Most people see great potential in the growth of LGD jewelry market

Currently Wayne Wang-Wang Yichun is the General Manager, LUSANT - Incubation Project Management Department of Yuyuan Jewelry Co., Ltd. He was the General Manager of Shanghai Yuyuan Jewelry Co., Ltd - A Fosun Group Company; and General Manager of international...

20 june 2022

De Beers sees good potential for exploration activities in Angola

De Beers recently signed two mining investment contracts (MICs) with the Angolan government for licence areas in the provinces of Lunda Norte and Lunda Sul. The MICs for the two licence areas are for the award and exercise of mineral rights covering...

13 june 2022

Ali Pastorini: The jewelry consumer does not evaluate the brand only by price

Ali Pastorini is the co-owner of Del Lima Jewelry and President of Mujeres Brillantes, an association that brings together more than 1,000 women working in the gold and diamond trading sector, mainly from Latin America, as well as from Turkey, Spain...

06 june 2022

“We aim to bring in a different kind of a jewellery experience for the consumers,” says Vaishali Banerjee, Managing Director, PGI-India

Vaishali Banerjee made a shift from the advertising and marketing industry to the jewellery industry to create category awareness for a metal that was lesser-known in the subcontinent. Initially, it was all about category creation in a vibrant, mature...

30 may 2022

Demand for large lab-grown polished diamonds will grow in high-income countries

Anastasia Shramko is an expert in precious stones, rough and polished diamond market, and an analyst. She is an author of the course “Lab-Grown Diamonds: Gemology and the Market” conducted on the site and in collaboration with the GemAcademia (International...

23 may 2022

Changes in China’s diamond and jewellery industry in recent years…

13 june 2022

During the past few years, China’s diamond and jewellery industry has been growing in leaps and bounds, reaching the second largest market next only to the US. But in the last couple of years, due to the outbreak of Covid-19, China’s growth had slowed down to some extent. According to market watchers, unlike the US and Europe, China and the Far East have not picked up after slowing down with the outbreak of the pandemic.

Though China slowly overcame the pandemic and was moving towards normalcy, the recent covid pandemic that struck again slowed down the country’s economy, affecting the diamond and jewellery sector in particular. The current lockdown in certain parts of the country will do more damage than expected, according to market analysts. According to the Gems & Jewelry Trade Association of China, the country’s diamond market reached about 79 billion RMB in 2021.

China is currently the second-largest diamond industry globally. It is also the top consumer of gold in the world.

In the DeBeers Diamond Insight of 2019, it is mentioned that China acquired about 58 per cent of diamonds for love-related occasions. However, just about 50 per cent go for engagement rings, while diamond rings, pendants and diamond studs together represent 30 per cent of love gifts.

Of late there have been five emerging trends in China’s diamond market. For instance, independent women buying diamonds for themselves; men looking for diamond jewellery; affluent consumer profiles post Covid-19 pandemic; the shift to online shopping, and lastly interest in lab-grown diamonds.

As per market studies, changes have been noticed in China’s diamond market due to the Covid-19 pandemic. In 2020, there was only a 30 per cent increase in diamond jewellery acquisition with the average carat weight and price, while demand for diamonds dipped from the average consumer. However, affluent consumers’ demand for larger, higher quality diamonds increased considerably. The pandemic also caused a big increase in online research and purchases of the diamond. In the first quarter of 2021, there was by 49 per cent increase in online purchases year-on-year. 

China’s lab-grown diamond market is on the rise and users prefer it because they can afford a bigger, higher quality synthetic diamond , while for the same price they would not get the same size/quality of a natural diamond. The market value of lab-grown diamonds worldwide has been steadily increasing since 2018, and it may reach 185 billion RMB in 2025, says Daxue Consulting.

In the Chinese market, one sees jewellery of metal, precious stones and others. While jewellery made from metals such as gold, platinum and silver are popular, non-precious metal jewellery made from copper and aluminium is also visible. Of late, imitation of precious metal jewellery resembling precious metals has become popular as well.

Common precious stones used in China include diamonds, rubies, sapphires, crystal, jade, pearls, amber and topaz. Varieties of processes are utilized for making ornaments made with these precious stones like grinding, carving, inlaying and stringing.

Platinum jewellery is a favourite too in China and the country one of the world’s largest consumer market for platinum jewellery. China depends mainly on imports of platinum but due to the pandemic, China’s imports of platinum jewellery were down 17.1 per cent in 2020.

Gold jewellery is the most popular in China. As per the China Gold Association, consumers bought 490.6 tons of gold jewellery in 2020, down 27.5 per cent year on year.

According to the National Bureau of Statistics, total retail sales of jewellery in mainland China in 2020 were RMB237.6 billion, a decline of 4.7 per cent from the year before. China Gold Association showed that China’s gold consumption in 2020 decreased 18.1 per cent year on year to 821.0 tons.

China’s diamonds are mainly imported and the demand has been rising continuously and reached RMB70.7 billion in 2020, and is expected to continue to increase, according to De Beers’ Diamond Insight Report. China’s diamond import volume fell 16.4 per cent year on year in 2020, but the low tariff on diamonds (0 4 per cent) is very attractive to businesses. Shenzhen is the centre for diamond production and wholesaling on the mainland.

About 30 jewellery malls and wholesale markets are present around the city. Of Shenzhen’s diamond production, 90 per cent is to meet domestic demand. This accounts for 70 per cent of the country’s total production and had an estimated worth of about RMB150 billion in 2020. In China, made-to-order jewellery is very popular and it allows retailers to keep zero inventory and commence production only after getting a deposit. Besides reducing labour costs, connecting with retail outlets via the internet makes business more convenient. The wedding market is the main market for jewellery sales in China and accounts for about 50 per cent of mainland consumer jewellery sales. Another new market is the ‘jewellery rental market’ which is still growing. Shenzhen accounts for 70 per cent of China’s total jewellery production and sales. Most of the manufacturing units are on the mainland, located in Guangdong, Shandong, Shanghai, Fujian and Zhejiang.

Small and medium sized jewellers will flourish on the mainland in the coming years. Non branded jewellers are said to have entered into the fray as well. Over the past few years, China’s jewellery brands have increasingly moved into e commerce. Live streaming sales of jewellery have grown steadily in recent years and the projection is that the size of the live streaming e commerce market will reach RMB1,995 billion while the share of jewellery items in live streaming sales is expected to grow to 20%, as per market analysts. According to a 2020 market report on live streaming e commerce on the mainland, jewellery is one of the top three sectors in terms of growth and share of total sales.

The Shanghai Diamond Exchange is China’s only legal channel for the import and export of diamonds for general trading, as well as for the domestic sale of rough diamonds.  Players in China’s jewellery market can be divided into 3 main groups: world-renowned brands, Hong Kong brands and Chinese mainland brands. Chinese domestic jewellery companies are younger than their international competitors. Most of them have no more than a hundred years of history and thus offer cheaper prices. China’s branded jewellery only accounts for 15 per cent of China’s jewellery market, showing that there is still room for new players to enter the market.

The Chinese market is dominated by 24-karat gold jewellery, which holds about 85 per cent of the market share. Such pure gold jewellery is usually sold by weight. Retailers multiply the net weight of the items chosen by their customers in grams by the daily gold price and then add a markup comprising labour charge and retail margin.

In recent years, gold jewellery has faced stiff competition from gem-set and other jewellery products in first-tier cities. According to a survey carried out by the World Gold Council only 18 per cent of women in these cities would choose to buy gold jewels when given 5,000 RMB, against 14 per cent and 15 per cent who would buy diamonds or platinum jewellery respectively. However, in lower-tier cities since consumers, there has a strong preference for high karat and heavy gold jewellery for wealth preservation purposes.

Chinese Gen-Z dislikes gold jewellery goods and tends to opt for diamond and platinum jewels. As younger generations impose themselves as the main drivers of national consumption, China’s diamond market boasts a greater potential for growth than other developed countries. Chinese Millennials are expected to surpass their US counterpart in terms of purchasing power.

Chinese young consumers tend to consider diamonds as fashionable accessories rather than just symbols of romantic commitment. Highly educated women living and working in higher-tier cities are among the most important self-purchasing consumers.

Unlike Westerners, Chinese men show a great appetite for jewels and diamonds: among Chinese male consumers in the 30-44 age group surveyed by the Hong Kong Trade Development Council, 67 per cent of them declared wishing to own diamonds. Nevertheless, the current supply cannot meet Chinese men’s demand for something more than gothic rings and rapper chains, inducing them to purchase women’s jewellery with gender-neutral designs.

Under Chinese traditions, people give longevity locks, bracelets, and necklaces to children as lucky charms as well as a way of wishing them a healthy and happy life. In particular, gold jewellery items are the top choice among parents concerned about the family’s future financial situation due to their inflation-proof value. Many companies have thus launched their children’s collections.

Nowadays, the digital world imposed itself as an essential part of the luxury consumer’s journey. According to McKinsey about 60% of touch-points are digital in China, however, customers tend to gather information online and then purchase them in physical stores. Display counters in large shopping malls, speciality stores and experiential stores are the main distribution channels for jewellery in China. Nevertheless, independent shops, chain stores and e-commerce are gradually gaining ground.

Chinese consumers looking for engagement and wedding rings are more likely to buy their rings in physical stores rather than online, while they opt for jewellery e-tailers when willing to purchase personalized diamond jewellery that is less likely to require opinions from family members. Retailers tend to keep their most expensive items in physical stores since customers prefer having the chance to see and try jewellery items when it comes to spending great sums of money. Live sales have become increasingly popular for all major jewellery brands and jewellery accessories ranked as the fourth most important category in terms of live-streaming sales in 2020.

To meet the needs of customization-demanding younger consumers, the main players in China’s jewellery market are enhancing customer experience by integrating online and offline features. Chinese jewellery houses and Chinese brands bet on design, social commitment, quality of raw materials and cost-effectiveness. Another big difference between foreign and domestic brands lies in their products. While classic pieces from big names are perceived as ever-green and extremely versatile, domestic brands provide younger and more fashion-forward jewels to target Gen-Z.

According to Agility TrendLens 2021, of global consumers, 88% of Chinese high-end jewellery consumers take into account brands’ social responsibility when it comes to purchasing luxury goods in a serious matter. 89 per cent of the Chinese interviewees declare being willing to pay a premium for sustainable and eco-friendly products. This trend extends to China’s diamond market as well: about 56 per cent of respondents are open to paying between 10 per cent and 20 per cent more for a sustainable diamond.

Despite the bias against artificial diamonds persists, moissanite diamonds are getting increasingly popular among Chinese Gen-Z consumers. Indeed, since young couples are eager to have more cost-effective weddings, they are keener to purchase lab-grown gems. The outbreak of the pandemic accelerated this trend, as couples prefer allocating their money to other commodities.

Here are a few takeaways from China’s jewellery market…China’s domestic jewellery market kept on growing in 2019, despite the overall global market suffered. Due to their differences, foreign and domestic brands target distinctive market segments and adopt different strategies.

However, branded jewellery only accounts for 15 per cent of China’s jewellery market so far, illustrating that there is still room for new players to enter the market. 24-karat gold is Chinese consumers’ favourite jewellery material; nonetheless, younger generations tend to prefer platinum and diamond jewellery goods. Lower-tier cities, non-bridal, self-purchasing, and smart jewellery are keywords in today’s jewellery market in China. Meanwhile, single women, men and kids are imposing themselves as important drivers for growth.

To conquer the hearts of Chinese young consumers, jewellery houses need to develop a strong digital and social media strategy aimed at enhancing customer experience by integrating online and offline features. Chinese high-income consumers take seriously into account brands’ social responsibility efforts during their shopping, and they are willing to pay more for sustainable luxury goods.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished