CHALLENGES AND OPPORTUNITIES OF DOING JEWELRY BUSINESS IN CHINA
Just because the jewelry is classified under the luxury goods, there are several factors that act as opportunities as well as challenges. For instance, per capita income is one of the greatest determinants of the growth of the jewelry business not only in China but also in the entire globe. In 2014, some of the main cities in China such as Hong Kong and Mainland recorded the highest global share in the jewelry business with a total of $80. 7 billion out of a total of $ 157 billion (Zhao et al. As a result, China garnered the largest share in the jewelry business globally. For example, Mainland China majors in gold jewelry and thus the prices of gold are the primary determinants of the jewelry market.
In 2013, the costs of gold recorded a vast slump resulting in a positive influence on consumer behavior. The consumers preferred to buy golden jewelry in large quantities due to the speculations that the prices may eventually shoot in the preceding years. As a result of such a slump in the jewelry prices, China recorded an increase of 42% in the consumption in that particular year (Zhao, 62). In the preceding year 2014, the demand for the golden jewelry dropped by 6. 2 dollars. That is about 5. 6 times than Chinese. Benefiting from the large population, China can be the top jewelry consumption country with lower per capita jewelry consumption. Moreover, Chinese have the demand for diamond and gold jewelry while wedding. People’s way of life has been changing.
They have more willing to shop online than in the past. Taobao, the most popular e-commerce platform, total sales 3. 77 trillion RMB in 2017. The jewelry market of the third-tier city and fourth-tier city in China most jewelry brands have not covered the third-tier city and fourth-tier city. In 2017, the consumption of luxury jewelry made from gold increased by 6. 7% RMB14. 9 billion accounting for 2. 4% total jewelry sales (Zhao et al. Such a trend is a clear indication that China offers a steady market for jewelry as compared to other economic partners. Nonetheless, the emergence of such big local Chinese companies creates business opportunity not only for the residents but also for the entire world. Aspiring entrepreneurs prefer to establish long lasting and beneficial connections to supply quality raw materials such as gold, platinum, and silver to the large companies that major in jewelry.
Availability of Complex Distribution Network China proves to be one of the leading vendors in the jewelry business owing to its diverse distribution network. Unlike other countries that do not empress the jewelry business, China offers the best market for jewelry. Due to the steady economic growth in the country, so many business professionals are securing jobs in Chinese jewelry companies (Ramachandran et al. Chinese leaders demand that their junior employees must obey their orders without questioning regardless of the nature of the commands (Gan, 94). Therefore, it would be challenging for people from western countries to cope with the Chinese culture during the jewelry dealings and transactions. For instance, there would be a cultural clash if an American employee opposes the opinions of his or her boss at the workplace.
Additionally, Westerners working in jewelry businesses in China ought to show maximum respect to their Chinese bosses since China is engulfed in the belief that the western countries are out to exploit them. High Operation Cost It is common for investors in the jewelry industry to establish their businesses overseas to cut on the high operational costs in their countries. The other challenge resulting from government-controlled activities is that the negotiations do not guarantee a legal obligation to establish the businesses for the agreed period because the government may decide to change the policies anytime. For instance, an investor may prefer to develop a joint venture in China, but it may eventually collapse due to the change in government policies as well as the amendment of laws (Chow, 511).
Corruption Recently, corruption is becoming a significant issue in China because of the clash between the country’s policies and the market liberalization. For instance, theft, bribery, misspending and kickbacks cost the state’s GDP around 3% annually. Therefore, the jewelry business being very critical, it is very likely for investors to be conned or fraudulently robbed their money and other valuables such as gold, silver and platinum (Berger et al. Chow, Daniel CK. "Why China's Crackdown on Commercial Bribery Threatens US Multinational Companies Doing Business in China. " Ariz. J. Int'l & Comp. Radhakrishna Pillai. "Harnessing the Digital Marketplace in India: Revolutionary Growth, Challenges and Opportunities. " Digital Marketplaces Unleashed. Springer, Berlin, Heidelberg, 2018. Schipani, Cindy A. "A Conceptual Discussion on the Peculiarity of Doing Business in China–A Framework Extracted from Critical Review of HBSP China Case Studies.
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