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Friday, September 26, 2014

Unsettled Weather, Politics and Economies Lead to an Unusual Hong Kong Jewelry Fair

The traditional Dragon Dance that opens the finished jewelry portion of the September Hong Kong Jewellery & Gem Fair each year. 

I left Shanghai the same way I arrived into Hong Kong, riding the tailwinds of a typhoon. In between, the weather changed from hot and humid to overcast and blustery. The September Hong Kong Jewellery & Gem Fair was unusual this year because the overall attendance was as unpredictable as the unsettled weather. 

The first two days of the fair held at the AsiaWorld-Expo (September 15 – 19) for jewelry making materials and equipment, packaging and other supplies, saw attendance surge by 11.2 percent compared with the prior year. Even for a show that has experienced substantial growth for nearly its entire 31-year existence, this was impressive. The jump in attendance seemed even more remarkable because it happened at a time the city was experiencing a category 8 typhoon. Free shuttle service from downtown to the expo building near the airport was suspended. Yet buyers still made their way to the fair and they were spending. By all accounts diamond dealers were happy, even ecstatic in some cases. This is no easy group to please.

On the third day the fair’s focal point shifted downtown to the Hong Kong Convention & Exhibition Centre (September 17 – 21) where the portion of the show for finished jewelry began. At this venue, something even more peculiar happened. The number of attendees appeared to have dropped compared with previous years. Comparison numbers were not available as of this writing; but the first indication that things were different this year was at the registration desk on opening day. Based on my experience, the crowd of buyers would be stacked layers deep and even overflowing onto the lobby area. This year, while still crowded, the overflow of people wasn’t there. 

The second day there appeared to be even fewer people. The exhibition floors of the convention center were still humming and business was still being conducted but it lacked the overall vitality of prior years. However, by the third day the buyers were back in force, making it difficult to get around. I think the official numbers will support this view. 

The leaders of the Hong Kong jewelry and gem industry at the opening day press conference.

Wolfram Diener, the energetic, friendly and accessible senior VP of UBM Asia Ltd., responsible for the massive jewelry portfolio of the tradeshow and publishing company, seemed to take all of the ups and downs in stride. During an interview at opening day at the convention center he refused to blame the typhoon for the apparent early drop in buyers at the convention center.

“The typhoon had no effect. It may have caused delays in a few overseas flights but that’s it. It’s business as usual,” he said. “The Hong Kong buyers will come.”

In fact, Diener says the waiting line in prior years has been a problem, and it is being remedied by the creation of other registration areas. So at least part of the reason the lines were not as long as in the past was due to a more efficient registration system. 

As already noted, by the third day the buyers (whether from Hong Kong or other areas) did come.

He also wasn’t surprised by the substantial increase in buyers for raw materials, which, according to those who were there for the remainder of the show, remained strong. 

He seemed to think that in the end the world’s largest B2B jewelry trade fair will meet its conservative forecast and report a slight gain in attendance to more than 52,000 buyers (another annual record). The slower growth is due to a number of regional concerns, he says, in particular, the brutal violence and political unrest in the Middle East, the Western sanctions imposed on Russia, and the still weak European economy. 

“We have fewer buyers from the Middle East and Russia,” he says. 

Even local politics are becoming an issue. This came up during the opening day press conference. As explained to me, when Hong Kong was returned to Chinese rule, the Chinese government guaranteed that the city would eventually become fully democratic. This hasn’t happened, there is no movement toward this and it is causing political unrest in the city. There is also an issue with the high cost of living in the city that is having an adverse effect on the quality of life for middle class families, who live in the shadows of new luxury high rise buildings being built largely for investment purposes.

Kent Wong, chairman of the Hong Kong Jewellers’ & Goldsmith’s Association, responding to a question about these local issues, says that in the short term the impact on the jewelry business in the city is minimal. In the long term it may present a challenge, adding, “I’m an optimist.”

It’s difficult not to be an optimist when it comes to the Hong Kong fair. As Diener stresses, it is truly a global fair. At any given moment during the weeklong event you will have Brazilians doing business with Italians, Germans doing business with Thais, luxury brand representatives shopping for materials, retailers from all over the world looking for jewelry ranging from the mass produced and inexpensive to haute couture. 

It is the one place in the world where you can get a feel of what’s happening in the jewelry industry. Judging from this year’s event, it appears that retailers are being cautious when it comes to their inventories but this isn’t stopping manufacturers and designers from creating new jewelry.

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