As manufacturers report greater demand volumes and retailers having confirmed a steady increase in business in April and May, platinum marketing organisation the Platinum Guild International (PGI) reports that the Chinese jewellery industry is in the beginning stages of a V-shaped recovery following disruptions brought about by the Covid-19 pandemic.
The organisation also notes that a confluence of factors is leading to platinum becoming a strategic category as the industry embarks on recovery programmes.
The greater demand volumes through April and May are a result of a “remarkable level” of replenishment buying in platinum, notes the PGI, adding that retailers across the board, from national and Hong Kong chains, through regional chains, independents and wholesalers are showing a strong interest in a new generation of designs that provide stronger margins.
By May, the guild points out, platinum fabrication volumes returned to a level on par with the same period in 2019. Retailers are witnessing a gradual ramp-up in business volume since reopening, with some reporting sales of platinum jewellery reaching 80% or higher compared with the same period in 2019.
Overstocking of gold and gem-set jewellery as a result of Covid-19 lockdowns imposed since January had led to an inventory backlog in these categories, thereby resulting in record high prices for gold having depressed buying among consumers and retailers, while a record low platinum price has made platinum an attractive replacement for some pure gold and k-gold counters, offering improved profit margins, notes the PGI.
These market influences come at a time when PGI's manufacturing partners are prioritising new collections and design directions to meet changing consumer needs. Underpinning this innovation is the development of new alloys and technologies led by the PGI.
This includes hard platinum and heat-treatable alloys that enable refined contours in designs, better polish, better shape retention and a higher resistance to scratch.
The PGI notes that these innovations are expected to enable platinum to capture a more competitive market position in the jewellery space. The incorporation of new materials, including enamels, also adds colour and novelty enabling more designed collections, such as Chow Tai Fook’s Frozen II and Angel of Peace Collection.
PGI CEO Huw Daniel says the guild’s initiatives to engage with both the jewellery trade and consumers have been extremely effective in accelerating the recovery post-Covid-19.
“Despite pandemic uncertainty ahead, we hope conditions will allow for continued foot traffic to stores to ensure the sell through needed for a sustainable recovery.”
Further, the PGI reports that more players are entering or re-entering the platinum jewellery industry, leading to a rising interest in platinum fabrication.
New players from the gem-set and gold retail industries have also started to carry platinum; for example, Shining House, which is a newcomer in platinum gem-set jewellery, now carries platinum in 100 of its more than 300 stores in Central and East China, with the intention to include a platinum exclusive collection – One Life One Love – to all stores by the end of the third quarter.
PGI China MD Pui P Poon says the jewellery industry underwent tremendous pressure at the height of the Covid-19 outbreak in China, during a traditional peak sales period.
“The fact that platinum jewellery is now a key value contributor to, and is at the heart of the industry’s recovery, is testament to PGI and our partners’ tenacity and joint efforts.”
Furthermore, the PGI notes that, with branding and storytelling attached to an increasing amount of platinum jewellery, consumer uptake is recovering faster than expected.
“These factors have come at a time when the industry is eager for something new to aid in rebooting their business, and platinum appears to be fulfilling that role,” says Daniel.