Platinum Jewellery Leads China Jewellery Industry in a V-Shaped Recovery
(14 July, 2020) Hong Kong – With manufacturers reporting greater demand volumes and retailers confirming a steady increase in business in April and May, the China jewellery industry finds itself in the midst of a V-shaped recovery in the second quarter of 2020. A confluence of factors has led to platinum becoming a strategic category as the industry embarks upon recovery programmes.
Platinum jewellery manufacturers have been reporting greater demand volumes through April and May as a result of a remarkable level of replenishment purchasing in platinum. Retailers across the board, from national and Hong Kong chains through regional chains, independents and wholesalers have shown strong interest in a new generation of designs which provide stronger margins. By May, platinum fabrication volume had returned to a level on par with the same period last year.
Retailers have witnessed a gradual ramp-up in business volume since the reopening, with some reporting sales of platinum jewellery reaching 80% or higher compared to the same period last year.
Over-stocking of gold and gem-set jewellery due to lockdowns imposed since January had led to an inventory backlog in these categories. Record high prices for gold have depressed buying among consumers and retailers, while a record low platinum price has made platinum an attractive replacement for some pure gold and k-gold counters, offering improved profit margins and turn.
This comes at a time when manufacturing partners of Platinum Guild International (PGI) have been prioritising new collections and design directions to meet changing consumer needs.
(Photo: Platinum Love "Secret Garden" Collection by Lao Feng Xiang)
Underpinning this innovation has been the development of new alloys and technologies that PGI has been working with partners in recent years. This includes hard platinum and heat-treatable alloys that allow for refined contours in designs, better polish, better shape retention and higher resistance to scratch. These innovations are expected to enable platinum to capture a more competitive market position in the jewellery space. The incorporation of new materials including enamels also add colour and novelty allowing for more designed collections, such as Chow Tai Fook’s Frozen II and Angel of Peace Collections.
“Our industry partners in China are reporting a platinum recovery driven by competitive pricing and the launch of new products which utilise innovative new technologies and designs that are capturing the interest of a new generation of consumers. Platinum Guild International’s initiatives to engage with both the jewellery trade and consumers have been extremely effective in accelerating this recovery during post-COVID-19. Despite pandemic uncertainty ahead, we hope conditions will allow for continued foot traffic to stores to ensure the sell through needed for a sustainable recovery,” says CEO Huw Daniel of PGI.
More players have begun to enter or re-enter the platinum jewellery industry, leading to a rising interest in platinum fabrication. New players from the gem-set and gold retail industries have also started to carry platinum. For example, Shining House, which is a newcomer in platinum gem-set jewellery, now carries platinum in 100 of its 300+ stores in Central and East China, with the intention to include a platinum exclusive collection (“One Life One Love”) to all stores by end of third quarter.
”We are prioritising these new SKUs, with improved production technology, that enables better pricing and recognisable new features for sales push this summer. We believe these SKUs could better help sales recovery,” says Ms. Sun, Product Head of Changzhou Jewellery, a regional prominent retailer in East China.
(Photo: new hard platinum jewellery by Shenzhen Bofook Jewellery Co., Ltd.)
“The jewellery industry had undergone tremendous pressure at the height of the COVID-19 outbreak in China during a traditional peak sales period. The fact that platinum jewellery is now a key value contributor to, and is at the heart of the industry’s recovery, is testament to PGI and our partners’ tenacity and joint efforts,” says Managing Director Pui P. Poon of PGI China.
With branding and storytelling attached to an increasing amount of platinum jewellery, consumer uptake is recovering faster than expected. “These factors have come at a time when the industry is eager for something new to aid in rebooting their business, and platinum appears to be fulfilling that role,” says CEO Huw Daniel of PGI.