Costume Jewelry
China's costume jewelry export industry has been experiencing steady growth over the past couple of years. The country shipped out close to US$650 million worth of costume jewelry in the 10 months to October 2005, giving a year-on-year growth of more than 50 percent. Export sales were even 20 percent higher than total shipments in 2004.
China is home to more than 5,000 manufacturers of costume jewelry. Robust export growth has encouraged many new suppliers to join the line and the supplier base continues to grow.
The following are some of the key trends we see in China's costume jewelry industry:
• Prices will generally remain level in 2006 even though rising material costs will continue to be a challenge for most makers. Some suppliers will raise prices but only by about 5 percent.
• The majority of makers will be increasing their production capacity to meet surging demand. While most large and many midsize companies will upgrade their current facilities or construct new factories, most small suppliers will increase subcontracting.
• Low-end costume jewelry will continue to be China's mainstay for the next several years, even though many companies have started to produce up market designs.
• Buyers can expect more ornate and colorful releases from China in 2006. Many new designs will feature beads, shells and imitation gemstones in a multitude of hues. But because these materials are available in a limited number of colors, suppliers are dyeing them in various shades to widen the range.
Apart from mixing color, makers are combining beads, pearls and shells in different shapes and sizes for design variety.
China makers can offer most types of costume jewelry, which can be broken up into many categories. For the purpose of this report, costume jewelry is divided into five major categories: bracelets & anklets, chokers & necklaces, earrings, rings, and brooches.
While most suppliers offer a range of costume jewelry across all categories, some specialize in one or two lines. More than 80 percent of the suppliers in this report make all types of costume jewelry, and 15 percent offer four. These companies focus mainly on the production of chokers, necklaces and bracelets. Two of the suppliers in this report however, focus on just one type: rings or brooches.
The features and prices of each type of costume jewelry are discussed according to low end, midrange and high end in the Products & Prices section.
The R&D segment discusses how makers are creating design variations by mixing different types of materials in each style. It also touches on how suppliers are adding value to their designs by using alternative materials.
The Materials & Components section explains sourcing of metal, plastic and decorative stones, and how this affects overall product quality. The Manufacturing section details the production and QC processes in small, midsize and large companies.
Most costume jewelry suppliers in China are locally owned while a few are foreign-invested or joint ventures. Reflecting this breakdown, about two thirds of companies profiled in this report are locally owned, and the rest are funded mainly by Hong Kong or Taiwan suppliers.
Industry Overview
Higher raw material costs and a growing supplier base are intensifying competition in China's costume jewelry export industry.
The prices of petroleum-based materials have been escalating since2004 because of the higher cost of crude oil in the world market. There has also been a marginal increase in the cost of metal. With sustained and significant increases in material costs, the majority of costume jewelry manufacturers in China have had to raise prices at the start of 2005 to offset higher expenses.
In fact, the average export value per gram of costume jewelry exported from China in the first 10 months of 2005 increased 24 percent.
But while the higher average export value per gram is mostly attributed to a general increase in prices, an up market shift among suppliers is also a factor.
With costume jewelry exports increasing at a healthy rate in each of the past two years, new manufacturers have been quick to join the industry. The number of suppliers is expected to grow further as the low-entry barrier attracts more companies to the line.
With the supplier base growing, many of the more established companies are moving up-market to distinguish themselves and become more competitive. Their years of experience in the line, financial stability, and technical and design expertise have helped them make the shift from low-end to midrange and even high-end production. Some companies now specialize in sterling silver models, many of which are plated in 18K gold.
Although raw material costs are not expected to stabilize in coming months, most manufacturers will not raise prices in 2006. This is particularly true for companies that have already implemented price increases in 2005 and those that have moved up market.
Industry Composition
China is the world's foremost producer of costume jewelry, accounting for about half of global supply. Exports have been increasing in the past few years and continue to show strong growth: Sales in the first 10 months of 2005 grew more than 50 percent to US$650 million. It is estimated that 70 percent of the country's exports in the line go to OEM and ODM customers.
Currently, about 60 percent of all costume jewelry export volume in China is low-end, 30 percent midrange and 10 percent high-end.
About 70 percent of China's 5,000 costume jewelry makers have export capability and of these, only around 1,000 can ship products directly. The rest export via the country's more than 1,500 trading companies.
A richer sales experience, better service quality and more distribution channels are some of the advantages of sourcing from a trading company. Because of these factors, small makers and entrants may find it difficult to compete with trading companies that have been long-term major players in the industry.
However, products from trading companies are usually 5 percent more expensive than when they are sourced directly from manufacturers.
About 65 percent of costume jewelry makers are small companies and around 90 percent are privately owned. Large manufacturers account for no more than 5 percent of all exporters, and only about 10 percent are foreign-owned or joint ventures. The majority of makers can produce all types of costume jewelry, although a few concentrate on one or two product lines.
Supplier Profile
Affinity (Jewelry) Ltd
Established in March 2004, Affinity exported close to US$1 million worth of mostly midrange costume jewelry in 2005, mainly to the US and the EU. The company is targeting to expand its market reach to Asia, Japan in particular. Exports to Japan are expected to account for 30 percent of total shipments in coming months.
ODM work accounts for 30 percent of exports and OEM orders, 70 percent.
Products
Affinity produces about 100,000 pieces of costume jewelry each month. Ninety percent of these are made of sterling silver and the rest are copper.
Metal, imitation stones, buckles and machine-made chains are all sourced locally.
The cost of materials and R&D expense are key price determinants, accounting for 60 percent and 15 percent, respectively, of total product cost.
In general, low-end jewelry in simple designs, fewer stones and lower weights are priced from US$0.50 to US$5. Mid-range designs are US$5 to US$15, while high-end models in elaborate styles and high-grade materials are priced at US$15 and above. Some of the newer releases with intricate design detailing even go for as much as US$50 each.
The company has a 50-member R&D team, of which two are designers. The other team members are in charge of samples. The team releases 300 styles monthly, with samples finished in seven to 10 days.
Manufacturing
The production facility consists of a three-story building for the office and plant, and the workers' living and dining quarters. The plant occupies two floors of the manufactory building.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
If you'd like to order the China Sourcing Reports, please go to Global Sources website - http://www.globalsources.com, or click here. It is simply and convenient.