Top Indian gold/diamond retailer to move into China
As another indicator of China's market growth for precious metals and diamonds, top Indian retailer Gitanjali plans to open 50 outlets there.
Author: Shivom Seth
Posted: Thursday , 08 Jul 2010
mineweb.co.za
MUMBAI -
The lure is enticing and cannot be ignored. Close on the heels of announcing its plans for India, major jewelry retail chain in the country, Gitanjali Gems has announced plans for a foray into China. The investment kitty - $3.5 million.
Gitanjali is already set to open 550 stores in India by the end of the financial year, as it seeks to push demand here. Touted as India's biggest gold and diamond jewelry retailer, the firm is not just seeking to tap demand in the world's biggest gold-buying nation. The retailer has decided to spread its wings and open some 50 stores across China.
The jewelry exporter also announced plans to invest 4 billion rupees ($85 million) in the next 18 months to expand its retail business in India and the overseas markets.
``We have been supporting some jewelry retail chains in China, but have been keen to go it alone for some time now,'' said Gitanjali Gems chairman, Mehul Choksi. Maintaining that demand for gold jewelry studded with diamonds was growing at 15% to 25% for the last three years in China, Choksi said that demand had picked up pace to 25%-30% from the start of 2010.
``That is reason enough for us to go to China. Real growth is only taking place in India and China. Given that we have a supply-related relation with some jewelry chains, we decided to go solo in China. Moreover, China also appears to be using the same amount of gold as India,'' he added.
India, the world's predominant purchaser of gold, accounts for over 20% of global demand. Choksi insists that gold is ``picking up in China, a beautiful country, but there was insignificant demand earlier.''
``Chinese consumers need to be exploited in the same manner as Indians. Earlier, platinum was the hero. Now, the size of the diamond market in China is nearly double that of India. At the moment, they are into diamond jewelry though they don't wear diamond necklaces like Indians. The Chinese people are only into solitaires,'' Choksi added.
Gitanjali, which bought Samuels Jewelers Inc in 2006 and Rogers Ltd in 2007 in its bid to expand in the U.S., has said that the retail environment in the U.S. has picked up considerably this year. The firm is one of India's leading integrated diamond and jewelry retailing and manufacturing companies.
The company is gearing towards improving the value of its brand and not just improving sales, and is looking at multiplying the value of its brands by 1.5 to 2 times by 2011-2012. Being one of the earliest diamond houses in India, the company was accorded a Sight by the Diamond Trading Company, London, as early as 1968. Choksi opined that his reasons for choosing the Chinese market was its labour force.
``Labour in China is far more disciplined and consistent when it comes to cutting diamonds and precious stones. We plan to make an investment of about $3.5 million in China as there is a huge domestic demand there, especially for platinum jewelry,'' he said. Even as India remains the prime focus for growth, the company is also planning to grow its business in the Middle East and Japan.
The Indian jewelry maker also maintains two diamond and jewelry production facilities in China employing about 4,000 people. |
