Young Chinese people shun diamonds in favor of gold, seeking safe investment amid economic downturn

Currently in China, where the domestic gold price hit a new high last year and a gold rush is occurring in the retail market, many people sympathize with Mr. Huang’s consumerism.

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Chinese consumers sell old jewelry as gold prices hit record highs

Chinese consumers sell old jewelry as gold prices hit record highs

And as China’s stock market struggles to recover and undermines investor expectations, consumers with limited access to overseas investment products are struggling to find a way to buy bars or jewelry in retail stores, even if they face additional fees. Even so, they are turning to gold as a safe investment.

Fred Koo, business development manager for a jewelry brand focused on eastern China markets, said retail gold hoarding was particularly prevalent in lower-tier cities and less affluent counties.

He added that despite the high prices, gold is preferred by young people because homes are not selling in smaller cities and counties and prices have fallen significantly.

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According to state broadcaster CCTV, the annual consumption level of gold jewelry per person in third-tier cities and below will increase from 460.7 yuan (US$ 65) in 2017 to 617.5 yuan in 2022, with an average annual growth rate of 6%. Ta.

This growth rate exceeded not only the national average level but also the growth rate seen in tier-1 and tier-2 cities, the bureau added.

EqualOcean analyst Zhuang Jinglun said that during the global economic recession, gold tends to be valued by more investors due to its strong asset preservation properties.

According to the National Bureau of Statistics, retail sales of gold and silver jewelery rose 11.9% year-on-year from January to November last year, outpacing retail sales of overall consumer goods, which rose just 7.2%.

In recent years, jewelry companies, recognizing the purchasing power of lower-tier markets, have stepped up investments in third- and fourth-tier cities.

Most of the 15 gold jewelry stores have opened in the past two to three years along a street less than 200 meters long in Quzhou, a prefecture-level city in eastern Zhejiang province, CCTV reported.

According to Chow Tai Fook’s interim report from April to September, the expansion into lower-tier cities is in line with the company’s overall brand strategy.

As of the end of September, the distribution of POS locations in China had increased from 3,835 locations as of March 2020 to 7,699 locations.

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Of the total locations, 45.5 per cent are located in tier 3 and 4 cities and below, up from 33.3 per cent in March 2017.

“Despite strong gold prices, gold jewelry and products continue to be popular with consumers,” the report said.

From April to September, revenue from gold jewelry and products increased by 12.8%, the report added.

In contrast, a weak macro environment weighed on discretionary purchases, with revenue from gemstone sets, platinum and K-gold jewelery down 18% over the same period, it added.

And while gold has a well-established recycling mechanism, diamonds face challenges and have high depreciation rates, EqualOcean analyst Zhuang added.

And amid the current socio-cultural changes, belief in the myth that diamonds are eternal is fading, resulting in a noticeable decline in demand for diamonds, Zhuang said.

She added that along with the high price of diamonds, improved craftsmanship and more elaborate designs in gold jewelry influenced Ms. Huang, an elementary school teacher.

Jewelry brand manager Khoo said that with the Lunar New Year approaching, many young people are returning home for blind dates and marriages, and as a result, gold jewelry is in high demand, and wedding and marriage-themed designs are in high demand. He added that there are many.

“At the end of the year, people who buy gold jewelry mainly focus on heavy items,” he said, pointing to gold bracelets and necklaces.

In mid-September, the retail price of gold for major brands such as Chou Tai Fook and Chou Sansan rose to 600 yuan (about 84,000 yen) per gram, but peaked at about 630 yuan per gram from early to late December. Reached.

Prices fell slightly in the last two days of 2023, but have remained around 625 yuan per gram since the beginning of the year.