Gold

1
Gold
2
China Jewellery Market Structure
Both a Gold Production, Manufacturing and
Consumption Centre
3
China Gold Production 1995-2002
Source China Gold Society
4
Gold Market in China

• A 200 tonnes market. Dominated by 24-karat
  jewellery.
• Perceived of 24-karat gold not fashionable.
• Market tightly controlled which hinder the
  development and growth of the market.
• There is a slippage of demand in urban areas,
  while still maintain strong demand in rural areas
  as they still perceived gold as store-of-value.

5
2002 World Top Five Gold Jewellery Markets
Tonnes
Source GFMS Gold Demand Trends
6
2002 Far East Gold Jewellery Demand
Tonnes
Source GFMS Gold Demand Trends
7
Historical China Gold Jewellery Demand
Source GFMS Gold Demand Trends
8
Gold Per Capita Consumption
World0.7g HK 2.7g US 1.42g China 0.16g
World
World 0.7gm HK
Source WGC
9
China Gold Jewellery Demand First Half 2003
Total gold jewellery demand amounted to 93.3
tonnes in the first half of 2003, down by 13.6
vs same period last year
Tonnes
Source GFMS
10
Karat Gold Demand

• A volume of 30-40 tonnes of karat gold from
  Italy, Indonesia,
• Malaysia are seen smuggled in China.
• Official import is minimal.

11
Imports of Gold Jewellery from Italy to Hong Kong
1999-2002
HK imported US230 m worth of gold jewellery from
Italy in 2002
US M
Source HK Census Statistics Dept
12
Import of Gold Jewellery from Italy to HK
Jan-July 2002-2003
HK import HK 862 m ( US 110.5 m) worth of gold
jewellery from Italy from Jan - July, 2003, -
23.7 vs same period last year.
US Million
Source HK Census Statistics Dept
13
Karat Gold Products Market Share

• In general, the product mix of a retail stores
  who are selling gold and diamond is in the split
  of
• Diamond 30-35
• 24-K gold 30-40
• Platinum 20-25
• Karat gold 5-10

14
Karat Gold Products

• Smuggled 18K jewellery mainly from HK is flooded
  the retail market. Mass appeal products are
  penetrated in every retail outlets.
• However, there is also sophisticated 18K
  jewellery available in the market and the variety
  is limited.

15
Karat Gold

• High penetration in the market, especially in SZ,
  GZ and BJ
• Italian product occupies majority share of K-gold
  market from sophisticated design to basic items
• Some jewellers especially the diamond retail
  outlets are selling K-gold even they dont have
  gold retail license
• Due to the high intl price of Pt, jewellers use
  K-gold as substitute to fill up shelf space

16
Karat Gold

• Selling by piece instead of by weight
• Plain K-gold is the mainstream
• 18K is preferred
• Preferred white and pink gold
• Product with multi-colour, i.e.. Yellow/pink/red,
  is selling quite well in the market
• Purchase price range Within RMB1,000

17
Seasonality

• Major peak buying seasons are
• New Year Dec/Jan
• Chinese New Year Jan/Feb
• Labours Day 1st May
• National Day 1st October
• K-golds peak season is in Summer while diamond
  and platinum is more year round.
• Sales of necklace is better in Summer, bracelet,
  brooch, earrings are better in Winter. Ring is
  all year round