The Chinese Gems and jewellery industry has over the past 25 years of reforms & opening-up grown from a base which did not existed to emerge as a new industry which is dynamic and have high development prospects. The annual production of this industry, including various types of gems and jewellery, is valued at 120 billion RMB (about US$14.6 billion). It employs an estimated 5 million people. Moreover the industry is growing at the rate of over 10% annually coupled with sustained high growth rate of the Chinese economy for more than two decades and the prospects for continued growth. Gems and Jewellery businesses all over the world have started turning towards the Chinese market, trying to promote their brands and sell their products.
There are plenty of factors as to why gems and jewellery industry in China should be able to maintain its growth over the medium term.
• Firstly, jewellery is traditionally a luxury item of consumption, and demand for jewellery is highly elastic to income. As China’s per capita disposable income rises, jewellery, after real estates and automobiles, has emerged as the third hottest item of consumption in recent times.
• Secondly, the appeal for jewellery is the highest among younger consumer sections. China’s young working age population is quite high. There is also a large demand from 5 the matrimonial market. Every year, about 18-22 million people in China get married. Total annual wedding expenses in China are estimated at 250 billion RMB (about US$ 30.5 billion). Even if one-tenth of that is used for jewellery consumption, the figure is a high 25 billion RMB (about US$ 3.1 billion). The younger consumer section is also fashion-conscious, and the rate of design obsolescence is fast, thereby helping innovation and sales. The high growth of diamond and platinum jewellery witnessed in the Chinese market after the initial rush for gold in the 1980s can be attributed to the desire for new and trendy ornaments among the younger consumers. According to consumer research of Diamond Trading Company (DTC), a subsidiary of the De Beers Group, three out of four brides in Beijing and Shanghai expect their husbands to buy them diamond wedding ring. Wedding rings account for one-third of all diamond sales in China.
• Third, foreign tourists in China are also one of the major categories adding to jewellery demand in China. Every year, over 30 million travellers from all around the world visit China, and it has been estimated that their annual spending on Chinese jewellery is over 10 billion RMB (over US$1.2 billion). As China brand becomes popular overseas, especially in traditional areas of Chinese strength like jadeite, jade ornaments and pearls, as well as new areas like diamond processing, the demand in these segments would only grow.
• Fourth, as China’s GDP and per capita income increases, a part of the consumer class has started using jewellery items as items of domestic use, for instance gold and silver cutlery and decorative items. Due to a combination of all these factors, it is predicted by industry sources that by 2010, China’s jewellery consumption, at the existing rate of growth, will exceed US$ 35 billion, making China the second largest consumer nation in the world.