'Thirty years ago the Hong Kong industry was mainly for tourists. Today, Hong Kong is one of the world's biggest jewellery exporters.'

Hong Kong Trade Development Council (TDC) figures show that Hong Kong is the leading exporter of imitation jewellery and the world's second-largest exporter of precious jewellery. It has a long history as a major centre for the production of jade jewellery and, more recently, has made its mark as a dominant distribution centre for pearls.

TDC economist Raymond Yuen Shiu-yung said Hong Kong used to take design commissions from overseas and make the jewellery here and on the mainland. But now Hong Kong designers were catching up with the best from long-established jewellery exporters such as Italy.

He said these design skills coupled with the increasing purchasing power of mainland consumers meant that Hong Kong had an opportunity for some great growth potential.

'We've done consumer surveys asking people from the mainland how they rank Hong Kong jewellery. They are willing to pay a premium for jewellery made in Hong Kong because they see it as better designed and offering more value for money because it is better quality compared to that made on the mainland. It is also seen as more affordable than European brands,' Mr Yuen said.

Still, all this success comes at the cost of labour shortages, and Mr Lo and Mr Yuen said that industry growth was hampered by the need for more skilled staff in key areas.

Of most concern was the lack of personnel in design, marketing and gemology.

Trained gemologists are becoming increasingly important because of the growing proliferation of synthetic stones or, as they are sometimes called, created stones.

'There are so many synthetic stones around you need a trained eye to detect what is what. In theory, the quality can be so good that you can't tell if you aren't trained,' Mr Lo said, referring to some of the scams played on tourists that had been reported in Hong Kong.

The price of a created stone can be 5 per cent to 10 per cent of the cost of a real ruby or sapphire. The lower cost of the raw materials and the beauty of many synthetic stones had led to a growth in demand from consumers for fashionable, affordable synthetic jewellery.

Synthetic stones offer manufacturers the chance to produce a large number of identical pieces - something the vagaries of real gemstones do not permit.

Although many value-added processes are still in Hong Kong, the liberalisation of the mainland market and shortage of people in Hong Kong willing to work in the manufacturing sector means that manufacturing is being shifted to the mainland, particularly to Shenzhen and Panyu.

However, China's economic growth in recent years has shown that even in a country with a population of more than a billion there can be labour shortages. The resulting need to increase manufacturing wages means Hong Kong firms cannot rest on their laurels. And they have to be aware of the stiff competition from India, where wages are low and the quality is high.