Report by ICA Director from China, Chen Shen 2
Report by ICA Director from China, Chen Shen
Tariffs, Monetary Restrictions & More in Hong Kong and China That Could Impact the Colored Gemstone Trade
"One of the most important trade shows—the September Hong Kong fair—is coming. There are many things happening in China and Hong Kong, and they could impact the colored stone business.
The tit-for-tat tariffs between the USA and China will hit the jewelry business if a trade agreement is not reached soon. Jewelry and jewelry-related products are on the next-round tariff list for the two countries. This will have a greater impact on Chinese jewelry export manufacturers.
Hong Kong is changing. A new law dictates that any person entering or leaving Hong Kong must make a written declaration if in possession of the equivalent of more than HK$120,000 in cash (US$15,200). For those flying from Mainland China to Hong Kong, this law was announced on the plane. We saw more obvious inspections at the Hong Kong airport on a recent trip. And, Hong Kong banks are asking more and more questions about the accounts of diamond and colored stone businesses. Big banks are sometimes even forcing companies to close their accounts.
Although China’s economy is slowing down, the nation's GDP growth will still be over 6% this year. The Chinese stock market is, however, down quite a bit and many local Chinese governments are restricting the growth of the housing market by limiting he number of apartments or houses Chinese can buy. In the past three months, more than 200 P2P personal lending companies collapsed and many investors lost their investment.
Since the March Hong Kong Show, the Chinese RMB lost more than 10% against the U.S. dollar. These developments may not, however, necessarily be a bad thing for the colored stone business or the jewelry industry as a whole. There is now a lack of investment opportunities in China. When the stock or housing markets were flying high, people put money into them. Now, Chinese dealers and consumers are buying more stones for inventory or investment.
China is still a great market for colored stones. The July retail growth is 5% (even if slow by Chinese standards). In Shanghai, top restaurants are still packed with people. The price of the top Chinese alcoholic drink, Maotai, is at an all time high and difficult to buy through official channels. Colored stones are mostly sold in first- and second-tier cities. Smaller cities, used to buying gold jewelry, are only starting to buy diamonds. Colored stones tend to follow diamond purchases, meaning that the market potential is huge. Will all of this make for a better Hong Kong Show? We shall see."
Chen Shen was born in Shanghai, China. He graduated from the University of Baltimore with B.S. and MBA degrees. He then attended executive programs at the American Management Association.
Chen started his career with the National Shipping Company of Saudi Arabia as a marketing analyst. Later, he joined Schlumberger and spent 15 years with the company in various marketing and management positions around the world.
Through his travels in Colombia, he fell in love with emeralds. In 2008, Chen started Skywalk Global, a gemstone wholesale business specializing in Colombian emeralds.
In 2015, he and his partner, Ronald Ringsrud, published the book, Emeralds: A Passionate Guide, in China. It is the first professional book detailing the Chinese history of emeralds.
Chen is a member of the American Chamber of Commerce in Shanghai and the One Belt One Road Working Group of the U.S. Embassy in China.