With the domestic jewelry industry and jewelry consumption
developing so quickly, quality issues are becoming a subject of greater concern
among consumers. And quality complaints have been raised, even with first-tier
brand names. Centered around annual International Consumers Day on March 15,
the China Consumers’ Association and local media raised the quality flag once
again by publicizing the issue.
Consumer complaints about domestically produced jewelry
generally focus on the purity of the metal, the grading of the diamonds,
craftsmanship, potential safety hazards in the design of the jewelry, exaggerated
and/or false representations and difficulties in returning and exchanging faulty
jewelry. In addition, in popular tourism areas, there are also complaints about
the overpricing of low-quality items.
One reason for the increase in quality issues is that the
modern Chinese jewelry industry is relatively young — starting only in the
1980s — but it has been expanding at a very fast pace. Many new trade members have
been brought into the industry in recent years, along with new capital, and
some of those new players were hoping to make quick money. When competition
within the industry heated up, and the costs of space, materials and human
resources increased, some firms chose to seek a “shortcut” to quality control
and management.
As a result of the quality complaints, many jewelry firms
are re-examining their management and production systems and trying to
establish quality as a core value of their companies. At the same time, they
are paying a lot more attention to control of the materials and production
processes, scientific standards, certification of jewelry and gemstones and
more education for staff.
EXPORTS HIT $27 BILLION
According to a recent report by China Gold newspaper,
jewelry exports reached $27.3 billion in 2011, an increase of 121.63 percent
from 2010. Jewelry exports totaled slightly more than $5 million in 2005, and
rose steadily in each successive year until they declined in 2009 in the midst
of the global economic crisis. In 2010, jewelry exports climbed by 66.38
percent over the previous year, followed by a further increase in 2011.
Trade members offer four reasons for the continued increase.
First of all, the craftsmanship of China’s exported jewelry is good in general.
Many large jewelry manufacturers have established their factories in Shenzhen,
Panyu and Qingdao. Second, the world jewelry market improved in 2011, and global
gold demand reached 4,067.1 tons. At the same time, the demand for diamond
contract cutting also increased from 7.81 million carats in 2010 to 12.1
million carats in 2011. Third, materials such as gold and diamonds posted price
increases of approximately 30 percent in 2011, resulting in higher dollar
export totals. Fourth, there is more money available and consumers, as well as investors,
wanted to use it to buy something, including precious metal products and big
diamonds, in 2011.
RETAIL COOLS DOWN
According to a recent report by Guangzhou Daily, the general
retail sales of 50 major Chinese retail firms increased by 8.15 percent year on
year in the first quarter of 2012; however, the rate of growth slowed from
earlier forecasts. Sales of cosmetics and food grew by 14.23 percent and 13.49
percent, respectively, while electronic appliances increased by only 1.39
percent.
In March, general sales increased by 11.56 percent, but
silver and gold jewelry by only 1.9 percent. One reason was the decline in the
price of gold, which caused many Chinese consumers, who also regard gold as a
store of value, to pull back from jewelry purchases. A number of trade members
tried to jump-start jewelry sales by launching campaigns in April to promote
sales during the Labor Day weekend from April 29 through May 1, a prime time
for weddings.
EXPANDED TRADING CENTER
Phase Two of the Kingliving International Jewelry Trade
Center celebrated its grand opening recently as an important expansion of the
Shuibei jewelry trading area of Luohu District in Shenzhen. The new center is
located in the National Gem Testing Center Building, with 215,000 square feet
of space in four stories for jewelry, diamond and colored stone companies. Established
five years ago, Phase One of the Kingliving center is located only three-tenths
of a mile away from Phase Two and has 320,000 square feet of retail space in seven
stories.
The trade center has played an important role in the
development of the Shuibei jewelry trading region, which is home to several
trading centers and hundreds of gem and jewelry companies. While some trade
centers are successful, a small number are not. To assure it is one of the
successful ones, developers of the Phase Two complex of the Kingliving center
are offering various tenant support services, including help with company
registration, human resources, financing, security and company communication.
The importance of using support services to attract tenants was illustrated by
Lu Jialiang, vice president of the trade center, with the saying, “When the
nest is warm, the phoenix will come.”
THE MARKETPLACE
- Wholesale sales were steady in advance of the busy retail
sales season surrounding the Labor Day weekend from April 29 through May 1.
- Demand is strong for .30-carat to 1.1-carat round D-H,
VS1-SI2 diamonds with Gemological Institute of America (GIA) certificates,
preferably in triple EX cut.
- Asking prices for 1-carat diamonds have increased.
Article from the Rapaport Magazine - May 2012. To subscribe click here.