China Looks To Southeast AsiaBy SBMA
Published on December 20, 2019
Once a relatively closed market, Southeast Asia’s gold jewellery market has been gradually opening up and undergoing reforms, and is now growing rapidly. Economic growth in the region is stimulating robust gold demand. In the past nine years, gold and jewelley demand in Southeast Asia has grown steadily. Gold consumption in the 10 ASEAN countries reached 309 tonnes in 2018, second only to China and India.
Chinese firms are eager for a piece of the pie. Some large gold and jewellery companies have begun to cooperate with leading local companies to export products, technologies and other services. China not only has a large output of gold jewellery, but is also an important gold jewellery manufacturing and innovation hub. Being located close to Southeast Asia means that collaboration opportunities abound in gold jewellery design, process technology and intelligent manufacturing, and more.
Gold jewellery processing and design firm Batar Group from Shenzhen, China, is already active in Singapore, Malaysia, Thailand and other countries with large Chinese communities. The firm works with leading gold and jewellery companies to supply wholesale bridal and retail jewellery products that cater to the local market. In recent years, Batar Group has cooperated with leading companies from Singapore, Malaysia to Hong Kong. Batar hopes that soon, its gold products can be directly exported to ASEAN from its Shenzhen, Hangzhou and Tianjin production facilities to reduce operating costs and improve efficiency.
At the Asia Pacific Precious Metals Conference (APPMC) in June 2019, Batar Group chairman Mr Edmund Chau said the firm would strengthen exchange and cooperation with overseas markets, continuing the development of gold products and exploring the essence of 5,000 years of Chinese culture, as well as combining Southeast Asia’s culture with creative designs and high-tech craftsmanship to provide exceptional cultural products made in gold for the ASEAN market.
In Thailand, Shenzhen-based Yuehao Jewellery supplies wholesale gold jewellery and exports technology and equipment that have raised the efficiency and standard of domestic jewellery production. The firm has started to explore the Indonesian market.
Mr Defen Zhou, president of Yuehao, said he believes the local Chinese have enough disposable income to spend on gold jewellery, and is also confident about the Singapore market, which is comparatively more developed.
Chinese jewellers going global respect the diversity of preferences in Southeast Asian market and cater their offerings to the local gold and jewellery culture. For example, in the process of exploring and developing the Thai market, Yuehao Jewellery has adopted many Thai designs into its products to attract domestic consumers.
Even though there is a gap in the development of the Southeast Asian jewellery market in terms of product purity and market maturity compared to the Chinese market, there is no difference in the popularity of gold among locals.
According to the World Gold Council’s Gold Demand Trends Q1 2019 report, gold jewellery demand remained stable in Malaysia and Thailand, while Indonesia and Vietnam have stronger demand, largely from the local Chinese market.
Seeing the market potential and strong consumption, especially among local Chinese, SK Jewellery Group, a well-known local jewellery retailer in Singapore, first introduced 24K gold jewellery to Singapore in 2012 and became the first retailer to sell 9999-purity gold in the local market. The firm partners Batar and Yuehao in its design and manufacturing process.
Retailers like Chow Tai Fook from Hong Kong have also started operations in Southeast Asia. Today, Chow Tai Fook has a network of outlets in Malaysia, Singapore, Vietnam and Cambodia.
Customs data shows that in 2018, mainland China and Hong Kong exported a total of $621 million in gold jewellery to Southeast Asia. Gold jewellery exports also reached 4.6 tonnes, with a growth rate of 3.6%, accounting for 87% of exports.
While more Chinese gold and jewellery companies are paying attention to the Southeast Asian gold market, there is no denying that their entry to markets there has not been as fast as expected. Many firms are finding hard to replicate the rapid growth of China’s gold market in Southeast Asia – the region’s gold business needs to develop incrementally and cannot grow as fast as China’s.
Today, China is one of the world’s largest gold jewellery processing and manufacturing centres, with exquisite processing technologies and rich labour resources. New Chinese products and technologies such as solid gold, coloured gold and 5G gold rank among the forefront globally. Prices of Chinese gold jewellery products are also competitively priced. As such, there is an opportunity for China’s gold and jewellery industry to cooperate with ASEAN enterprises and develop the Southeast Asian markets.
Meanwhile, the transformation and upgrading of China’s gold and jewellery industry are accelerating. As the younger generation becomes the main consumer group, China’s gold jewellery innovation has hastened and product structure has changed significantly: 3D solid gold, mirror gold, 18K gold and 22K gold are becoming more popular among the new generation of consumers who want fashionable designs and cheap prices. At the same time, ancient gold, 5G gold, and HD gold are growing in popularity. In addition, there is a large space for cooperation in the financial sector and e-commerce.
“With the rapid development of technology, more intelligent manufacturing will take place in the jewellery industry. While production efficiency was greatly improved by automation and mechanisation, we can also expect China’s jewellery manufacturing capacity will be further improved. The large innovative manufacturing bases in China can fully meet the needs of local and overseas retailers and wholesalers”, Mr Roland Wang, World Gold Council managing director, China, said at the APPMC.
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