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China’s Jewellery Market

I. Market overview

As a result of the economic slowdown in China over recent years, the demand for jewellery has declined. According to figures from the National Bureau of Statistics, in 2017 jewellery retail sales from businesses above a certain designated scale totalled RMB297 billion, up 5.6% from the previous year. It seems, however, that many investors switched their focus from gold jewellery to gold bars. In line with this, 2017 figures released by the China Gold Association show that gold consumption in China increased 9.4% year-on-year to 1,089 tons, making the country the world’s leading gold consumer for the fifth year running.

At present, jewellery in the Chinese market can be divided into three main categories: metal, precious stones and others.

  • Metal jewellery: Jewellery made from all kinds of metals, which can be further divided into:

    • Precious metal jewellery: Jewellery made from precious metals, such as gold, platinum and silver. Common examples are platinum jewellery, gold jewellery, silver jewellery and alloy (carat gold) jewellery.

    • Non-precious metal jewellery: In comparison with precious metal jewellery, jewellery made from non-precious metals offers better value for money. Commonly, this kind of jewellery is made from copper and aluminium.

    • Imitation precious metal jewellery: This refers to jewellery made from materials that bear a close resemblance to precious metals. In fact, this kind of jewellery does not contain any precious metals, but it has achieved a large degree of popularity because it can offer certain advantages, notably colourfastness, lower prices and a high decorative value.

    • Thin film jewellery: This kind of jewellery is created using special techniques to bond a layer of precious metal firmly on the surface of another, cheaper material. Examples of this include gold-plated, gold-gilded and forged gold jewellery.

  • Precious stone jewellery: Precious stones are made into ornaments using a variety of processes, including grinding, carving, inlaying and stringing. Thanks to its aesthetic value and innate elegance, precious stone jewellery is becoming increasingly popular. Common precious stone types include diamonds, rubies, sapphires, crystal, jade, pearls, amber and topaz.

  • Other jewellery: Jewellery made from materials other than metals and precious stones. This would include materials such as clay, wood, string, leather and ivory.

Platinum jewellery: China is one of the world’s largest consumer markets for platinum jewellery. According to a report released by the Platinum Guild International, in 2017 retail sales of platinum jewellery in China dropped by 2.8% from the preceding year. One significant factor in the dwindling demand for platinum is that consumers now prefer to buy gold.

Gold jewellery: In recent years, gold jewellery manufacturers have begun to move away from traditional, homogeneous designs and, instead, have looked to match with other materials. As a result, more and more young people are beginning to favour this style. According to the China Gold Association, demand for gold jewellery in 2017 rebounded to 650 tons and businesses began to pay more attention to the value of gold jewellery. In line with China’s growing wealth, sales of gold jewellery are expected to grow in future.

Diamond jewellery: According to De Beers, the US remains the world’s largest diamond consumer, with 70% of Americans owning diamond jewellery. By comparison, only 20% of mainland urban dwellers own diamond jewellery at present, suggesting that there is considerable room for expansion in the mainland diamond market. De Beers also pointed out that although diamond sales in China dropped by 4.8% to US$9.7 billion in 2016, market confidence rebounded in 2017 as the renminbi stabilised, with the result that diamond sales increased by about 1% year-on-year to US$9.8 billion.

Luxury jewellery: According to Euromonitor, luxury jewellery sales increased by 6.6% year-on-year to RMB14.9 billion in 2017, accounting for 2.3% of overall jewellery sales. Demand for luxury jewellery is on the rise as more women take up employment and are earning more. Compared with women, men tend to buy luxury jewellery more as a status symbol.    

Made-to-order jewellery: According to a recent industry survey, bespoke diamond wedding rings are the leading choice for 75% of the post-80s and 90s generations living in first- and second-tier Chinese cities, such as Beijing, Shanghai, Shenzhen and Chengdu. In recent years, the traditional sales model for finished jewellery products has failed to meet growing consumer demand for exclusivity and individuality. As a result, bespoke jewellery has been gaining traction, so much so that many companies have introduced made-to-order services and are even letting customers take part in designing and making the jewellery.   

The wedding market: It is estimated that more than 50% of mainland consumer jewellery sales is related to weddings. The less developed the city (such as second- or third-tier), the higher the share. In 2016, there were 11.328 million newly wed couples in China. Over the next few years, it is expected that this trend will be maintained, with more than 10 million couples getting married every year. As jewellery items are seen as essential components of traditional Chinese weddings, the jewellery market is sure to benefit from this growth in matrimonial statistics.

Festival market: The level of jewellery sales on the mainland is very much influenced by festivals and anniversaries. Many people have a habit of buying jewellery as a gift to celebrate birthdays and festivals, especially the Lunar New Year and Valentine’s Day. Many shopping malls also organise promotional activities tied in to these festivals.

Men’s market: While the traditional women’s market is fiercely competitive, the male jewellery market is still in the early stages of development. As well as traditional jewellery items, such as rings, the men’s market also includes solely masculine items, such as tie clips, cufflinks and belt buckles.

Mainland male consumers’ interest in jewellery stems mainly from their taste for diamonds. According to one industry report, among Chinese males in the 30-44 age group, 67% wish to own diamonds. Compared with the relentless growth in overall demand, though, the development of the mainland male jewellery market is relatively slow. To address this situation, companies could open up new markets by placing greater emphasis on boosting innovation with regard to product designs, products’ cultural connotations, product point-of-sale promotions and advertising.

Junior market: In accordance with Chinese traditions, people give longevity locks, bracelets and necklaces to children as goodwill tokens and as way of wishing them a healthy and happy life. In particular, the kinds of gold jewellery items that can be worn and have inflation-proof value are the top choices among parents with an eye on managing finances. With the implementation of China’s ‘two-child policy’, demand in the junior market is expected to grow. Nevertheless, when compared with the adult jewellery sector, where new styles are launched on a regular basis, the children’s jewellery market offers fewer choices. It also receives less promotional support than adult jewellery.

Senior market: Compared with young people, the elderly give a higher priority to jewellery that is both inflation-proof and has a demonstrable sentimental value. According to industry sources, the elderly age group’s spend on jewellery is no longer restricted to four traditional items – gold rings, gold bracelets, gold earrings and gold necklaces – as they also have a growing preference for jade, ruby and sapphire jewellery.

Gold Association Survey

A 2016 consumer survey conducted by the China Gold Association of 2,000 females in first- to fourth-tier mainland cities had the following findings:

  • 70% of respondents owned gold jewellery and over 50% owned platinum jewellery.

  • Assuming they had a budget of RMB5,000 for buying jewellery, the respondents said they hoped to buy gold jewellery most, followed by platinum and diamond jewellery. Preference for gold jewellery was higher in the third- and fourth-tier cities. Preference for gold, platinum and diamond jewellery was quite similar among respondent in the first-tier cities, at 18%, 14% and 15% respectively. Gold appealed less to young people aged 18-25, with only 9% showing a preference for gold jewellery.

  • Overall, respondents mainly bought jewellery from physical stores (81%). The remainder (19%) said they made purchases online.

  • 50% of consumers said the main drawback of buying jewellery online is not being able to touch the physical object. The second stumbling block has to do with security (48%). 30% of consumers thought it more convenient to buy from bricks-and-mortar stores.

  • 59% of consumers said that fashion/jewellery brand websites influenced their buying of jewellery and luxury items. Other channels that affected them included physical stores, bloggers and social media.
China’s 2017 jewellery imports breakdown:
HS CodeDescription2017
(US$ million)
2017/16 Growth (%)
7101Pearls, natural or cultured, not strung, mounted or set, or temporarily strung for convenience of transport66.7105.8
7102Diamonds, whether or not worked, but not mounted or set7,839.71.0
71023100Diamonds, non-industrial, unworked or simply sawn, cleaved or bruted624.1-6.2
71023900Diamonds, other non-industrial
7,213.3
1.7
7103Precious stones (other than diamonds) and semi-precious stones, not strung, mounted or set; ungraded, temporarily strung for convenience of transport476.8-82.7
7105Dust and powder of natural or synthetic precious or semi-precious stones27.749.2
7106Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form1,306.061.1
7107Base metals clad with silver15.717.3
7110Platinum, unwrought or in semi-manufactured forms, or in powder form2,943.810.9
71101100Platinum, unwrought or in powder form1,325.4-8.5
71103100Rhodium, unwrought or in powder form137.727.0
7111Base metals, silver or gold, clad with platinum20.4-4.9
7113Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal921.8-12.1
7114Articles of goldsmiths’ or silversmiths’ wares and parts thereof, of precious metal or of metal clad with precious metal13.8104.0

Source:Global Trade Atlas

II. Market Competition

The majority of jewellery processing enterprises on the mainland are located in Guangdong, Shandong, Shanghai, Fujian and Zhejiang. Overall, Guangdong is the primary location for jewellery production for the whole country, while Shenzhen and Panyu are the leading centres for jewellery processing. In the case of Shenzhen, it has been dubbed the ‘City of Jewellery’ as its jewellery businesses hold the largest share of the domestic market, mainly through setting up sales counters and specialty stores across China.

Even though China has the craftsmanship required by many top international brands, the industry has yet to catch up in terms of branding and product design.

The huge potential of China’s consumer market has seen numerous international jewellery giants keen to stake their claim in the sector. To this end, many of the world’s leading jewellery brands have already entered the mainland market, including De Beers, the world’s largest dealer of diamonds, Cartier, the celebrated French jewellery and watch giant, and Perles De Tahiti. A number of Hong Kong brands, most notably Chow Tai Fook and TSL, have also followed suit.

The arrival of so many foreign brands has inevitability seen them competing for market share with the local brands. The mainland jewellery market is currently dominated by brands such as Chow Tai Fook, Chow Sang Sang, Luk Fook, Laofengxiang, Lao Miao, Ming Jewelry, TSL and Chow Tai Seng.

Overall, jewellery brands are developing at a rapid pace, while stepping up their expansion into China’s second- and third-tier cities. Over the next few years, many of these brands will need the help of franchisees to complete their moves into the second-, third- and fourth-tier cities. Given their superior local resources, many of these franchisees will be well equipped to access the sales channels in these new territories.

III. Sales Channels

Mainland jewellery retail and wholesale channels can be divided into the following categories: jewellery counters at shopping malls, chain stores, supermarkets, specialty stores and specialised markets. Chinese consumers mainly shop for jewellery on weekends and public holidays, typically making their purchases at department stores’ jewellery counters. The proportion of consumers making their purchases at independent shops and chain stores, however, is now on the increase.

Over the past few years, China’s jewellery brands have moved increasingly into e-commerce. The success of its ‘website + experience store’ concept, for instance, has seen zbird.com expand swiftly on the mainland. Both Chow Tai Fook and Chow Sang Sang, sell online via Tmall.com, while Chow Tai Fook runs its own B2C shop. Despite the recent explosive growth of e-commerce across China, the fact that the online sale of jewellery currently accounts for just 5% of the industry’s total demonstrates that the market is still very much dominated by the traditional brand-name jewellery stores.

For many, the mainland’s trade fairs offer the most effective means of getting an overview of the jewellery sector in China and beyond, while also being the best places to meet dealers. Mainland jewellery fairs scheduled for the second half of 2018 include:

DateExhibitionVenue
16-19 August 2018Chengdu International Jewelry Fair (Autumn Edition)New International Convention & Exposition Center Chengdu Century City
7-10 September 2018Hangzhou International Jewellery FairPeace International Conference & Exhibition Centre, Hangzhou
11-15 October 2018Tianjin International Jewellery FairMeijiang Convention & Exhibition Center, Tianjin
7-10 December 2018China International Jewellery & Gem Fair - ShanghaiWorld Expo Exhibition and Convention Center, Shanghai

IV. Import and Trade Regulations

2018 import tariffs of jewellery items:

HS CodeDescription%
7101Pearls, natural or cultured, whether or not worked or graded but not strung, mounted or set; pearls, natural or cultured, temporarily strung for convenience of transport0,21
7102Diamonds, whether or not worked, but not mounted or set0-8
7103Precious stones (other than diamonds) and semi-precious stones, whether or not worked or graded but not strung, mounted or set; ungraded precious stones (other than diamonds) and semi-precious stones, temporarily strung for convenience of transport3,8
7105Dust and powder of natural or synthetic precious or semi-precious stones0
7106Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form0
7107Base metals clad with silver10.5
7108Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder form0
7109Base metals or silver, clad with gold10.5
7110Platinum, unwrought or in semi-manufactured forms, or in powder form0,3
7111Base metals, silver or gold, clad with platinum3
7112Waste and scrap of precious metal or of metal clad with precious metal; other waste and scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal0-8
7113Articles of jewellery and parts thereof, of precious metal, or of metal clad with precious metal20,35
7114Articles of goldsmiths’ or silversmiths’ wares and parts thereof, of precious metal or of metal clad with precious metal35
7115Other articles of precious metal or of metal clad with precious metal0-35
7116Articles of natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed)35

Source: Customs Import and Export Tariff of the People’s Republic of China 2018

The Shanghai Diamond Exchange is China’s only legal channel for the import and export of diamonds for general trading, as well as for the domestic sale of rough diamonds transferred-out in the course of the processing trade. For details of its import and export policies, customs supervision policies, tax policies and foreign exchange management policies, refer to www.cnsde.com/enindex.aspx.

The Shanghai Gold Exchange began operation on 30 October 2002, with its launch seen as a sign that China’s gold sector is moving towards complete marketisation. For details of its business code of conduct and other relevant laws and regulations, refer to www.en.sge.com.cn/.

In May 2003, the mainland abolished the licensing system for running businesses trading in gold or silver products. As a result, the production, processing, wholesale and retail of jewellery are all now fully deregulated, meaning that any individual can now register to operate a business in the jewellery production, processing or wholesaling sectors.

On 1 December 2004, Guangdong launched a pilot scheme aimed at de-linking gold prices from workmanship fees within Guangzhou’s jewellery retail market. As of 1 September 2006, the practice was extended throughout Guangdong. As stipulated in the Interim Measures for the Separate Marking of Retail Price and Workmanship Fee for Gold Jewellery Items in Guangdong’s Jewellery Market, the prices of gold jewellery items in the Guangdong market are now displayed in the form of ‘material price + workmanship fee’, in contrast to the traditional method of pricing on a ‘per gram’ basis. Currently, the practice of de-linking gold prices from workmanship fees has also been adopted in a number of other cities, including Shanghai and Chengdu. Conversely, in Fujian province, with the adoption of a new set of gold jewellery pricing rules by the Gemmological Association of Fujian, the practice of price and fee decoupling has been reversed since 1 May 2015. In other words, within Fujian the material costs and workmanship fees for gold jewellery items are now no longer marked separately.

The QB/T 2062-2006 Precious Metal Adornment and QB/T 1689-2006 Terms of Precious Metal Adornment have been in force since 1 December 2006. The former stipulates the classification, requirements, test methods, inspection regulations as well as the labelling, packaging, transportation and storage requirements for adornments made from precious metals. The latter, meanwhile, seeks to standardise the terminology and definitions used with regard to precious metal adornments, materials and craftsmanship.

The GB 11887-2012 Jewellery - Fineness of Precious Metal Alloys and Designation has been in force since 1 May 2013 and replaced GB 11887-2008 Jewellery - Fineness of Precious Metal Alloys and Designation. The new standard has removed specific provisions relating to hazardous elements and the testing of hazardous elements, while incorporating a number of additional relevant standards issued subsequently.

The GB/T 18781-2008 Cultured Pearl Grading, which supersedes GB/T 18781-2002 Cultured Pearl Grading, has been effective since 1 May 2009. This standard specifies text descriptions for quality factors and grades of cultured pearls. In terms of the overall standard, requirements are laid down for the six freshwater cultured pearl quality factors of colour, size, shape, lustre, smoothness and the thickness of pearl layers (in the case of nucleated pearls).

The national standard GB/T 23885-2009 Jade Grading drawn up by the National Gems & Jewellery Technology Administrative Centre of the Ministry of Land and Resources has been in effect since 1 March 2010. This standard provides clear definitions and classification rules for ground and polished natural jade, both inlaid and non-inlaid. The GB/T 29155-2012 Transparent (Colourless) Jade Grading, which has been effective since 1 October 2013, is similarly applicable to transparent colourless jade.

The national standard GB/T 25071-2010 Classification and Codes for Products of Gems and Precious Metals was implemented on 1 December 2010. As an important basic standard for the informatisation of China’s jewellery industry, it provides the basis for the management, transmission, retrieval and dissemination of data with regard to gem and precious metals products.

As of February 2011, updated versions of the three national standards on jewellery – GB/T 16552-2010 Gems: Nomenclature; GB/T 16553-2010 Gems: Testing; and GB/T 16554-2010 Diamond Grading, became effective simultaneously, superseding the earlier 2003 versions.

Content provided by Picture: HKTDC Research
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