When the tide recedes, the real competitiveness of enterprises is valued.
Text: "Chinese Entrepreneur" reporter Deng Shuanglin
Editor|Li Wei
Header image source: Visual China
"We locals are saying that last year was hot, this year was hot, and next year will definitely be tepid. Shanxiahu Town, Zhuji City, Zhejiang Province, an online car-hailing driver said.
Drivers are the first to feel the change in the flow of locals. Three or four years ago, there were only a dozen or so ride-hailing drivers in Shanxiahu Town, "basically no one took online ride-hailing, and there were not many people in East China International Jewelry City." "Until last year, when the pearl exploded, the town of Yamashita Lake, with a permanent population of just over 20,000, was flooded with 20,000 tourists in a day at its peak.
"Most of them are purchasing agents and wholesalers, and a small number of individual customers. April and May are the hottest time for the pearl business, and last year there was no place to park near the Jewelry City, and there were more than 60 people queuing up for online car-hailing, and the whole road was full of people. The driver told "China Entrepreneur", "But this year, there are obviously fewer people coming to Shanxia Lake, and there is no fullness last year." ”
In 2023, Ni Ni, Gao Ye and other celebrities will wear pearls out of the circle, which will attract pearls to become popular among young people.
With an area of just over 40 square kilometers, Shanxiita Lake Town is currently the world's largest freshwater pearl distribution center. During the peak sales season, the all-season hotel opposite Yamashita Lake Jewelry City can't be booked a month in advance, and even the nearby home-style noodle restaurant needs to wait for a seat.
Pearls are rising in price almost every month, the Australian white in the saltwater pearls has risen by 10% ~ 20% every month, and even the freshwater pearls that were not popular with consumers in the past have become in demand, and many merchants have sold out their inventories more than ten years ago, and the myth of "monthly income of 10 million" is often staged in Shanxia Lake.
But now, the booming pearl market seems to have reversed.
In October last year and April this year, "Chinese Entrepreneur" visited the East China International Jewelry City in Shanxiahu Town, and through comparison, it was obvious that the "crazy pearl" was ebbing - last year, the jewelry city was hard to find, and the occupancy rate was almost 100%, but this year there are obviously many more empty counters. A merchant told "China Entrepreneur": "Some counters are only a few square meters, but the rent has risen 5 times, and the annual rent has risen from 150,000 yuan to 750,000 yuan. ”
Interior view of East China International Jewelry City in Shanxiahu Town. Photo: Deng Shuanglin
Tahitian pearls, which rose several times last year, have begun to return to the average this year, and the most popular millet pearls in the previous two years have not sold as well as before this year, and their prices have dropped significantly.
"The phenomenon of the general crazy rise before is impossible to appear, first, the production capacity has stabilized, and the second is that many pearl merchants have 'finished' and exited. Only high-quality pearls will continue to soar in the future. A jeweler said to "China Entrepreneur", "Everyone can still fight to make some money this year, but next year will definitely not work." In recent years, the purchase price of raw materials has risen several times, and the goods cannot be suppressed, and the inventory in hand is sold out and does not leave, so you have to lose money. ”
Crazy pearls, why did they suddenly cool down?
A pearl creates a myth of wealth
The central area of Shanxiahu Town is not large, and almost all the businesses are gathered around the East China International Jewelry City, and the "CBD" of this town can be measured by walking alone.
Although the sparrow is small, it has all kinds of organs. Although Yamashita Lake is a small town, it is fully equipped with commercial facilities. There are not only large supermarkets near Jewelry City, but also drink shops such as Starbucks, Bawang Chaji, Tea Baidao, and Gu Ming. The all-season hotel opposite the jewelry city is "hard to find" in the peak season, usually "full" within half a month, and at the end of last year, several new express hotels were opened around the Radisson Hotel and Hanting Hotel.
An online car-hailing driver told "Chinese Entrepreneur" that before the explosion of Shanxiita Lake, he could earn 3,000 yuan a month by running an online car-hailing service, barely supporting his family.
Approaching Valentine's Day, Women's Day, Mother's Day and other sales peaks, the counters in the jewelry city were surrounded by purchasing agents, and some purchasing agents even carried sacks and rode scooters in the jewelry city, and even the toilets on the first floor were lined up.
Wearing a pearl necklace around his neck and holding more than two mobile phones in his hands, this is the basic portrait of Yamashita Lake purchasing agents. Opposite the Jewelry City, there is a local specialty "Second Dock Noodle", where the purchasing agents like to settle down for lunch, and there are customers sharing tables in the store almost all day long.
"After pearls became popular, many daigou did not replace cosmetics, saying that the profits were not as high as pearls. Because there is no pricing standard for pearls, consumers do not know the reserve price, unlike gold that follows the international gold price. The owner of a counter in the jewelry city told "Chinese Entrepreneur", "The daigou is basically doubled, such as 500 yuan quality baby beads, which can be sold for more than 1,000 yuan." ”
baby珠,也叫小米珠。 摄影：邓双琳
In the past year, the price of pearls has generally doubled, and some have even increased by 2~3 times. "The best-selling millet beads, three years ago, ordinary quality, small dots were only a few dozen yuan a string, and last year's Mother's Day rose to 500 yuan. In the past, a flawless, well-rounded 15mm Venus Australian white nude pearl sold for more than 10,000 yuan, and now it has risen to nearly 30,000 yuan.
Some merchants even sold out the inventory that had accumulated for more than ten or twenty years. "Many peers have been doing business for more than 20 years and have had mediocre sales performance, but last year they made 20 times more. Millions are considered to be small in the jewelry city. The above-mentioned shopkeeper told "Chinese Entrepreneur".
The crazy price increase of pearls is mainly related to the relationship between supply and demand. Both saltwater and freshwater pearls have been in high demand in recent years, but production has been decreasing, mainly in China and Japan, two major pearl producing regions.
According to the data, Japan's pearl production in 2022 was only 13.2 tons, a 40% decrease from 2018, and China's pearl production fell from 1.2 million kilograms in 2019 to 1 million kilograms in 2020 and only about 700,000 kilograms in 2021. The decline in Japanese production is mainly due to the discharge of nuclear-contaminated water into the sea, while the decline in domestic production is due to the closure of many farms that do not meet ecological standards and the introduction of new regulations banning the cultivation of certain mussels.
In addition, the promotion of live broadcast and star effect has also made pearls more and more accepted by young people. For example, Ni Ni's 30 sets of pearls not only brought fire to Tahitian pearls, whose prices had not changed for several years, but also brought fire to special-shaped pearl baroque. Although the area of Yamashita Lake is small, there are many live broadcast bases. According to public information, in the past two years, Zhuji Pearl's sales in the live broadcast industry have increased by 440% year-on-year.
Chen Huifei, Secretary of the General Party Branch of Fengjiang Village, Shanxiahu Town, once mentioned in media reports that on May 8 ~ May 16, 2023, in just 9 days, a pearl farmer in Fengjiang Village sold pearls for tens of millions of yuan. There are more than 300 pearl farmers in the village, who not only raise pearls, but also sell pearls through the live broadcast room. The annual income of pearl farmers who do business in East China Jewelry City and other countries is more than one million yuan.
But this "get-rich-quick myth" is not sustainable.
"Business this year is significantly worse than last year. Merchants in East China Jewelry City expressed their concerns to China Entrepreneur, "Peers feel that it will go downhill in the next few years, and it is impossible to return to the highlight moment." ”
On the one hand, the price of the counter has risen, and the profits of merchants have become thinner.
Merchants in Jewelry City told China Entrepreneur that the counter leases of some merchants in Jewelry City expire and will increase by 5 times if they are renewed. During the visit, "Chinese Entrepreneur" did see that some shop counters were closed, and some had already hung up the sign of "Wangpu Sublease".
"This wave of people who left the market when the rent expired made enough money last year. The worst thing is that the group of speculative shops, who bought a bunch of shops, and now they can't rent or sell them for millions of yuan, and they are smashed in their hands. The above-mentioned merchant said.
Closed shops in East China International Jewelry City. Photo: Deng Shuanglin
On the other hand, the purchase price of raw materials has skyrocketed.
"The price increase on the sales side follows the supply side. For example, this year's newly raised Nanyang gold beads, the purchase of a pack of 500~600 pieces, the price has increased by 200,000 yuan compared with last year. When it comes to the consumer side, it is an ordinary quality one that rises by 500~1000 yuan, and there is no upper limit to the price increase of high quality. ”
Last year, saltwater pearls such as Rio White, Tahiti, Akoya, and Edison and baby pearls in freshwater pearls have experienced several rounds of crazy rise in supply.
The pearl industry is an asset-heavy investment that requires a large amount of stockpiling. Last year, almost all the pearl merchants who "got rich and made money" relied on selling the inventory that had been accumulated at low prices. After the inventory is cleared, it is not certain whether you can make money by spending 3~5 times the price to stock up on new goods.
Under the impact of traffic thinking
The crazy pearl has created a myth of wealth, but it has also buried many hidden dangers.
The most direct problem with the surge in sales is that there are not enough pearls to sell - even Zhuji, the world's largest freshwater pearl distribution center, has also been seriously out of stock.
After the outbreak of demand, some merchants began to consume the inventory of more than ten years ago, but more than ten years ago, the pearl cultivation technology was backward, basically seedless pearls, low cost, uneven quality, most of them are small in diameter, yellow in color, and not round in shape. In order to sell, many merchants will carry out deep processing of the non-seeded pearls in stock, including brightening, bleaching, dyeing, etc., resulting in a further reduction in the life of the pearls.
At the breeding end, many mature mussels in the mussel pond have almost been fished out, and many young mussels that have to be raised for another two years have been cut open in advance to take pearls. "In order to make money, I can't wait to raise the mussels for three days and cut them off. Some locals said with emotion.
Li Feng, the founder of a local pearl brand in Zhuji, said frankly that what worries him the most is the deterioration of consumers' impression of pearls.
"The greatest value of pearls is their wearability, not their collectible value. Li Feng said. Pearl is a renewable organic gemstone, the main components are calcium carbonate and organic matter, the chemical stability is relatively poor, the life span and wearing time, the way of preservation has a lot to do with it, but oxidation dull is an inevitable process.
"But many anchors will market pearls to consumers as collectible and investment value as gold, and consumers will believe it in the short term, but the long-term result will inevitably be to recognize the essence of pearls. At that point, the entire industry will be dealt a fatal blow. Li Feng worried, "Now merchants sell poor quality pearls to consumers at high prices, which will make consumers mistakenly think that pearls look so cheap." After consumers' perception of pearls is blurred, practitioners who really want to promote the development of the industry will encounter huge obstacles. ”
In addition, in this round of madness, many people uphold the idea of "harvesting" fast money and use traffic thinking to do industries, such as live broadcasts.
"The profit of the entity is thin, basically at 10 points, and the transaction volume of tens of millions can only earn millions, and we mainly rely on making the transaction volume high. The merchants in the jewelry city said, "But the profit of the live broadcast is very high, it can reach 30~40 points, the cost is low, the price is low, and it mainly depends on the goods, but the quality of the pearls in the live broadcast room is low, and it cannot be picked." ”
The live broadcast room is also the hardest hit by pearl counterfeiting. After deep processing, the quality of the pearl cannot be distinguished in the live broadcast footage, and the freshwater pearl that costs 20 yuan can be marketed as a saltwater pearl for 2000 yuan. Some merchants use high-quality pearls in online live broadcasts, and slightly lower pearls will be used for offline delivery, which is difficult for buyers who don't know how to find out.
This is mainly because there is no clear industry standard for the pricing of pearls - pearls, as "non-standard products", usually have a price for one thing, and each pearl has different size, brightness, roundness, and imperfections, which can affect the price of pearls. As a result, merchants naturally have more room to operate on pricing.
Some unscrupulous merchants will even send high-quality pearls for inspection repeatedly, issue multiple certificates, and then put them on some pearls of less good quality and sell them. "Set of certificates" has also become a tacit unspoken rule in the industry.
When consumers are no longer willing to be "leeks", the market will inevitably enter a reshuffle stage.
The future after the ebb tide
The sudden boom in pearls has also exposed irregularities in many aspects of the market, such as the challenge of talent.
In Shanxiahu Town, there are not many comprehensive talents who understand jewelry and e-commerce. Part of the reason for the high return rate of live broadcasts is that the professional quality of the anchors is not enough, and they do not understand the quality evaluation standards of pearls at all, and they take up their posts without systematic training. For example, some anchors mistakenly describe nucleated pearls as non-nuclear pearls, exaggerate the material of pearl accessories, etc., which is false propaganda in the eyes of consumers.
There are multiple live broadcast bases near East China International Jewelry City. Photo: Deng Shuanglin
Whether a large number of high-quality talents can be introduced determines the upper limit of the future development of Zhuji Shanxia Lake Pearl.
In addition, there are currently no precise grading standards in the pearl industry in terms of quality specifications. As to whether to learn from Japan and implement more accurate grading standards for freshwater pearls, the answer of many practitioners is no.
He Tieyuan, secretary general of Zhejiang Pearl Industry Association, once said in a media interview that the current primary standards are in line with market demand, "the national standards should not be too high, they should be scientific, rigorous, and practical." The interests of all need to be balanced. But large enterprises can formulate their own standards on the basis of national standards, and if others can't meet your standards, then you are the boss. ”
China Entrepreneur understands that some practitioners who are committed to long-term value are sparing no effort to educate consumers on how to identify pearl quality and promote grading standards. But it's a long and arduous process.
In the eyes of many practitioners, the really important issues are at the breeding end and the processing end. "Pearl processing is the focus of our industrial chain, it is like Huawei's chips, without this technology, it will not become a finished product. Pearl farming is our foundation, and without pearls raised, everything is empty. He Tieyuan once said.
In 2017, Zhuji issued the strictest "ban" on freshwater pearls in history, triggering a large-scale remediation campaign against pearl farming pollution.
Yamaxiahu Town pearl farming mussel pond. Photo: Deng Shuanglin
Nowadays, the upgraded automated pipe network farming technology has effectively solved the problem of "polluting water sources with fertilizer, and not growing mussels without fertilizer", and pearl farming has also transformed from a polluted industry to a water pollution control industry.
In terms of cultivation technology, the cultivation technology of nucleated pearls is also becoming more and more mature, and now it is possible to cultivate pearls with a cold white color and quality comparable to saltwater pearls from the cultivation end.
When the tide recedes and the real competitiveness of enterprises is valued, the pearl market can move towards the next stage of better.
Li Feng is a pseudonym in the article