Many of China’s workers received a much smaller bonus than usual before the Chinese New Year because of the global financial crisis, and 60 percent of Chinese consumers have decided to tighten their belts in 2009, according to a recent survey. Despite this, however, Chinese New Year Golden Week spending remained robust. The weeklong holiday, which started January 25, is China’s closest equivalent to the Western Christmas shopping season. According to recent figures from the country’s Ministry of Commerce, the seven-day holiday harvested $42.4 billion in retail sales, with a year-on-year increase of 13.8 percent.
The enthusiastic spending was facilitated by sales promotions in major cities. Also having an impact is a program currently operational in 12 provinces that the government launched in rural areas in 2007. It grants a 13 percent subsidy to farmers who buy certain home appliances. The developing rural market is believed to have great potential to boost domestic demand and shore up the economy.
Retail sales of gold and silver jewelry were up by 17.2 percent year on year during the weeklong holiday, and retail jewelry sales grew 29.2 percent in January 2009. Caibai Jewelry Store of Beijing reported a total of $24.3 million in sales for gold products, a 30 percent year-on-year increase. Ox-themed gold bars, figurines, amulets and coins honoring the Year of the Ox were very popular.
FaithMost Chinese people believe the fundamental factors of the Chinese economy remain strong, according to a survey conducted by China’s National Bureau of Statistics (NBS) involving 10,000 samples nationwide. The survey found 80.9 percent of the respondents were of the opinion that despite the impact from the international financial crisis, China, which contributed more than 20 percent to world economic growth in 2008, would realize a healthy and relatively fast economic growth in the next few years. The findings also showed most people surveyed took a “quite rational attitude” toward the ongoing financial crisis, though many admitted being “a bit worried.”
Internet Savvy
In its January 2009 report, the China Internet Network Information Center (CNNIC) recorded the number of Chinese netizens, or internet population, at 298 million at the end of 2008, with a 41.9 percent year-on-year increase. Broadband users exceeded 270 million. The number of “.cn” — the country code for China — domain names reached 13.6 million with a 50.8 percent increase. China ranks in first place in the world in those categories.
RapNet launched its Chinese B-to-B version in 2008 and a number of suppliers utilize the online real-time, inventory-and-ordering system to support efficient trading. Zbird, 9 Diamond and the recently launched Tiamo represent the fast-developing B-to-C websites. Zbird currently employs more than 200 people, operates Zbird.com and opened showrooms in Nanjing and Chengdu in January 2009, bringing its number of showrooms to seven. The “brick plus mouse” approach is quite practical in China since most clients still demand to view diamonds and jewelry before purchasing. Tiamo, supported by Beta Diamond, launched TDiam.com and opened its first showroom in Shanghai recently. TDiam.com featured two diamonds of 8.88 carats each in recognition of the Chinese love of the number eight.
In an interview with RDR, Bridd Xu, copresident of Zbird, announced that the company exceeded $14.6 million in sales in 2008. “The market share of internet jewelry sales is still not comparable to traditional retail sales in China, and it is still at a preliminary stage of development, but we predict very fast and accelerating growth in 2009 and in the next few years,” said Xu. “Budget concerns in the current market situation and easy access to the internet contribute to the fact that more consumers are going online in search of better prices than those offered by traditional retail stores. I hope that eventually the website-based jewelry sales will stand shoulder to shoulder with traditional retail. Right now, internet consumers are mainly looking at prices, but in the next stage, internet sales will also be about competition of brand names.”
The Gems and Jewelry Trade Association of China (GAC) held a discussion with nine major online jewelry companies on Feb. 17, and published “The Self-Discipline Pact for China’s E-trade on Diamond Jewelry” to protect consumers’ rights in the country’s fast-growing, website-based jewelry business. The pact is designed to prevent irregularities and fraudulent activities in the online jewelry business, said Sun Fengmin, GAC secretary-general. In 2008, China’s online diamond trade totaled approximately $146 million, and the figure is expected to double in 2009, according to GAC.
The Marketplace
• The diamond wholesale market is seasonably slow during and after the Chinese New Year holiday, while the retail market is relatively stable.
• Most in demand are rounds in 0.15- to 0.69-carat G+, VS and in 0.15- to 0.69-carat I-J, VVS.
• Demand remains stable for 1-carat round, D-H, VS, GIA-certified diamonds, triple EX and with no fluorescence. Diamonds with laser-inscription registry are more popular.
Article from the Rapaport Magazine - March 2009. To subscribe click here.