UAE-made jewellery to glitter in China

UAE jewellers are planning an aggressive expansion into China which they believe will continue to boom despite the worldwide economic turmoil. China is an emerging retail market for diamonds and jewellery with growth fuelled by the economic growth along the coastal belt and demand from the prosperous young generation. And jewellers in China say they would welcome partnerships with Middle East companies. The US diamond market, traditionally the world’s largest, is reeling because of the credit crunch and liquidity crisis and this has had a knock-on effect on suppliers in Hong Kong. But the domestic Chinese market remains strong. “We already have a presence in Hong Kong, which is the gateway to the mainland Chinese market,” Damas Managing Director Tawhid Abdullah told Emirates Business. “We are going slowly and steadily and are looking for the right partner to explore the Chinese jewellery market. Our objective is to get closer to Chinese customers through a suitable partner. Our long-term plan is to have a presence in all the major provinces. To start with we will open at least 25 outlets in China, the minimum needed to have any impact on the market there.” Dubai-based Damas is no stranger to overseas expansion – it has stores in 18 countries and operates 50 outlets in India through a partnership with a local company. Amit Dhamani, CEO of Dhamani Jewels, one of the largest fine jewellery chains in the Middle East, said: “China and the UAE can work together in many segments of the jewellery trade. We can have production facilities there and the domestic retail market for jewellery and diamonds is huge. “The Chinese population is a major attraction for any diamond chain – about 10 million Chinese couples get married every year. We are also planning to expand our business in mainland China. The diamond business all over the world is facing a crisis but the Chinese market seems to be the light at the end of a dark tunnel.” William Wong, CEO of Hong Kong-based jeweller Luk Fook Group, said: “As Chinese people are getting richer and richer, demand for diamond jewellery is growing rapidly. “The demand is higher in northern China, which accounts for 60 per cent of the total market, than the southern part. Southern consumers prefer gold jewellery and demand peaks in the October-November marriage season. “About 50 per cent of our sales, worth HK4 billion (Dh1.9bn) comes from China and we have not been much affected by the slowdown in Japan and the US. “We are not worried about Middle East firms entering the Chinese market. There is a considerable difference between the precious metal markets in China and the Middle East. Dubai jewellers will take time to learn about the Chinese market. We would like to have a strong partner from Dubai.” He said the high and volatile gold price had boosted demand for diamonds. “The average spend on diamonds in China is $500 (Dh1,840) per transaction. The higher end purchases go up to $150,000. Middle East investors should know the difference in rules and consumer attitudes in northern and southern China. “Hong Kong companies, which have been badly hit by the economic slowdown in the US, are now focusing on the mainland market. Until recently 50 per cent of Hong Kong’s diamond exports went to the US.” Luk Fook has 380 outlets in the Hong Kong, Macau, elsewhere on the mainland, Canada and the US. Kent Wong, Director and General Manager of Chow Tai Fook Jewellery China, said: “We have 800 outlets all over the country and every year we have seen double-digit growth in the market. “Even now, when the economic tsunami has hit Hong Kong jewellers exporting to the US market, Chinese consumers continue to show a traditional appetite for jewellery. “Consumers in mainland China prefer to invest in 24-carat gold jewellery as an investment and as an ornament for daily use. All our outlets have been doing well but the outlets along the coastal belt have been doing particularly well.” Wong said the coastal cities had witnessed strong growth following economic reforms and product lines aimed at younger buyers were doing exceptionally well. “Young Chinese couples spend in the range of $50 to $200 per jewellery piece. Rich Chinese consumers spend an average of $1,000 per piece.” Mark Wong, Chief Purchasing Officer of the diamond department of a leading Chinese company, said new shopping malls and conventional department stores were both important channels for the sale of diamond and gold jewellery. “The average investment to open a new shop in China is $600,000. Compared with the US or Hong Kong the crime rate is very low on the mainland. About 95 per cent of Hong Kong jewellers have shifted their production to China. “UAE companies will have to establish partnerships with experienced Hong Kong firms to successfully penetrate the Chinese market.” China is the fifth largest diamond consumer in the world, with sales soaring from $230m in 1995 to $1.2bn in 2007. More than 2.5 million diamond jewellery items are sold annually on the mainland. VM Sathish