Luxury jewellery’s resilience and growth in China

六月 19, 2024

“In 2023, China's economy grew by approximately 5.2%, a noteworthy figure given the OECD put global growth at 3.1%.

Despite a decade-long deceleration, China’s luxury sector exhibited remarkable resilience, expanding by 12% YoY, driven by fashion, lifestyle, and jewellery, with the latter growing sales between 15% and 20%.

The luxury jewellery market saw significant gains, with Richemont, the parent company of Cartier and Van Cleef & Arpels, reporting a 25% increase in sales in mainland China, Hong Kong, and Macau for the last quarter of 2023. Chow Tai Fook, a Hong Kong-based jeweller, although facing a revenue contraction of 4.3%, remains a powerhouse, accounting for 7.6% of total jewellery sales in China and achieving over €10 billion ($10.9 billion) in revenue in FY 2023. Its aggressive expansion, growing from 5,700 outlets in 2022 to over 7,200 by March 2023, underscores its market dominance.

Urbanization and rising disposable incomes have fuelled demand for luxury goods, including diamonds. Between 2008 and 2018, diamond jewellery sales in Greater China expanded at a 10% compound annual growth rate (CAGR), outpacing global averages and establishing China as a critical market for diamonds.

While 2023 presented challenges including Covid-19 disruptions, stagnant income levels, and a struggling property market, which led to an 18% contraction in the jewellery sector, the future looks promising for China’s luxury market.

Driven by an expanding middle class and a rise in high-net-worth households. The World Bank projects that by 2030, nearly 70% of China’s population could belong to the middle class. Moreover, the Centi-Millionaire Report 2023 forecasts a surge in ultra-high-net-worth individuals in key Chinese cities.

Luxury diamond jewellery continues to captivate Chinese consumers. The Diamond Insight Report 2023 by De Beers Group revealed that diamonds are the third most-coveted gift category among Chinese women. Additionally, 70% of affluent female consumers prioritize diamond jewellery in their luxury purchases.

Bain & Company predicts that mainland China’s share of the global luxury market will rise from 16% in 2023 to at least 20% by 2030, with the luxury jewellery segment expected to expand at a 3% CAGR from 2024 to 2028. This growth is propelled by increasing wealth among high-net-worth individuals and a burgeoning retail landscape in less-developed urban areas.

Despite declining birth rates and a focus on individualism leading to fewer marriage registrations, diamond engagement and wedding rings remain integral to the Chinese wedding industry. In 2022, 75% of bridal diamond jewellery purchases were for engagement or wedding rings.

Beyond the bridal market, evolving attitudes towards relationships and love continue to drive diamond jewellery sales.

The China Diamond Acquisition Study 2023 commissioned by De Beers highlighted that 71% of Chinese women see diamonds as a timeless symbol of love, and 78% of non-bridal diamond gifts mark relationship milestones or express love and commitment.

This presents an opportunity for diamond brands to expand into the non-bridal segment, promoting diamonds as symbols of love beyond wedding traditions.

China’s macroeconomic landscape, coupled with an evolving stance on luxury and diamond jewellery, presents a dynamic market with both challenges and opportunities.

As China’s middle class and HNWIs continue to rise, the demand for luxury jewellery, particularly diamonds, is poised for sustained expansion. Brands must navigate economic shifts while tapping into the evolving consumer sentiments to ensure long-term growth in China’s vibrant luxury market.”

SOURCE: Jing Daily

www.jingdaily.com