Dragons fly as Chinese millennials take a shine to gold

Luk Fook Holdings (International)

29/08/2021 01:00

* Demand for gold jewellery doubles in first half of 2021
    * Popularity among consumers in their 20s and 30s a factor
    * Patriotism and e-commerce boom help drive the trend
    * China's heritage gold mkt to reach $15 bln by 2024
-consultancy

    By Emily Chow
    SHANGHAI, Aug 29 (Reuters) - For many affluent young Chinese
consumers, modern simplicity is out and tradition is back in
when it comes to jewellery.
    Sales of gold bracelets, pendants, earrings and necklaces
that draw on dragons, phoenixes, peonies and other traditional
Chinese patterns and symbols are flying among consumers,
especially those in their 20s and 30s, helping drive a rebound
in gold demand in the country after a pandemic-induced slump.
    An e-commerce boom and national pride are fuelling the rise
in demand for what is known as heritage gold jewellery, which
requires intricate craftsmanship and can command premiums of 20%
or more over conventional gold jewellery, industry executives
say.
    The popularity of these new pieces began to take off in
mid-2020 and helped gold jewellery demand in China - the world's
top consumer of the metal - more than double in the first half
of 2021 from a year earlier to pre-pandemic levels, according to
the World Gold Council (WGC).
    A strengthening economy and improving consumer spending are
helping sales. Young consumers' interest in the classic designs
and often chunky gold jewellery with a matte finish marks a
turnaround in their appetite for the precious metal, previously
eschewed as an ostentatious sign of wealth and status symbol for
older generations.
    It also provides a boost for gold at a time when demand from
India, the world's second-largest consumer, has been hit as the
pandemic delayed weddings, where gold is traditionally included
in the dowry.
    
    
   
    Major Chinese jewellery retailers like Hong Kong-listed Chow
Tai Fook Jewellery Group Ltd  1929.HK  and Luk Fook Holdings
International Ltd  0590.HK  said their heritage gold collections
are doing well especially among young consumers. 
    Chow Tai Fook, China's largest jeweller by market value,
said its heritage gold collection accounted for 40% of the total
value of its retail sales of gold products in mainland China in
its fiscal year-ended March 2021 - up from 29% the previous
year, faster growth than for other jewellery.
    Part of heritage gold jewellery's appeal, especially among
young consumers, reflects a desire to be patriotic amid a
backlash against Western apparel brands in China that expressed
concern over allegations of rights abuses in the Chinese region
of Xinjiang. Beijing has denied the allegations.  urn:newsml:reuters.com:*:nL1N2O100A
 urn:newsml:reuters.com:*:nL1N2LN0E5
    "The younger generation grew up when China's economy was
stronger, they have more confidence in Chinese development and
may have less admiration for Western culture," said Roland Wang,
managing director of WGC China.    
    "They want to have more traditional Chinese culture in their
daily life, which can be represented through what they wear or
how they decorate their home... Heritage gold can deliver this."
    Gao, a 29-year-old sales executive from eastern Jiangsu
province, who only wanted to be identified by a single name,
says she has spent 30,000 yuan ($4,620.15) this year on a
bracelet and hairpin, featuring filigree patterns, for everyday
use. She plans to pass them on to her two-year old daughter one
day. 
    "I really like Chinese culture and prefer products with
Chinese history. I often wear (traditional) Han-style clothing,
which is why I choose heritage gold, to match my overall look,"
Gao said.
    Jewellers say the products are increasingly popular with
millennials in Beijing, Shanghai and other big cities too and a
boom in e-commerce, giving consumers access to much greater
choice of jewellery products, is reinforcing the trend.
    "The pandemic indeed made me spend more on gold jewellery...
It sparked a lot of live-streaming sales," said Gao.  
    
        
    GOLDEN OPPORTUNITY
    In anticipation of longer-term demand, gold jewellery
manufacturers are stepping up investment in heritage gold. A
manager at a Shenzhen-based manufacturer, who declined to be
identified as he was unauthorized to speak to the media, said
his firm is mainly promoting heritage gold this year after
receiving large orders from major brands and customers. 
    "Heritage gold sales were amazing this Lunar New Year
holiday, surpassing that of conventional gold jewellery," he
said. 
    "After seeing this trend, our company expanded research and
development on design and technology to create more new designs
of heritage gold. Other gold jewellery manufacturers in Shenzhen
are doing the same." 
    
    
    The China Gold Association says heritage gold jewellery has
become the main driving force in the industry's recovery from
the impact of the pandemic. And fast growth looks set to
continue. According to industry and market research consultancy
Beijing Zhiyan Kexin Consulting, the market for heritage gold in
China increased tenfold between 2017 and 2019, and is seen
reaching nearly 100 billion yuan ($15.43 billion) by 2024. Its
share of China's gold jewellery market is forecast to jump from
less than 2% in 2017 to nearly a quarter by 2024.  
    "Gold jewellery enterprises are rapidly recognising the
importance of cultural value and are digging deep into it," the
consultancy said in a report on heritage gold in January. 


($1 = 6.4815 Chinese yuan renminbi)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Mainland China’s gold demand by quarter    https://tmsnrt.rs/2Wnw0Vw
Global gold jewellery demand by quarter    https://tmsnrt.rs/2WmMgGq
Global gold jewellery demand growth by quarter    https://tmsnrt.rs/3kkN1YR
Mainland China’s gold jewellery market value outlook    https://tmsnrt.rs/3sKlHHi
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Emily Chow in Shanghai, additional reporting by
Beijing and Hong Kong newsrooms; Editing by Shivani Singh and
Susan Fenton)
 ((emily.chow@thomsonreuters.com; +862120830020; Reuters
Messaging: emily.chow.thomsonreuters.com@reuters.net))