Many Chinese like to chase deluxe brand name handbags or cars but when they buy jewellery, they feel “value for money” is more important and this tends to benefit Hong Kong-listed jewellery brands Chow Tai Fook, Chow Sang Sang and Luk Fook.
Brands like Nike and Adidas dominate sportswear, handbags are the domain of Chanel, LV and Prada, and luxury cars are the turf of Audi and BMW, according to a Morgan Stanley report.
But when it comes to buying gold or diamonds for a wedding or a gift to a new born baby, the mainland Chinese jewellery buyers go for local brands.
“If we use Hong Kong as a reference for a mature Chinese city, we can see that despite the high disposable income per capita, mass market jewellery brands such as Chow Tai Fook, Chow Sang Sang and Luk Fook still own the lion’s share of the jewellery market in Hong Kong,” Morgan Stanley said, adding the trio of Hong Kong jewellery retailers command a 40 per cent share of the market.
In contrast, foreign brands such as Tiffany and Cartier only has meagre two per cent market share each.
The reasons behind this was because customers believe the local jewellers are very conscious about “quality” and “value”, the Morgan Stanley survey of about 1,500 mainland and Hong Kong jewellery buyers showed.
“This supports our thesis that mass market, value for money brands like Chow Tai Fook (which ranks well on these metrics), as opposed to premium-positioned jewellery brands, could continue to be market leaders in China, and gain share in a fragmented jewellery market,” it said.
The survey showed mainland customers prefer to spend more on the materials of the jewellery, such as paying more for a bigger carat of diamond or a larger amount of gold, than paying the premium of a luxury brand.
The lender noticed that some overseas brands are on average 20 to 30 per cent more expensive than Chinese brands on a similar solitaire diamond ring.
“This may have to do with the fact that it is more difficult to show off a ‘brand’ on a ring than say a handbag or a car,” the Morgan Stanley report said.
Read more at South China Morning Post.