Year of the Golden Pig

RAPAPORT… A strong yuan currency and surging stock index have been boosting retail sales in China since the end of 2006. Overall diamond sales continue to be satisfactory, with stable prices, in the days leading up to the Chinese New Year.

While worrying about more transparency in prices and reduced margins, dealers are pleased to see that the market is gradually accepting a wider range of the 4Cs spectrum. For example, good SI and I to K stones, and even certificated fancy light yellow diamonds, are in demand, thanks to promotions by the retail sector.

Buoyant Retail Market Before Holiday

A happy mood prevailed everywhere in different markets in China in February, when the most important selling season of the year was approaching. This year’s Chinese lunar New Year — the Year of the Pig — falls on February 18, four days after Valentine’s Day.

Bridal jewelry remains the best seller before the lunar New Year, because many couples are rushing to get married before the Year of the Pig, which is said to be inauspicious for weddings. Dealers worried that sales of diamond wedding rings would decline this year, but sales in the prelunar New Year holiday period actually were better than the same period of the previous year. The retailing sector was also quite optimistic for sales on Valentine’s Day, which has developed into a popular custom for gift-giving among lovers and young couples.

Retail Product Trends

Animal signs are the source of many traditional customs and the inspiration for product design. The Chinese zodiac is composed of 12 animals, which are in a 12-year cycle used for designating the years according to the lunar calendar. They represent a cyclical concept of time, rather than the Western linear concept of time. The theory of “five elements” — the basis of the universe according to Chinese Taoism — indicates that 2007 is a year of metal, or gold, which means it is not just the Year of the Pig, which comes every 12 years, but also the Year of the Golden Pig, which comes every 60 years.

As a result, gold became the hottest metal in January and February. China Gold Coin Inc., China’s sole wholesaler of gold bars and coins, issued 3,000 kilograms of 99.99 percent pure gold bars celebrating the Chinese New Year of the Pig at the end of 2006. The gold bars were weighted from 50 to 1,000 grams. Up to 70 percent of the gold bars sold out before their debut in the market.

Jewelry factories are reported to be extremely busy fulfilling their orders for gold jewelry and ornaments. According to China Gold newspaper, Lao Feng Xiang, a local jeweler based in Shanghai, sold out more than three tons of gold jewelry in two wholesale jewelry fairs held especially for the New Year and the Chinese New Year market.

The Golden Pig is a popular image that is being seen everywhere in 2007. And while Year of the Pig is considered an inauspicious time to marry, Year of the Golden Pig is considered an auspicious time to be born. It is believed that babies born this year will have good fortune and lead comfortable and wealthy lives.

In fact, jewelers are trying to diversify their products as well as promote special themes in order to survive in a year that is expected to be lower in bridal jewelry sales. Many of them plan to increase jadeite and colored stone jewelry, in addition to nonwedding diamond jewelry, like women’s self-purchase diamond jewelry and diamonds for birthdays, Valentine’s Day and other occasions. And jewelers in Beijing and Shanghai have begun to make preparations for tourist-themed jewelry for the 2008 Olympics and the 2010 World Expo, which will take place in Beijing and Shanghai, respectively.

“The would-be decline in sales of wedding diamond jewelry should not affect this year’s sales too much,” said a diamond dealer from Beijing. “As a matter of fact, we should take advantage of the opportunities that lie in the Year of the Pig. For example, there will be a baby boom because of the golden pig. We can learn from the Millennium diamond promotion in 2000 to design and create newborn baby diamond souvenirs for the market this year. After all, we are optimistic for sales in 2007 as long as the yuan stays strong.”

The exchange rate of the Chinese yuan to the U.S. dollar was recorded at 7.75 on February 14, 2007, compared with 8.30 on July 15, 2005, the day the Chinese government removed the yuan peg to the U.S. dollar.

The benchmark Shanghai Stock Market Composite Index climbed to 2,993 points on February 15, from around 1,200 points at the beginning of 2006.

The Marketplace

• The majority of demand is focused on VS+, G-I, 1/10 -1/3 and VVS, G-H, 40 to 50 points, prices being stable compared with those of previous months.
• New Year promotions for carat stones in the retail section created good demand for bigger goods and, consequently, a shortage in supply.