China's jewellery market – quietly improving
According to the WGC, Market Update for June, China’s jewellery industry has responded to the changing consumer landscape over recent years. It has adopted two main strategies: offering an improved product range and blending the online and offline retail experience.
Improving product offering 24ct gold jewellery has dominated China’s gold jewellery market. It resonates well with older, more traditional consumers. But young, city folk have different tastes. 18ct gold (also known as K-gold) has played an important role in meeting the needs of this part of the market for some time.
And more recently, the jewellery industry has developed 22ct gold. Both 18ct and 22ct gold jewellery are viewed as more fashionable and affordable in comparison to traditional 24ct gold. 18ct red gold – the colour obtained from a gold-copper alloy – is more popular with young women who tend to buy it as a reward or a treat, perhaps partly because of its romantic name of “rose gold”.
As well as meeting consumers’ desires, these products offer fatter profits for retailers. 24ct jewellery is usually sold by weight, with slim margins. K-gold is sold by piece, which allows the retailer to boost profit margins.
Jewellers have also uncovered ways to offer intricately designed pieces that meet lower budgets.
3D hard gold enables this shift to thrift. A special chemical process makes 3D gold four times harder than 24ct gold. Yet it uses only one-third of the gold that traditional jewellery uses to produce a same-sized piece, making it much more affordable.
Jewellery retailer Chow Tai Fook was an early adopter of these developments. Its 3D Fuxing Baobao series was well received by consumers and has generated good sales revenue, according to the jeweller. In addition, more and more jewellers are using renowned intellectual property to leap into the millennials’ mind.
Chow Tai Fook’s Disney Tsum Tsum collection is an example of the successful marriage between much-loved characters and stunning jewellery design, and is sought after by fans of all ages.
China’s jewellery market is emerging from a tough few years, having developed better strategies to engage with modern consumers. While good progress has been made, we believe the industry can do more. Developing brands and creating new buying occasions will help jewellers meet the needs of China’s modern consumers. This, combined with China’s increasingly consumer-driven economy, should support the Chinese and global gold market.
