Shanghai - Jily Ji was
24 when she got her first diamond ring, a 2.5-carat solitaire given to her by
her parents. In the three years since, the executive assistant from
Shanghai has amassed a 15-piece diamond collection, including a ring, pendant
earrings and necklaces that she bought for herself.
“We don’t
have to passively wait to be gifted a diamond by a man,” the unmarried college
graduate said. “Diamond jewelry is a natural way to express ourselves. It’s a
far better investment than most fashion items as it won’t only gain value, but
can also be passed down through the generations.”
Financially
independent, college-educated and born in China after 1980, Ji personifies a
key consumer group the world’s diamond industry is counting on for growth.
So-called millennials now account for 68 percent of diamond jewelry sales by
value in the world’s most-populous country -- worth $6.76 billion last year,
according to research by De Beers SA, the world’s biggest diamond producer.
Millennial
women - defined by De Beers as those aged from 18 to 34 - spent about $26
billion on diamond jewelry in 2015 in the world’s four main markets, acquiring
more than any other generation, Chief Executive Officer Bruce Cleaver said in a
report in September. These 220 million potential diamond consumers are still a
decade away from their most affluent life stage, representing a “significant
opportunity” for the industry, Cleaver said.
Tapping
them could buoy prices from the gems, which dropped 18 percent last year, the
most since 2008.
No jade
Diamonds
have caught the eye of Chinese consumers only recently because of their
exposure to western lifestyles and marketing, said Ji, a business-English
graduate, who counts Harry Winston Inc. and Tiffany & Co. among her
favorite diamond jewelers. Her mother, for example, is more likely to purchase
jade or gold jewelry, she said.
For Chinese
millennials, diamonds are more of a fashionable mark of achievement
instead of a symbol of everlasting love, said Joan Xu, Shanghai-based associate
planning director at J. Walter Thompson, an advertising agency. The trend is
changing how companies such as Chow Tai Fook Jewellery Group Ltd. and Shanghai-traded
Lao Feng Xiang Co. are designing and marketing jewelry in China.
Read also: Lovers don't buy diamonds the way they once did
Chow Tai
Fook, the market leader in Chinese jewelry with a 5.7 percent share, bought
Boston-based Hearts on Fire Co. for $150 million in 2014, giving it a greater
selection of unique, millennial-preferred pieces, including earrings and
pendants with multiple small diamonds embedded in precious metals.
‘Practical
and fashionable’
“We need to
tap into this audience very quickly with designs for millennials that are more
practical and fashionable, such as mixing gold with diamond,” Chow Tai Fook
Executive Director Adrian Cheng said in an interview in Hong Kong.
Chow Tai
Fook, for whom millennials make up half its clientele, will introduce new lines
and products by the end of 2017 and has signed spokespersons including
29-year-old South Korean actor-singer Li Min-ho and rapper G-Dragon, 28, to
reach millennial buyers, Cheng said.
That may
help the Hong Kong-based retailer, which operates more than 2 000 jewelry and
luxury watch outlets, boost sales and profit, which have slumped since mid-2014
as an economic slowdown and crackdown on graft dampened Chinese demand for
luxury goods.
Read also: De Beers sees good demand for rough diamonds
Shanghai-based
Lao Feng Xiang, which is majority-owned by the Shanghai government with 3 000
stores throughout China and 5.4 percent of the market, is also working to offer
more choice for millennial women, said Marketing Manager Wang Ensheng.
Fashion chaser
“This
consumer isn’t looking for super expensive jewelry,” Wang said in a telephone
interview. “She’s chasing fashion, she changes outfits every day, and wants
jewelry to match. What we need to provide for her are pieces that are personalized,
unique - but not too expensive, as she’ll possess many, not just one diamond
piece.”
The young
middle-class are the target for Luk Fook Holdings International Ltd., said its
executive director Nancy Wong. Hong-Kong based Luk Fook, which has 1,400 stores
in mainland China and a 0.7 percent market share, will provide manicurists in
some of its stores and “handsome” chauffeurs to win over females customers, she
said.
Independence
is the top trait Chinese millennial women identify with, according to a Female
Tribes survey conducted by J. Walter Thompson that interviewed 4,300 women
across nine countries about a year ago. More than two in five Chinese
respondents said financial independence was more important than
marriage, and 32 percent identified success as financial independence.
Pandora
A/S, the Denmark-based maker of silver charm bracelets, said it’s intentionally
staying away from love-centric marketing. This year, Pandora doubled its number
of stores throughout China from 43 to 81.
No lovey-dovey
“You won’t
see a couple in our images,” said Isabella Mann, Pandora’s Hong Kong-based vice
president of marketing for Asia on the phone. “That has been a premeditated
decision. We want our brands to appeal to as many people as possible, and we
think it’s dated to show a lovey-dovey couple in a jewelry ad.”
That may be
wise. An unfavorable demographic shift leading to fewer weddings has
resulted in a “tepid” outlook for Hong Kong-listed jewelry companies, HSBC
Global Research analysts Lina Yan, Karen Choi, Erwan Rambourg and Vishal Goel
said in an October report. They forecast that wedding rates would fall 1
percent in each of the next two years because of a decline in the population of
millennial women.
Divorce in
China has also risen, with more than 3.84 million couples splitting up in 2015,
a 5.6 percent increase from the year before, said China’s Ministry of Civil
Affairs in July. The national divorce rate is now 2.8 per 1 000 individuals, up
from 0.9 in 2002.
Marriage not forever
“Companies
that are built on the institution of marriage, like diamond companies, will
struggle a little bit unless they evolve,” said J. Walter Thompson’s Xu. “The
idea was that marriage is eternal - like diamonds - but what happens when
marriage is not seen as eternal anymore?”
Millennials
getting divorced could ultimately be positive for the diamond industry. De
Beers’ research from the US found that Americans spend 20 percent more on the
diamond ring bought for their second marriage than their first, said
Stephen Lussier, De Beers’ executive vice president for marketing on the phone.
“There’s no
reason why second marriages in China should not take the same trend as in the
US,” he said. “This gives us an opportunity at a larger market.”
-With
assistance from Daniela Wei and K. Oanh Ha.