Sparkle in gem and jewelry trade
Updated: 2015-01-16 05:31
By Zhou Mo in Guangzhou(HK Edition)
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The jewelry industry on the Chinese mainland has introduced Internet finance to broaden its sources of funding. Jerome Favre / Bloomberg |
Hong Kong-listed China Assurance Finance Group Ltd (CAF) will cooperate with Guangzhou Commodity Exchange's (GCE) Gems and Jewelry Trade Center to provide financial support for enterprises and traders in the industry.
An online platform for the center was officially launched on Thursday to provide comprehensive services, including financing, trading, marketing, storage and clearing, for the industry.
CAF has invested 12 million yuan ($1.9 million) in Beijing Jindianpai Ltd, securing a 60-percent stake in the company. Jindianpai will act as the platform operator. CAF Vice-Chairman Nixon Pang Man-kin said the company has been promoting financial innovation of the gems and jewelry industry since 2013. "The group attaches great importance to cooperating with GCE, which is a core point in the combination of the industry and Internet finance. Cooperation prospects for both sides are broad," he said.
Industry insiders are upbeat with the online platform. "The platform changes the traditional trading mode and establishes a bridge between supply and demand," said Chen Guifang, general manager of Guangzhou Xiyaoyuchi Jewelry which specializes in making Hetian jade.
"Previously, there was no link between the jewelry industry and finance on the national scale. The exploration of GCE is the first cheese in the industry," she said.
Chen's company, a member of the trade center, will conduct its first transaction through the platform soon, but she did not disclose the trading amount involved. "I've confidence in the trading platform as it provides sound services and supervision."
According to statistics from the Gems and Jewelry Trade Association of China (GAC), the industry's retail volume on the mainland exceeded 470 billion yuan in 2013, of which Guangdong province accounted for more than 300 billion yuan - about two-thirds of the national volume. More than 60,000 enterprises are involved in the industry.
However, the industry is undergoing a difficult time as prices of raw jade and diamond have gone up considerably while gold prices have been fluctuating violently. Last year, growth in the gems and jewelry industry plunged to 3 percent from 28.7 percent in 2011.
A major challenge facing the gems and jewelry industry is financing. Due to a lack of widely recognized value and risk management systems, financial institutions are not willing to support the industry.
Yu Dingchang, honorary chairman of GAC, pointed out that critical cash flow and sluggish sales are the two main difficulties confronting the industry. "The industry strongly needs systematic innovation, financial support and a new mode," he said.
The online platform, in some sense, will help solve the problem as it introduces third-party organizations to provide authentication and appraisal reports for every piece coming to the transaction stage. A third-party storage management organization has also been brought in to provide safe storage for the jewelry.
Apart from traditional bank loans, some innovative financing modes, including P2P and crowd-funding, have been introduced on the platform, providing enterprises and traders with a variety of fund-raising methods.
Yang Yong, executive vice-president of the Peking University Alumni Venture Association, said the gems and jewelry industry is one of the fields that's quite suitable for crowd-funding. "If 200 people, each contributing 200,000 yuan, cooperate together, it will be easy to open a jade experience shop in a city. Investors who are experts in the field will, at the same time, be able to bring in customers to ensure that it's profitable," Yang said.
(HK Edition 01/16/2015 page8)