Executive summary
As China’s economy developed rapidly in recent years, consumer spending grew exponentially and demand for luxury goods was especially voracious. Even with the sharp rise in the cost of jewellery materials, mainland consumers’ demand for jewellery showed no sign of abating.
Due to the enormous size of the mainland market and the different consumption characteristics of consumers in different cities, generalisations are not possible. The Hong Kong Trade Development Council (HKTDC) has already conducted surveys on jewellery consumption in various mainland cities in 2002, 2004 and 2007. In order to track the latest trends in jewellery consumption and better understand the advantages of “Hong Kong brands” in the mainland market, a survey was once again conducted in 2011 in 10 mainland cities. It is hoped that the findings and recommendations of this survey will be useful to Hong Kong companies intent on entering the mainland jewellery market.
From all the surveys conducted so far, it is found that mainland consumers in general are knowledgeable about Hong Kong jewellery brands to a certain extent. In the minds of many consumers, Hong Kong brands are not only a guarantee of quality, but also stand for trendiness and good taste. Hong Kong companies should therefore make good use of this excellent reputation in tapping the potentials of the mainland jewellery market.
The current survey was conducted in May 2011 and the 10 cities covered were Shanghai, Hangzhou, Nanjing, Beijing, Dalian, Shenyang, Wuhan, Chengdu, Chongqing and Guangzhou. A total of 3,000 adult females who had bought jewellery in the preceding two years were interviewed. The findings of the survey are summarised as follows:
- The ratio of impulse purchase to planned purchase is 47:53, with the share of planned purchase showing a slight increase from 2007. Necklaces and rings remain the most popular jewellery items while most consumers are planning to buy ones made with gold, platinum and karat gold. It is worth noting that in recent years more and more consumers are buying gold jewellery to hedge against inflation. Purity of material, good workmanship and reasonable price are the most important criteria in buying jewellery. Unique, creative design is still the most favoured.
- More than 40% of the respondents plan to spend Rmb4,000 or more on jewellery in the coming one year—a higher percentage than in 2007. For all the surveyed cities, the average budget for jewellery is Rmb4,566, representing an increase of more than 20% over the corresponding figure in the 2007 survey. The increase in average budget is particularly high in Dalian, Hangzhou, Shenyang and Wuhan.
- Consumers have the habit of visiting jewellery shops from time to time, with some 65% of the respondents visiting jewellery shops at least once every half a year. The proportion of those visiting jewellery shops at least once a month shows a drop from 2007 though. Most jewellery purchases are made on holidays, and jewellery counters in department stores are the most popular shopping spots. On the whole, consumers are satisfied with jewellery shops, but there is still room for improvement: jewellery shops are expected to provide better after-sale service, particular in offering jewellery cleaning.
- In recent years, there has been more exchange of jewellery information among mainland consumers while the mass media became less of an important information channel. Nevertheless, TV commercial is still the channel through which consumers most often get their jewellery information. The respondents also reckon TV commercials attract their attention most.
- As in previous surveys, the respondents like Hong Kong brands and also Hong Kong jewellery brands. Hong Kong jewellery brands are known for their superior product styles and designs. Respondents have preference for Hong Kong brands when it comes to buying low- to mid-range and mid- to high-end jewellery. Compared to mainland brands of the same quality, the majority of respondents are willing to pay a higher price for Hong Kong brands. The average price premium is 46% or 10 percentage points higher than that found in 2007.
In sum, it is recommended that:
- Since the respondents have a positive attitude towards new brands and are willing to pay a premium for Hong Kong jewellery brands, Hong Kong companies should make good use of this advantage in building their brands by clearly defining their market positioning and target customers.
- Product-wise, Hong Kong jewellery brands should target the mid- to high-end segment and foster a new consumer culture by offering Hong Kong styles, Hong Kong brand name, Hong Kong designs and Hong Kong management in addition to meeting local consumer preferences. Furthermore, Hong Kong brands also have potentials to compete in the high-end and low-end segments. Though there are less risks in making inroads in the mid-range market, on gaining a firm foothold, Hong Kong companies should consider venturing into other market segments to increase their market shares.
- In pricing, as consumer purchasing power rises gradually, Hong Kong companies can make moderate adjustments in product and price. Yet customers with weaker purchasing power should not be ignored. Hong Kong companies can introduce products under different brands or different series to attract different customer groups. They should take special note of cities with higher-than-average budgets for jewellery or where the growth in average budget is particular high.
- Where sales channels are concerned, department store counters are the most popular shopping spots with consumers. Hong Kong companies can therefore consider setting up new points of sale in department stores which already have other jewellery counters. This way, more customers can be attracted due to the clustering effect for the benefits of all parties. As consumers have growing expectations for after-sale service, jewellery shops should consider offering jewellery cleaning, repair and resizing services. If these services are already on offer, they should be highlighted in promotion materials in order to make deeper impressions on customers.
- As for promotion strategy, Hong Kong companies can boost brand penetration through TV commercials. When coupled with more vigorous in-store promotions, this could produce unexpected publicity. In addition, as word-of-mouth has become increasingly important, Hong Kong companies can consider setting up a membership club or sending out discount coupons to encourage referrals among consumers and their relatives and friends.
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.
Objectives and methodology
Background and objectives
As China’s economy developed rapidly in recent years, consumer spending grew exponentially and demand for luxury goods was especially voracious. Even with the sharp rise in the cost of jewellery materials, mainland consumers’ demand for jewellery showed no sign of abating. In order to track the latest trends in jewellery consumption, the Hong Kong Trade Development Council (HKTDC) conducted a survey on jewellery shoppers in 10 mainland cities in 2011 on top of the ones it had conducted in 2002, 2004 and 2007. Based on the survey findings, recommendations were made for Hong Kong companies wishing to venture into the mainland jewellery market.
As in the 2007 survey, this latest survey covered the 10 cities of Shanghai, Hangzhou, Nanjing, Beijing, Dalian, Shenyang, Wuhan, Chengdu, Chongqing and Guangzhou. Since male consumers were known to buy jewellery mostly to please others or as gifts, this survey targeted female consumers who had bought jewellery in the preceding two years so as to better understand the consumption patterns and preferences of jewellery end-users.
Previous surveys have found that mainland consumers are highly receptive to Hong Kong jewellery brands. So in the current survey, in addition to using the marketing model of 4P (Product, Price, Place and Promotion) to better understand the mainland jewellery consumption market, respondents were also asked about their views on branding. The findings should therefore be useful reference to Hong Kong companies intent on entering the mainland jewellery market.
Method of data collection
In this interview the “Central Location Interview” method of carrying out face-to-face interviews was employed. The locations selected were shopping malls with heavy shopper traffic in each city (See Appendix 1 for interview locations).
Interview targets, sample size and distribution
All respondents were females who had bought jewellery in the two years prior to the survey; they had all lived in the city surveyed for at least two years, and were either working or retired.
The survey was conducted in May 2011. The total sample size was 3,000, with 300 consumers interviewed in each city. The 300 respondents in each city were divided equally among three age groups, namely 18-30, 31-45, and 46 or above.
Background information on the respondents, including their age, education level and income is given in Appendix 2. Detailed analyses of the consumer habits of the different age groups are given in Appendices 3 and 4.
