China’s demi-fine jewelry market: Thriving or losing its sheen?

China’s demi-fine jewelry market sits at a sweet spot. Filling the void between luxury investments and fast fashion, the segment’s trend-driven designs and affordable price points initially struck a chord with Chinese spenders. But persistent post-pandemic headwinds, paired with China’s recent employment downturn, is threatening business. Can the market keep up the momentum? Global disruptors Globally, the demi-fine jewelry segment still shows potential. The market is reportedly poised to grow from $2.53 billion in 2023 to $7.62 billion by 2031, expanding at a CAGR of 14.80 percent during the forecast period (2024-2031). In China, the market remains a key area of interest for Western players as they recognize a gap for global brands. Last year, the country's jewelry sector hit a historic high of $113.6 billion, growing by 14 percent YoY. Spearheaders like APM Monaco led the way. The label established a presence in China in 1992, cementing itself as one of the first global movers into the arena. Pandora was another early entrant in 2010, which, over its first decade of operations in China, opened 240 stores covering 78 cities. Danish brand Missoma followed suit in 2015, investing heavily in its online e-commerce model. Eponymous British label Monica Vinader followed in 2018. Shifting consumer priorities Demi-fine jewelry’s model of affordability resonated with Chinese consumers when the concept first hit the mainland. But with customers today tightening their purse strings, priorities are changing. “Consumers are increasingly opting for products that can retain their value over time, favoring gold as a safe-haven asset,” Antonello Germano, marketing manager at Daxue Consulting tells Jing Daily. “Demi-fine jewelry brands, which don’t offer the same long-term value retention as fine gold jewelry, may struggle to attract cost-conscious buyers.” Local consumers' growing preference for authentic Chinese design may also put global brands in jeopardy, says Gillian Gu, General Manager of Fashion at Gusto Collective. "Non-Chinese jewelry brands need to continually reassess what their core competitiveness is," Gu adds. Domestic businesses, such as Chow Tai Fook and Lao Feng Xiang, are supplanting Western brands as shoppers favor local retailers who specialize in culturally resonant pieces. Who’s winning? Pandora is one brand feeling the pinch. It posted subpar performance between 2019 and 2023, with sales sharply declining in recent years from DKK 1.97 billion (around $284 million) in 2019 to DKK 564 million (roughly $82 million) in 2023. Yet others aren’t in such dire straits. “Even though brands like Swarovski and Pandora are declining, other demi-fine jewelry brands such as APM Monaco are thriving,” says Germano. APM Monaco, which filed for a listing on Hong Kong’s HKEX main board in 2021, reported 16 percent YoY revenue for 2023, with sales in China accounting for 55 percent of total revenue, according to the brand. The label boasts 230 stores across the mainland. Monica Vinader has also remained on a steady growth trajectory post-Covid. “Our business has been strong and has been growing consistently since 2021,” Martin Byrne, Monica Vinader’s Chief Commercial Officer, tells Jing Daily. Byrne points to the brand’s accessibility as a reason behind its impressive performance. “We have consumers in both Tier one and Tier two cities, as well as some in Tier three,” he adds. “We also have quite a broad age range compared to other brands.” Localization leads the way Byrne also cites Monica Vinader’s holistic approach to its product range as a reason behind its success. “We’re not reliant on products specifically designed for China,” he says. “Some of our best sellers are styles that aren’t traditionally what people thought would work.” Nonetheless, localization still plays an important role in Monica Vinader’s China expansion. Livestreaming for instance is a key tool, says Byrne. The brand works closely with popular KOLs across the mainland, as well as influential KOCs. This month, Monica Vinader teamed up with Chinese musician and actress Wang Fei Fei on an exclusive capsule collection of mixed-metal pieces. “It’s one of our biggest collaborations this year,” Byrne says. APM Monaco is another player doing localization right. “We’ve been working to better serve [Chinese] customers and meet their needs and expectations,” Philippe Prette, CEO and co-founder of APM Monaco, tells Jing Daily. Shopping festivals in particular are peak seasons for the arena, with shoppers gifting, and treating themselves to semi-precious accessories. Brands are taking note. Missoma unveiled a limited-edition line of red garnet accessories in January to mark the Lunar New Year, while APM Monaco will capitalize on the lucrative upcoming sales period surrounding Qixi Festival (August 10), often described as China’s Valentine’s Day, with a special project. Pandora, meanwhile, is counting on local collaborations to help rejuvenate its image among Gen Z shoppers. Last month, the brand teamed up with Tencent-owned Honor of Kings on a collection of pendants and bracelets, which customers could purchase via Pandora’s Taobao store. The deal marked the first time Pandora has partnered with a major gaming IP in China’s e-sports industry. Robust digital strategies As economic woes cloud the future of physical retail in China, brands are investing aggressively in e-commerce to reprise their market dominance, given that online sales across the country are forecast to reach $3.56 trillion this year. Monica Vinader’s digital-only presence across the mainland has proven advantageous. The brand wasn’t hit with the blow of store closures during lockdowns (though it did still face challenges with logistics, such as shipping, says Byrne) and has focused solely on funneling all of its resources into its online playbook. Initially managed in China by a wholesale partner, the brand decided to take control over its digital presence in 2021. Today, its portfolio of online channels spans WeChat, Weibo, Bilibili, Tmall, and Xiaohongshu, with plans to diversify further. Missoma is also banking on a robust e-commerce model to maximize its impact. As part of its China-centric digital strategy, the brand brought in Beijing-based luxury influencer Savi to design a capsule collection and host Missoma’s Tmall livestream in 2022. What’s next? As local consumer preferences evolve, is there still a place for demi-fine jewelry in China? Yes, says Germano, but brands will need to play their cards right. “The market will likely consist of a stronger emphasis on quality to appeal to value-conscious consumers,” Germano says. He notes that collaborating with domestic names and IPs, enhancing after-sales services, and leveraging the mainland’s guochao trend can also help brands resonate with local preferences. Pandora is shifting gears in the hope of a rebound. The brand delayed its official relaunch last year, redirecting its focus to enlisting new ambassadors, such as Chinese singer Liu Yuxin, to boost its cultural prestige. But for thriving players like Monica Vinader, it’s a case of keeping the wheels turning. “A big part of it is continuation,” Byrne says. The brand will carry on fleshing out its presence online with new content, while exploring other avenues. Opening a physical store is also potentially on the cards. “It’s a question of the right time. I definitely see it as part of the future,” Byrne adds.

China’s demi-fine jewelry market: Thriving or losing its sheen?

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Published May 30, 2024

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China’s demi-fine jewelry market: Thriving or losing its sheen?