Jewellery in China:There are huge opportunities for International Brands in China E-commerce market that can meet high demand of affluent Chinese consumers.

China is undergoing rapid population growth, with increased urban concentration, and brisk financial development of middle class who are now emerging as China’s upper class as the society moves from production to consumption focused.

Market analysis of Jewellery in China market

China is now the second largest world economy by GDP, following the United States and leading from Japan and Germany. It is also the world’s second largest retail market, and is expected to exceed the U.S. by 2017.

Demand and jewellery sales in China is seeing growth each year, amid 2005 and 2012, sales grew 224%. Greater China (including Hong Kong & Macau) is now the world’s second largest consumer of luxury products.  According to report published by Polygon, an active online community and trading network for qualified gem and jewellery professionals, Jewellery is also the third largest investment category in China, behind real estate and automobiles.

What’s the Demand of Gold Jewellery in China?

In (Q1 2014) China surpassed India as the world’s largest consumer of gold, it is not an overestimation to say that China’s growing market will continue to race for the top position.

Popular Chinese style gold ornaments

Popular Chinese style gold ornaments

In China, lower prices combined with favourable macro-economic factors – including the swiftly emerging middle class, greater disposable income, growing urban populations, and lenient government restrictions on gold buying – set new records for jewelry, bar and coin demand, which reached at 1065.8 tons. In China, demand for gold jewelry increased nearly 200%, from 224 tons to 669 tons in 2013 when compared to records of gold demand in 2004.

 

 

 

What’s the Demand of Silver Jewellery in China?

Demand for Silver in among the Chinese citizens that can be met by China Ecommerce Jewellery Brands

China is the world’s largest producer of silver jewellery, and jewellery manufacturing accounted for 34% of silver consumption in China.

Silver Dragon Bracelet

Silver Dragon Bracelet

Generally, silver jewelry is popular among younger generations in first and second-tier cities of China, and provides an opportunity for low-cost choices.

Rhodium-plated silver is preferred as it has the look of platinum, most of the customers are interested in expensive looking jewelry without the high price tag.

 

 

 

What’s the Demand for Diamonds among other Jewellery in China?

Diamonds are most the favorite ornament among rich Chinese. Now, there are more and more options to buy diamonds; the price has become increasingly sensitive. Majority of consumers start their purchasing process online by shortlisting and comparing prices of diamonds on various websites and sales are completed in person. Therefore, having a sturdy online digital presence is absolutely necessary for diamond jewellery retailers.

 

In China, there is high-pitched demand for diamonds and thus, China is positioned as the biggest emerging diamond buying markets. Gradually, demand is expected to grow, and by 2018, it is estimated that demand will outweigh supply, in large part due to the expanding Chinese and other emerging markets.

International Jewellery Brands in China

Cartier's popular product among Chinese

Cartier’s popular product among Chinese

In Cartier’s 2016 annual report, Richemont’s management emphasised China as a key growth market, up 26% year over year, which balanced weakness in Hong Kong and Macau. Chinese and Hong Kong sales made up 22% of Richemont’s revenue last year. Cartier is making a substantial growth by putting a virtual storefront on China’s WeChat.

 

For Jewerly Brands , Wechat is the King

While for some brands it might seem odd for a luxury brand to put a storefront on a messaging app but L2 research recently called WeChat, owned by Chinese internet giant Tencent as “the most important platform for luxury brands” in China today, as reported by the Financial Times.

WeChat has been introduced to Chinese netizens for a little over 5 years, but boasts 850 million monthly active users. Many of the local jewelry retailers, such as Chow Tai Fook, already have storefronts on the site.

Tiffany can do better in Chinese ECommece

Tiffany is currently losing on global sales but considers China as an “engine of growth”. Although, its Asia-Pacific region reported a minor decline in 2016, which was due to drops in sales in Hong Kong, Macau, Taiwan, and Australia. CEO Michael Kowalski indicated on the recent Q4 conference call, “We certainly see … Mainland China opportunity as continuing to be very, important. In order to cash from this enormous opportunity Tiffany needs sustainable presence on Chinese E-commerce platforms.

Tiffany invests mainly in Branding

Jewellery in China:Tiffany Bracelet

Tiffany Bracelet

However, Tiffany uses WeChat for marketing, it has not embraced a WeChat storefront yet, as Cartier.  Tiffany is still following old school marketing attributes perceiving that by being on E-commerce platform, the brand might lose its exclusive appeal. Chinese fashion blogger Hazel Meng was quoted by the Financial Times as saying this is a mistake. She proposed that Tiffany can market it silver bracelets on China’s digital platforms to test E-commerce performance. As many young Chinese prefer Western brands with “a little heritage” and like to buy online.

Jewellery brands struggle with Chinese e-Commerce

Brands that are reluctant to clinch opportunity on e-commerce and only believe in in-store experience are putting them at risk of losing sales in China. Its the matter of thought paradigm shift,where jewellery brands needs to understand that in China sales increase by branding and being present on ecommerce platform .

Pandora Successful case study on Tmall

Pandora is playing well on Chinese E-commerce digital playground by marketing its trendy, silver charm bracelets on various digital platforms of China. Pandora entered China in 2011 and now has staggering 100 stores. Last year, Pandora emerged on social e-commerce platform of China, and also owns a storefront on TMALL. Pandora targets middle-aged women in the U.S., but in China it is extremely popular among 25-35-year-old demographics. Pandora also partnered with Chinese celebrity actress, Ivy Chen to promote its products in Chinese market.

Jewellery in China:Charms by Pandora

Charms by Pandora

“The launch of PANDORA jewellery on Tmall.com is another important step in establishing the PANDORA brand amongst Chinese consumers. TMALL is a clear leader in China’s internet retail space, and is the right business partner for PANDORA to get the broadest approach to the Chinese consumer,” Kenneth Madsen, president, Pandora Asia Pacific, was quoted as saying in an October 2016 press release.

Chinese sales increased 175%

Chinese sales increased 175% in 2016, with same-store sales in the fourth quarter of 44%.

As of now, China is representing one-third of the global jewelry market, it is still only 4%-5% of Pandora sales, which means there seems to be high likelihood for Pandora to do well in China.

Characteristics of customers that are expected to Grow Jewellery Brand Sales

  • New wealth – those that want to show off status
  • Emerging market consumers – brands represent trust and status This holds true in many emerging markets, particularly, in China
  • Young customers – turn to brands for self-realization + expression

Jewellery brands are confronted with new environment. Here they are faced with increasing competition, partnership, globalization and shrinking margins. American jewellery companies can no longer trust on local markets to generate growth, as demand has shifted towards emerging markets like China.

Companies are developing global strategies to adjust shifting consumer shopping habits by accepting wide-ranging multi-channel approach, and considering to offer customers more than one channel for purchasing, this way they expect to drive more sales.

E-commerce Solutions for International Jewellery in China 

There are notable challenges, to enter Chinese ecommerce platform but these challenges can also be translated into opportunities by developing local market centred strategies and partnering with local digital marketing agency that offer all-inclusive digital marketing campaign to reach, act, convert and engage Chinese consumers. Entering Chinese ecommerce platform is for those brands who are ready to seize this immense opportunity.

China has the window of opportunity for International Jewellery Brands in Chinese cross-border, e-commerce market. To penetrate Chinese e-commerce market digital marketing agency recommends two are extremely vital solutions; Branding and presence on well-known e-commerce platforms of China.

International Jewellery Brands can avail Ecommerce opportunities by Branding themselves on Chinese digital platforms

 

Jewellery in China: Upper middle class Chinese family celebrating parent's birthday

Upper middle class Chinese family celebrating parent’s birthday

 

In China Branding is everything

Successful digital marketing campaign requires an extremely concrete Branding. This is achieved by an in-depth understanding of the traditional Chinese culture. This also involves taking advantage from various cultural events and occasions. For example, apart from the wedding market, many jewellery companies began to target, the gift market for friends and families, like buying a gift for a new-born baby or on parents’ birthday. Online marketing is one of the key strategies for the International jewelry brands.

Chinese people do not buy on Brands website, they prefer ECommerce platforms

 Presence on Chinese E-commerce Platforms

To enter e-commerce market of China International brands must learn policies of digital platforms. This includes TMALL, JD.com, Haitao, Taobao and WeChat (social e-commerce)

How can Jewellery Brands Enter Chinese E-commerce market via TMALL?

Jewellery in China: Tmall.com

Jewellery in China: Tmall.com

TMALL holds the biggest market share in e-commerce market of China at 57%. It mainly focuses on premium brands. This characteristic makes TMALL most expensive e-commerce marketplace in China. For Chinese consumers, high price indicates high quality therefore many customers prefer buying their products from TMALL.com TMALL is owned by Alibaba Group. It provides an opportunity to International brands to open exclusive online stores and directly sell products to Chinese consumers without being physically present in China.

To protect the exclusivity of the online marketplace, TMALL has invitation-only policy where only qualified international brands can either be invited to join or can apply through a certified digital marketing agency (TP). To sell products through TMALL, international brands needs to follow some strict guidelines and can contact digital marketing agency for updated ecommerce  policies in China list is hereunder:

Requirements for an International brand to operate an online TMALL store

  • To penetrate Chinese e-commerce market, international brand must be an authorised distributor and have corporate identity outside China.
  • The company must be independent, and hold retail and trade rights
  • The company must be the brand owner or authorized agency having the authority to sell products under its name
  • The company must hold relevant inventory certification for the stock

Apart from aforementioned formalities the brand needs to have strong digital marketing strategy catered towards Chinese online customers. The foreign brand needs to gain visibility and build E-reputation in order to have success on TMALL platform.

How can Jewellery Brands Enter Chinese E-commerce via JD.com?

JD is China’s largest online direct sales company. It relatively has less market share than TMALL.com. It operates seven fulfillment centers and 166 warehouses in 44 cities. JD.com has 4,142 delivery stations across several districts of China.  International companies can open individual online stores on JD.com and brands are permitted to import food, beverages, apparel and shoes from overseas. JD’s cross-border service, JD Worldwide, enables suppliers to sell directly to Chinese consumers without a local presence.

Jewellery in China: JD.com

Jewellery in China: JD.com

JD.com is less expensive than TMALL.com. It provides active global promotion of JD Worldwide (mainly in the U.S. and Australia) and supports in-house logistics service.  JD.com has a zero tolerance policy for counterfeit products.

Requirements for an International company to operate an online JD store

  • To penetrate Chinese e-commerce market, international brand must be an authorised distributor and have corporate identity outside China along with registration capital of over RMB500,000(Around US$76,660.00)
  • The company must be independent, and hold retail and trade rights
  • The company must be the brand owner or authorized agency having the authority to sell products under its name
  • The company must hold relevant inventory certification for the stock

JD allows operating an online store in 3 different ways

  • Franchising Business Partner –International brands can set up store on JD.com and avail the facility of JD warehouse to stock their products. JD provides warehousing, delivery of goods and customer service.
  • Licensing Business Partner – International brands can set up their online store and can ship the order. JD will supervise customer service and process invoice.
  • Self – Operation Partner – International brands can sell on the JD platform, however warehousing and delivery of good must be supervised by the international brands.

Apart from aforementioned formalities the international brands are expected to have Chinese consumer oriented digital marketing strategy to attract targeted customers.

How can Jewellery Brands Enter Chinese E-commerce via Haitao Web Interface?

In Chinese language, the term Haitao means; buying goods online from overseas. Growing numbers of Chinese shoppers have been engaged in international cross-border import trade over recent years. The transaction worth of China’s online shoppers buying on overseas online platforms accounted for 74.4 billion yuan in 2013, up from 12 billion yuan in 2010.

Image showing growing popularity of cross-border e-commerce in China

Image showing growing popularity of cross-border e-commerce in China

The sales expected to rise up to 140 billion yuan by the end of 2014, reported by Fung Business Intelligence Centre.

TMALL Global and Amazon.cn are among the most popular cross-border e-commerce platforms to buy jewellery. Expert local marketing agency can provide further information on how to promote international jewellery products using Haitao websites.

How can Jewellery Brands Enter Chinese E-commerce via Taobao?

Taobao is owned by Alibaba Group. It offers largest C2C e-commerce marketplace in China. Taobao allows registered or non-registered businesses to sell directly to consumers. It has more than a million sellers, along with countless product categories. Establishing a store on Taobao is virtually free but the online marketplace is ruled by small sole sellers who compete fiercely on price and honesty and authenticity is an unwritten rule of their trade ethics. Mostly, Chinese web celebrities are the most prolific sellers. They take advantage of their popularity and drive traffic to their Taobao online store from blogs, online videos and social media. Chinese web celebrities are mostly known for selling cosmetics, baby and clothing products on Taobao. Sellers with low budget and low quality products opt for this platform. However, just like all other online platforms in China, Taobao also needs strong digital marketing skills to be visible to online customers.

Cost: Alibaba charges a small fee per transaction made via Alipay. Creating an online store is free, and retailers need to show their Chinese ID card.

Logistics: Individual stores manage logistics (including warehousing, customs clearance, customer delivery) and use their own third party or a recommended Taobao nominated third party.

Customer Payments: Online transactions paid by customers are managed through Alipay.

How can Jewellery Brands Enter Chinese E-commerce via WeChat Official Account?

WeChat is magical bullet of digital ecosystem of China. It is all in one app which integrates social e-commerce seamlessly. There are three types of service accounts available for promoting business on WeChat; WeChat Subscription Account, WeChat Service Account and WeChat Enterprise Account. Businesses present on WeChat via aforementioned accounts can broadcast information to their followers. The information post can be shared, reposted or generate comments by the followers.

WeChat Subscription Account:

Subscription account is the most basic version of all official WeChat accounts. It can be used to push information to the followers. The messages sent to followers are grouped in one folder containing all other subscription account that the user is following. It is generally used for the daily news and information broadcast. However, upon received a message the user is not notified, in fact the user needs to go into the desired subscription folder to retrieve delivered content. Secondly, subscription accounts have much less integration ability and advance functionality that can be integrated into service account.

WeChat Service Account:

Wechat official accounts summary

WeChat Service Account is considered the most suitable for business and organisation that aspire to access advanced WeChat Official Account. Service accounts allows more APIs (Minisite) than Subscription Account and companies are enable to build its own application, get inquires and broadcast promotional content to its followers. With the help of Service Account, one message per week and 4 messages per month can be sent to the followers. Users are able to receive push notification when the message is delivered. WeChat Service Account provides higher degree of functionality to users, with the help of customized menu along with integrated e-commerce facility within the app.

WeChat Enterprise Account:

Enterprise Accounts are also called Corporate Accounts, these are mainly used for internal company use, for example; sharing memos, private group chat or a simple project and task management system. These accounts are being increasingly used within Chinese organizations. These accounts are secure and followers have to go through an authentication process unlike other WeChat account where gaining followers is the primary goal.

WeChat Official Account Guidelines

The WeChat accounts formed to target Chinese users must be registered inside China or else it will not be visible to Chinese users. Possessing an Official WeChat accounts requires a legal Chinese entity, a Chinese Residence ID and A China mobile phone number. International companies are advised to partner with expert Digital Marketing Agency, which is willing to apply for an official WeChat account on behalf of the international company. Together with opening an official WeChat Account, it requires sound and expert knowledge of the market and digital strategy to target right customer group and successfully penetrate WeChat landscape.

Chinese economic development has established investment opportunities for International brands by providing in-house state of the art social e-commerce platforms that are engrained in Chinese consumer’s lifestyle. Digital Marketing agencies provide International Brands with tools that are optimal to unlock this enormous market to earn their full potential and multiple sales with millions of users. If you are interested in exploring Chinese Digital E-Commerce platforms, reach out to us for customised advice.

 

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