Cautious Optimism Fills Baselworld Buoyed by Asian Demand for Luxury

A fractured arm kept me from attending Baselworld this year. Fortunately, I know some of the best writers and experts in the jewelry and watch industry. One of those folks is William George Shuster who has kindly agreed to take time from his busy schedule to write a few stories from the tradeshow. Below is his first report from the event.

By William George Shuster
Special Correspondent

BASEL, Switzerland – Baselworld, the world’s largest and most important watch and jewelry trade show, opened March 8 amid optimistic expectations by many for good business in 2012—but not too optimistic.

“We’re confident about 2012” because of strong business results in 2011, especially in luxury due to China’s appetite for it,” said Francois Thiebaud, chairman of the show’s Swiss exhibitors and president of upscale watch brand Tissot, echoing many vendors, “but we’re not overconfident. The Eurozone crisis and debt problems elsewhere could still have effects [on business].”

This 40th annual BaselWorld fair, in Basel, Switzerland, Mar. 8 – 15, has 1,815 exhibitors (608 in watches, 689 in jewelry and 518 in related products and services) from 41 countries. More than 100,000 buyers and visitors from 100 countries are coming, and all is being reported on by more than 3,000 print, TV, radio and Internet journalists from around the globe.

The reason for their interest is obvious: Because Baselworld is, in the words of Show Director Sylvie Ritter, “a microcosm, where the players from the world’s watch and jewelry industry gather for a week.” It is an important bellwether of products, innovations and trends affecting the industry, consumers, and the retail business worldwide for year ahead.

Bullish. The cautiously bullish mood among exhibitors and analysts at the show is based on strong—even record-breaking—results for watch and jewelry exports and sales in 2011, especially in the luxury sector. That’s due largely to sharply rising consumer demand in Asia, especially China, say industry analysts in Basel. These strong business statistics for 2011 came despite many economic problems affecting sales and profits worldwide, they say, including the dramatic debt crisis in many Eurozone countries, the uncertain U.S. economy and the strong Swiss franc (which weaken Swiss watchmakers’ profits). Still, “[even] in this far-from-encouraging environment,” said Jacques J. Duchêne, long-time President of the Show Exhibitors’ Committee and former Rolex SA executive, at the annual pre-show press conference, “one industry has been able to stand up well and even break numerous records—the watch and jewelry industry.”

Indeed, it has. The year 2011 was “historic,” as Duchene put it, for the Swiss watch industry. Their exports totaled 19.3 billion Swiss francs (about $21 billion), an increase of 19.2 percent, making it the best year ever in the industry’s history—rebounding from its worst in 2009. Actual pieces exported were just under 30 million.

Unquenchable. Much of that was led by the seemingly unquenchable demand in Asia for fine watches: Over half (55 percent) of the Swiss exports went to Asia, primarily China, up 48.7 percent. (North America got 14 percent while Europe got 29 percent).

Duchene was quick to point out, however, that the Swiss success is not only due to the Far East. “It’s true demand was very buoyant in Asia,” he said, “but the watch industry has built up a good reputation in all emerging countries and succeeded in creating demand, especially in the luxury-products segment.”

So, “even in the face of a rather unfavourable economic environment, we envisage export growth in 2012,” Duchene said.

The Swiss aren’t the only ones feeling bullish about 2012. Spokesmen for the German, French, Italian, Israeli and Hong Kong delegations (the latter, being the show’s second-largest) also report good sales and export results in both watches and jewelry in 2012, despite the economic challenges, again especially in the luxury sector (and again, buoyed by record Chinese consumer consumption of revelry and watches). They too were upbeat about business results for the industry in 2012. As Gaetano Calvalieri, president of The World Jewellery Confederation (CIBJO) and spokesman for the Italian delegation, noted, “consumers in Asia, especially China, will carry Italian jewelry industry to new heights.”

Even if Chinese consumption slows slightly in 2012, as some reports suggest, “Even a one digit increase in demand this year is more than last year,” said Thiebaud.

"Excellent.” Those in the gem and diamond business also expressed upbeat predictions for 2012.

Eli Avidar, Managing Director of the Israel Diamond Institute Group of Companies, told its annual Baselworld luncheon that 2011 was “an excellent year” for the Israeli diamond industry, which exported $7.2 billion of polished diamond, and has “emerged from the crisis [of the 2008/2009 recession] stronger.” Again, some of this is due to Asia. “There is a steady rise in demand for large diamonds in China and we believe it will go much further,” especially is the international industry invests significantly in promoting diamonds and diamond jewelry in China. He also noted that there are “signs of recovery in the U.S. economy”—unlike Europe, where was no visible increase in diamond demand in 2001 or 2012—and we expect significant rise in demand in diamond jewelry in the U.S. this year.”

William George Shuster is a multi-award winning writer—including three Jesse H. Neal Award, business journalism's highest honor. He has 40 years experience as a journalist, author and editor. He is considered one of the world’s top watch industry journalists, covering the world of timepieces for the past 30 years.

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Early Reports at Hong Kong Jewelry Fair: Moderate Sales, Moderate Optimism and Diverse Offerings

Buyers crowd around a Japanese Pearl dealer.

HONG KONG — Acres of diamonds, miles of pearls and nearly every gemstone on earth were on display during the second day of the SeptemberHong Kong Jewellery & Gem tradeshow.

I arrived for the second day and while the show had a slow comfortable pace early, by afternoon the aisles were jammed with buyers. This is the first part of the two-tier tradeshow. The first being held now (September 19-23) at the Asia World Expo Centre for raw jewelry making materials along with technical equipment and packaging. The finished jewelry portion of the show, which attracts the most attention, will open Thursday and run till September 25 at the Hong Kong Convention & Exhibition Centre near the center of this bustling, business-minded city.

An assortment of gemstones from Marcel Poncet.

Jewelry manufacturers from around the world are the primary buyers at the Asia World Expo portion of what has become the world’s largest fine jewelry show, finding equipment and materials to meet their diverse needs.

One person representing a Filipino-based gold jewelry manufacturer said he was happy with the compact size and technological advancements in the new laser soldering machines at the show and was ready to purchase.

A pearl jewelry manufacturer from Hawaii said she was easily able to find the types of pearls she needed for her market. Hawaii depends on tourism, particularly from Asia and the U.S. She said in recession has left only the high-end Asian market and the low-end U.S. market.

“The middle has disappeared,” she said. She was also a bit perplexed by the cost of pearls these days. All pearls have risen in price dramatically she said, noting as an example that an average-sized golden South Seas pearl costs about $3,000.

Coral art displays from Lucoral's of Taiwan.

According to reports, the first day of the show was on the moderate side but diamond dealers are cautiously optimistic, citing recoveries in both the China and U.S. market. Leibish Polnauer, founder and CEO of Leibish & Co., a fancy-colored diamond company, said one- to three-carat fancy light yellow diamonds have been popular lately because they present a value.

“The world is not coming to an end,” Polnauer said. “They (Chinese consumers) maybe making less money then they made a couple of months ago but they made money and they’re happy and they’re looking forward to enjoy what they made. The American market altogether is improving.”

He continued, “I think the show has a better momentum than the last one (held in June). “The prices (of diamonds) are settled and with the fancy colored stones, there’s no downturn at all…. In general the mood in America is not bad and in China, it’s getting back from the temporary slowdown they experienced in the summer and I think the jewelry consumption will go up.”

Diamond dealers at the show and on the flight arriving to the event said large statement diamonds continue to be popular as an investment for wealthy consumers.

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Exhibitors Release Pent-Up Optimism at Hong Kong Jewelry Show

Byers and sellers at the Frank & Label booth during the September Hong Kong Jewellery & Gem Fair. Photo credit: Anthony DeMarco 

I’ve been writing about the jewelry industry for 13 years and attended many tradeshows during that time. I can’t remember when exhibitors have expressed as much optimism and excitement as there has been during the September Hong Kong Jewellery & Gem Fair. Even the diamond dealers who had low expectations coming in were pleasantly surprised. 

The world’s largest fine jewelry show is held at two venues: The Asia-World Expo Centre, (September 11 – 15) for raw jewelry-making materials and jewelry-making equipment, and the main show for finished jewelry at the Hong Kong Convention & Exhibition Centre (September 13 -17). I’ve spent four days at the show so far (one day at the raw materials show and three days at the finished jewelry show) and nearly all exhibitors said business is strong to booming. 

For example, there was talk of a coral dealer at Asia-World Expo Centre who sold 80 percent of his inventory to other exhibitors a day before the show opened. On opening day at the HKCEC, several vendors and buyers were still conducting business after the show was closed. 

Myriam Gumuchian, owner of the fine jewelry design firm, Gumuchian, said at the HKCEC, that she has been busy throughout the first two days. 

“It’s my second year of the show and it’s been much better than last year,” she said. “It’s non stop.” 
 

The "Ring Cycle" by Gumuchian. It's a ring that turns into a bracelet.  Photo credit: Anthony DeMarco

Gumuchian said her most popular item by far is the “Ring Cycle.” It’s a ring that with the press of a button becomes a bracelet. It’s available in 18k yellow, rose and white gold and either in diamond pave or a hammered-gold finish with a diamond center stone. As she was showing me the ring a female Japanese buyer gasped with joy when she saw how it worked. 

Gumuchian was one of 10 high-end jewelry designers who were exhibiting from a single booth provided by Frank & Label, a company that provides marketing and sales services for independent luxury jewelry designers who want to enter into the China market. It was one of the more interesting concepts at the show. Other designers included Temple St. Clair, Alex Sepkus and Victor Mayer. 
 

Temple St. Clair at her jewelry stand inside the Frank & Label booth.  Photo credit: Anthony DeMarco

Evert deGraeve, Frank & Label China business development director, said this is the second year the company has been providing this space at the September Hong Kong fair. This year, possibly to accommodate approximately 100 new exhibitors, the company had its booth size cut in half. Looking at the crowd of buyers, deGraeve said, “We really could use the extra space.”

It’s a good problem to have. 
 

Buyers at one of the registration areas during the opening day of the finished jewelry portion of the show. Photo credit: Anthony DeMarco

The new exhibitors bring the total number of vendors at the fair at both venues to 3,633 from 48 countries. Officials from UBM Asia, which owns and operates the show, have estimated that 52,000 buyers will visit the show but from looking at the registration areas on opening day at HKCEC and from reports on the floor, they may have underestimated. Regardless, the number of exhibitors easily cements its place as the world’s largest fine jewelry show. 

Also to accommodate new exhibitors, show officials moved antique and estate dealers in the last available hall in the HKCEC which is really a foyer. It’s a spacious area that had the hustle and bustle of business being done. 

Edward Faber, owner of Aaron Faber Gallery New York, which specializes in vintage watches and jewelry, said early during the opening day he made a number of sales. Among the biggest sellers were vintage Omegas, Patek Philippe pocket watches and erotica timepieces. 

This is Faber’s third time exhibiting at the show and he said he is impressed with how quickly Asian buyers have taken to the nuisances of fine watch collecting. 

“They’ve quickly become more sophisticated,” he said. “It’s surprising the comfort level they have when it come to style and design. It’s a good thing.” 

One of the big successes I’ve seen at the show is an area called “Designer Avenue.” It’s located on the mezzanine level of the HKCE. It’s basically a balcony-like space that houses small independent jewelry designers and artists, providing them with inexpensive booth space. I’ve seen small designers become overwhelmed and out of place at large jewelry shows. Here, these artists from every continent have their own separate space that constantly filled with admirers and buyers from all over the world. 
   

The jade, wood and enamel works of independent jewelry designer, Soco So of Shenzhen, China.  Photo credit: Anthony DeMarco

Etienne Perret, a US based independent jewelry designer who exhibited in the area, said buyers from Russia, China, Australia and several eastern European countries have expressed interest in his gem-ceramic designs. 

“The world is here and people seem to be buying,” he said. “People in the US have no clue how much money there is in Russia, China and even places like Iran.” 

Deep into the active main hall was Colin Shah, managing director of Kama Schachter, an India-based jewelry manufacturer that produces several brands. The company was introducing its newest brand, Fiamma, which features bridal and fashion jewelry using color-enhanced pink diamonds. It was quiet when I showed up but he said people have been coming in. 

“All appointments have showed up,” he said on the second day of the HKCEC portion of the show. “So far it’s been great.” 
 

Inside the Hong Kong Convention & Expo Centre.  Photo credit: Anthony DeMarco

Walking around the cavernous convention center, the only places where buyers did not fill were in Hall 3 inside the International Pavilion, where vendors are segmented by their country of origin, and in an area known as the Design Pavilion, for luxury jewelry design companies.

A collection of rare fancy colored diamonds from Francis Errera.  Photo credit: Anthony DeMarco

My first day at the show was spent at the Asia-World Expo Centre during its day. This is where materials, such as diamonds, colored gems, pearls and other jewelry making materials and equipment were being sold. Most exhibitors I spoke with were generally happy with the show but aired some complaints. 

For example, fancy colored diamond dealer, Francis Errera, said the first day of the show was “very, very busy” with “high-quality” clients from all over the world but on the second day traffic trailed off. 

One reason he said was because his clients, primarily luxury jewelry brands and investment banks, shortened their time at the fair due to religious holidays. 

“I think major shows like this one should be held outside of any important holidays,” he said. 

Overall, Errera said the positive sales reflect the growth of the overall economy. “America is getting much better,” said the French native who moved his business to Hong Kong several years ago. “Japan is getting better as well but Japan is always strong for fancy colored diamonds. China is good.” 

The only economy that is lacking growth is Europe, he said, which also reflected his business at the fair, as only one representative from the continent came to his booth during the first two days. 
 

A collection of carved freshwater pearls from Galatea.  Photo credit: Anthony DeMarco

Meanwhile, in the pearl section, Chi Huynh, owner of pearl company, Galatea, was selling its loose sculptured freshwater pearls for designers and manufactures. His booth was crowded. 

“Designers love them,” he said. “I don’t think wholesalers know what to do with them.” 

He said that in addition to his loose pearls, customers were interested in his finished jewelry and to accommodate these people he is considering opening a booth at the convention center. 

“I was surprised by the reaction,” he said. “So next year I might split the booth to two places.”

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