Patriotic Gen Zs Fuel Pandemic Jewellery Boom In China

China’s greatest jewelry retailer Chow Tai Fook is banking on the younger, patriotic and prosperous Era Z cohort shopping for “China-chic” items to gasoline progress.

The sturdy demand from these born after 1995 for jewelry impressed by Chinese language symbols resembling dragons and phoenixes — the normal emblems of emperors and empresses — has pushed substantial progress in the course of the pandemic.

“[Gen Z] is likely one of the cohorts that has the flexibility [to pay] and is most prepared to spend huge,” stated Chow Tai Fook managing director Chan Sai-cheong in an interview with the Monetary Instances.

“Lots of them should not breadwinners of their households . . . to allow them to get pleasure from life extra in contrast with their dad and mom.”

The youthful era was patriotic and prepared to spend on home manufacturers over the foreign brands that had loved extra status prior to now, stated Chan. Guochao — a pattern roughly translated as “China-chic” — has led to an explosion of Chinese language luxurious manufacturers.

“They love our [traditional] merchandise, which might go along with the fashion tremendously,” Chan defined.

Millennial and Gen Z cohorts accounted for greater than 56 per cent of gross sales for Chow Tai Fook’s “heritage assortment” between April and September of 2021, in response to the corporate.

Based in 1929, Chow Tai Fook grew from one goldsmith’s store within the southern Chinese language metropolis of Guangzhou to turn into often called the Tiffany’s of the east.

The corporate has prospered in the course of the pandemic. Whole retail income on the Hong Kong-listed jeweller soared 79 per cent between April and September final yr to HK$44bn (US$5.7bn). Throughout that interval, income from mainland China rose 82 per cent to HK$38bn.

Chow Tai Fook is planning to open greater than 2,000 new shops throughout the nation by 2025, © Paul Yeung/Bloomberg

Chan stated progress was partly due to China’s “one-child” coverage — carried out between 1980 and 2015 to curb the nation’s inhabitants — that resulted in members of Gen Z rising up in middle-class households with disposable revenue. The cohort makes up about 15 per cent, or about 200m, of China’s inhabitants, in response to McKinsey.

With greater than 5,000 shops in over 660 cities in mainland China, Chow Tai Fook is plotting a speedy enlargement at the same time as President Xi Jinping pushes his “common prosperity” social reforms and cracks down on corruption.

It’s planning to open greater than 2,000 new shops throughout the nation by 2025, a lot of which might be positioned in smaller third- or fourth-tier cities which have a fast-growing center class.

The corporate is specializing in “reasonably priced luxurious” or less complicated gold jewelry gadgets, resembling pendants, bracelets and rings, with most gadgets priced on a median of not more than Rmb10,000 (US$1,570).

China’s private luxurious items market has doubled in dimension between 2019 and 2021 to symbolize about US$69bn, or 21 per cent, of the general international market, in response to a Bain & Co report issued in November.

Gold jewelry at a Chow Tai Fook retailer © Chan Ho-him/FT

That progress came about when luxurious markets in Europe, Japan and the remainder of Asia have solely “partially recovered” final yr and had nonetheless not reached pre-Covid ranges, it stated.

Xianchi Dai, affiliate professor of promoting on the Chinese language College of Hong Kong, believed the demand for high-end jewelry in mainland China would solely get stronger.

Progress “will proceed over the subsequent [few] years”, stated Dai, including that “frequent prosperity” would additional drive gross sales as the center class elevated and Gen Z’s shopped on-line.

“[Gen Z] likes various kinds of jewelry . . . their desire for the design of Chinese language cultural parts might additionally rise throughout instances of excessive worldwide tensions,” he stated. “They’ve grown up in the course of the digital age and thus they’re much extra pleasant to on-line buying.”

One among Chow Tai Fook’s rivals, Hong Kong-listed Lukfook Jewellery, additionally has plans to speak in confidence to 350 new shops this yr with a lot of them positioned in lower-tier cities, whereas additionally increasing its ecommerce platforms to achieve the youthful era.

“[We will] step up our efforts to advertise the gross sales of reasonably priced luxurious jewelry merchandise . . . within the younger shopper market,” stated Nancy Wong, Lukfook’s government director and deputy chief government. “The mainland China market shall be our progress driver.”

The give attention to China comes as Chow Tai Fook and Lukfook’s gross sales in Hong Kong are shedding momentum. Income has picked up however continues to be decrease than pre-pandemic ranges on account of fewer mainland Chinese language vacationers, who have been the most important customers.

For now, the retailers are nonetheless holding out hope for a border reopening between Hong Kong and mainland China, which has been in talks for weeks however has but to materialise, to assist increase progress within the metropolis.

Peter Suen, Chow Tai Fook’s government director, stated: “A partial resumption of quarantine-free journey may not be capable of convey us swift progress [in sales] . . . however that’s positively a greater scenario.”

Courtesy: Universal Personality