Big Luxury Watch Brands Attract Big Interest in China

For the second year in a row Omega is the top luxury brand based on Internet searches.

China continues to show strong interest in Swiss luxury watches despite a slowdown in the world’s fastest growing economy, according to a survey of Internet searches released Monday.

The Geneva office of the Digital Luxury Group, a digital consulting and marketing firm for luxury brands, said its analysis of 65 international watch brands shows that every category of luxury watches from “prestige” to “haute horlogerie” has seen an increase in interest the first half of 2012 compared to the same period in 2011, with a near 40 percent increase in aggregate searches.

“This shows that the attention expressed for Swiss watches in China remains strong despite the reported macroeconomic slowdown and the economic uncertainty linked to the political changes,” according to the report released Monday.

“Interest for watches is increasing. This is opposite of what the media is taking about,” added Florent Bondoux, head of Strategy and Intelligence at DLG, in a recent interview prior to the release of the report. He did, however, stress that online interest does not reflect sales.

“We know that this information aggregation in fact does not translate to sell out trends,” he said. “The interest continues to grow, but there are indicators that the purchase cycle (as revealed by the data from the Federation of the Swiss Watch Industry) has slowed.”

In March, DLG, in its WorldWatchReport, revealed that for the first time, China surpassed the U.S. as the country exhibiting the highest demand for luxury watches based on Internet searches. 

The WorldWatchReport measured results in five market segments: “high range,” “prestige,” “couture,” “women’s jewelry,” and “haute horlogerie” The largest growth in Internet search interest is in the “prestige” category, according to the survey. In addition, the best known international brands also received the most interest.

Out of the 65 brands analyzed, the top 10 most-searched luxury watch brands (Omega, Rolex, Longines, Cartier, Rado, Patek Philippe, Vacheron Constantin, IWC, Piaget, Chanel) represent nearly 80 percent of the search market, according to the survey.

The trend toward the big names also includes models. The top models searched this year remained unchanged compared to last year’s survey but now account for more than 50 percent of all online watch searches. They are: Omega “De Ville” (19.6%), Omega “Constellation” (13.30%) Cartier “Ballon Bleu” (6.60%), Chanel “J12” (5.9%), and Longines “Master” (5.10%).

After years of growth in the major coastal cities, such as Shanghai and Beijing, interest has grown in the booming and vast interior of the country. Again, the advantage tends to lean toward the big watch brands as they are the ones who are able to invest locally in these communities, according to the survey.

Style (such as “men’s watch” or “classic style”) followed by price are the most important factors in searching for luxury watches, according to the survey. Bondoux said part of this reason is because the Chinese are becoming more sophisticated in luxury goods. It’s also easier for Chinese consumers to search for style as many of the names for models have no Chinese translation.

“Their overall knowledge is increasing,” he said. “We know that gifting is a very important factor in luxury watches. If you are buying for someone you would not necessarily look for the price but search for generic name.”

The report can be downloaded directly at www.digital-luxury.com/chinawatches.

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B2C Jewelry Show in Eastern China Attracts Wealthy Buyers

About a thousand high-net-worth consumers attended the Treasures Hangzhou jewelry fair, held October 24 - 26 at the Hyatt Regency Hangzhou, according to Hong Kong based Asian exhibition and publishing company, UBM Asia. 

The jewelry show, held at the second-tier city of Hangzhou, about 150 km from Shanghai, was aimed at China’s "sophisticated jewelry consumers, private collectors and high-end jewelry retailers," UBM Asia said in a statement.

The jewelry show was UBM Asia’s first attempt at producing a business-to-consumer jewelry fair in China. The company said second-tier cities is where the jewelry market in China is showing strong potential.

“The rapid growth of China’s economy is producing a lot of high-end consumers here that are eager to enjoy a better lifestyle by snapping up luxury goods including exquisite jewelry,” said Joe Ho, UBM Asia’s deputy Jewellery Fairs manager for China.

The new show featured over 30 high-end jewelry exhibitors from five countries and regions (China, Sri Lanka, Switzerland, Hong Kong and Taiwan), who brought with them a variety of jewelry, diamonds, gemstones, lustrous pearls and jadeite jewelry.

Ho said promotion activities for the show included going directly to financial institutions and private clubs.

“We invited their VIP customers and organized tailor-made seminars on topics that cover the essentials in collecting and investing in high-end jewelry products, which they undoubtedly found attractive,” he said.

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PPR Acquires Chinese Fine Jewelry Brand Qeelin

On Wednesday in New York, François-Henri Pinault, chairman and CEO of PPR, told me he was in the market for more jewelry and watch brands for the luxury portion of the international holdings company’s portfolio. In particular he was looking at the fast-growing Asian market (which almost always means China). What he didn’t tell me was how close he was to making a deal. Sunday, the French company said it acquired a majority stake in the Chinese fine jewelry brand Qeelin. The transaction is expected to be finalized in January 2013.

Qeelin describes itself as a company that “embraces the mythical essence of China’s cultural heritage with the excellence of French craftsmanship” through contemporary fine jewelry design. It interprets mythical and superstitious Chinese symbols as contemporary jewels. Founded in 2004 by Chinese designer, Dennis Chan, and French entrepreneur, Guillaume Brochard, the brand operates 14 boutiques (seven in Mainland China, four in Hong Kong and three in Europe). Its jewelry can also be found in trendy multi-brand stores, such as Colette in Paris, and Restir in Tokyo.

Pinault, said Qeelin “shows strong growth potential in China and beyond. We thus have great ambitions for the brand and will make it benefit from our expertise and know-how, so that it can speed up its development.”

PPR operates brands in the luxury and “Sport & Lifestyle” markets specializing in apparel and accessories. Distributed in more than 120 countries, PPR generated revenues of €12.2 billion ($15.7 billion) in 2011. Its brands are Gucci, Bottega Veneta, Yves Saint Laurent, Alexander McQueen, Balenciaga, Brioni, Stella McCartney, Sergio Rossi, Boucheron, Girard-Perregaux, JeanRichard, Puma, Volcom, Cobra, Electric, Tretorn and Fnac.

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UBM Asia Provides Scholarships and Grants for Jewelry Education in China

UBM Asia recently held an award ceremony for 26 students who received scholarships and grant money to further their jewelry education.

The tradeshow organization provided renminbi 50,000 yuan ($8,000) for the first ever UBM Asia Scholarship and 30,000 yuan ($4,800) for the annual UBM Asia Grant.

The UBM Asia Scholarship awards were presented to 13 students by Wolfram Diener, Senior VP of UBM Asia. The UBM Asia Grant was presented to 13 underprivileged students by Meng Yuanbei, party secretary of Guangzhou Panyu Polytechnic.

“Through the collaboration with the Jewelry Institute of Guangzhou Panyu Polytechnic, we hope to provide more practical learning experience to the students, and groom them to become jewelry professionals with international mindedness, thereby contributing to the development of jewelry industry in China,” Diener said.

UBM Asia will arrange its management teams to give lectures at the Jewelry Institute, and invite teachers and students to its jewelry fairs. In addition, UBM Asia will launch a special incentive program. Students winning awards in international and national jewelry competitions will be fully funded to visit the world's largest jewelry fair, the September Hong Kong Jewellery and Gem Fair organized by UBM Asia.

Chow Tai Fook Set to Issue IPO that Could Raise $3 Billion

Hong Kong jewelry retailer Chow Tai Fook is looking to raise nearly $3 billion in an initial public offering that would be one of the largest in Hong Kong this year, according to published reports.

The company will offer 1.05 billion shares at HK$15 to HK$21 each, putting the total deal size at up to HK$22.05 billion ($2.83 billion), Reuters reports. In another report by The Standard in Hong Kong, the IPO could raise HK$23.34 ($2.99 billion). The IPO would value the company at about $27 billion.

The deal would surpass the $2.5 billion IPO by Milan-based Prada SpA in Hong Kong in June. Commodities company Glencore raised nearly $10 billion in a Hong Kong and London dual listing in May, with most of the funds raised in the London portion of the offering, Reuters reports.

Chow Tai Fook, controlled by billionaire New World Development Co. chairman Cheng Yu-tung, has about 1,500 stores, most of them in Greater China. The company also has shops in Singapore, Taiwan and Malaysia. About 80 stores are located in Hong Kong and the gambling center of Macau.

Chow Tai Fook will be shopping the IPO to large investors on Monday, with pricing slated for December 8, Reuters reports. The stock will trade under the symbol “1929,” the year the company was founded.

30% Increase in Customers at Treasures Hangzhou Jewelry Fair

The second edition of Treasures Hangzhou ended with a 30 percent increase in visitors, according to UBM Asia, who owns and operates the high-end jewelry show for consumers.

More than 1,200 high-net-worth consumers attended the three-day event at the Hyatt Regency Hangzhou, in eastern China near Shanghai.

“The increase in attendance numbers is certainly encouraging because it not only confirmed the strength of the high-end jewelry market in Eastern China, but also the healthy development of the Hangzhou Fair,” commented Joe Ho, UBM Asia’s Deputy Jewellery Fairs Manager for China.

Treasures Hangzhou is jointly organized by UBM China Holdings Limited, UBM China (Guangzhou) Co Ltd, the Jewelry Jade Industry Association of Zhejiang and Beijing San Arts Import & Export Co Ltd. 

The fair provides a platform where consumers can purchase jewelry and gemstones from suppliers from various parts of the world. It featured about 30 high-end jewelry exhibitors from five countries and regions, namely: China, Hong Kong region, Sri Lanka, Taiwan region and Thailand. The exhibitors brought with them jewelry, diamonds, gemstones, pearls and jadeite jewelry.

During the fair, professional seminars were to held on jadeite and high-end jewelry, which including jewelry investment opportunities.

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5% Increase in Q3 Gold Jewelry Demand

Gold jewelry demand for the third quarter of 2013 increased 5 percent year-over-year to 486.7 tons, the World Gold Council said Thursday, marking the best third quarter performance for the precious metal since 2010. 

In terms of value, gold being used for jewelry for the period fell by 15 percent year-over-year, due to a drop in the trading price of the precious metal, according to the WGC’s Gold Demand Trends report for the third quarter of 2013. Demand for the period was worth $20.8 billion, the lowest quarterly value since the third quarter of 2010.

Global growth for the period was led by high-karat gold jewelry purchases in Asia, the Middle East and the US, 

“An almost universal phenomenon in the third quarter was the increasing popularity of higher carat jewelry,” the WGC said in its report. “Across Asia, the Middle East and in the US, higher carat jewelry was noted as an area of particular growth as the increased investment properties associated with gold of higher purity came to the fore. The fact that jewelry retailers in a number of markets were increasingly stocking investment products (small bars and coins) provided further evidence of the greater blurring of the jewelry/investment distinction.”

Consumers in China generated 163.7 tons of jewelry demand in the third quarter, making it by far the largest single jewelry market. The country’s year-to-date, demand of 518 tons already equals the same amount for the full-year 2012.

“To some extent, exhaustion set in towards the end of Q3 after such a frenetic second quarter, but continued expansion of the retail network confirms that the trade sees prospects for growth,” the WGC said.

Increases were reported in 24k jewelry (known as “chuk kam”), which has a purity rating of 95.95 percent and in “four nines” gold (gold jewelry of 99.99% purity, compared with the typical 24-carat purity of 99.95%). The WGC explained that the former is unique to China and is most popular with consumers in lower tier markets and rural areas as an investment hedge.

Mainland Chinese consumers also attributed to a 28 percent increase in gold jewelry consumption in Hong Kong to 7.5 tons.

In the US, the WGC noted that “demand was a key development.” Gold jewelry demand for the third quarter rose 14 percent year-over-year to 43.4 million tons.

With the exception of fourth quarter demand (driven by holiday sales), the third quarter was the first quarter in four years in which gross jewelry demand exceeded recycling—creating net positive jewelry demand,” the WGC said. “Since Q3 2009, gross new quarterly jewelry demand had been exceeded by the recycling of old gold jewelry as distress selling took off during the economic downturn,” WGC said. “Increasingly positive sentiment among US consumers during the third quarter reversed this trend.”

The report also notes a shift towards 18k jewelry from 14k.

“Given recent developments in the US, consumer sentiment has taken a hit early in the fourth quarter, but the seasonal impact, together with prices holding below US$1,400/oz, suggests a certain amount of resilience,” the WGC said.

India, one of the world’s largest markets for gold jewelry, saw demand drop by 23 percent year-over-year to 104.7 tons due to import restrictions imposed by the government. “Demand for gold jewelry among Indian consumers remains strong, but reduced supply has prevented this demand from being fully realized,” the WGC said.

"The smaller Asian markets had robust growth for the period, with the exception of South Korea where weak consumer sentiment and a sluggish domestic economy dampened demand," the WGC said. "Across the rest of the region, there was a trend for higher karat jewelry pieces of relatively simple design as consumers across the region took advantage of gold’s increased affordability."

Gold jewelry demand in the Middle East increased 9 percent to 51.2 million tons, due to lower prices across the region, the WGC said. The “unsurprising” exception was Egypt.

“The emphasis on 22-karat gold at the expense of 21- and 18-carat diamond-set jewelry suggests demand was stronger among domestic consumers relative to western tourists.”

The third quarter in Turkey, which is traditionally strong, saw year-over-year demand increase 14 percent. In value terms, demand was virtually flat, due to a 12 percent decline in the local currency price of the precious metal.

Russia’s growing middle class, armed with greater disposable income, helped generate a 7 percent year-over-year growth in jewelry demand.

“European markets were again the exceptions to the more positive global picture, with both UK (-14%) and Italy (-7%) posting year-over-year declines due to “economic concerns,” WGC said.

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Q3 Global Gold Jewelry Demand Down 4%, US Demand Up 4%; India Demand Surges 60%

Global gold jewelry demand fell 4 percent year-over-year to 534.2 tons for the third quarter of 2014, according to the World Gold Council in its Gold Demand trend report released Thursday. However, the decline comes against an unusually robust third quarter of 2013, which experienced the strongest growth for jewelry demand since 2008. 

“Longer term analysis shows a market in good health. Q3 demand was marginally stronger than the five-year quarterly average of 527.6 tons, while year-to-date volumes continue to extend the broad uptrend from the low seen in 2009,” the WGC said in its report.

Two markets did shine, the US, with a 4 percent rise that helped lift manufacturing outputs in several gold jewelry producing countries; and India, which surged 60 percent. China and Hong Kong, meanwhile, experienced steep declines in gold jewelry demand. 

US ‘Revival’
The WGC’s report said the economic recovery and a downward trend in the price of gold created a “revival” of gold jewelry demand in the US that has had a “ripple effect” around the world.

“The US sucked in greater volumes of gold jewelry imports from markets as diverse as India, China, Italy, Mexico and Oman, according to the report. “Third quarter growth in the US market was very much an extension of the trend that has prevailed since early last year. Mounting conviction in the economic recovery has boosted sentiment and whetted consumers’ appetite for discretionary purchases. Gold jewelry has been a clear beneficiary: improving sales of higher carat and non-wedding related items helped demand to the highest Q3 total since 2009.”

The report added, “Lower gold prices have aided the recovery of US demand as retailers are more easily able to meet key price points without crimping margins. Or, similarly, to increase karatage while maintaining price levels. This has enticed some mass- market retailers back into the gold jewelry sector.”

India
The market that had the strongest third quarter by far was India, which reported a 60 percent year-over-year increase to nearly 183 tons—the second highest third quarter on record, the WGC said. 

“The third quarter of 2013 was decidedly weak as the introduction of complicated new measures to restrict gold imports and the subsequent sharp rise in local prices knocked demand,” the WGC said in its report. “But this quarter, other more positive forces were also at play.”

Among those forces is the confidence in the new Indian government led by Prime Minister Narendra Modi, a drop in the price of gold and robust buying during the Diwali festival season. 

“Although Indian consumers are typically wary of buying gold while the price is still moving, preferring to wait until it settles at a more stable level, the opportunity to buy at cheaper prices proved, for some, hard to resist.”

China
Meanwhile, China experienced a 39 percent year-over-year decline to 147.1 tons in gold jewelry demand. Hong Kong (where consumers from the mainland China account for most of the demand) fell 31 percent to 9 tons. The WGC said much of this decline is in comparison to the rapid expansion throughout 2013 and that gold jewelry sales are normalizing.

“18-karat (K-gold) jewelry was relatively more robust than the 24-karat (chuk kam) segment,” the WGC said. “The government’s anti-corruption drive may have contributed to this trend.”

Other Markets:
* Indonesia saw third quarter demand fall 16 percent to 9.7 tons partially in response to strength of demand last year. However, the WGC said “equally important was the Presidential election in July, which created a degree of political instability and discouraged spending on gold jewelry.” 

* Third quarter jewelry demand in Turkey fell 18 percent, year-over-year, to 19.2 tons—the lowest third quarter on record, the WGC said. “Consumers were unnerved by domestic political turmoil; worrying economic signals; and escalating Syrian violence in close proximity to the Turkish border. The ban on paying for gold jewelry by credit card installments continued to hang over the market, although this restriction was partially repealed in October.”

* Demand in the Middle East fell 14 percent year-over-year to 36 tons. Demand for gold jewelry across the region suffered from the comparison with strong demand last year, the WGC said, leading to a trend towards lower-karat and gem-set jewelry.

* Jewelry demand in the UK increased 18 percent to 4.6 tons, the fifth consecutive year-over-year rise.

* Gold jewelry demand in Russia edged up 1 percent year-over-year to 18.6 tons, despite a rise in the average domestic gold price due to a weaker rouble, the WGC said. 

* Demand in Italy fell 4 percent year-over-year to 2.7 tons. 

The Gold Demand Trends report also tracks gold for investment and technology purposes. In the third quarter overall demand was “subdued,’ the WGC said, falling by 2 percent to 929.3 tons. The price was relatively stable for the period. 

“Quarterly volatility in the US$ gold price was among the lowest levels seen over the past two decades,” WGC said. “This was both a cause and effect of the benign demand environment. Investor behavior in particular contributed to this circularity: the lack of a clear price signal caused investors to hold back from buying gold, which in turn dampened down price moves.”

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Tiffany Looks to China for Growth

Tiffany & Co. Shanghai Store.  Photo: Cal Otero

Luxury retailer jeweler Tiffany & Co. said it will open more stores in China than anywhere else in the world over the next three years.

“China will rapidly become the place where we will have the greatest number of new stores. Within the next three years, the number will stand between 25 and 30,” Michael J. Kowalski, chairman of Tiffany & Co, told China Daily.

The New York-based company plans to open four stores in China during the current fiscal year, which ends January 2011 and will invest more heavily in the country’s second and third tier cities, Kowalski reportedly said.

Expansion in China is being driven by robust sales growth in the market, Kowalski said. In the second quarter of 2010, Tiffany witnessed its fastest growth in China, with a 27 percent increase, year-over-year. He expects sales in the Asia-Pacific region, led by China, to increase by more than 20 percent. He said China will surpass the United States as the largest jewelry market in the world over the next five to 10 years.

The jeweler currently has 12 retail stores and boutiques in China, including three in Beijing, four in Shanghai and one in Chengdu. Its store at the China World Shopping Mall in Beijing opens this month, with another in Kunming opening in December.

To attract as many customers as possible in its fastest-growing market, Tiffany unveiled its 2011 jewels and diamonds collections in Beijing on October 22—the first time the brand has unveiled a major new collection outside the U.S.

“We aim to let Chinese customers become more familiar with the connotation and history of our brand through this activity, which brings Tiffany closer to its Chinese buyers,” Kowalski reportedly said.

In contrast to other luxury brands, whose stores are operated by their Chinese distributors, all of Tiffany's boutiques in China are owned directly by the company, and that will continue to be the case, Kowalski reportedly told the newspaper. Currently, 97 percent of Tiffany stores around the world are operated directly by the company.

9th China International Gold, Jewellery & Gem Fair – Shanghai opens Nov. 8

The key fine jewelry trade fair in Eastern China, the 9th edition of the China International Gold, Jewellery & Gem Fair – Shanghai, will be held from Nov. 8 – 11 at the Shanghai World Expo Exhibition and Convention Center.

More than 300 exhibitors from 17 countries and regions will showcase contemporary jewelry, classic bestsellers and up-and-coming trends in 17,000 square meters of exhibition space.

“The trickle-down effect from China’s booming economy has contributed to the robust growth in jewelry consumption in China,” said officials representing UBM Asia, which owns and operates the tradeshow.

Retail sales of consumer goods in Shanghai totaled RMB388 billion ($63.63 billion) in the first half of 2013, according to the Shanghai government, and sales during that period increased by 60 percent.

With its November schedule, the Shanghai fair provides a last-minute opportunity for buyers to replenish inventories for the Christmas and Chinese New Year seasons.

The fair will have several pavilions and special product displays. They include:

* Premier Pavilion, which features world-renowned high-end jewelry retailers;

* Taiwan Pavilion with 30 exhibitors, featuring with its translucent jade and jadeite jewelry;

* Sri Lanka and Thailand Pavilions with 40 exhibitors featuring colored gemstones;

* The Australia Pavilion will make its debut at the Fair featuring its national gem: opal. It will include the National Opal Collection with its display of rare opal fossils and specimens from the dinosaur age.

Translation services will be provided on site for free, upon request. An on-site professional product testing service to examine the quality of products. In addition, a free shuttle bus service will be provided to take visitors from Exit 4 of “Yaohua Road” Metro Station to the fair venue.

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China Leads World in Luxury Attitude and Spending

Affluent consumers in the U.S. and much of the world are pulling back on their spending and attitude toward luxury. However, in China, affluent consumers are choosing luxury in every aspect of the lives, according to a seven-country survey of households earning at least $150,000.

About 57 percent of wealthy Chinese shoppers say that the economic environment has prompted them to spend more on luxury in the past year, and 50 percent plan to boost spending in the next 12 months, according to the survey by the Luxury Institute, a New York-based consulting firm. Restraint is more evident in the U.S., where 10 percent of the wealthy stepped up luxury spending in the past year and 6 percent plan to spend more in the next 12 months. U.S. consumers are twice as likely as those in China (32% vs. 16%) to have trimmed luxury spending last year.

Meanwhile, in Europe the currency crisis did not stop 14 percent of wealthy shoppers in France and 17 percent of those in Italy from boosting luxury spending this year, according to the survey, which represents the top 10 percent in household income. However, 38 percent of high-income shoppers in both countries plan to cut back in the coming year.

In Japan, the March earthquake and tsunami dampened enthusiasm for luxury shopping, with 7 percent of wealthy Japanese consumers reporting higher levels of spending and 34 percent cutting back.

The most widespread retrenchment comes in the U.K., where 38 percent of wealthy shoppers have pared back luxury spending, and 41 percent plan reductions in coming months. Germany shows more stability compared to other rich nations: Only 17 percent of wealthy German consumers say that they are spending less on luxury now and 29 percent plan to trim luxuries in the coming year.

Across all seven markets, luxury travel is the category in which most wealthy consumers anticipate stepping up spending, with China far and away showing the strongest appetite, according to the survey.

In China, 58 percent of the wealthy plan to spend more on leisure travel, followed by 28 percent in Italy and 22 percent in Germany who say the same. A total of 16 percent of wealthy consumers in the U.K., and 18 percent in the U.S., Japan, France and Italy, plan to spend more on travel.

Spending plans across the board in each of the 26 luxury categories were substantially higher in China than in Europe and the U.S., with some of the biggest disparities showing in apparel, watches, jewelry and gifts where Chinese consumers were six to seven times more likely to boost spending, according to the survey. Also strong in China are luxury auto sales, with 43 percent of the wealthy planning to spend more on cars, compared to 11 percent in the U.S., U.K. and Japan.

Attitudes towards luxury are far more positive in China than they are in other rich nations, with 78 percent of those surveyed saying that luxury goods and services are more important in today's economy. The reverse is true in the U.S. where 80 percent of wealthy shoppers say that luxury has become less important.

More than 75 percent of Chinese say that luxury expenditures are prudent purchases, while 78 percent of wealthy consumers in the U.S., U.K., and Germany find them to be an extravagance. Similarly, 78 percent of China's wealthy shoppers say that luxury goods and services are an important part of their lifestyle in today's economy, compared to 25 percent in U.S. and Germany and 20 percent in France who agree that luxury remains central in their lives.

Wealthy Chinese consumers are also highly inclined to place a premium on exclusivity and quality, and discounting turns them off. More than half of wealthy Chinese and 49 percent of Japanese say that brands that discount their merchandise are not truly luxury brands. In the U.S. and Germany, one-third of wealthy consumers share the same dim view of discounting, as do 40 percent of wealthy shoppers in the U.K, Italy and France. Despite the dour attitude towards discounting, 56 percent of wealthy Chinese say that discounting has increased their overall spending on luxury and 50 percent plan to spend more on discounted luxury items in the coming months.

Hublot Plans Big Push into China

Luxury Swiss watch brand Hublot, which recently opened a flagship store in Singapore, is going after the China market in a big way.

The brand, owned by LVMH Moet Hennessy Louis Vuitton SA, says it plans to have 15 stores in the country by next year, Bloomberg News reports. Jean-Claude Biver, Hublot CEO, told the news service that China offers 30 years of growth.

“It’s such a huge country that I see no limit for luxury brands,” 62-year-old Biver told Bloomberg. “I might die in 30 years, so I see no limit.”

September Hong Kong Jewelry Fair is a Global Event and a Gateway to China

Registration during the opening day of the 2013 September Hong Kong Jewellery & Gem Fair.

The world’s largest jewelry fair is set to begin in two weeks and its organizers are still billing it as the entryway to the fastest growing jewelry market in the world: China. 

The September Hong Kong Jewellery & Gem Fair will be held from September 15 – 19 at the AsiaWorld-Expo near Hong Kong International Airport; and September 17 – 21 at the at the Hong Kong Convention and Exhibition Centre in the heart of the city. 

AWE will display jewelry raw materials from over 1,700 exhibitors from around the world, while HKCEC will showcase fine finished jewelry from more than 1,900 exhibitors.

China Market Research Reports reveals that 2013 jewelry sales in Mainland China were approximately $75.8 billion, equivalent to 41.2 percent of total global consumption. UBM Asia, which organizes the fair, says that Hong Kong's location and its duty-free status makes it the “ideal gateway to China and the rest of the Asia." It's a claim UBM Asia has made since I started attending the event more than 10 years ago and it's even more true now than it was back then.

“The Fair occupies 135,000 square meters of exhibition space to accommodate more than 3,680 exhibitors from 51 countries and regions,” said Sunny Chan, Deputy Fair Manager, Jewellery Fairs, UBM Asia. “We expect to welcome more than 52,000 visitors from around the world.” 

New attractions at the 32nd fair include exhibitors from Egypt, Kazakhstan, Norway and Tahiti. For the first time, coral exhibitors from Japan will exhibit under the banner of Japan Coral. Together with coral exhibitors from Taiwan and Italy, there are more than 60 coral exhibitors at AsiaWorld-Expo. 

In addition, the fair has 22 dedicated pavilions: Antwerp, Brazil, China, Columbia, France, Germany, Hong Kong, India, Indonesia, Israel, Italy, Japan, Korea, Poland, Singapore, Spain, Sri Lanka, Taiwan, Thailand, Turkey, the United States, and the International Colored Gemstone Association, UBM Asia said. This year's “Design Arena” has increased by 40 percent in terms of exhibition space and will relocate to the Chancellor Room and Mezzanine 4 of HKCEC. Also, the International Premier Pavilion is bigger by 8.6 percent in terms of exhibition area.

This outpouring of exhibitors and attendees solidifies its reputation as a truly global event.

The Alrosa Group, Russia’s leading diamond company and the world’s biggest diamond miner by volume, will again host a diamond auction, along with the Paspaley Pearl Auction. In addition, the fair will again feature the world’s largest diamond pavilion, Asia’s biggest gemstone marketplace and the biggest display of Hong Kong jewelry in the world.

Visitor pre-registration is available at this link  until 1st September. The fair mobile app is available for download at this link. More details of special events are available by at this link. 

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Tiffany Q2 Earnings Up 16%, Global Sales Up 4%

Exceptional growth in China along with improvements in operating margins led to a better-than-expected 16 percent net earnings increase to $107 million, or $0.83 per diluted share, in the second quarter for Tiffany & Co.

Worldwide net sales for the New York-based luxury jeweler rose 4 percent to $926 million. On a constant-exchange-rate basis, worldwide net sales rose 8 percent, and comparable store sales rose 5 percent due to sales growth in most regions.

As a result, the company raised its year-end outlook to $3.50-$3.60 per diluted share, from $3.43-$3.53 per diluted share in its first quarter outlook. It also plans to continue its worldwide expansion of stores unabated.

In addition to regional growth, product categories also performed well, according to Tiffany’s second-quarter earnings report released Tuesday. The results were dampened a bit by lower-than-expected sales growth in the US and the drastic decline of the Japanese Yen.

Mark L. Aaron, Tiffany VP-Investor Relations, said in a conference call Tuesday that growth in fine jewelry and statement jewelry were extremely strong and outperformed modest growth in fashion jewelry. He added that diamond jewelry, led by colored diamonds, did well particularly well for the period.

Gross margin (gross profit as a percentage of net sales) increased to 57.5 percent in the second quarter from 56.3 percent a year ago. Aaron said this was the result of diminishing product cost pressure and price increases taken earlier in the year. This help lead to a “better-than-expected” improvement in operating margin.

“We were pleased with the results of our efforts to improve gross margin which, combined with well-controlled expenses, yielded a solid increase in operating margin,” added Michael J. Kowalski, Tiffany chairman and CEO.

Sales by region are as follows:

* In the Americas, total sales increased 2 percent to $444 million in the second quarter. Comparable store sales were unchanged in the quarter, led by growth in Tiffany’s New York flagship store sales. Aaron noted that sales in the US were lower than expected and were mixed throughout the country with no discernible pattern.

* Total sales in the Asia-Pacific region rose 20 percent to $208 million in the second quarter. On a constant-exchange-rate basis, total sales also rose 20 percent and comparable store sales increased 13 percent, “led by especially strong sales growth in Greater China,” the company said in its report.

* Aaron focused a great deal of time on Japan where the company operates 54 stores. The negative translation effect from a substantially weaker yen caused total sales to decline 14 percent to $136 million in the second quarter. However, he noted that on a constant-exchange-rate basis, total sales increased 7 percent in the second quarter, due to comparable store sales growth of 8 percent with strong growth in engagement and higher-end jewelry categories.

* Total sales in Europe rose 11 percent to $111 million in the second quarter. On a constant-exchange-rate basis, total sales rose 10 percent and comparable store sales rose 7 percent due to sales growth in the United Kingdom and most of continental Europe.

* Sales classified as “Other” sales increased 33 percent to $26 million in the second quarter, primarily reflecting the conversion in July 2012 of five Tiffany & Co. stores in the United Arab Emirates from independently-operated to company-operated. The company said it expected to increase its presence in the Middle East.

Tiffany opened three stores in the second quarter, including its ninth in Hong Kong store. Other openings were in, in Verona, Italy and in Villahermosa, Mexico. The company closed a store in Tokyo, due to the mall the store was in closing for long-term renovations, Aaron said.

The company in the second quarter operated 277 stores (116 in the Americas, 67 in Asia-Pacific, 54 in Japan, 35 in Europe and five in the U.A.E.), versus 260 stores (106 in the Americas, 61 in Asia-Pacific, 55 in Japan and 33 in Europe and five in the U.A.E.) a year ago.

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Global Gold Jewelry demand Fell 30% While Sales in the US and UK Improve

Yellow and white gold bracelets by Italian jewelry brand, Antonini. There was increase in Italian gold jewelry exports for the second quarter of 2014. 

Plummeting gold jewelry sales in India and China led to a 30 percent year-over-year drop in gold jewelry demand for the second quarter of 2014, the World Gold Council said Thursday. The loss was slightly offset by increases in consumer demand in the US and UK. 

Gold jewelry demand fell to 509.6 tons in the second quarter of 2014 compared with 726.7 tons in the same period of 2012, the WGC said in its quarterly report, “Gold Demand Trends.” Officials for the gold industry market development organization said the decline was expected due to the strength of 2013 demand and a natural annual weak period for such demand. In addition, the organization (which also tracks gold demand in investment, among central banks and for technology uses) notes that jewelry demand historically has accounted for more than half of global gold demand and the second quarter of 2014 was no different at 53 percent. 

“In what is traditionally a quiet quarter for gold jewelry demand, Q2 2014, was unsurprisingly lower,” said Marcus Grubb, WGC managing director of Investment Strategy, said in a video addressing the report. “However, jewelry has been extending its broad upward trend from the base established in the depths of the financial crisis in early 2009.”

Nearly all Asian and Middle-Eastern countries experienced double digit declines in demand, while western markets either remained flat or fared better, according to the report. The exception is Italy, where consumer demand was down 8 percent. However, the country, known as a gold jewelry manufacturing hub, saw gold jewelry exports improve due to increased demand in the US and other key markets.

This decline in gold jewelry demand helped to influence a 16 percent drop in overall gold demand (investment, central banks and technology) to 963.8 tons, which the WGC described as “not surprising … given the stark contrast in conditions in the global gold market between the two time periods.” 

Grubb added, “Global gold market continues to recalibrate in 2014 following an exceptional 2013 for gold buying.” 

By country, China was the market most affected by the comparison with the second quarter of 2013, WGC said. Gold jewelry demand fell 45 percent to 143.4 tons. Hong Kong also experienced a similar decline (52 percent to 9.1 tons) due to a drop in mainland China consumers.

“The second quarter began as the first had ended, with consumers adopting a more cautious, considered and ‘occasion driven’ approach to gold jewelry buying,” according to the report. 

Grubb added, “Price sensitive consumers … held back from purchasing more due to uncertainty around the future direction of the gold price and the fact that purchases have been made in 2013 instead.” 

In India, jewelry demand fell by 18 percent to 154.5 tons. The WGC said holiday and wedding purchases remained steady but the drop was primarily because of the recent general election that culminated in the victory of Narendra Damodardas Modi who took office as India’s 15th prime minister in May. High value purchases were restricted by the previous government in the run up to the election, the WGC explained. Now consumers are waiting to see whether Modi will remove those restrictions.

“Consumers held back from buying on the expectation that restrictions on gold would be relaxed by the new government,” Grubb said. “No substantial changes have been made by the Indian government to date.”

In the Middle East gold demand saw a 25 percent decline to 47 tons. The WGC says the escalation of violence in Iraq had a “deleterious impact” on demand across the region. In addition, demand slowed ahead of Ramadan. “Nevertheless, the region as a whole remains relatively healthy, particularly as non-resident Indians provide a steady source of demand for the 22k segment.” 

While the east and Middle East markets are in decline, western markets are continuing to rebound from the 2008-09 recession, with the most notable increases in the US and UK. 

Gold jewelry demand in the US for the second quarter increased 15 percent to 26.1 tons as the country is taking in more imports from India, China and Italy. It was the country’s fifth consecutive quarter of year-over-year growth. In the UK, demand increased 21 percent to 3.6 tons. 

Gold jewelry demand in other key markets is as follows:

* In Turkey, demand fell 20 percent year-over-year due to a clampdown on credit card purchases and ongoing political turmoil, WGC said. The lower end market took the brunt of the decline while larger, more established brands were “relatively resilient.” 

* Thailand experienced a 60 percent decline in demand due to recent political instability and high comparisons to the second quarter of 2013, the WGC said.

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Luxury Brands Still Bet on China

Hublot Shanghai boutique.

Despite the recent reports of an economic slowdown in China, luxury companies continue to build their extravagant retail spaces for the growing mass of wealthy and middle class shoppers.

The latest example of this is Swiss luxury watch brand, Hublot, which opened its second boutique in Shanghai Tuesday. Located on Nanjing West Road, an area renowned for its concentration of top luxury brands, the boutique features the black that defines the Hublot brand along with leather furnishings, glass and metal fixtures, and high-tech details that create a contemporary space.

The boutique is the fourth in China for Hublot along with four other points of sale in Beijing, Shanghai, Dalian, Shenyang and Wuhan. The brand said it plans to have 15 outlets in China “within a short time frame.”

A month earlier, the German luxury brand, Montblanc, opened a four-story flagship in Beijing to house its luxury writing instruments, timepieces, fine jewelry and leather goods with an extravagant party attended by 1,000 persons, including Jessica Alba, Naomi Watts, Nicolas Cage and Amber Heard.

It is the largest store by the brand and includes interactive displays throughout the store that focuses on the company’s heritage.

So while investors take a pause, luxury brands continue to bet that China will continue on its road to prosperity.

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Eastern China Jewelry Event Targets New Luxury Consumers

Hangzhou—the capital city and political, economic and cultural center of Zhejiang province—will host, Treasures Hangzhou, a new jewelry event in Eastern China October 24 to 26 at the Hyatt Regency Hangzhou.

The event will give the province’s jewelry consumers, private collectors and high-end jewelry retailers the opportunity to purchase jewelry, diamonds, gemstones, pearls and jadeite from international jewelry designers and manufacturers. Among these exhibitors are Hini Star Ltd, Golden Dynasty (HK) Ltd, Shenzhen Color And Diamond Jewellery Co Ltd, SYM Jewellery Co Ltd and Houlang Jewellery (Shanghai) Co Ltd.

The show is jointly organized by UBM China, the International Colored Gemstone Association and the Jewelry Jade Industry Association of Zhejiang.

Hangzhou, located about 100 miles southwest of Shanghai, is one of China’s second-tier cities whose consumer market is growing. Like in the rest of China, there are a growing number of high-end consumers in Hangzhou eager to enjoy a better lifestyle. According to the 2010-2011 World Luxury Association survey, Hangzhou ranks first among China’s second-and third-tier cities as having the highest consumption of high-end goods apart from Beijing, Shanghai and Guangzhou. A report released by Goldman Sachs showed that over the next five years, second-and third-tier cities including Hangzhou, Wenzhou and Ningbo, will account for much China’s high-end consumer market.

Nationwide, total consumption of gems and jewelry reached 70 billion Chinese yuan renminbi ($11 billion) in 2010. Of this figure, diamonds account for more than $1.1 billion, making China potentially the world’s largest diamond consumer market and the world’s second largest diamond processing country, according to the World Luxury Association. Jade also accounts for a large part of the total figure.

Treasures Hangzhou will be held concurrently with the “Liang Zhu Bei” Zhejiang Jade Carving Exhibition, also at the Hyatt Regency Hangzhou. This prominent carving art event in attracts art lovers and collectors throughout China, including high-net-worth individuals. During the Fair, a series of professional seminars will be held to give visitors the chance to enrich their knowledge of collecting and investing in high-end jewelry.

Double-Digit Decline in U.S. Gold Jewelry Demand

The high price of gold continues to have a detrimental impact on the worldwide jewelry market as demand in this sector for the precious metal fell by 6 percent, year-over-year, in the first quarter of 2012, the World Gold Council said Thursday. The value of jewelry demand, meanwhile, grew by 14 percent to $28.3 billion.

Gold jewelry demand was weaker in all but six countries and clearly reflects the year-over-year 22 percent increase in the average gold price of gold to 1,690.57, according to the WGC Gold Demand Trend report for the first quarter of 2012.

In the U.S., demand fell 10 percent to 17.6 tons. In addition to the high price of the precious metal, the report blames high gas prices and cautious consumers. In value terms, gold increased by 10 percent to $958.2 million.

In Italy, demand slid 14 percent to 3.5 tons “as the negative economic environment took its toll,” according to the report. In the U.K., demand dropped 4 percent to 3 tons.

India, the world’s largest consumer of gold and gold jewelry, was largely responsible for the worldwide decline, according to the report. An unexpected substantial increase in the import tax on gold and the introduction of an excise duty on gold jewelry resulted in a three-week countrywide strike among jewelers until the government agreed to end the excise duty. A weaker rupee also added to the decline.

Meanwhile, China dominated the jewelry market as demand increased 8 percent to 156.6 tons in the first quarter. China accounted for 30 percent of all demand for the period, making it the largest gold jewelry market for the third consecutive quarter.

Demand in Russia was also robust with a 28 percent increase in the first quarter to 20.4 tons, attributed partly to stock building among the trade. However, the repot notes that “historically low inflation, GDP growth, improving consumer confidence and real wage gold,” contributed greatly to the gains. “Gold remains the most popular metal of choice among Russian jewelry consumers.”

Overall, global gold demand in the first quarter fell by 5 percent to 1,097.6 tons, the WGC reports. “This decrease was largely to be expected given the introduction of import taxes in India and high gold prices,” the report states. “Demand for the quarter was underpinned by increased demand in China, continued central bank purchasing and inflows into exchange-traded funds.”

Gold demand value for the period increased 16 percent to $59.7 billion. Gold demand includes its use in jewelry, technology, investment and official sector institutions (such as world banks).

“China and India have seen continuing economic growth and whilst China’s economy is expected to slow, it will nonetheless surpass the rates of growth in the West,” said Marcus Grubb, managing director, Investment at the World Gold Council. “As we previously forecast it is likely China will become the largest source of demand for gold in 2012.”

U.S. Sees First Increase in Gold Jewelry Demand in 7 Years

Gold jewelry making a comeback.

Gold jewelry demand in the U.S. for the first quarter of 2013 grew by more than 5% year-over-year to reach a value of $986 million. This is the first increase in demand since the third quarter of 2005, the World Gold Council said Thursday.

The lower-end of the U.S. jewelry market rebounded considerably, the WGC in its quarterly Gold Demand Trends report, adding that it’s “a further positive sign of recovery in the U.S. economy, coinciding with a correction in the gold price over the course of the quarter.”

Meanwhile, the amount of gold used for the fabrication of jewelry worldwide increased by 12% year-over-year to 551 metric tons for the first quarter of 2013, worth a record value of $28.9 billion, according to the report.

The dramatic decline in the value of gold has led to an increase in demand, the WGC said in the report. However, that demand is largely limited to India and China, who continue to distance themselves from the rest of the world in their passion for gold jewelry. The two countries combined now account for 62% of gold jewelry demand, according to the report. The U.S. for the first time in more seven years saw a year-over-year increase in gold jewelry demand.

Other highlights of the report include:

* Gold jewelry demand surged by 19% in China to a record level, led by Chinese New Year gifting in January and a rebound in consumer sentiment, WGC said. This is despite new in leadership in China calling for less conspicuous consumption. Demand saw the largest increase in 24k gold jewelry, although demand for 18k gold jewelry also increased.

* In India, year-over-year demand grew by 15% and came just short of beating the fourth quarter 2012 record. However, that gain was compared a very soft first quarter of 2012.

* Meanwhile, gold jewelry demand in Italy and the U.K. fell dramatically, 12% and 7%, respectively, as difficult economic continues continue to lead consumers to purchase lower-karat gold and silver jewelry.

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Enzo Targets Underserved $10 Billion Wedding Market

Chinese jewelry retailer Enzo launched the  “All About Love” jewelry collection that targets China's vast wedding market. The collection, unveiled at Enzo's 20,000 square foot flagship store in Macau, features colored gemstones and diamond products that enable consumers to create personalized jewelry sets for engagements, weddings and anniversaries. 
(Caption: Asian celebrities Aarif Lee and Janice Man model 'AllAboutLove' collection at its unveiling)

The collection is Enzo's first comprehensive line targeted specifically at the wedding market. The retailer says it estimates total sales in China to be about $10 billion, based on an average retail price of $1,000 and 10 million weddings each year. This is just for wedding rings. The potential markets for engagement and anniversary rings are comparably large.

“Most Chinese consumers up to now have had limited choices in wedding, engagement and anniversary items at local jewelers,” said Yu Chuan Yih, chairman and CEO of Enzo's parent company, LJ International. “We think the consumer is ready for this fresh western retailing concept, and Enzo is in an ideal position to profit from it with a full range of offerings not only in wedding rings, but in engagement and anniversary jewelry as well. For these reasons we expect All About Love to be a big winner for both Enzo and the consumer.”

All About Love provides a selection of colored gemstones and a collection of diamond products that, together, make up a comprehensive wedding collection. Customers can mix and match a full range of engagement, wedding and anniversary jewelry pieces to create their personalized wedding jewelry sets of engagement rings and wedding bands made of colored gemstones and diamonds.

LJ International Inc. is engaged in the designing, branding, marketing and distribution of a full range of jewelry. It has built its global business on a vertical integration strategy. As a wholesaler, it distributes to fine jewelers, department stores, national jewelry chains and electronic and specialty retailers throughout North America and Western Europe. Its product lines incorporate all major categories, including earrings, necklaces, pendants, rings and bracelets.