Sparkling fu­ture beck­ons fash­ion jew­elry

China Daily (Canada) - - DEPTH - By EM­MAGON­ZA­LEZ em­magon­za­lez@ chi­nadaily.com.cn

Kasey Zhang, a Bei­jing­based young pro­fes­sional in her late 20s, be­lieves that women al­ways need a piece of jew­elry in their lives. It is an im­por­tant el­e­ment of their daily rou­tines, help­ingth­emto dress up a work­ing out­fit or adding a spe­cial touch to a party en­sem­ble.

How­ever, she does not be­lieve that di­a­monds are a girl’s best friend. She per­son­ally prefers crys­tal jew­elry over fine jew­elry be­cause of its af­ford­abil­ity and del­i­cate de­signs.

“I like buy­ing crys­tal jew­elry pieces be­cause of their beau­ti­ful de­signs and be­cause they are much cheaper than other jew­elry cre­ations,” ex­plained Zhang. “So if I lose them, I will be sad but it is not a tragedy.”

Tra­di­tion­ally, the pur­chase of jew­elry in China has been driven by con­ser­va­tive rea­sons re­lated to its per­cep­tion as an eco­nomic asset.

For this rea­son, the Chi­nese jew­elry mar­ket con­tin­ues to be dom­i­nated by fine jew­elry, par­tic­u­larly by pieces with pre­cious met­als and stones.

To­tal re­tail sales value of the jew­elry mar­ket in China sur­passed 500 bil­lion yuan ($77 bil­lion) in 2015, of which re­tail sales value of gold jew­elry ac­counted for around 75 per­cent, ac­cord­ing to re­search and con­sult­ing group Frost & Sul­li­van.

“Chi­nese con­sumers con­sider fine jew­elry an in­vest­ment tool to main­tain their wealth un­der the more chal­leng­ing con­di­tions of eco­nomic down­turn,”said OlayaHuo, re­search an­a­lyst at Euromon­i­tor In­ter­na­tional.

How­ever, young Chi­nese like Zhang are quickly de­vel­op­ing an ap­petite for af­ford­able fash­ion jew­elry from for­eign brands be­cause of their in­no­va­tive de­signs and good rep­u­ta­tion.

As the in­come level of the younger con­sumers is com­par­a­tively lower than that of the el­der gen­er­a­tion, af­ford­able jew­elry prod­ucts with fash­ion­able and stylish de­signs are gain­ing­more­fa­vor among the younger gen­er­a­tion, said Neil Wang, global part­ner and greater China pres­i­dent of Frost and Sul­li­van. “As a re­sult, af­ford­able jew­elry prod­ucts are be­com­ing more and more pop­u­lar in China.”

Aus­trian crys­tal brand Swarovski en­tered the Chi­nese mar­ket in 1995 us­ing a fran­chise model to dis­trib­ute its prod­ucts in the coun­try.

Nowa­days, al­most half of its stores are di­rectly man­aged by Swarovski, with the com­pany now grad­u­ally try­ing to take over some of the fran­chises to strengthen its con­trol over dis­tri­bu­tion.

Swarovski, which de­fines it­self as a pre­mium, yet af­ford­able name for ev­ery­day use, ex­pects to open around 30 more new stores this year to reach 300 com­mer­cial spa­ces across China.

The crys­tal jew­elry group plans to be present in 90 cities across the coun­try this year, cov­er­ing 10 more lo­ca­tions than in 2015.

“Our main fo­cus is to keep ex­pand­ing into third- and fourth-tier cities be­cause the re­tail land­scape is be­com­ing more ma­ture in these lo­ca­tions,” said Fran­cis Belin, se­nior vice-pres­i­dent of Asia Pa­cific at Swarovski. “We see more op­por­tu­ni­ties to open stores there.”

Swarovski be­lieves that in­creas­ing dis­tri­bu­tion and ac­ces­si­bil­ity of the brand are cru­cial el­e­ments to keep its ex­pan­sion.

For this rea­son, the com­pany is draft­ing an on­line strat­egy to drive sales up.

Last year, the com­pany was one of the first for­eign jew­elry brands to open a store­front on Alibaba Group Hold­ing’s on­line­mar­ket­placeT­mall.com.

De­part­ment stores and spe­cial­ized jew­elry re­tail­ers re­main the lead­ing dis­tri­bu­tion chan­nels for jew­elry in China, said Huo of Euromon­i­tor. “How­ever, In­ter­net re­tail­ing con­tin­ues to in­crease dy­nam­i­cally.”

Swarovski, which also sells prod­ucts on­line through its own Web­site, re­mains cau­tious over its on­line strat­egy be­cause Chi­nese cus­tomers still pre­fer to visit their shops to check first­hand the vol­ume, shape and char­ac­ter­is­tics of the pieces.

“For on­line pur­chases, we see lim­ited growth now. Cur­rently, less than 10 per­cent of our sales in China come from on­line chan­nels,” said Belin. “How­ever, at some point this year or next year, we will start ex­plor­ing other op­tions to team up with other on­line play­ers.”

With around a third of its to­tal rev­enues com­ing from Chi­nese con­sumers, in­clud­ing pur­chases over­seas done by Chi­nese trav­el­ers, China re­mains a cru­cial mar­ket for the brand.

Although the com­pany re­fuses to dis­close an­nual rev­enues, it hints that the turnover gen­er­ated in China amounts to a cou­ple of bil­lion yuan. This year, the com­pany ex­pects to grow in high sin­gle dig­its.

Be­cause Chi­nese con­sumers still have a pref­er­ence for pre­cious met­als and stones, Swarovski de­cided to launch an ex­clu­sive line of fine jew­elry in 2012 specif­i­cally de­signed for the Chi­nese mar­ket.

The col­lec­tion of fine jew­elry com­bined the tra­di­tional de­signs of the brand with the use of pre­cious stones, pro­duc­ing 18-karat gold di­a­mond swan neck­laces and amethyst hearts.

“We thought that it would be a smart strate­gic move for us to en­ter that mar­ket,” said Fran­cis. “Both fash­ion jew­elry and fine jew­elry are grow­ing at sim­i­lar speeds here, which means that in the last years we have not seen fine jew­elry los­ing ground to fash­ion jew­elry.”

Dan­ish sil­ver jew­elry man­u­fac­turer Pan­dora en­tered the Chi­nese mar­ket in 2010 by sign­ing fran­chise agree­ments with three lo­cal part­ners in Harbin, Shang­hai and Shen­zhen.

It was only six months ago when the com­pany changed its busi­ness strat­egy to be more di­rectly in­volved in the stores and start in­vest­ing in mar­ket­ing cam­paigns.

“We are strug­gling to get the busi­ness foun­da­tion to op­er­ate across China,” said Ken­neth Madsen, pres­i­dent of Pan­dora Asia. “We want to grow quite fast at the moment, but we need a con­trolled ex­pan­sion strat­egy.”

The re­tailer, which had a re­tail net­work of 72 stores in 2015, plans to open 30 ad­di­tional stores this year, con­cen­trat­ing on open­ing full-size com­mer­cial venues and fur­ther ex­pand­ing into sec­ondtier cities.

This year, the com­pany will open stores in cities like Chengdu, Dalian, Chongqing, Nan­jing and Tian­jin.

“We were very sur­prised by the strong de­mand from smaller cities and we re­al­ized we can be very suc­cess­ful in some of these sec­ond-tier cities,” addedMad­sen.

Pan­dora, which de­fines it­self as an ac­ces­si­ble lux­ury, pro­duces hand-fin­ished sil­ver jew­elry pieces at com­pet­i­tive prices, with a fo­cus on beads and charms with dif­fer­ent mo­tives to per­son­al­ize the pieces.

Although Pan­dora does not dis­close fig­ures for in­di­vid­ual mar­kets, it notes that the Asia-Pa­cific re­gion ac­counted for 16 per­cent of the com­pany’s to­tal rev­enue last year, a fig­ure sig­nif­i­cantly higher than in 2014.

“Asia Pa­cific, with China be­ing the largest mar­ket in this re­gion, is tak­ing a big­ger and big­ger share of Pan­dora,” said Madsen. “This re­gion is an ab­so­lute pri­or­ity for us.”

In 2015, Pan­dora recorded global an­nual rev­enues of 16.7 bil­lion yuan. For this year, Pan­dora ex­pects to reach rev­enues of 19 bil­lion yuan, with the Asia-Pa­cific re­gion driv­ing growth and tak­ing a large share of the com­pany’s turnover.

The com­pany is now ex­am­in­ing op­tions to team up with on­line stores to in­crease its sales in the coun­try.

“We do not have an e-com­merce plat­form at this point, but it is cer­tainly a big, if not the largest, pri­or­ity for us right now,” addedMad­sen.

Chi­nese con­sumers con­sider fine jew­elry an in­vest­ment tool to main­tain their wealth.”

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.