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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4083)	1/5/2005 7:24:09 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China Power By Gaston D'Aquino Posted: 1/5/2005 3:01 PM Christmas is usually the most active period for jewelry retailers and many were expecting bumper sales in 2004, with most of the larger chains reporting an increase in sales of between 20 percent and 30 percent as compared to the 2003 Christmas season. Hopefully, this will carry on into the new year as the Lunar New Year this year falls in early February. More tourists from the Mainland are expected to visit Hong Kong during this period. Will Prices Weaken? It was very obvious that diamantaires from around the world tried desperately to sell in Hong Kong during December. Huge quantities of certified diamonds were being shown around town. But this only served to scare the local merchants who felt that if there was too much available that prices would weaken. News of the weak U.S. market tended to reaffirm these fears. The prices of diamonds were not as stiff as they were a few months ago and pressure to sell meant that some diamantaires had to lower their prices. Overseas diamantaires were often seen carrying their goods in large wheeled suitcases and had extra men accompanying them, obviously due to the requirement of insurance companies for additional security because of the high value of the goods that they were carrying. Some large local companies even refused to view goods and only did some symbolic business with companies they had close relations with. The demand for Indian small sizes was soft in December, but prices remained high. The new production after the Diwali holidays will most likely be available in the New Year and sales will depend on whether the demand will be able to sustain the higher prices. Manufacturers and Demand Some of the smaller jewelry manufacturers in China are having a very difficult time as they did not have any orders for the end of 2004. They are considering letting go some of their employees if things do not rapidly improve in the new year. They attribute the slowdown to the high price of gold and diamonds during the past months. Although demand holds steady in the U.S., Hong Kong and Chinese manufacturers are concerned that payments have been extremely slow and there are many rumors of impending failures of large U.S. jewelry houses in the near future. Consumers worldwide are pessimistic about the future, despite better economic outlooks for 2005. It seems that they have collectively decided to tighten their belts and curtail spending. Despite the high euro, which makes diamonds and jewelry from Hong Kong less expensive, demand from the European markets is sluggish because of high gold prices, weaker consumer demand and the fear that the high euro will affect exports. Apart from China, which continues to be strong, the other surrounding markets in the region are very slow. Demand for diamonds in VVS clarities in G through J colors for the China market continues to be very strong. The hottest sellers are 1/10 and 1/6 items and demand for 1/5 stones is increasing. By comparison, 1/4 and 1/3 goods are weaker, but 1/2 and larger diamonds are also increasing in demand. There is some light at the end of the tunnel. It appears that Mainland consumers are not the ones resisting SI clarity, but rather the merchants who are not willing to take the risk of having stock that does not sell. If more publicity can be introduced to sway the consumers’ desire only for high-clarity diamonds, there is the potential of increasing the demand tenfold, if not more, as a wider range of diamonds become salable. This is something that De Beers can achieve very easily as their name alone can swing sentiment of consumers toward accepting diamonds in a variety of qualities and sizes. Certs It is also important that changes be made in the certification of diamonds or that certificates from overseas gem laboratories such as the Gemological Institute of America (GIA), Antwerp Diamond High Council (HRD) and the International Gemological Institute (IGI) be accepted by consumers. The problem with overseas certificates is that they arouse the interest of tax and customs officials, who associate these certificates with diamonds that were imported into China, whether legally or otherwise. If diamonds can be certified inside China by some of the foreign gem laboratories, this would certainly help in building consumers’ acceptance of internationally recognized grading standards. Promotion of fancy cut diamonds is another avenue that can be taken to widen the base of diamonds being sold in China. For the moment, the Chinese consumer is only interested in round brilliants and is skeptical about other cuts. Presently, there is a booming trade in not only gold, but in gold derivatives as well. Figures show a 45.35 percent increase in the amount of gold sold compared to 2003. The weakness of the U.S. dollar makes gold an interesting investment during these uncertain times. The economy in China continues to outpace most of the world and this looks likely to continue, despite the revaluation of the Chinese yuan and the continued increase in the price of raw materials. President Hu Jintao has recently stated that he will only allow loosening the yuan’s peg to the U.S. dollar under the right conditions and even if there is a token increase in the value of the yuan, there is still virtually no other country to take the place of China as the factory of the world. The Chinese are very resilient people and if they have to work for less they will do so as long as it puts rice in their bowls diamonds.net