Could The Vital Chinese Market be Turning a Corner in Jewelry Sales?

One of the biggest concerns for diamantaires over the past couple of years or so has been the decline in sales of diamond jewelry in China. Following the financial crisis of 2008 and the recession that gripped Europe and the United States, the strength of the Chinese market was seen as giving a degree of support to global sales.

But as the Chinese economy has declined, with GDP consistently decreasing, and an anti-corruption drive has put a sharp brake on luxury gift-giving in a bid to stem corruption, the luxury sector in general, and diamond jewelry sales in particular, have been feeling the pain.

Only stable, and perhaps somewhat slightly growing, sales in the United States have managed to give diamantaires some form of salvation.

It's for these reasons that the financial results from Chow Tai Fook, China's largest jewelry retailer, that Mainland sales beat those in Hong Kong during the Chinese New Year holiday period are to be welcomed, although few people will be rushing to celebrate just yet.

Hong Kong, of course, won't see the figures as anything to be pleased about, but then again nobody there expects strong results, said one leading Hong Kong-based manufacturer this week. The retail jewelry sector has been hit hard by the decline in visitors from Mainland China.

Chow Tai Fook reported that its store revenues from Mainland China increased by 4 percent from mid January to the start of February.

The results would appear to confirm comments by Israel Diamond Exchange President Yoram Dvash at a press conference following the 2017 Presidents Meeting this week that there is a slight uptick in sales in China and the market seems to be recovering. "We do sense an increase in sales, and that gives us optimism for 2017," he commented.

It appears that the wider luxury market in China could be on the rebound. Hermes International SCA this week reported that shoppers in Asia are buying more silk scarves and Birkin handbags. “I see an improvement in China and much higher appetite for our industry generally since the second half,” Chief Executive Officer Axel Dumas was reported by Bloomberg as telling reporters. “We see a lot of appetite for a diverse range of our products, from shoes to ready-to-wear, bags and silk.”

Overall, retail and catering industry sales reportedly jumped by more than 11 percent in the Chinese Lunar New Year holiday week which ran from January 27 to February 2, according to the Chinese Ministry of Commerce.

The Chinese economy appears to be firming up, according to recent data showing that manufacturing activity is growing and factory gate prices rising. Just last week, the country's central bank raised some interest rates, though it was seen as little more than an exercise aimed at keeping a shaky economic recovery on course while simultaneously trying to cool down the overheating property market.

The Chinese economy grew by 6.8 percent on the year in the fourth quarter, slightly ahead of expectations of a 6.7-percent rise. Although it was the slowest pace of growth for more than a quarter of a century, it was received well by economists who commented that the solid results gave them heart as GDP progressively came in at lower numbers during 2016.