The Chinese Gem and Jewelry Industry Reacts to COVID-19
As the country gradually reopened at the end of March 2020, business remained very slow. But China has one of the most advanced digital ecosystems in the world. Mobile technology leapfrogged laptops and credit cards, while cheap, reliable, and efficient delivery companies made it easier for consumers to spend. Local businesses turned to the internet to reach old and new clients during the pandemic (figure 1). With fewer clients visiting stores, sales often started by livestreaming products, followed by sending photos and videos through WeChat, and then utilizing WeChat Pay or Alipay to complete the transaction. Chinese digital infrastructure made a big difference in helping the jewelry business bounce back so quickly.
During these difficult times, relationships with suppliers and clients are the key to keeping business moving. Trust built over years is extremely important when buying or selling valuable gemstones and jewelry online without actually seeing the items in person. Major jewelry chain stores, which rely more on foot traffic, experienced a dramatic double-digit decline in business in the first half of 2020, while small jewelry stores that rely more on personal contact and relationships felt little to no impact.
Due to travel restrictions, we did see certain product shortages on the market, as it was initially difficult for some goods to enter China. Some Chinese dealers took a risk and broke quarantine to visit Sri Lanka or India to source products. On the other hand, some international businesses even came to China for products and services when jewelry and diamond cutting factories closed in the U.S. and India.
In general, jewelry sales had negative growth for the first half of the year. Sales started to pick up in July. Sales from October, November, and December were up 16.70%, 24.80%, and 11.60%, respectively, compared to the same months in 2019. International jewelry brands such as Cartier, Tiffany, and Van Cleef & Arpels (figure 2) did exceptionally well in 2020 since Chinese consumers could not travel for overseas shopping trips.
Figure 2. To maintain social distance, Van Cleef & Arpels limited the number of clients in stores. Here, clients wait outside the store in the Shanghai IFC Mall. Photo by Chen Shen.
With social distancing and a mandatory mask policy in stores, these luxury brands saw an immediate business jump in China by April 2020. Plaza 66 Shanghai, owned by Hang Lung Properties, is the country’s top luxury shopping mall. Its reported retail sales were up 60% in a year with COVID-19, demonstrating an amazing year for luxury brands in China.
