Editor’s Note
This article examines the paradox of high gold prices amid weak consumer demand in 2024, highlighting the severe operational pressures faced by major jewelry retailers. It underscores a challenging disconnect between commodity markets and retail realities.
In 2024, while gold prices soared, the consumer end of the gold and jewelry market turned cold, with most retailers facing tough times. By the end of the third quarter of 2024, the performance of listed gold and jewelry retailers such as Caibai, Laofengxiang, Chow Tai Seng, and Mingpai Jewelry had declined, with Mingpai Jewelry’s net profit attributable to shareholders plummeting by over 90% year-on-year.
The overall business situation for merchants engaged in gold and jewelry wholesale and retail in Shenzhen’s Shuibei district is similar to that of these major retailers.
As gold prices kept rising, many consumers adopted a wait-and-see attitude. Moreover, the current macroeconomic environment and changes in the consumer market have had a significant impact on the entire gold and jewelry retail sector.
Wu Ming (pseudonym) operates a gold and jewelry counter in a shopping mall in Shuibei, handling both wholesale and retail, and also sells products on social platforms like WeChat Moments and Xiaohongshu.
In 2024, price wars spread to many industries, unexpectedly reaching the Shuibei district as well. Since gold prices are transparent and the business relies on craftsmanship fees, merchants have engaged in a craftsmanship fee price war to secure deals.
Many Shuibei wholesalers and retailers offer discounts on craftsmanship fees based on order volume to retain customers. While they generally avoid losses, profits are certainly lower than in previous years.
With poor offline business, many merchants have shifted online, focusing efforts on live streaming, community marketing, and social media promotion to earn some income.
There are also merchants exiting Shuibei. According to Wu Ming, some gold wholesalers are transferring their counters. If sales cannot cover costs like rent and labor, some choose to transfer, potentially earning a transfer fee in popular locations. However, in less popular areas, some merchants suffer heavy losses, choose to withdraw, and even forfeit deposits to cut losses.
As a bellwether for China’s gold and jewelry industry, Shenzhen’s Shuibei directly reflects frontline information and future trends in the domestic consumer market.
Since 2024, especially in the second half, Shuibei merchants have actively explored new opportunities beyond traditional gold jewelry.
In recent years, many consumers, particularly young people, have embraced “平替” (pingti) or affordable alternatives, seeking value for money—spending less for more enjoyment. This trend has also流行起来 in gold and jewelry consumption.
Some consumers, especially those concerned about appearance, are willing to choose gold alternatives. A key market factor behind this is the current weakness in gold jewelry consumption, influenced by消费降级 (consumption downgrading).
Additionally, many Shuibei merchants are极力 selling low-weight gold products.
For example, as the Spring Festival approaches, many are selling gold phone stickers, which are very popular among consumers, particularly young women.
Many young people, facing fast-paced, high-pressure lives or encountering unhappiness, seek to change their luck, driving sales of luck-bringing jewelry in Shuibei.
Whether it’s gold-plated silver, gold phone stickers, or luck-bringing jewelry, these products reflect existing market demand and highlight the increasingly明显的 trend of younger consumers in the gold and jewelry market. Shuibei merchants are fiercely competing for young customers.
For these merchants, when traditional gold jewelry sales are poor, new popular products can bring opportunities, improve counter operations, offset losses, and earn some income.
Looking ahead to 2025, multiple factors including the economic performance of China and the US, the pace of Federal Reserve interest rate cuts, and central bank gold purchases will continue to influence gold prices. Many chief economists and analysts from financial institutions expect gold prices to仍有上行空间 in 2025.
In its 2025 China Gold Market Outlook, the World Gold Council stated that it expects volatility in key areas of China’s gold demand to decrease, with overall market demand趋于稳定 over the coming year.
The Council also pointed out that drivers for China’s gold market demand are not solely based on price. The fundamental drivers for gold jewelry consumption and gold bar/coin investment are closely related to economic growth, the number of weddings, interest rate changes, RMB trends, and growth in retail gold investment. It is预计 that gold jewelry demand will持续下降 in 2025, but the rate of decline will大幅收窄 to 3%.
If gold prices continue to rise or experience significant fluctuations in the future, it will continue to directly impact all gold and jewelry wholesalers and retailers, including those in Shuibei.
