China’s corruption crackdown takes shine off sales of gold jewellery
Sales of gold bars – seen as traditional investments and gifts among many Chinese people – have been hardest hit
President Xi Jinping’s anti-corruption campaign, which has banned officials receiving gifts, has led mainland consumers to buy fewer jewellery and gold products in the past year, industry insiders said.
Sales of gold bars – seen as traditional investments and gifts among many Chinese people – have been hardest hit.
However other factors have influenced the decline, too, including the fall in the price of gold and a rally on the stock market that has led mainlanders to invest much of their money in shares, the insiders said.
“There has certainly been a big slump in sales of gold, which is often bought as a gift,” said Wang Ensheng, chief spokesman of Shanghai jewellery company, Lao Feng Xiang.
“The central government’s corruption crackdown has had a lot to do with the drop in sales.
“Generally speaking, other jewellery has been affected, too, but not quite as much as gold.”
Lao Feng Xiang, a century-old jewellery company that specialises in gold, has been forced to diversify into sales of other jewellery items and luxury products as consumers target less high-profile items, Wang said.
Ou Canrong, assistant general manager of the marketing department at Hangbai Jewellery, a gold processor and wholesaler in Hangzhou , said its orders for gold bars, gold coins and gold stamps over the past year had fallen by 10 per cent compared with the year before.
“This is something that other gold companies have experienced, too,” he said.
A report written by Shi Hongyue, deputy chairman of the Gems and Jewelry Trade Association of China, said China’s jewellery market literally stopped expanding last year – with a reported sales volume of about 500 billion yuan (about HK$633,000) – following three decades of double-digit growth.
A survey by the association of more than 600 jewellery companies in China showed that 90 per cent of them experienced a drop in sales of more than 10 per cent last year compared with 2013.
“The acute overcapacity of the market, the end to the practice of sending gifts to officials, and the slackness in restructuring the sector have all left jewellery companies facing an unprecedented struggle,” Shi wrote.
However, sales of pearls – more than 95 per cent of which are manufactured by China – remain buoyant. About 10 billion yuan worth of pearl products were sold last year – a 20 per cent increase compared with the year before.
Wang Feifei, sales manager of Angeperle, a pearl company based in Zhuji city, in Zhejiang province, said: “China’s First Lady Peng Liyuan likes to wear pearls. She even gave pearl jewellery as gifts to state guests. There is no doubt that she has helped to boost our industry.”
Shi wrote: “The corruption crackdown doesn’t prohibit the wearing or collecting of jewellery.”
He added: “Corruption is often linked with jewellery, but jewellery is never the main reason for corruption.”
Many Chinese jewellers also said mainland consumers had gained a more sophisticated appreciation of luxury goods and were also more sensible about what they bought.
Han Jing, the manager of Kimberlite Diamond’s exhibition department, in Shanghai, said dove-egg-sized diamonds were no longer so popular among mainland shoppers.
“In recent years, what is regarded as ‘affordable luxury’ has grown in popularity,” Han said. “People like to buy smaller, specially designed and delicately made items.”
Zheng Qifei, a Shanghai white-collar worker and jewellery lover, said: “In the past, Chinese shoppers liked to buy big items so they could that show they were richer than other people, but now they pay more attention to whether an item of jewellery is comfortable to wear, or well designed.”
Wang Ensheng said that in the past, when he attended a buyers’ meeting, people would have few specific design requirements. “But now we’re all asking for exquisite items,” Wang said.
Despite the overall recession, the jewellery market was likely to recover slowly, he said.
“The basic demand is still there – especially for gold, which traditionally has been bought by Chinese people for more than 5,000 years. People will continue to buy it for special occasions, such as marriages and the birth of a child.”
Shi also expected this year’s total sales of jewellery, including gold, would beat last year’s level and reach 550 billion yuan.
Last year, China slipped back to become the world’s second-largest country in terms of gold demand with 813.6 tonnes of jewellery consumption and bar and coin investment – with India in first place, according to the World Gold Council.
It was a substantial 38 per cent decline as mainland consumers pulled back after a record year in 2013.
China and India accounted for a combined 54 per cent of the world’s consumer gold demand in 2014, according to the council, a London-based industry group.
