Gemstone and jewellery companies are banking on emerging markets as a new source of business in the face of macroeconomic uncertainties.
Citing difficulties arising from an ongoing US-China trade dispute, leaders of Hong Kong’s jewellery and gemstone sector highlighted the growing importance of Southeast Asian markets to the business.
According to them, the Association of Southeast Asian Nations (ASEAN), which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, presents manifold opportunities, especially now that the US – the world’s largest diamond jewellery market – is waging a trade war with China.
Existing US tariffs, which now cover the gemstone and jewellery industry, are seen to affect US-based jewellers who import raw materials from China during the holiday season. Chinese exporters meanwhile could lose American buyers who may opt to source tariff-free products from other countries.
Lawrence Ma, founding president of the Diamond Federation of Hong Kong, China Ltd, said ASEAN is the next viable market for gemstone and jewellery traders since it is closer to Hong Kong.
Hong Kong – a melting pot for jewellery manufacturers, designers, wholesalers, exporters and retailers – offers competitive pricing, on-trend designs and quality assurance, among others. By trading with Hong Kong, ASEAN countries can also expand their reach into China.
“The US is a huge and established market but ASEAN has massive growth potential, which could translate to strong demand for jewellery,” disclosed Ma.
Ken Lo, chairman of the Hong Kong Jewellery and Jade Manufacturers Association, said businesses have been preparing contingency plans due to global challenges and among these strategies is switching their focus to areas other than the US.
The US is ahead of ASEAN when it comes to market maturity, but the latter is more diversified, noted Lo. Population-wise, ASEAN is home to more than 640 million people – considerably larger than the US population of over 327 million. Apart from ASEAN, jewellery traders can also take advantage of China’s Greater Bay Area, which could likewise present business opportunities.
Hong Kong Jewelry Manufacturers’ Association Chairman Benny Do echoed this sentiment. He stated that the jewellery industry should draft concrete ways to seize prospects in ASEAN and the Greater Bay Area owing to anticipated shifts in the supply chain.
“We should start working on this as early as possible. US consumption is significant compared to other countries, but we don’t see an imminent resolution to the trade war. This will continue to weaken consumption,” noted Do. “ASEAN is on the verge of growth and as the economy continues to advance, new opportunities will be generated.”
Despite uncertainties, the Chinese market has likewise stabilised a bit, with demand for commercial-quality products on the rise, according to Ma of the Diamond Federation of Hong Kong.
Chinese buyers have become partial to diamonds of 30 to 50 points of SI clarity grade, which represents a growing demand from the mass market.
“This is a trend that we will be looking at,” remarked the industry expert. “Over the last few months, we’ve also seen reduced rough in the market, which is healthy as the supply chain rationalises its inventory level.”
Fan Xiao Bin, president of the Hong Kong Gemstone Manufacturers' Association, meanwhile cited relevant changes in China’s jewellery market, including the emergence of jewellery brands, intellectual property awareness, as well as more sophisticated consumers who attach importance to design, craftsmanship and individuality of products.