Platinum Jewellery in China and India keys to future ... · PDF filePlatinum Jewellery in China and India keys to future platinum demand ... Jewellery as a percentage of Platinum demand

LBMA/LPPM Precious Metals Conference 2012 12 November 2012

Session 4 – Courage 1

Platinum Jewellery in China and India

keys to future platinum demand

LBMA Hong Kong

5th November 2012

Content

• Platinum jewellery’s performance

• Jewellery demand is important

• China – the major player

o Manufacturers

o Retailers

• India – an opportunity



Platinum market continues to show long

term growth in value terms

0

200

400

600

800

1000

1200

1400

1600

1800

2000

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

4,500,000,000

Total Value of Gross Ounces US$ Average

US Dollars (Bn)

Source: Johnson Matthey Price Source: Kitco.com

Platinum Jewellery value has grown well

above Global GDP Index 2001=100

0

1000

2000

3000

4000

5000

6000

50

100

150

200

250

300

350

400

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Platinum Value NominalGDP US$ value gain

US$ gain over

nominal GDP

trend

Sources: IMF (April),

Johnson Matthey

4



Figures: Johnson Matthey 2012 Review

Demand for platinum for jewellery manufacturing

not greatly affected by metal price

0

500

1000

1500

2000

2500

0

500

1,000

1,500

2,000

2,500

3,000

2005 2006 2007 2008 2009 2010 2011

China Japan US Jewellery Europe

Other US$ Average US$ Low US$ High

Jewellery as a percentage of Platinum demand – trending

up

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2006 2007 2008 2009 2010 2011

Jewellery Gross Total Gross Demand Ratio J:I

‘000 oz



China - a volume demand source for

platinum

7

PGI’s Marketing programme in China

jewellery development worth US$4.3

billion in net demand



Meaning vs Cleaning

• Meaning is on the up when you compare

Europe to China

Demand for Autocatalyst (Europe) and

Jewellery (China) 2007-2011

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011

Autocat. Europe

Jewellery China

2009 does not

included

300,000 oz of

stock build –

according to

JM’s 2010 review

Source: Johnson Matthey Review 2012

‘000 oz



China – a major industry

• The role of China - a volume demand source for

platinum

• The potential of China jewellery

11

These Chinese jewellery manufacturers

produce more platinum jewellery than the

USA + UK + Germany

• Baijue

• Bo-fook

• EDL

• Fuqi

• Junli

• Ganlu

• Guanhua

• KingLi

• Lingchen

• S & M

Some manufacturers produces more than the total US jewellery production



2.0%

2.1%

3.0%

3.1%

3.6%

3.8%

6.4%

6.9%

7.1%

9.0%

12.6%

Chow Sang Sang

Kimberlite Diamond

Luk Fook

Cartier

Zhe Jiang Ming

First Asia

Beijing Caishikou

Lao Miao

Chow Tai Seng

Lao Feng Xiang

Chow Tai Fook

Jewellery market share by retail value

in China (2010) Chow Tai Fook has over 1,600 points of sale & aims to open a net average of 200 jewellery POS per year from 2012 to 2015

PGI works directly with retailers representing 31% of

the jewellery market and covering 320 cities in China

1st tier PGI Partners: 6

6771outlets

Approx 28% of market

Key Influencers HK Or National Brands

Key Growth Driver Strong Market Performance

High Growth Rate Significant market investment

6670outlets Approx 31% of market Key Influencers HK Or National Brands Key Growth Driver Strong Market Performance High Growth Rate

Significant market investment

........................................................................................



0

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2009 2010 2011 E 2012 E 2013 E 2014 E 2015 E

Tier 1 cities Tier II cities Tier III cities and lower tier cities

Outlook for jewellery benefitting from

increasing growth in lower tier cities (in HK$ billion)

Total: 2010 – 2015E CAGR: 39%

Tier I cities: 2010-2015E CAGR: 32%

Tier II cities: 2010 – 2015E CAGR: 37%

Tier III cities & other lower tier cities: 2010 – 2015E CAGR:

45%

Source: Frost & Sullivan Report

0

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2009 2010 2011 E 2012 E 2013 E 2014 E 2015 E

Gold products Platinum/Karat gold products Gem-set jewellery

Positive outlook for the jewellery market

in China with breakdown by product

(HK$ billion)

Total: 2010 – 2015E CAGR: 39%

Gold products: 2010-2015E CAGR: 40%

Platinum/karat gold products: 2010 – 2015E CAGR: 40%

Gem-set jewellery: 2010 – 2015E CAGR: 35%




5006 5486 5809

Y2009 Y2010 Y2011

No. of Outlets Within monitored 32 cities

10%

3900 4938

6731

Y2009 Y2010 Y2011

No. of Outlets among 5 SPs (CTF/LF/LFX/S&M/CTS)

nationwide

27%

6%

36%

New Jewelry Store Opening

(2009 – 2011)

• The average annual increase in new jewellery store opening in mainland China is 15%

• In the 32 cities PGI monitors, the rate has ranged from 6 -10%

• PGI’s strategic partners, focused more on lower tier cities, have increased by 27 – 36%

Others, 1.7% Specialised markets, 9.8%

Stores in shopping mall, 13.7%

Stand-alone branded stores,

30.1%

Department stores, 44.7%

China’s jewellery sales breakdown by

retail channels (2010)




Bridal opportunity for platinum

2011 urban wedding population

Total wedding

population

12.65 Mn

Unit: Pair

Urbanization

47.5%

Urban wedding

population

5.7Mn

Urban wedding population with

HHI to purchase bridal rings

4.17Mn

Source: Millward Brown

Note:

1.Registration data from Ministry of Civil Affairs of China

2.There is no split for age breakdown or 1st/repeat marriage from the raw data.

National volume of bridal ring potential

530,000 oz (6.5% of total global demand)

2014 volume estimate of Pt bridal

potential

• Key assumptions

o Annual growth of wedding population: 5% (accumulated 16%)

o Urbanization reached 50%

o Annual growth of avg. No. of rings 5% (accumulated 16%)

o Annual growth of Pt acquisition: 5% (accumulated 16%)

Urban wedding population with affordability (excl 6)

5.26 Mn

Volume Estimate of bridal ring potential in 2014

875,000 oz

+ 64.7% accumulated growth in 3 years



New Asia is developing a new dynamic

for platinum jewellery

• The role of China - a volume demand source for

platinum

• The potential of China jewellery

• India – platinum meets the opportunities of an

evolving consumer and a new type of jewellery retailer

India – an opportunity – at trade and

consumer levels

• Now the 4th largest market for platinum

jewellery

• Platinum finding a market in traditional areas

o Platinum Day of Love

o Gift to daughter

o Men’s market



Developing an insight

• Marriages’ arranged

• Wedding – family occasion

• Couple find their……

Platinum Day of Love



Increasing support from the jewellery industry

India – the opportunities come together

• Younger consumers are looking for a wider

choice

• Retailers are looking to increase their sales

and margins

• Platinum is an answer

• New stores

o Tanishq & Reliance

o In-store in department stores

o Regional and independent jewellers focusing on the

emerging Indian consumer



Meaning vs Cleaning

• China platinum jewellery demand is running ahead of

Euro car catalysts

• China is well placed to grow through bridal acquisition

and jewellery expansion - especially in the Tier ll and

Tier lll cities

• India is finding platinum traction with the young and as

the symbol of love after they get married

• There is an opportunity for men’s platinum jewellery

• Platinum is driven by consumer desire and the business

benefit for the retailer.

Platinum Jewellery in China and India keys to future ... · PDF filePlatinum Jewellery in China and India keys to future platinum demand ... Jewellery as a percentage of Platinum demand

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