Economic changes have shaped people’s perception of high-end coloured gemstones and jewellery which are now seen as potential investments as well. The situation is particularly noticeable in China where ‘perfect stones’ are strikingly sought after. At a recent interview with Hong Kong Jewellery, Markus Wild, managing director of Paul Wild OHG, gives an overview of the fast-moving high-end gemstone market in the mainland.
How was the market sentiment for coloured gemstones in Mainland China in 2013?
Chinese buyers were acting far more conservative than in the years before, but I am cautiously optimistic for this year. Over the last few months, we have seen renewed interest in traditional coloured stones such as emerald, sapphire and ruby as well as those in usual designs. Greater demand for rare stones such as spinel, Paraiba tourmaline, demantoid and alexandrite is also seen.
My forecast would be that the outlook for the world’s demand for coloured stones will remain unbrokenly positive for 2014 and we will see strong increases especially in China in both quantity and quality.
What are the bestselling gemstones in China?
The market in China is only at the early beginning of its development. For sure, coloured gemstones have gained attention from China’s jewellery industry, and consumers as well.
At the beginning most inquiries focused on all kinds of tourmaline, and then on emerald or tanzanite. Recently we are seeing a broader range of coloured stones that sell. Sapphire and ruby on the classic side enjoy substantial recognition but also beryl in form of aquamarine and morganite, all the garnet varieties, from Mandarin garnet and tsarvourite to demantoid, and cat’s eye or star phenomenal stones are experiencing more solid demands now.
Nevertheless, until now except for tourmaline sales opportunities seem to be limited to important stones at the high-end and inexpensive commercial-quality stones. There is a lack in demand for stones in the mid-level grades and price points which is an untapped market segment.
Design-oriented cuts and carvings are still a niche market segment which allows jewellers to create unique pieces that fulfill the desire to express individuality.
How do you see the supply trends?
Limited supply of natural precious gemstones especially for high-end specialties of genuine rarity such as unheated Burmese ruby, Kashmir sapphire or Colombian emerald unavoidably means further price increase which will put more and more pressure on jewellers to find alternatives. Stronger demands for colours have made Paraiba tourmaline, spinel, padparadscha, pink sapphire, tsavorite, to name a few, more sought after.
I believe the coloured stone market is moving in a positive direction over the next decade.
The ongoing and upcoming challenges will be on the mining and sourcing sides. Our own mines in Africa and Brazil, however, have placed us in an economically advantageous position. We can also count on our networks established by generations as well as the relentless search for the finest gemstones for our customers.
Spending on luxury goods in China has been slashing recently. To what extent does it impact the high-end gemstone sales?
Indeed several unfavourable circumstances in 2013 impacted on the sales of certain luxury items. This sentiment has also generated great uncertainty and a perceptible buying restraint on part of our customers too.
Nevertheless, there were a number of positive developments in China last year. Besides the growing number of affluent consumers and middle class consumers, there were also regulatory changes to the advantage of the high-end gemstone market such as the tightened restrictions on real estate purchase and car license plates in many big cities that left the rich with more limited options for investment.
Durable, beautiful, rare and an important means of exchange, gold and diamonds have long been sought after for investment purposes. Recently, however, attention is gradually being shifted to precious stones as a store of wealth. Individuals from Asia in particular are now considering gemstones an insurance against fluctuation and depreciation of paper money. The change becomes more apparent when macroeconomic, geopolitical, monetary and systemic challenges facing modern global financial system and economy are getting severer.
The yearnings for uncommon gemstones are growing among consumers and investors due to a loss of confidence in time-honoured assets and a renewed perception of gemstones as a tangible asset with strong investment potential.
What are your strategies to take care of the diversified markets in different regions in China?
Wealthy consumers in tier-one and tier-two cities prefer low-key with their rising level of sophistication. They look for unique luxury products with good design that highlight their individual tastes. In smaller cities the traditional consumption patterns are prevalent. Nevertheless, with the ongoing urbanization and the rising aspiration of a luxury lifestyle, our customers already started promotion of coloured gemstones down to tier-three cities.
Our clientele includes jewellery manufacturers, gemstone dealers, investment companies, small jewellers and big retailers from Harbin to Shenzhen, from Urumuqi to Fuzhou. With our extensive studies of and experiences in the China market, we are able to work hand in hand with every customer in different cities via our office in Beijing to analyze their special market positioning and business plans. Not only we share our gemological knowledge with them, we help work out customized strategic purchasing plans, assist them in the designing process, providing them with marketing materials and sales support.
What is your outlook for China’s high-end gemstone market in 2014?
China will clearly represent the market with the largest growth potential for our industry in the next two to five years. And a large segment of this market volume will be generated in the high-end sector.
The request for “perfect stones” is prevailing and will get stronger. It is difficult to explain to customers and their clients that gemstones are Mother Nature’s precious gift of beauty and rarity. Therefore, they can never be custom-made to perfection. Big, loupe-clean perfect untreated stones in ideal colours from sought-after origins are an extremely rare exception. The number of existence will never be sufficient to fulfill market demand. After all, it is the imperfection that grants a gem its individuality.
What are your major plans for the next two years?
The Asian market is for sure of strategic significance for our further development. Since 2012, we have strengthened our capacities in China by setting up a trading office in Beijing which allows us to benefit from the proximity to our customers, helps us have a deeper understanding of the market, while enforcing a mutually trusted relationship with the key players in China’s jewellery industry.
Nevertheless, there are not without obstacles. On the technical side, gemstone classification, certification, mounting, knowledge and customs issues should be enhanced. Also, we look forward to seeing more favourable legal framework and regulatory environment in the medium-term future.
In a global perspective, markets in Russia, Europe and North America are carrying equal importance for us. We will continue to strive hard for further expansion. For instance, we have recently opened an office in Paris. And the preparation for Baselworld is well underway.
Do you foresee a major surge in the popularity of gemstones in ‘Radiant Orchid’ or variations of this hue?
Began to emerge as a worldwide colour trend one or two years ago, green will last for a while longer. The trend might have got a push by Pantone pronouncing Emerald Green as last year’s colour of the year.
For sure, the influence of fashion is more obvious than it used to be since jewellery and coloured gemstones have become more lifestyle-oriented. My prediction for the next upcoming trend colour is blue, although it might only be prevalent by 2015. After all, blue and green symbolize nature. In the blue range, fashionistas can go for sapphire, tanzanite, aquamarine or even lapis lazuli. After all, blue, next to green and red, is traditionally highly appreciated in Asia.
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