Chinese love jewellery

Purchases of jewellery are soaring in China on the back of the rise in household income and improved living standards.

According to IBISWorld, China, with a jewellery store industry currently pegged at US$79.4 billion, has become the largest consumer of gemstone, jade and platinum jewellery in the world and the second largest consumer of gold jewellery after India and of diamond jewellery after the US.

Jewellery retailing is highly fragmented in China, with the five largest jewellery retailers jointly accounting for less than 25 per cent of industry revenue in 2012. Low industry concentration is mainly due to fragmented domestic markets and relatively low industry entry barriers.

In addition, most jewellery retailers choose to specialise in one to two categories, such as gold, diamond, platinum or gemstone. This restrains their market shares in the industry as a whole, says IBISWorld.

The jewellery store industry in China is characterised by leading retailers in local markets such as Laofengxiang and Yuyuan in Shanghai, Ciabai in Beijing and Huiyunlou in Shenyang. However, despite their prominence in local markets, their shares in the nationwide market are much lower.

Even for large-scale jewellery retailers such as Chow Tai Fook, which has about 1000 jewellery outlets in China, coverage mainly focuses on large cities and is much lower in second and third-tier cities and rural areas. The large market size in those areas provides opportunities for a large number of small and medium-sized jewellery retailers.

Since per capita jewellery consumption in China is well below that in developed economies and the world average, the future growth potential of the industry is substantial.

IBISWorld anticipates that more jewellery retailers will adopt franchise-store expansion strategies and move into second-tier and third-tier cities to exploit those markets.

GB

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