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Industry, retailers seek new ways to spur platinum jewellery demand in China

13th November 2018

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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The platinum industry is, together with key retailers, changing its strategy in China to try to reignite platinum jewellery demand in that market, says financial services provider BMO Capital Markets.

In a research note published on Tuesday, it points out that China accounts for 55% of global platinum jewellery demand. China’s demand for platinum jewellery has, however, decreased from 2.1-million ounces in 2013 to about 1.34-million ounces.

Compared with the gold market in China, platinum still remains very small at roughly one-tenth of the size, and with jewellery retailers restructuring over the past five years, amplified by price underperformance, platinum has underperformed its peers, explains BMO MD for commodities Colin Hamilton.

The small size of the platinum jewellery industry in China has also meant a relative reluctance to embrace technology, he adds, but notes that platinum is also widely known to be more durable than gold, particularly for diamond settings.

Platinum has, however, faced competition from 18 ct gold, where the addition of copper, nickel, and/or palladium increase strength.

As part of changes being implemented to grow demand for platinum jewellery, retailers are starting to charge per jewellery piece, rather than per unit weight, and are focusing on providing tailored and commissioned pieces that achieve better margins, says Hamilton.

Retailers in China, such as Chow Tai Fook, have also started to target the younger market with new tailored platinum offerings with less or no gold, as such jewellery pieces attract weaker margins.

“They are hoping for mid-high single-digit industry growth, with platinum trending in line with that. Platinum also has a much better percentage of sales than gold in their online store and to younger buyers, and has limited sales currently in Tier 3 cities,” Hamilton points out.

Rhodium has, meanwhile, been one of the best performing commodities this year, and remains a China jewellery beneficiary, he adds, noting that this figure has risen by more than 40% in the year to date.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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