The jewelry market in China is the biggest of any such market in the world. Not only is it the biggest but it also accounts for an estimated 30% of the global demand for jewelry. This translates into an annual revenue in excess of 80 billion dollars; a significant part of Chinas GDP. While this is a great statistic on the surface, there are still several untapped growth potentials in the biggest jewelry market in the world.
Despite the size and performance of the Chinese jewelry market, it has seen stagnation over the past few years. The market growth finally dropped in 2013 and was in a decline until 2017 when the demand for jewelry started to rise again. This phenomenon deserves a more critical look to discover the problems that caused the stagnation and therefore discover ways to increase the growth of Chinas jewelry market.
A Quick Overview of Chinas Jewelry Market
The Chinese jewelry market can be divided into three broad categories; Metal jewelry; precious stones; and others.
- The metal jewelry category is made up of jewelry made from precious metals like gold, silver, platinum. It also includes jewelry made non-precious metals like aluminum and copper.
- The precious stones category deals with gemstones like diamond, pearl, jade, ruby, sapphire, crystal and others. This market category is gaining more popularity due to the value placed on them by the public, they also make for good pieces when inlayed or used in decorations.
- Jewelry included in the ‘others’ are exotic vessels and materials made from ivory and clay.
Of these three categories, the most promising is the precious metals segment; accounting for 50% of sales in the market. Gold is incredibly popular among Chinese jewelry consumers; due in part to its strong spiritual and financial symbolism in society. However, the major reason why gold is seeing a rise in demand is its investment potential; people buy it so they can get a good return on investment when they decide to sell it later on.
One peculiar feature of Chinas jewelry market is that it does not follow any conventional standards; rules and standards that apply in other parts of the world dont apply in the Chinese jewelry market. The implication of this is; new ideas can be implemented; bringing forth several innovative ways of trading in the market. Innovation as we know; drives any economy to greater heights and this holds true in the Chinese jewelry market.
Behavior and Key Features of the Market
- Consumer behavior
Consumer behavior in the Chinese jewelry market is interesting to observe. The majority of the demand in the market is fashion-driven. It is believed that jewelry is used by fashionable people of a certain social class. This has led to the demand for more exotic and individual or exclusive products. This behavior is seen as a diversion from the belief that Chinese society is more of a collective than it is individualistic. Younger consumers are now opting for individual products to distinguish themselves from their peers. This trend is what is driving the demand for precious metal jewelry in the form of necklaces, bracelets, and rings in the Chinese jewelry market.
One other notable trend is the difference in consumer preferences in different regions of the country. People in tier 1 cities prefer to buy more precious stone jewelry; leading to higher demand for diamond and platinum than in other cities. Lower-tier cities, however, sell more gold jewelry as people in those regions view them as investment opportunities.
- Competitive Nature of the Market
The consumer behavior in different regions of the country has also influenced the competition between the jewelers in those regions. It is important to note that there is fiercer competition in tier 1 cities to sell diamonds and platinum; leading to unhealthy price competitions to attract more customers. On the other hand, stores in lower-tier cities compete fiercely to sell more gold products. But since the demand has been topsy-turvy over the years, it has led to the opening of more stores all over the place with lesser sales.
The main reason for this is the presence of foreign or international jewelry companies in the market. These companies charge much higher prices for their brands and this has seen them competing directly with the local jewelers. Jewelry consumers in China value the history and emotional connection to the brands. Local brands dont have as much history as foreign brands leading to a weaker overall market appeal.
- Complex Distribution Network
Another feature of Chinas jewelry market is the complexity of the distribution networks. The available channels available to consumers currently include jewelry shops; chain stores; supermarkets; and specialty stores.
All these channels all work only when the consumer visits the physical store, and according to a study, Chinese millennials would rather spend their money on tech gadgets and fashion items than buy jewelry. The difference between these different commodities; jewelry and tech gadgets is that the latter can be bought online. So, online channels are yet to be fully explored in China’s jewelry market.
So, what are the Potentials for Growth in the Chinese Jewelry Market?
There are different aspects that could be improved upon to further boost the Chinese jewelry market. These include:
1. Marketing Brands
While foreign companies with longer histories and bigger brands focus on their history, younger companies can drive more sales if they market their brands. This step, however, requires an understanding of the market and how to craft a unique brand that will stand out among other competitors.
2. Leverage the Power of Cross Border E-Commerce Platforms
Online shopping is a popular trend in China, with more than 70% of participants in a recent survey stating it is their favorite leisure activity. This leaves an effective method to market brands or even sell to consumers in the Chinese marker without the need for a warehouse or supermarket or any other traditional distribution channel. These powerful E-commerce channels include Wechat store; Tmall Global; and JD Worldwide. With a better digital presence, stores will have better access and will be able to sell more items to the final consumer.
3. Better SEO Strategies
It may sound unnecessary in China since there’s no Google, but Baidu offers many similarities to the western search engine. Implementing better SEO for your website will give you better visibility in search results. Some important SEO practices include optimizing websites in mandarin, registering on .cn domains and running ad campaigns that can get your brand out there.
There are many other growth potentials in China’s jewelry market including digital and offline strategies. You can head over to marketing2china blog to get more insight on the topic.