jewellers are opening outlets in China, where demand for jewellery is set to
grow while appetite wanes in western markets.
Royal jeweller Garrard
became the latest in a string of British brands to open an outlet in the
Lane Crawford department store in Hong Kong last month, where brands usually
test the waters for Chinese demand.
The British Jewellers'
Association (BJA) held a showcase in Beijing also last month organised by
designer Fei Liu and attended by Chinese actress Liu Shishi.
'The endgame is China,'
Boodles managing director Michael Wainwright told Reuters. The upmarket
British jeweller, founded in 1798, opened an outlet in Lane Crawford in
August and plans to expand into the mainland along with an expansion of the
'What appeals to us is
what appeals to everyone else about the place - their appetite for luxury
goods and their existing wealth and their likely wealth in the coming five,
10 years,' Mr Wainwright said.
The newcomers stand to
benefit from British culture and design as they seek to tap a market that is
growing rapidly and is already the world's second-largest market for gold
and the biggest for platinum jewellery.
'I think there is a sense
of coolness with British jewellery, something distinctive about their
designs, which makes it different from other European brands,' said Angelica
Cheung, editor-in-chief of Vogue China.
Demand for gold jewellery
in China rose 13 per cent year-on-year in the third quarter, and platinum
demand is expected to increase by 2 per cent by the end of the year. By
contrast, UK and US jewellery consumption fell by 14 per cent and Italy's by
16 per cent in 2010.
Tiffany's annual report
showed an increase in sales of 29 per cent in Asia-Pacific in 2010 versus 12
per cent in the Americas.
Stephen Webster, a
British jeweller with outlets in Spain, Russia and the
United States, opened
in Lane Crawford in 2010. 'China is certainly in our sights,' founder
Stephen Webster said in an e-mail.
Theo Fennell first opened
in Lane Crawford in 2005, and its chairman and chief executive of the same
name said earlier this year that the brand wanted to establish itself on the
'The Chinese are keen to
invest in precious metals and very interested in luxury products produced by
up-and-coming UK designer brands,' said Lindsey Straughton of the BJA.
But Jolene Chao, a
23-year-old financial recruitment consultant at Michael Page in Beijing,
said: 'UK brands have only a few high-end stores in China. Therefore they
are yet to be nationally acknowledged and admired.'
Vogue's Ms Cheung said
that British jewellers need to position themselves carefully and highlight
what makes their brands different.
They face local
competitors such as Chow Tai Fook and established foreign players such as
Tiffany and Cartier. Cartier opened its first boutique in 1997 and now
boasts 36 across China.
The market is growing so
rapidly, however, that newcomers do not need to take market share from
established brands to succeed, said Fflur Roberts, global head of luxury at
'(Chinese consumers) do
like brands that have a story behind them. There has to be a lot about the
heritage of that brand within the advertising,' Ms Roberts said, citing the
success of British clothes brand Burberry in China.
The warrants given to
British companies that are official suppliers of the royal family are 'a
wonderful marketing route to take', she said.
One Hong Kong banker said
an exhibition about British jewellery through the ages proved popular in
Shanghai a few years ago and that 'it might be a good idea to start
marketing the history and royalty of most British brands in China'. --
2011 December 12
A report from Barclays Capital says China
now accounts for 12% of global luxury goods sales. This is set to rise
further as the country's market is forecast to grow a further 20-30% a year.
Bear Stearns and GOME bet big on China
Bear Stearns and the founder of GOME
create a $500 million fund to invest in growing businesses in China's retail
US investment bank Bear Stearns and Eagle
Investment Group, an investment company of the GOME group, have announced a
strategic investment alliance to focus on opportunities in the retail sector
Bear Stearns’ private equity arm, Bear
Stearns Merchant Banking (BSMB), will work with the 50:50 joint venture.
Each partner will contribute $250 million of capital to the fund, which will
be deployed in retail businesses in China, helping them to expand both
domestically and beyond China. Bear Stearns representatives told press
typical investment size would be in the $25 million-$100 million range and
further capital raising could be considered, once the initial commitment is
Eagle Investment is a closely held
company chaired by Wong Kwong Yu, founder of Hong Kong listed GOME
Electrical Group. Wong is one of China’s richest men. He is
self-made, having established GOME in 1987 and building it one of China’s
largest electronics retailers. GOME is today the largest retail business
listed on the Hong Kong Stock Exchange and a constituent of the MSCI China
BSMB manages around $5 billion of funds.
Since it was founded in 1997, it has invested in more than 50 companies
including Aeropostale, Balducci’s, New York & Company, Seven for All
Mankind, Stuart Weitzman and Vitamin Shoppe Industries in the retail sector.
In April 2006, Wong sold $160 million of
stock in GOME to meet free float requirements, reducing his stake in the
company from 75.67% to 69.6%. The sale was well-timed, coinciding with a
rally in the Hong Kong index to an all-time high. There was good appetite
for the stock, illustrating that investors seem to share Wong's conviction
that China’s retail sector is set to continue booming.
In July last year, Wong then merged China
Paradise’s network of 205 stores into GOME’s 296 and created a
leadership position in the retail sector. He has now committed to injecting
the home appliance stores he owns into the listed entity by 2011.
“Bear Stearns Merchant Banking will
contribute to Eagle’s success in China”, says Wong, drawing attention to
the combination of the US private equity firm’s experience in the retail
sector and his own retail China-centric experience. Wong told press he was
bullish on opportunities in China’s second-tier cities and the rural
market. He also clarified that the fund would not invest in GOME or in home
electrical appliances companies.
China has become the world’s second
largest economy in terms of purchasing power parity and is registering
strong annual GDP growth. The country’s 1.3 billion strong population and
growing purchasing power have made investors bullish on the retail sector.
In February, Wal-Mart acquired the Trust-mart chain of 101 hypermarkets in a
deal estimated to be worth $1 billion. Other international retailers
investing in China include Carrefour, Auchan, Watson, Tesco and Metro.
But simultaneously, local entrepreneurs
like Wong are waking up to the opportunities that lie beyond the obvious
metros and big cities. A large percentage of China's population resides in
the smaller towns and cities where the opportunity for organised retail is
huge. If the retail experience of Bear Stearns and Eagle gives them a
competitive edge in identifying who tomorrow’s winners will be, the fund
is set for success. - By
Sameera Anand ASIA
FINANCE 21 March 2007
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