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September 30, 2009

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Wholesale jeweler to double retail outlets

Shenzhen Yihua Jewelry is to double its consumer outlets in China by the end of next year as it continues to expand from its dominant position as a wholesaler into the retail sector.

Yihua established nearly 70 retail outlets in China last year. Its development of franchises this year will concentrate on the Yangtze River Delta, Beijing and the Pearl River Delta in the south of the country.

"The financial crisis has squeezed already low wholesale profit margins," Tom Xie, director and president of Yihua Jewelry, said yesterday. "We have been planning our retail strategy for years, and we think the crisis has made the timing of the shift ideal. Retailers are doing the best business in the jewelry industry."

Profit margins for wholesalers are less than 10 percent, Xie said.

Yihua teamed up with Shanghai Lao Miao Jewelry Co and Hong Kong's Lukfook Jewelry to make its move into retail sales.

The Shenzhen-based company's long-term target is to go public, using its burgeoning retail business as a foundation.

Revenue from its mainland wholesale business last year totaled about 8 billion yuan (US$1.17 billion) and exports were valued at 1.5 billion yuan.

The southern Guangdong Province, where Shenzhen is located, is home to the majority of China's gold jewelry wholesalers and processors.


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