Writuparna Kakati | 29 May, 2008
In September 2005, India's Gems and Jewelry Export Promotion Council (GJEPC) sent a delegation to China to explore the possibilities in China's jewelry market. The underlying intent was to look for opportunities, and determine whether China is a potential market or a threat for Indian gems and jewelry industry.
After extensive research, the team made three main observations in its report: firstly, China was emerging as India's arch-rival in the jewelry sector. Secondly, China would become the world's leading jewelry consumer and processor by 2010; thirdly, China's jewelry market would surpass $21.7 billion in 2010, accounting for 10% of the world's market.
During the last couple of years, China's jewellery industry witnessed further growth. In 2006, annual sales value of the country's jewellery market reached 160 billion RMB (US$ 20.5 billion). According to a report published by China's National Bureau of Statistics, retail sales of gold, silver and jewelry in 2006 had increased by 30.8% from the year earlier.
Parallel to this amazing pace of growth, the jewellery industry in China has also been creating new job opportunities. Twenty years ago, only 20 thousand people were engaged in the industry, and, at present, the figure is more than 3 million.
Present scenario
In the recent years, the jewelry consumption maintained a steady 15% growth rate in China. According to China government's statistics, current sale of platinum in China has amounted to 1.4 to 1.5 million ounces while annual demand for gold jewellery has reached approximately 200 tons. Annual sales for gold jewellery, diamond jewellery and jade and pearl jewellery has reached approximately 30 billion RMB (US$ 3.8 billion), 30 billion RMB (US$ 3.8 billion), and 40 billion RMB (US$ 5.1 billion) respectively. Such mind boggling growth of the jewellery market in China has made the country a lucrative market to the whole world.
At present, about 5,800 manufacturers (state-owned or private) in China are engaged in the jewellery making industry. Amongst them, almost 500 of these manufacturers enjoy an annual sales volume of over RMB 100 million (US$ 12.8 million). South China's Guangdong Province, with so many jewelry processing and selling centers in Shenzhen, Panyu and Dongguan, is considered as the hub of the jewellery industry in the country. In addition, some special jewelry bases like Sihui, Jieyang, Pingzhou and Ruili Jade Processing and Selling Bases, Zhujj Pearl Producing Base and Wuzhou Artificial Jewelry Producing, Processing and Selling Base are also worth mentioning.
What China imports
As far jewellery import is concerned, China is sourcing more and more products and raw materials from overseas in the last few years. In 2006, China imported more than US$ 1.3 billion of platinum (unwrought or in semi-manufactured forms) and over US$ 2.4 billion of diamonds (whether or not worked, but not mounted or set). During the time, Belgium remained the largest exporter of diamonds to China while South Africa and Switzerland were the top exporters of platinum and jewellery with precious metal respectively. In the year 2006, India positioned itself only as the third largest exporter of diamonds to China. Considering that India processes 120 million carats of diamond annually, this figure is not satisfactory at all. India can do far better in this sector and Indian exporters can play a crucial role in helping India maintain its dominant position in the world's cut and polished diamond market.
Import tariff
To fulfill its WTO commitments, China has greatly reduced its import tariffs on jewellery and raw materials since 2002. The tariff on articles of jewelry, pearl, and precious & semi-precious stones has dropped from a range of 31 to 33.3 % to 0 to 20 % while the tariff on diamonds, silver, gold and platinum in semi-manufactured forms has been cut to zero. In addition, the China government is gradually easing controls on gold trading while exchange of gold, silver and diamonds were also established.
Opportunities for Indian jewellery exporters
- The demand of diamonds, rubies, sapphires, emeralds, or gems has been increasing everyday in the Chinese jewellery market.
- K-gold and platinum jewelry products have become hot popular among Chinese customers especially young girls as the prices are low compared to those of jewellery with precious stones.
- Market share of import brands of costume jewelry in China jewelry market has been growing fast. In this scenario, Indian exporters can consider seeking opportunities also in this field.
In addition, manufacturers operating in India can also consider manufacturing in China as the country is lagging far behind in the diamond processing sector. The jewellery industrial park at Panyu offers a ready pull of skilled labour while the Shanghai Diamond Exchange could be a great help for Indian exporters of cut and polished diamond.
For years, the US has been the largest market for Indian gem and jewellery exporters. But recently, different factors like US recession, rupee appreciation, high interest rates, volatility of gold prices, withdrawal of Generalized System of Preferences (GSP) benefits and slowdown in all major markets have led to the decline of the sector not only in the US market but also globally. As a result, it has become very important for the Indian jewellery export community to search for diversified markets. Given this present scenario, China can be considered as a lucrative destination for Indian jewellery exporters. Despite the facts that the jewellery market in China is getting increasingly mature and that the domestic jewellery enterprises are doing well in China, the market still offers enough opportunities to overseas exporters and investors.
