Over the years, different gem and jewellery manufacturing hubs have established themselves as centres of excellence in specific areas. China’s is jewellery manufacturing. The country’s skilled workforce, technological advances, low labour and operational costs, and high-quality output have drawn designers, retailers and manufacturers to rely on its production capabilities.

China’s jewellery manufacturing industry is largely concentrated in Guangdong Province, specifically the city of Shenzhen and the Panyu District of provincial capital Guangzhou. The country built up its expertise from the late 1980s when international companies started establishing their production bases in China, particularly in Panyu. Investments and expertise from Hong Kong played a pivotal role in developing China’s jewellery manufacturing sector. Shenzhen likewise rose to prominence over the last three decades as a manufacturing and wholesale hub, especially for the domestic market.

While geopolitical and socioeconomic concerns such as the US-China trade war and rising costs have led some international companies to move their production out of the country, China remains a force to be reckoned with in the jewellery manufacturing space.

Given the ever-changing business environment and the coronavirus-related challenges, Chinese jewellery companies, trade associations and local governments are bolstering the viability of the country’s jewellery manufacturing hubs with a slew of initiatives. These include stimulating demand and expanding channels; improving the business service ecosystem; adopting the latest talents and technology in jewellery design, manufacturing and marketing; and strengthening collaboration under the new Guangdong-Hong Kong-Macau Greater Bay Area (GBA) structure.

Market shifts

In the last three decades, Panyu has transformed into a fully integrated jewellery manufacturing hub, providing production facilities and services, gemstone setting, design, marketing and supply-chain support such as training centres, laboratories and logistics handlers.

Da Luo Tang and Shawan are the district’s two main jewellery towns. Most of the jewellery factories are located at Shawan Town, Shatou Street, Shiqiao Street, Donghuan Street and Shiji Town.

The Shawan Jewelry Industrial Park houses 25 production facilities, two office buildings, a Customs house, a bonded warehouse, the National Gemstone Testing Center, the Guangzhou Diamond Exchange and the Guangdong Jade & Gems Exchange.

Hong Kong companies such as Chow Tai Fook Jewellery Group, Chow Sang Sang Group, Luk Fook International Holdings and Tse Sui Luen Jewellery have all set up production bases in Panyu.

Exports are the main focus of Panyu’s jewellery sector. According to the Guangzhou Panyu Jewellery Manufacturers Association, the district accounts for 70 per cent of Hong Kong’s jewellery entrepot trade. Panyu’s jewellery exports constitute around 60 per cent of China’s total, with the bulk of Panyu’s deliveries heading to the EU, Hong Kong, the US, Singapore, the UK, the Middle East, Australia and Russia.

Developments in recent years, however, are making establishments rethink business strategies. The association’s president Wu Wei said jewellery enterprises in the district are increasingly developing their domestic market base to counter export downturns since the global financial crisis in 2008.

“International orders have been on the decline while costs have steadily risen, posing a serious threat to the survival of Chinese jewellers. In addition, the Covid-19 pandemic has dealt a tremendous blow to Panyu-based companies, which engage mainly in international business. Panyu jewellery enterprises realise they must shift from an export-oriented business model to a multi-market one covering international and domestic sales. Our present goal is to develop Panyu as a jewellery manufacturing hub that caters primarily to the international market but also serves domestic clients,” Wu explained.

Last year, the Panyu District government issued the “Measures to upgrade and transform the Panyu jewellery industry” to allocate funds for incentives in 11 areas, including establishment of corporations, subsidies for office space, production and trading contribution, key projects, trademark strategy, overseas exhibitions, jewellery-themed events, and e-commerce.

It also announced the Panyu working plan to build the jewellery cooperative manufacturing zone of the GBA. The plan intends to combine Panyu’s strengths in agglomeration, manufacturing prowess and services with Hong Kong’s advantages in research and development (R&D), marketing and product launches. It also aims to upgrade the quality, efficiency and international profile of Panyu’s jewellery manufacturing industry, and build a jewellery town in the GBA.

Local engagement

To accelerate the evolution of Panyu’s jewellery industry, the association is reinforcing the “Panyu Jewellery” brand and focusing on business development in the domestic market.

In June this year, it hosted the 2020 Guangzhou Panyu Jewellery Livestreaming Festival. Featuring 142 companies in Panyu, the three-day initiative attracted more than five million viewers, sold 30,000 pieces of jewellery and reeled in RMB20 million (US$2.86 million) worth of sales.

The Guangzhou Panyu Jewellery Manufacturers Association is also reaching out to local associations, jewellers and retailers in other Chinese regions to entice them to produce or source their jewellery from the district. It has held small matchmaking events, organised factory visits and encouraged companies to participate in jewellery exhibitions under the Panyu Jewellery Pavilion.

Panyu is indeed redefining itself as a supply base for global and domestic jewellery brands. Targeting annual production levels of over RMB100 billion (US$14.3 billion), the district is transitioning from a “Made in Panyu” concept to the “Created in Panyu” distinction. Initiatives to champion innovation in design and technology are geared towards establishing Panyu as the source of innovative and original jewellery pieces for the international and domestic markets.

Domestic priorities

Shenzhen, for its part, has always had the domestic market in mind. According to Guo Xiaofei, secretary general of the Shenzhen Gold & Jewelry Association, the main target of the city’s jewellery industry is China itself. Jewellery manufacturing is the backbone of Shenzhen’s gem and jewellery industry. The city houses over 30,000 jewellery business units, 8,900 of whom are based in the Shuibei area of the Luohu District. All 14 publicly listed jewellery companies in China have offices in Shenzhen as do Hong Kong jewellers such as Chow Tai Fook, Lukfook and other renowned brands.

More than 90 per cent of Shenzhen's jewellery supply is for domestic demand. While most of the diamonds and coloured gemstones are imported, the vast majority of jewellery sold in China is made in Shenzhen. Most of the tools, packaging and auxiliary materials used in production can be purchased in the city as well. Support and related services are likewise available from local establishments. Given the current global economic turmoil, Shenzhen enables China to be a largely self-sufficient jewellery manufacturing centre.

Shift to precision production

China’s manufacturing processes are likewise seeing major transformations. Technological advances facilitate greater collaboration and transparency along the production cycle. Manufacturing is increasingly customer-centric and linked to the Internet and cloud computing platforms.

Jewellery market segments are also becoming more diversified. The younger generation of consumers have more sophisticated needs. Fancy colour diamonds, fancy shape diamonds and coloured gemstones are rising in popularity, while non-traditional materials such as ceramics, titanium and palladium increasingly make their way into jewellery designs. Existing materials are seeing technological upgrades as well. 3D hard gold is widely used. Chow Tai Fook is researching and reviving ancient Chinese gold techniques in present-day manufacturing.

China’s manufacturers continually invest in innovation and design to combat timeworn misconceptions that the country’s jewellery industry lacks product diversity and added value. Shenzhen Xingguangda Jewelry Industrial Co Ltd champions independent innovation and R&D; focuses on the application of new technologies, materials, techniques and models; and identifies new opportunities in the market.

Given the current technological and industrial revolution, China’s jewellery manufacturing should be driven by innovation; reinforce synergies in design, technology, management and branding; and continuously evolve towards smart manufacturing, remarked Xingguangda Jewelry Chairman Lin Changwei.

“To continually enhance China’s jewellery manufacturing capabilities, it is imperative to master the core competencies of key production technology as well as research and development of materials and designs. We should also embody the spirit of craftsmanship and professionalism; create well-crafted, ingenious products; and establish respected brands in order for Chinese jewellery manufacturing to become synonymous with high quality,” he said.

With innovation at the centre of the company’s development strategy, Xingguangda Jewelry holds 370 patents and independent intellectual property rights, including pending motions. Its scientific, precise and complete production line enables it to cater to the needs of clients throughout China as well as established Hong Kong jewellery brands. The company produces over a million pieces of jewellery for more than 4,500 clients in China every year.

About the author

Julius Zheng is a jewellery industry analyst and senior consultant to various important firms and institutes. Actively engaged in industry matters, he has developed various projects that connect China’s diamond and jewellery sectors with international markets. Formerly general manager of Rapaport China, he has over 20 years’ experience in the international diamond and jewellery industry.