China jewelry reports lowest sales growth
Source: www.JewelleryNewsAsia.com
Lunar New Year sales in mainland China and Hong Kong, though reporting growth, were below expectations. That implies consumers may increase this year’s spending at a slower pace than in 2011.
Holiday sales on the mainland grew 16 percent to RMB470 billion, or US$75 billion, according to data from the Ministry of Commerce, the slowest pace since the 2009 financial crisis and three percentage points below last year’s increase.
This may mean trouble for the growing number of foreign companies rushing into China jewelry market, especially luxury brands, said Jason Yuan, an analyst at UOB Kay Hian in Shanghai, in an interview with Bloomberg. “This year is going to be tough, probably the toughest year for many foreign luxury brands since they entered into China,” he said.
Sales of jewellery and valuable watches during Chinese New Year were quite disappointing, said Caroline Mak, chairman of the Hong Kong Retail Management Association (HKRMA). “Sales growth of over 30 percent last year is unsustainable against a worsening macro-economic backdrop.”
Some member jewellers reported customers buying smaller diamonds than they used to, she added.
Sales at Hong Kong giant jewellery retailer Chow Sang Sang jumped as much as 28 percent in the first three days of the holiday, which began on January 23. Sales director Dennis Lau said the company expects quarterly sales growth to slow to 10 percent in the second quarter from 15 percent in the first, Bloomberg reported.
“We can’t see how strong the recovery in the US is, and the debt crisis in Europe never seems to end,” Mr Lau said. “If those economies mess things again, it could severely hurt global consumer confidence.”
Another Hong Kong jewellery chain store Luk Fook noted that sales at stores open at least a year grew 13 percent in mainland China and 4 percent in Hong Kong and Macau during the week-long holiday. That was below expectations as “a seasonal surge failed to materialize” for the industry, according to Citigroup Global Markets.
“The sales of jewellery and valuable watches are good indicators of how strong the Chinese tourists’ purchasing power is,” Ms Mak from HKRMA said. “We expect some Chinese shoppers to cut back on big-ticket items as the wealth effect fades.”
Ms Mak said her association expects Hong Kong retail sales growth to slow to 15 percent this year from 25 percent in 2011.
The Lunar holiday, like Thanksgiving or Christmas in the US, is among the biggest selling periods in China and parts of Asia. Chinese consumers spend more at home and at overseas vacation spots such as Hong Kong and Macau. This year’s holiday extended from January 23 to 29 and marked the start of the year of the dragon.
|
