Post on 22-May-2020
Chinese Jewellery: Market Growth in an
Expanding Economy
Vincent Chow
Chow Sang Sang, Hong Kong
71,666
16,690 15,685
8,227 5,960
3,400 2,613 2,435 2,253 2,015
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
World EU US China Japan Germany France UK Brazil Russia
2012 GDP by Country (World Bank)
USD Billion
9.6% 9.2%
10.4%
9.3%
7.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2008 2009 2010 2011 2012
China’s GDP (World Bank)
USD Billion Growth
8.4%
9.8%
7.8%
8.4%
9.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2008 2009 2010 2011 2012
Urban Disposable Income (National Bureau of Statistics of China)
USD Growth
22.7%
15.5%
18.3%
17.1%
14.3%
11.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2008 2009 2010 2011 2012 2013 1H
China's Consumer Retail Spending ( NBSC)
USD Billion Growth
2012 Volume: Gold Jewellery and Platinum Jewellery
in China
• Gold consumption for jewellery 518.8 tonnes [WGC] • Plantinum consumption for jewellery 1.5 m ounces [GFMS] or
42.5 tonnes
12:1
• One company’s experience, in dollar terms
8:1
43.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
0
100
200
300
400
500
600
700
800
900
CGA WGC CGA WGC CGA WGC CGA WGC
2010 2011 2012 2013 1H
CGA Jewellery CGA Other Uses WGC Jewellery WGC Other Uses CGA Jewellery YoY
Tonnes Growth
China Annual Consumption of Gold for Jewellery &
Other Uses (China Gold Association [CGA], World Gold Council [WGC])
0
100
200
300
400
500
600
700
Annual Jewellery Consumption of Gold (GFMS)
2010 2011 2012
Tonnes
What is Gold Jewellery in
China
• WGC webpage:
“Chinese consumers look for the very highest level of purity; more than 80% of gold jewellery in China is made from pure 24 carat gold.”
• Our Company’s experience:
in China and Hong Kong, only 1 to 3% in 18K gold, not counting gem-set 18K gold.
An
Assortment
of Gold
Jewellery
for China
Bridal Bangles
112g each
Bridal Bangle 60g
Gold Wafers 10g each
Choker 72g
Rings 6g each
Necklace 124g
Beads ~1g each Figures 4 to 5g
each
Ring 9g
Rings 4 to 6g
Longevity 10g
Dragon 144g
Estimating the Number of Retail
Jewellery Outlets
• China Gold Association: 60,000 to 70,000 jewellery outlets
• China Commerce Association for General Merchandise: 9,000
department stores. Say average 5 jewellery outlets in each then 45,000 outlets plus those in shopping malls and street-level shops.
Who are the Players
• International Brands
• National chains based in Hong Kong (~6)
• National chains based in Shenzhen, Shanghai etc (~10)
• Regional chains (?) • Franchisees [some of whom are department
store operators] (?)
• Independents (?)
Taxes Give Hong Kong Price Advantage
China Hong Kong
Value Added Tax 17.5%* –
Consumption Tax 5% –
Import Duty if applicable 14~40% –
Corporate Income Tax 25% –
Profits Tax – 16.50%
*VAT not applicable to gold content in pure gold jewellery
24% 24%
20%
0%
5%
10%
15%
20%
25%
30%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2010 2011 2012 2013 1H
Mainland Chinese Arrivals at Hong Kong (Hong Kong Tourism Commission)
Arrival Count
Hong Kong’s Population: 7.6 million
Growth
35.9% 37.9% 38.6%
30.4% 32.6% 32.9%
66.3% 70.5%
71.5%
0%
20%
40%
60%
80%
100%
2011 2012 2013
Chow Sang Sang Total Jewellery Sales
Distribution by Customer Domicile
Mainland China Sales Hong Kong Sales to CN Visitors Hong Kong Sales to Locals
Other Sales Mainlander Total
Population in
million 2010 2011 2012
2012
Adjusted*
China 1,338.6 0.34 0.38 0.39 0.40
Hong Kong 7.6 2.71 3.64 3.45 1.73
Taiwan 23.0 0.34 0.30 0.30 0.30
Singapore 4.7 1.83 1.90 1.99 1.99
Saudi
Arabia 28.7 2.49 1.94 1.64 1.64
UAE 4.8 14.50 12.11 10.38 10.38
Other Gulf 7.7 2.86 2.48 2.20 2.20
Gold Consumption, Gm per Capita (GFMS)
Population in
million 2010 2011 2012
2012
Adjusted*
China 1,338.6 0.34 0.38 0.39 0.40
Hong Kong 7.6 2.71 3.64 3.45 1.73
Taiwan 23.0 0.34 0.30 0.30 0.30
Singapore 4.7 1.83 1.90 1.99 1.99
Saudi
Arabia 28.7 2.49 1.94 1.64 1.64
UAE 4.8 14.50 12.11 10.38 10.38
Other Gulf 7.7 2.86 2.48 2.20 2.20
Gold Consumption, Gm per Capita (GFMS)
*2012 Adjusted by attributing one half of Hong Kong consumption
to China
Hong Kong
The 2013 Gold
Rush
Hong Kong
The 2013 Gold
Rush
The Aftermath: empty
shelves and grumpy faces
1,000
1,050
1,100
1,150
1,200
1,250
1,300
1,350
1,400
1,450
1,500
1,550
1,600
1,650
1,700
-50%
0%
50%
100%
150%
200%
250%
Jan Feb Mar Apr May Jun Jul Aug Sep 1-14
Hong Kong China HK CN Combined Gold Price
%
2013 Chow Sang Sang Same Store Growth in Gold Weight Hong Kong, China & Combined
USD/oz Growth %
43.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
0
100
200
300
400
500
600
700
800
900
CGA WGC CGA WGC CGA WGC CGA WGC
2010 2011 2012 2013 1H
CGA Jewellery CGA Other Uses WGC Jewellery WGC Other Uses CGA Jewellery YoY
Tonnes Growth
China Annual Consumption of Gold for Jewellery &
Other Uses (China Gold Association [CGA], World Gold Council [WGC])
Guangdong
Fujian
Jiangsu
Henan
Xinjiang
Gansu
Inner Mongolia
Heilongjiang
Jilin
Liaoning
✪Tianjin
Hebei
Shandong
Yunnan
Sichuan
Guizhou
Guangxi
Jiangxi
Hunan
Hubei
Shanxi
Anhui
Zhejiang
Shanghai
Beijing
Taiwan
Hong Kong
Macau
Hainan
✪Chongqing
Shaanxi
Ningxia
Qinghai
Tibet
39 Chinese Cities with
2012 GDP ≥ USD 48b (RMB 300b) &
Growth over 2011 ≥ 10%
✪Kunming
✪Hefei
✪Erdos
✪Chengdu
✪Changsha
✪Baotou
✪Nanchang
✪Quanzhou
✪Wuhan
✪Nanjing
✪Yancheng ✪Zhengzhou
✪Nantong
✪Changchun
✪Fuzhou
✪Xian
✪Qingdao
✪Guangzhou
✪Tangshan
✪Shijiazhuang
✪Dalian
✪Yantai
✪Shenzhen
✪Suzhou ✪Wuxi
✪Shenyang
✪Harbin
✪Daqing
Shanghai 321b 7.5%
Beijing 284b 7.7%
Hangzhou 125b 9.0%
Reference: public data published by
municipalities and compiled by www.elivecity.cn.
✪Xuzhou
✪Weifang
✪Changzhou
✪Jibo
✪Jining
✪Handan
✪Linyi
✪Luoyang
✪Dongying