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Big spenders lure foreign jewellery firms
2005-03-24
China Daily
International luxury jewellery brands are seeking Chinese partners in a bid to enter the booming market in pursuit of the nation's growing ranks of big spenders.
Belgium's Pluczenik Group, which designs and manufactures diamond products for German fashion house Escada, plans to introduce its luxury jewellery line to the Chinese market by the end of this year.
"We try to enter the market as early as possible when it is with just a small amount of peers, or, as we foresee, a group of luxury jewellery makers will elbow in one after another in the next few years," said Sherri Wang, marketing director of Plucdiam Shanghai Ltd, Pluczenik Group's Chinese office.
US luxury brand Tiffany and French fashion leader Cartier already operate stores in Beijing and Shanghai.
But Pluczenik Group prefers to co-operate with experienced local jewellery retailers, said Wang. "Local dealers can provide better channels and insightful market knowledge to us, while also lowering operational costs," she explained.
Although Escada is already an established brand for luxury diamond products in overseas markets, Wang said it will take time for wealthy Chinese people to accept their products. "In the beginning, we may lose money. But for a long-term strategic investment, its future is undoubtedly brilliant," she added.
The Pluczenik Group displayed several pieces of Escada diamond jewellery at the China International Gold, Jewellery & Gem Fair in Shenzhen, which took place earlier this month, where it also released its plan for the launch of Escada jewellery in China.
A good many dealers have expressed an interest in co-operating with the company, according to Wang, of which two are very promising. "We will carefully consider their history, their operational capability and whether their own brands could match ours before we make a final decision," said Wang.
Hopefully, Escada diamond jewellery will first appear in Beijing and Shanghai, where many international fashion brands already have flagship stores.
The major feature of this new luxury brand is expected to be diamonds with one carat or above, Wang said.
Meanwhile, EMA Asia, an overseas arm of leading Israeli diamond manufacturer EMA Diamonds Ltd, introduced its Le Lumiere patented diamond pen, which allows the user to see the beauty of the hearts & arrows diamond from within through the mini loupe embedded in the upper barrel of the pen, in the same fair, which was organized by the China Gold Association and CMP China Ltd.
"Our products have attracted many buyers from around the country, especially from East China's Shandong Province, Central China's Hunan Province and South China's Guangdong Province," said Andy Yip, a sales manager at Le Lumiere Ltd, a subsidiary of EMA Asia.
Ronen Priewer, managing director of Le Lumiere Ltd, told China Daily that the successful launch of the diamond pen in the Chinese market will not only promote the brand in the nation, but also pave the way for the entry of their luxury finished jewellery.
"The diamond pen, with a retail price of at least 4,000 yuan (US$483.1) that depends on the size of the embedded diamond, will be sold in the Chinese market possibly from May. While the finished jewellery is expected to make its debut by the end of the year," said Priewer, adding that they are seeking a strong domestic retailer to act as their authorized agent.
Le Lumiere Ltd, based in Hong Kong, had expanded into 110 shops in the Asia-Pacific region, including Hong Kong, Australia and Singapore, and will also move towards the US and European markets this year.
A Merrill Lynch research estimated that the global sales of luxury goods could reach US$82 billion in 2004, of which about 11 per cent, or about US$9.02 billion, was generated in the Chinese market.
China Branding Strategy Association forecast that the number of people with monthly salaries ranging from 20,000 yuan (US$2,415.5) to 50,000 yuan (US$6,038.6) would surge to 250 million by 2010. They are the main purchasers of luxury goods.
However, compared with luxury brands of clothing and accessories, and cosmetics and watches, very few luxury jewellery makers have made their presence felt in this lucrative market.
According to a report by Chinese magazine People Forum, sales of the international branded cosmetic products in 31 Beijing department stores increased 24 per cent year-on-year in the first 10 months of 2004.
French cosmetics brand Lancome nets more than 17 million yuan (US$2.05 million) in annual sales from the eastern Chinese city of Hangzhou, the report said.
After locating its flagship store, with an area of more than 11,000 square metres, in the busy commercial area of Shanghai last year, top fashion brand Giorgio Armani plans to open additional 30 stores in major Chinese cities by 2008.
"The development of overseas jewellery brands in the Chinese market seems to be lagging far behind many other luxury brands, which is largely limited by people's narrow definition of a good diamond," said Pluczenik's Wang.
Chinese people are inclined to buy high clarity and perfect colour diamond products because they want the diamond, which may be the only one they will ever have, to be the best, said Wang.
"Each diamond should be treasured because it takes tens of thousands of years to shape it. People can buy expensive perfect stones, they can also buy some cheaper ones with more meaningful designs," said Wang.
Priewer agreed: "We want people to change the way they look at diamond and appreciate it as a gift from nature rather than just as something expensive," he said.
Meanwhile, 70 per cent import tariffs on diamond jewellery also prevented many manufacturers from entering the Chinese market, Wang said.
But this lucrative market remains attractive as nearly four-fifths of new brides in major Chinese cities will buy diamond rings.
Official figures showed that Chinese people purchased more than US$1.2 billion worth of diamond jewellery in 2003, making the country Asia's biggest consumer of diamonds and the world's fifth-largest consumer of diamonds.
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