Hong Kong is shedding its image as a mecca for low-end manufacturing as consumer demand and a firm nudge from industry organizations fuel a true native design movement. Still, the industry has a long way to go before it develops a style instantly recognizable as “Made In Hong Kong.”

Chinese consumers have traditionally considered jewelry a commodity, held more for its intrinsic value than its appearance. But a new generation won’t buy jewelry unless it’s visually appealing.

De Beers and the World Gold Council recognize the tremendous purchasing power of this emerging market and are pushing manufacturers to create contemporary, innovative designs to capture its discretionary dollars. Design contests sponsored by both organizations have turned out a selection of creative, salable jewelry, proving the talent is there. Meanwhile, several highly successful retailers who target young consumers with modern gold jewelry are expanding rapidly.

But real change is still several years away. The September Hong Kong Jewellery and Watch Fair featured aisle after aisle of beautifully crafted, fine-quality but highly traditional jewelry. And most Hong Kong manufacturers remain geared to contract-manufacturing for U.S., European and Japanese clients and/or making competitively priced versions of designs that are popular overseas. “Most Hong Kong manufacturers produce according to the requirements of their clients,” notes H.Y. Fong, chairman of the Hong Kong Jade and Colored Stone Manufacturers’ Association.

While much of the lower-end export manufacturing has shifted to mainland China, workers there still haven’t developed the skills needed to produce the quality of high-ticket goods Hong Kong is noted for. That reputation for fine craftsmanship should be a tremendous asset as Hong Kong increases its capacity for original design.

Domestic market: Hong Kong’s domestic jewelry market has two basic segments: 24k gold chuk kam, which is viewed mainly as a financial asset because it’s easily converted into cash, and everything else, which is called precious jewelry. Precious jewelry tends to be traditional gem-intensive pieces in the style of classic Italian jewelry or of great jewelry houses such as Cartier and Harry Winston.

Why has modern design development been so slow?

One reason is that Hong Kong preferences are clearly divided by age. Older consumers – the 40+ group that has had the most influence – prefer classic, traditional designs; younger consumers seek modern styles.

Another reason is a lack of jewelry art education, says Norman Grant, a design and marketing consultant with Grant Walker Ltd., a London company that presented a seminar on design trends at the September Hong Kong fair. “There is no design education here as such,” says Grant. “There is an artisan’s trade school, but no design schools. I’m surprised that with an industry as strong as this one, they don’t have the structure to support design education.”

Alan Wong, general manager of Myer Jewelry, a prominent Hong Kong manufacturer, concurs. “The technical institute helps develop local design talent, but it probably does focus more on craftsmanship,” he says. But some new contests have focused more attention on design. A contest at the September fair, for example, presented 18 awards to students and professionals. All but one of the student winners attend the Lee Wai Lee Technical Institute in Hong Kong; seven out of 10 professional winners are from Hong Kong firms.

Meanwhile, the 1994 Asia Chuk Kam Jewellery Design Competition organized by the World Gold Council presented seven awards to Hong Kong designers, says Mandy Yiu, public relations manager. But while better than many of its Asian counterparts, Hong Kong still lags behind Western nations in jewelry design, says WGC.

Change in the making: The traditional jewelry that dominated the September fair featured invisible and channel setting with top-quality gems and workmanship. Popular design themes included delicate lines, ribbon motifs and sprays of gemstone flowers. Vividly colored diamonds (usually treated) were a favorite choice, along with faceted emerald, ruby, sapphire and, to a lesser extent, tourmaline, tanzanite and amethyst.

But sprinkled among the traditional pieces were some with a more modern flair, says Mark Walker of Grant Walker Ltd. He noticed more cabochon cuts, a new purity and simplicity of line, a little less invisible setting and more bezel setting, as well as pavé setting used as texture with larger beads between the stones.

Chuk kam jewelry formerly was offered only in traditional motifs such as dragons, phoenixes or representations of household objects. But modern chuk kam design is catching on rapidly, thanks in part to the World Gold Council’s Chuk Kam Jewellery Design Competition and its efforts to teach Asian women that fine jewelry can be a fashion investment as well as a financial one. That’s important because women in Hong Kong tend to be very fashion-conscious, buy much of the jewelry sold in Hong Kong and strongly influence the choice even when men are buying the jewelry as a gift.

In the precious jewelry arena, De Beers raised the design issue with a recent contest titled Diamonds for Modern Women. The contest was created to stimulate design innovation for contemporary, affordable diamond jewelry that complements clothing. Some of the winning pieces featured unexpected materials such as wood, plastic and radio antennae.

Another sign that a native design movement is gaining steam is a growing acceptance of white metal. Eva Law, manager of the Diamond Information Centre in Hong Kong, says modern women often feel yellow gold is old-fashioned and like the appeal of platinum and white gold. (Rose gold is still very new to Hong Kong.)

Younger consumers in particular are interested in platinum jewelry, says Osamu Matsuura, president of the Platinum Guild International in Tokyo, which covers the Asian market. “If the style appeals, they’ll buy it,” says Matsuura. Indeed, while the traditional Chinese wedding calls for the bride to wear a red dress and as much chuk kam jewelry as possible, younger couples opt increasingly for a European-style ceremony with white metal jewelry.

Still, says Matsuura, the Hong Kong market remains a primarily yellow gold market. Nearly 90% of jewelry sold in Hong Kong is yellow gold; white gold accounts for less than 10% and platinum for even less. One reason for platinum’s poor showing is that many Hong Kong jewelers still call it “white gold,” a situation PGI hopes to correct through education. “Younger consumers who’ve been exposed to European culture do understand the difference between platinum and gold,” says Matsuura.

Gold, old and new: Traditional chuk kam jewelry still accounts for more than 80% of the gold jewelry market in Hong Kong, says Emily Y. M. Li, North Asia promotions manager for the World Gold Council. It’s a traditional wedding gift and what many women in Southeast Asia prefer.

But younger women, who have tremendous purchasing power, are receptive to modern chuk kam design, says Li. They were raised with the tradition of amassing chuk kam assets, but they insist on better design than their mothers did.

To satisfy this market, the World Gold Council works with manufacturers and retailers to offer more innovative designs. “We have some similarities with international trends, but we also have our own cultural differences,” says Li.

Several jewelers which have capitalized on this market are Just Gold, Goldi and Emphasis, a division of manufacturer Chow Sang Sang. All three have opened sleek, contemporary shops that sell only chuk kam. Additionally, leased jewelry departments in major department stores are gaining ground as a distribution channel for chuk kam and precious jewelry.

The stores: The best-developed modern chuk kam marketing program belongs to Just Gold, a chain of 20 stores (15 in Hong Kong, four in Taiwan and one in Macau). The chain is part of the Henry Jewellery Group.

“Traditional jewelry retailers are getting mature: the market is getting saturated and as customers get older, their purchasing power drops,” say Ian Ng, managing director, and Iris Chung, marketing manager, of Just Gold. “Our focal point is the younger consumer. If we focus on the young, we will get more and more profitable.” Just Gold’s target customer is working women ages 22 to 38 with a monthly income equivalent to US$775 to $3,886. About 60% of all Hong Kong women are employed.

Just Gold’s concept is to capture these customers with an identifiable brand name, start them with gold and gradually work up. (The company also is experimenting with a new concept store called Just Diamonds, the first of which was expected to be open by press time.)

Just Gold is 100% vertically integrated, meaning it designs, makes and sells all its own product, right down to the packaging. Its marketing concept is much closer to fashion than traditional jewelry marketing. It has four main collections: “Basic,” which offers classic day into night looks; “Nature,” inspired by elements of nature; the “In Look,” featuring items such as gold safety pins, hair ornaments and so forth; and “Childhood,” a collection of Disney- and Warner Bros.-licensed jewelry and other designs for women who are young at heart. The company introduces new pieces quarterly and phases out all but the classic and most popular items.

“Every woman has different faces, different tastes and different personalities,” says Chung. This makes fresh merchandise crucial. Ng adds that if a store changes designs frequently, there’s less chance of being copied. And if something is copied, she adds, chances are it’s late enough in the product’s life span that Just Gold already has made its profit.

The Just Gold stores are designed to offer a feminine and friendly shopping environment. Customers can wander freely, looking at jewelry displayed in easy-to-view wall cases with estimated prices (estimated because the actual price is determined by weight and the current gold market price, plus a charge for labor and design).

The same fashion concept underlies the chain of nine modern chuk kam shops operated by Goldi, which is owned by Le Saunda, a large chain of fashion shoe stores. Shoes and gold? “Absolutely!” says Betty Leung, business development manager of Le Saunda Jewellery Ltd. People have faith in the Le Saunda name, and they do think of jewelry as a fashion accessory, just like shoes.

European designers are employed to create much of La Saunda’s chuk kam. “Customers want a European look,” says Leung. “In clothes, shoes and jewelry, they really feel European design is superior to local.”

Leung also notes the lack of jewelry design education in Hong Kong: “The design department at Hong Kong Polytechnic focuses more on things like graphic design and packaging [than jewelry].”

The modern chuk kam stores have retained one key element of traditional jewelry stores: they buy back gold for cash, minus the labor and design charge. There are two prices: the resale rate, which they pay to buy back their own designs (minus labor and design), and the standard chuk kam rate, which they’ll pay for other chuk kam and which is generally the going rate on the island. The nicest part of chuk kam jewelry being resold easily, says the World Gold Council’s Li, is that consumers can trade a piece in if they become bored with it, not just when they need cash.

Diamonds, for modern Asian women: In the U.S., most diamond jewelry is geared to the male-to-female gift-purchase market. In Asia, however, women are a key target for diamond jewelry marketing. But it’s an uphill battle, says Eva Law of the Diamond Information Centre, because Asian women are not automatically attuned to diamonds. In fact, they seem to think diamond jewelry is always expensive.

De Beers hopes its Diamonds for Modern Women campaign and new design competition will help change this perception. The aim is to encourage the Hong Kong trade to design more contemporary and affordable diamond jewelry. The competition, launched in 1994, was the first intended specifically to create diamond jewelry that complements fashion.

“Diamonds have been perceived as very expensive jewelry, and the designs are always conventional,” says James Courage, De Beers’ marketing director for Hong Kong, the Philippines and Thailand. “Through this contest, we hope to bring the message to consumers that while diamonds can be bold and serious for formal occasions, they can also be casual, fun and versatile to complement modern fashion.”

The entries in the 1994 competition were judged on originality, wearability, fashionableness, diamond presence and contemporary appeal to women ages 18 to 34. The winning pieces ranged in retail value from US$350 to $1,600. Hong Kong consumers always could find diamond jewelry in this price range, says Law, but the design was ordinary until now.

The campaign: The overall focus of the Diamonds for Modern Women campaign is to encourage women to wear diamonds as fashion accessories, says Law. The campaign is aimed at daily wear for work, sports and play. For dressier occasions, De Beers will soon highlight another collection of diamond jewelry, similar to the Diamonds Today collection in the U.S., that has more sophisticated styling and higher price tags.

The Diamonds for Modern Women campaign targets women ages 18 to 34 with monthly personal income of roughly US$1,300. The market is about equally divided between married and single women, as Hong Kong women tend to marry fairly late (in their 30s, on average), says Law. Also, most Asian women live at home with their parents until marriage, so much of what they earn is disposable income.

Campaign ads appear on television; in fashion, lifestyle and gossip magazines; and in subway stations. (De Beers has found television advertising particularly successful in Asia. A 1993 campaign featured eight celebrities with a “modern woman” image who described their lives on television. In another successful TV promotion, quiz-show viewers were asked a question relating to a guest celebrity and told to mail in their answers. From the pile of correct answers, a winner was chosen to receive a piece of diamond jewelry.)

The future: What’s in store for Hong Kong manufacturers as the new market develops?

“We must strike a balance between the need for new design while not ignoring the product side,” says Myer’s Alan Wong. “We don’t just look at one aspect.” Most manufacturers already are geared to producing different styles for different clients (such as those who focus on craftsmanship vs. those who want to cut costs), so Wong doesn’t see any problems adjusting to new design demands. Wong praises such noted Hong Kong designers as Kai Yin Lo and Alan Tam of Athena for leading the movement toward design.

So what will typify Hong Kong design?

This remains to be seen. De Beers’ James Courage fears some consumers still think that “if it comes from Europe, it has to be better than here.” Wong says, however, “We welcome Western concepts, but we will bring in an Oriental element. We will welcome concepts from different cultures and use them to create a new kind of design.”