Posted On 2015/06/03 By In Business, News, Face, Fashion, Luxury, Shopping With 448 Views

When it comes to Jewellery, Chinese believe local Companies are best

Many Chinese like to chase deluxe brand name handbags or cars but when they buy jewellery, they feel “value for money” is more important and this tends to benefit Hong Kong-listed jewellery brands Chow Tai Fook, Chow Sang Sang and Luk Fook.

Brands like Nike and Adidas dominate sportswear, handbags are the domain of Chanel, LV and Prada, and luxury cars are the turf of Audi and BMW, according to a Morgan Stanley report.

But when it comes to buying gold or diamonds for a wedding or a gift to a new born baby, the mainland Chinese jewellery buyers go for local brands.

“If we use Hong Kong as a reference for a mature Chinese city, we can see that despite the high disposable income per capita, mass market jewellery brands such as Chow Tai Fook, Chow Sang Sang and Luk Fook still own the lion’s share of the jewellery market in Hong Kong,” Morgan Stanley said, adding the trio of Hong Kong jewellery retailers command a 40 per cent share of the market.

In contrast, foreign brands such as Tiffany and Cartier only has meagre two per cent market share each.

The reasons behind this was because customers believe the local jewellers are very conscious about “quality” and “value”, the Morgan Stanley survey of about 1,500 mainland and Hong Kong jewellery buyers showed.

“This supports our thesis that mass market, value for money brands like Chow Tai Fook (which ranks well on these metrics), as opposed to premium-positioned jewellery brands, could continue to be market leaders in China, and gain share in a fragmented jewellery market,” it said.

The survey showed mainland customers prefer to spend more on the materials of the jewellery, such as paying more for a bigger carat of diamond or a larger amount of gold, than paying the premium of a luxury brand.

The lender noticed that some overseas brands are on average 20 to 30 per cent more expensive than Chinese brands on a similar solitaire diamond ring.

“This may have to do with the fact that it is more difficult to show off a ‘brand’ on a ring than say a handbag or a car,” the Morgan Stanley report said.

“This is not to say that a brand does not matter in jewellery, far from it in fact. But the values sought by most Chinese consumers are different – more trustworthiness (authenticity of goods, fair and reliable prices, after-sale services), than luxury and aspiration.”

In the survey, it showed the most frequent jewellery buyer in the mainland is female between the ages of 25 to 34 years old with high income. They travel to Hong Kong and South Korea often.

Among the 21 jewellery brands in the survey, it showed Chow Tai Fook ranked top of the list with a positive long-term outlook, while Chow Sang Sang and mainland brand LaoFengXiang also ranked high. Luk Fook was generally weaker in brand awareness.

It said some of the Hong Kong jewellery retailers would suffer from the challenges of fewer mainland tourists coming to Hong Kong and Macau, but the long term outlook is positive. The report warned the local jewellery brands maybe at risk of losing share to international brands in future as these international brands have increased advertisements and expanded their distribution network.

“While headwinds continue with sales and a tourist slowdown in HK/Macau and share prices reflect this weakness, we see improving risk/reward profile for the sector, especially given its healthy fundamentals and local brands’ long-term competitiveness, as supported by our survey,” the report said.

“We believe industry consolidation and margin expansion through product mix improvement will serve as long-term earnings drivers for sector leaders such as Chow Tai Fook.”


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Article: SCMP / Image: Michael Chen

Many Chinese like to chase deluxe brand name handbags or cars but when they buy jewellery, they feel “value for money” is more important and this tends to benefit Hong Kong-listed jewellery brands Chow Tai Fook, Chow Sang Sang and Luk Fook. Brands like Nike and Adidas dominate sportswear, handbags are the domain of Chanel, LV and Prada, and luxury cars are the turf of Audi and BMW, according to a Morgan Stanley report. But when it comes to buying gold or diamonds for a wedding or a gift to a new born baby, the mainland Chinese jewellery buyers go for local brands. “If we use Hong Kong as a reference for a mature Chinese city, we can see that despite the high disposable income per capita, mass market jewellery brands such as Chow Tai Fook, Chow Sang Sang and Luk Fook still own the lion’s share of the jewellery market in Hong Kong,” Morgan Stanley said, adding the trio of Hong Kong jewellery retailers command a 40 per cent share of the market. In contrast, foreign brands such as Tiffany and Cartier only has meagre two per cent market share each. The reasons behind this was because customers believe the local jewellers are very conscious about “quality” and “value”, the Morgan Stanley survey of about 1,500 mainland and Hong Kong jewellery buyers showed. “This supports our thesis that mass market, value for money brands like Chow Tai Fook (which ranks well on these metrics), as opposed to premium-positioned jewellery brands, could continue to be market leaders in China, and gain share in a fragmented jewellery market,” it said. The survey showed mainland customers prefer to spend more on the materials of the jewellery, such as paying more for a bigger carat of diamond or a larger amount of gold, than paying the premium of a luxury brand. The lender noticed that some overseas brands are on average 20 to 30 per cent more expensive than Chinese brands on a similar solitaire diamond ring. “This may have to do with the fact that it is more difficult to show off a ‘brand’ on a ring than say a handbag or a car,” the Morgan Stanley report said. “This is not to say that a brand does not matter in jewellery, far from it in fact. But the values sought by most Chinese consumers are different – more trustworthiness (authenticity of goods, fair and reliable prices, after-sale services), than luxury and aspiration.” In the survey, it showed the most frequent jewellery buyer in the mainland is female between the ages of 25 to 34 years old with high income. They travel to Hong Kong and South Korea often. Among the 21 jewellery brands in the survey, it showed Chow Tai Fook ranked top of the list with a positive long-term outlook, while Chow Sang Sang and mainland brand LaoFengXiang also ranked high. Luk Fook was generally weaker in brand awareness. It said some of the Hong Kong jewellery retailers would suffer from…

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About

Stefan

Stefan (from Austria, Europe) has been living, studying and working in China since 2010. Stefan has worked on several research, publication and consulting projects focusing on the China Travel Market. He holds two Masters degrees and is an expert on China Outbound Tourism, Marketing and Social Media in China. Stefan works with BMG on the Global Ready China Seminars as well as the Global Ready China News and related projects. He also has teaching engagements in the areas of eMarketing and Tourism Strategy.

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