vacation” beginning in mid-May. “A month ago, it felt
like we were in July already,” he said. The wholesaler, who spoke on condition
of anonymity, said he expects the market to pick up in August. “Here, the
market can go quiet very quickly, but it can also restart very quickly. The
cycles are very short.”
Hong Kong jewelry retailer Chow Tai Fook made the top 20
list of the “most sought-after luxury brands” on the Mainland in the latest
“World Luxury Index China 2013” survey. The company was the highest-ranked
jewelry company in the listing, in 17th place, in the report released at the
end of June by New York–based market research firm Digital Luxury Group. That
placed the retailer ahead of French jeweler Cartier and Austrian firm Swarovski
in the listing.
Chow Tai Fook’s popularity among Mainland buyers is also
evident in the company’s first-quarter results for 2013/2014 released in early July,
which the company described as “remarkable.” Overall revenue growth for the
quarter was 63 percent, with sales in China up 45 percent year to year and
sales in Hong Kong and Macau up 85 percent over the same time period. It was
the largest quarterly increase since the retailer went public in December 2011.
Company spokesmen admitted the sales growth was boosted by the huge demand for
gold products after the decline in bullion prices in April.
“We saw signs of recovery in the mass luxury jewelry market
in Hong Kong, while in the Mainland of China, the continued economic growth and
emergence of a fast-growing middle class and high-net-worth population is
favorable to the jewelry market in the medium to long run,” said Kent Wong,
managing director of Chow Tai Fook Jewellery.
Wong said he expects the price of diamonds to increase
steadily because of this growing demand and the lack of supply. “We have
secured our sourcing capability through long-term partnerships with the world’s
three largest diamond miners: De Beers Diamond Trading Company (DTC), Rio Tinto
and ALROSA,” he said.
The company opened 20 new retail outlets in the first
quarter to meet the rise in consumer demand, 17 in China and three in Hong Kong
and Macau, bringing the total number of stores in these locations to 1,856 at
the end of June 2013. Online sales are also doing very well and tripled in the
past year, Wong said. “We will continue to step up our online platforms,
including the CTF e-shop, Tmall and 360Buy to promote jewelry sales online and
meet demand among the younger generations.”
There has been an increase in the popularity of smaller
diamonds and semiprecious stones at affordable prices, Wong said. “These appeal
to young customers who are looking for mass luxury, fashion gem-set jewelry for
daily wear and festive celebrations,” he said, pointing out that Chow Tai Fook
has “enhanced our product offerings” in those categories to meet the rising
demand.
The wholesaler who spoke on condition of anonymity said
“fancy color diamonds have been one of the major trends in the past two years,”
a trend he sees continuing. He noted that Chinese consumers have started to buy
carat-size diamonds in fancy colors and this was never the case in the past.
“In China, people used to buy only brilliant cut diamonds five to six years
ago, and now they buy fancy shapes and fancy colors. It is a big market with a
very wide range of goods being sold,” he said.
But he cautioned that Hong Kong clients often have very
specific, uncompromising demands. “It is very difficult if a client is looking
for 10 carats — you can’t sell him a 9 carat. If a client wants D/E color, you are
not going to be able to sell him an F. ”
The July 1 Hong Kong handover holiday, marking the
anniversary of Hong Kong being “handed over” to China by the U.K., gave some
people reason to celebrate and others to protest. This year marked 16 years
since the handover and the one-year anniversary of Chief Executive CY Leung’s
inauguration. Thousands — estimates ranged from 100,000 to more than 400,000 —
took to the streets “braving heavy rain to demand universal suffrage and the
resignation of Leung,” the South China Morning Post reported, referring to the
day as “one of the most polarized and divided handover anniversaries in the
past decade.” The government responded to the protest march by releasing a
statement, saying that it “fully respects” freedom of expression and will
“listen to marchers’ views in a humble manner,” and that it plans to “implement
universal suffrage for the chief executive election in 2017” in accordance with
current law, the paper reported.
Article from the Rapaport Magazine - August 2013. To subscribe click here.