Thanks to rapid economic growth in recent years, the income levels of consumers are rising in the Chinese mainland and their purchasing power is increasing at a breathtaking pace. Meanwhile, government policy also encourages domestic consumption. As a high-end consumer item, jewellery is very popular among mainland consumers. Jewellery consumption is expected to increase further and offer much growth potential.

Hong Kong jewellery companies made a head start in launching retail business and building brands in the mainland market years ago. After long years of efforts, many of them have established a good reputation and are well recognised in China today. Certain Hong Kong jewellery brands are much sought after by mainland consumers who generally have a very positive impression of "Hong Kong brands".

The Hong Kong Trade Development Council (HKTDC) had conducted surveys on jewellery consumption in 17 mainland cities in 2002 and 2004 respectively. The latest study was carried out in 2007 in 10 of the 17 cities previously surveyed to identify the latest jewellery consumption trends and analyse the advantages of "Hong Kong brands" in the mainland market. It is hoped that the findings and recommendations of this report will serve as useful reference for Hong Kong companies wishing to enter the mainland jewellery market.

The 10 cities covered in the survey conducted in February 2007 are Shanghai, Hangzhou, Nanjing, Beijing, Dalian, Shenyang, Wuhan, Chengdu, Chongqing and Guangzhou. A total of 3,000 female adult consumers who had bought jewellery in the preceding two years were interviewed. The findings are summarised as follows:

• In terms of products, necklaces and rings are the most popular, with platinum, diamond and gold being the most favoured materials. Consumer motivations are equally split between impulse buying and planned purchase. Consumers mostly purchase jewellery because they like the design. Other considerations include craftsmanship and quality of the material. Creative, unique designs are most sought after.
  
  
• Price-wise, about half of the respondents expect they will spend less than RMB2,000 - which is quite a small budget - on jewellery in the year following the survey. Nevertheless, individual respondents have very high purchasing power with some of them saying that they had bought jewellery priced at over RMB50,000 before. The average budget of the respondents for buying jewellery is RMB3,783. The majority of respondents find the current prices acceptable.
  
  
• Most consumers have the habit of visiting jewellery shops, with 30.9% of the respondents visiting jewellery shops at least once a month. Most purchases are made on holidays, and department store counters are the most popular shopping spots. Consumers are generally satisfied with jewellery shops, but there is still room for improvement. In particular, the respondents expect better after-sale service such as jewellery cleansing.
  
  
• TV commercials are the most influential promotion vehicle as consumers mainly rely on them for information on jewellery trends. Promotions at shopping malls/department stores can influence buying decisions most.
  
  
• Respondents like Hong Kong brands and Hong Kong jewellery brands. Overall, they find Hong Kong brands "unique in character", "fashionable" and "trend-setting". The reasons they like Hong Kong jewellery brands include: "innovative style", "creativity" and "tasteful design". The majority of them are willing to pay a premium of up to 35.9% on average for Hong Kong brands over mainland brands which offer similar product quality.

The following are our recommendations:

• Most respondents are receptive to new brands and are willing to pay a premium for Hong Kong jewellery brands. Hong Kong companies should capitalise on this advantage and clearly define their market positioning and target customers. By so doing, they can effectively build up their brand.
  
  
• Product-wise, Hong Kong jewellery brands should target mid-to-high end markets and foster a new consumer culture by offering Hong Kong styles, Hong Kong brandname, Hong Kong designs and Hong Kong management that suit local consumer preferences.
  
  
• In terms of pricing, while most consumers are low-budget shoppers, some of them have very high purchasing power. Hong Kong companies should adjust the styles and price of their products accordingly. Value-for-money is the key.
  
  
• Where sales channels are concerned, department store counters are the most popular shopping spots. Hong Kong companies may consider setting up points of sale together with other jewellery counters in the same department store. This can draw more customers and potentially offer a greater overall return.
  
  
• In terms of promotion, Hong Kong companies can boost brand penetration through TV commercials which, coupled with store promotions, could produce unexpectedly good results.

Consumer habits vary from city to city and among different age groups. Hong Kong companies should offer the right products to suit local consumer preferences.

This new report is available at TDC's Retail Outlets. It can also be purchased through the TDC Bookshop section in the TDC's trade portal: info.hktdc.com.