China has glitter for dealer of diamonds
Updated: 2014-12-03 07:12
By AMY HE in New York(China Daily USA)
Founders of Boston-based jeweler Hearts On Fire, Susan and Glenn Rothman, with American style icon Olivia Palermo (center), at the launch of the company's first store in mainland China. The company is owned by Chinese jeweler Chow Tai Fook.Provided to China Daily
It calls its product "symbolic of the Hollywood and red-carpet lifestyle", and now the Boston-based jewelry company Hearts On Fire will try to sell that image in China, the world's fastest-growing market for diamond jewelry, by opening a store in Shanghai this month and planning to launch more than 300 in China by 2019.
"We are very confident about the prospects for Hearts On Fire in Chinese mainland; it is ideally suited to realize these key emerging trends," said Adrian Cheng, executive director of Chow Tai Fook, the Chinese jeweler that acquired Hearts On Fire this year. "As demand for diamond jewelry continues to increase here, Hearts On Fire will become a household name, known not only for its extraordinary diamond cutting process, but also the luxury lifestyle that it represents."
Chinese consumers increasingly prefer diamond jewelry to traditional gold jewelry and Hearts on Fire is confident about the company's prospects in the mainland, it said on its Nov 28 launch.
Founded in 1996 by Glenn and Susan Rothman, Hearts On Fire has 14 locations globally, selling engagement and wedding rings.
"Back home in the United States, Hearts On Fire has already been embraced as symbolic of the Hollywood and red-carpet lifestyle," said Rothman, CEO of Hearts On Fire, in a statement on Nov 28. "We expect that this brand positioning and our retail strategy to deliver it will be very well-received here in mainland China."
Hearts On Fire was acquired by Chow Tai Fook for $150 million as the Hong Kong-based jeweler sought to add to its high-end gem catalog for the Chinese market. Cheng told Bloomberg News that it planned to open five stores in Asia by March, and to expand to more than 300 stores in China by 2019. Cheng said at the time of the acquisition that Hearts On Fire's product offerings are "ideal additions" to Chow Tai Fook's existing portfolio.
The debut of Hearts On Fire in China comes as China's demand for luxury jewelry rises, propelling diamond sales globally. According to jewelry company De Beers, global diamond sales hit a record $79 billion in 2013, led by strong interest from consumers in the world's second-largest economy. Sales of polished diamonds grew 3 percent last year to $25 billion due to a 14 percent jump in China, double the 7 percent in sales in the US.
Philippe Mellier, CEO of De Beers, said growth in China came particularly from newly married Chinese women, who "tend to treat themselves well with diamonds."
In a spring 2014 article in Gems & Gemology about the Chinese gem industry, Chinese consumers are becoming more knowledgeable about gemstones and jewelry. The Chinese are "more astute in their purchases. They have a keen sense of both value and brand trust, and they have become more open to contemporary and Western designs and materials. At the same time, technological advances in manufacturing are leading to higher quality standards and lower labor costs, allowing China to meet the increasing demands of the global and domestic markets."
Russell Shor, senior industry analyst at the Gemological Institute of America, said that US retailers expanding into the Chinese market need to be well aware of the subtle cultural differences before marketing designs to Chinese customers.
"It's like anything else: it starts with homework, and then you have to do more homework, and then you have to do homework after that. You can't just scoop up a showcase full of things from Kay Jewelers and Zales and plop it into China and expect to sell tons of it," he told China Daily.
Like China's appetite for other luxury goods, jewelry sales are increasing because of a growing middle class, he said.
"Things are maturing in China. Before, you saw 10-15 years of unbridled growth and people had a lot of spending power, particularly women who lived with their parents and would work in an office but didn't have to pay rent. They were free to go buy jewelry," Schor said. "Like any sort of young product category, it just mushroomed like crazy. In China, you have a lot of things going on right now, you have a lot of the population has the basics that they bought, and so they're looking for something a little new, or relying on events, marriages, holidays, to drive sales now instead of just impulse."