The Secretary General of the Pearl Association introduces a partner to young people. In order to make up for the shortcomings, Crazy Pearl was taken away with overwhelming wealth.
"There are obviously fewer people this year." When the taxi driver came out of the high-speed rail station in Zhuji, Zhejiang, he gave the reporter a warning when he learned that his destination was Shanxiahu Town.
This was not the case a few months ago. In 2023, celebrities such as Ni Ni and Gao Ye wore pearls, which made pearls quite popular among young people. In addition, live broadcasts and short videos fueled the trend, and the pearl market ushered in an unprecedented boom. The overwhelming traffic also brought fire to the previously unknown Shanxiahu Town. Shanxiahu Town covers an area of more than 40 square kilometers, but it can be called the "Yiwu of the pearl world". It is the world's largest freshwater pearl production and sales center, contributing 70% of the global and 80% of the country's freshwater pearl trade. Last year, this small town with a permanent population of only about 20,000 people had a peak of more than 20,000 tourists in one day. An old man in the town who has been dealing in pearls all his life sighed: "Except for the Spring Festival travel rush, I have never seen such a scene."
Today, the frenzy seems to have reversed. As the flow of people gradually recedes, the bustling town returns to calm.
On May 27, the reporter went to the East China International Jewelry City in Shanxiahu Town. The entire mall was empty. Before 5 p.m., some merchants had begun to count their items and prepare to close the shop. In the shops that were still open, some merchants were playing games on their mobile phones, and the tablets in front of them were playing popular TV series; some merchants stared at the pearls on the counter in front of them in a daze, with open cartons piled messily at their feet, and a white puppy lazily dozing on the steps. On the bench at the door of the store, a courier was idly watching short videos until his phone issued a reminder tone that the battery was less than 20%, and he got up angrily to find a power bank.
Since the beginning of this year, the business in the jewelry city has decreased a lot. Photo by Zhu Lingjun
British writer Mike Dash wrote in his book Tulip Fever: "People who have experienced the tulip craze cannot explain where the craze comes from." Locals and practitioners who have personally witnessed the growth of Shanxiahu pearls cannot explain the reasons. But the ups and downs of the pearl industry over the years have taught them to be calm. Faced with the unknown market conditions, they sometimes feel anxious, but they are not afraid to move forward. More people believe that "do your own thing and live your own life well, and life will always get better."
Today, recalling the crazy price increase of pearls, Zhong Chen, a pearl merchant who has been engaged in the jewelry business for more than ten years, sighed deeply: "I have never seen such a market."
In the past year, the price of pearls has generally doubled, and some high-quality seawater pearls have even increased by 2-3 times. The price of the highest-quality Australian white pearls changes almost every month. At its peak, a top-quality 15mm Australian white pearl sold for nearly 30,000 yuan. A year ago, pearls with the same parameters only cost more than 10,000 yuan. Even freshwater pearls, which were originally at the bottom of the contempt chain, have risen in value. "The best-selling small pearls used to cost only a few dozen yuan a string of ordinary quality and small size, but last year they rose to 400 to 500 yuan."
The crazy price increase is partly due to production. China and Japan are the main producers of pearls. Data show that in 2022, Japan's pearl production was only 13.2 tons, a 40% decrease from 2018. According to data from the Zhejiang Pearl Industry Association, the national freshwater pearl production was 1 million kilograms in 2020, which dropped to 800,000 kilograms in 2021 and about 700,000 kilograms in 2022. It is said that the reason for the reduction in domestic production is that many farms that do not meet ecological standards have been closed and new regulations have been introduced to ban the breeding of certain clams.
However, changes in supply and demand cannot summarize all the reasons. The pearl craze in Shanxia Lake has been on the rise since 2020. Taxi driver Ge Hu said: "Rather than saying it's crazy pearls, it's more like crazy purchasing agents. The pearls in Shanxia Lake are mainly brought up by purchasing agents." Ge Hu claimed that he had more than 600 purchasing agents added to his WeChat friends list. He usually runs to the train station and airport for pick-up and drop-off. At most, he would run five or six times a day. In the past, Ge Hu could make about 3,000 yuan a month, which was barely enough to support his family. "After it became popular, I could make a year's money in one peak season."
Signs that say "custom-made on behalf of others" are common in jewelry stores. Photo by Zhu Lingjun
The influx of purchasing agents has truly changed the face of the entire town. For example, many purchasing agents like to stay at the Four Seasons Hotel opposite the Jewelry City and eat at the "Ciwu Noodles" next to the hotel. During the peak season, hotel rooms are "hard to find" and are usually fully booked a month in advance. People have to wait for tables in the noodle shop almost all day. The strong demand has made Shanxiahu Town's commercial facilities quite complete. With the Jewelry City as the center, there are not only large supermarkets nearby, but also beverage shops such as Starbucks, Bawang Chaji, Cha Baidao, and Gu Ming. In addition, in order to improve the passenger reception capacity, many hotels such as Radisson and Hanting have opened around the Jewelry City in the past two years.
Ge Hu told the reporter that in Shanxiahu Town, purchasing agents are easy to identify. Wearing a pearl necklace around the neck, carrying a brand-name bag on the shoulder, holding two or more mobile phones in the hand, carrying a fashionable sack or pushing a suitcase, these characteristics constitute the basic portrait of purchasing agents. During the interview, the reporter also witnessed the "power" of purchasing agents. A purchasing agent just bought a string of pearls from a merchant at a purchase price of 1,300 yuan, turned around and made a phone call to promote it, and sold it for 6,500 yuan.
In Zhong Chen's view, the purchasing agent and pearl business is a question similar to "which came first, the chicken or the egg", which are mutually causal and mutually reinforcing. "In the past, many purchasing agents mainly went abroad to purchase cosmetics. In recent years, pearls have become popular, so they changed their track. Because pearls are non-standard products, there is no pricing standard, and consumers do not know the bottom price, so the relative profit can be higher. On the other hand, purchasing agents have their own sales channels, and sales have increased, but pearl production has decreased, which has further pushed up prices."
Many practitioners in the pearl industry in Shanxiahu Town believe that live streaming and purchasing agents have changed sales channels, revitalized local pearl resources, and benefited the entire upstream and downstream of the industry chain. In this wave of rising prices, almost all parties have reaped the benefits, and a number of "get-rich-quick myths" have been spawned. For example, a senior purchasing agent revealed that he had earned 2 million yuan in 3 months; before that, when Tahitian pearls were popular, Zhong Chen's store "sold one after another", and the monthly income reached 5 million yuan, of which the profit was about 2 million yuan. Chen Huifei, secretary of the Party General Branch of Fengjiang Village, Shanxiahu Town, mentioned in an interview with the media that a pearl farmer in the village had made a profit of more than 10 million yuan by selling pearls in just 9 days. There are more than 300 pearl farmers in the village, and many of them have an annual income of more than 1 million yuan.
However, the "myth" is hard to sustain. Starting this year, many people in Shanxiahu Town have seen the trend of pearl fever fading.
"A typical sign is that high-end goods are not selling well anymore." Chen Lijia, a staff member of the Zhejiang Pearl Industry Association, said that during the peak season, there is still a lot of traffic, but she clearly feels that purchasing power is declining. "In the past, goods worth tens of thousands of yuan were easily sold, but this year, goods worth hundreds or thousands of yuan may sell better, and the amount of money has decreased a lot."
"The pearl market has entered a period of adjustment. First, the production capacity has gradually stabilized, and second, a group of people have already withdrawn from the market after 'cutting all the leeks'. The previous phenomenon of widespread crazy increases is unlikely to occur again." Zhong Chen analyzed. Last year, the national freshwater pearl production rebounded to 940,000 kilograms, which has gradually approached the peak production. The supply and demand relationship has quietly changed, which has helped to stabilize the price. In addition, the price of freshwater pearls itself has a low starting point. After experiencing multiple rounds of price increases, some pearls are already facing a situation where there is a price but no market.
The decline in enthusiasm also occurred on the supply side. For many new players, the temptation of profit is also declining. Zhong Chen told reporters that the pearl industry is an asset-heavy operation model, and funds are invested in large quantities of stockpiling. "Although many stores are inconspicuous, the smallest store in our jewelry city is estimated to be worth more than 15 million yuan." Last year, in the so-called "get rich quickly" stories, many pearl merchants relied on the inventory that was previously accumulated at low prices. But in the past two years, with the skyrocketing purchase price of raw materials, the profit margin has been compressed, and the splash has naturally become smaller. "After the inventory is cleared, we spend twice or even three or five times the price to stock up. Sometimes we can't figure out whether we are losing money or making money."
Empty corridors in the jewelry city. Photo by Zhu Lingjun
Rent also affects profits. Some merchants complained to reporters that counter rents have been rising in recent years. Some counters are only a few square meters, but the annual rent is 750,000 yuan, which is five times higher than before. "The money earned in the past two years may not be as much as the increase in rent, so I have to close the store." The reporter walked around the jewelry city for a few times and saw that some store counters were closed, and some even posted notices of "popular shops being sublet." However, some stores are rushing to renovate and prepare for opening, and some stores are surrounded by "new store opening" flower baskets, but looking inside, it is found that the merchants are concentrating on playing "Happy Candy Crush".
"It is not necessarily a bad thing for consumption to return to rationality," said pearl merchant Huo Sheng. Huo Sheng has been in the jewelry business for 8 years. He and his wife opened a store together in the jewelry city, mainly selling pearl accessories, both wholesale and retail. Huo Sheng's store is located in a remote corner, and there is not much customer flow on weekdays. He works slowly and speaks slowly. When there is no business, he does handicrafts in the store. This seemingly "Buddhist" state can attract some individual customers with similar temperaments, and several small and medium-sized businesses have been made.
Huo Sheng realized very early that strengthening original design and pursuing design innovation is sometimes more effective than chasing hot spots. He was one of the first merchants in the jewelry city to use 925 silver gold plating to make pearl accessories. It was once a highlight, and now it has almost become a standard in the market.
Changes in consumers' aesthetic demands are forcing companies and merchants to constantly seek innovation and difference in design. Since last year, popular products such as "Millet Pearls" and "Baroque" have been discovered one after another and are very popular among young people. "Big, round and shiny are no longer the only aesthetic standards for pearls. Pearls that are considered inferior from a traditional perspective actually have market potential." Huo Sheng believes that although the pearl market has cooled down, the demand has always existed, but has shifted to more design-oriented and cost-effective options. "Whether we can meet new aesthetic needs and seize new consumer groups will determine whether we can win long-term dividends in the future."
In the jewelry city, merchants are waiting for business. Photo by Zhu Lingjun
In recent years, as pearls have become popular, sales and scale have risen rapidly. Data show that the scale of my country's pearl market will be about 35 billion yuan in 2023, an increase of about 46% year-on-year. In the past three years, the scale of the pearl market has continued to grow, with an average annual growth rate of about 34%. Since pearls are renewable organic gems, the main components are calcium carbonate and organic matter, and the chemical stability is relatively poor. The lifespan is closely related to the wearing time and storage method, but oxidation and dullness are an inevitable process. Some practitioners predict that pearl repair and maintenance may be a considerable market in the future.
Even in the current situation, more and more merchants have realized that the pearl business is not always a "one-time deal". Unless you want to make quick money, you have to work hard on follow-up services to enhance user stickiness. For example, when selling, Mr. Huo always emphasizes the concept of "lifetime warranty" to customers. For example, if the accessories are broken, they can be repaired. If they are in stock, they can be directly replaced. After a conversation, there will always be someone to pay for it. "From the product point of view, if I replace them with new ones, I will definitely lose money. But after all, the sales volume is very large. For example, I sold 1,000 pieces, but only 20-30 pieces were actually returned for repair. In fact, the loss is very small." Mr. Huo smiled slightly, "But this kind of service is additional, and it is also my advantage."
"The pearl industry has always been cyclical." When chatting with pearl practitioners in Shanxiahu Town, the reporter always heard a jingle-like saying - "It was hot last year, hot this year, and it will definitely be tepid next year." Most people are quite calm about the ups and downs of the pearl industry. Zhong Chen concluded: "We won't have a big meal or open champagne to celebrate the sales on Mother's Day, and there is no need to be sad because of sitting on the bench all day. Life must go on."
As early as the 1980s, Shanxiahu Town had become a well-known freshwater pearl trading center, but it has experienced many "dark moments" over the years. For a long time before that, the main customers of freshwater pearls were in the overseas market. Affected by the financial crisis in 2000, the price of pearls plummeted, and the entire market in Shanxiahu Town was almost frozen. It was not until the domestic consumer market heated up that it slowly recovered. Before this wave of pearl market, a large number of local pearl merchants were on the verge of bankruptcy.
There is a turning point in the crisis. Every market fluctuation is also an opportunity for industrial transformation. For example, the continuous improvement of pearl oyster breeding technology has made the roundness, brightness and flaws of freshwater pearls gradually controllable, and transformed them from raw materials to finished jewelry in the trading market. For example, purchasing on behalf of others and live broadcasting have changed the sales channels, gradually shifting the sales customer base from large companies to small channels, and continuously extending to consumers, becoming a "national product substitute" recognized and sought after by many people, which led to the sudden popularity last year.
He Tieyuan, secretary general of the Zhejiang Pearl Industry Association, believes that a complete industrial chain is the core advantage of the local pearl industry. Among them, pearl farming is the foundation. Without pearls, everything is empty; and processing is the key. He Tieyuan compares it to "chip production" and "without this technology, the finished product cannot be made." He Tieyuan is one of the earliest villagers engaged in the pearl industry in Shanxiahu Town. He is still deeply impressed by the pearl crisis at the turn of the century. "In 2000, Zhuji freshwater pearls were in a life-and-death situation because there was no industrial closed loop at the processing end. The pricing power is in the hands of foreigners because they have design aesthetics and processing technology. They say they don't want your pearls, and we have no way to deal with it."
The logo of the World Pearl Conference and the advertisements of the merchants. Photo by Zhu Lingjun
In the past two years, He Tieyuan likes to introduce young people in the industry, especially "to bring in outstanding young women to become the pillars of our Shanxiahu pearl industry". He believes that an industry must have young people to solve problems and be more hopeful. Judging from the data, many young practitioners have returned to Shanxiahu Town in recent years. It is their efforts to innovate on the sales side that have magnified the advantages of the industry and even formed a prosperous scene that is "rare in decades". But in He Tieyuan's view, under the hustle and bustle, what is concealed is the real problem of the industry. "There are very few young people entering the processing and breeding ends, which has led to technological stagnation and an imbalance in the industrial structure."
"Speeding up the shortcomings of the industry" is the consensus of many practitioners. After the heat subsides, it is a good time to exert internal strength. However, it is difficult to accomplish it relying solely on the strength of enterprises or merchants. "Although our pearl industry has developed rapidly, it is still weak in variety selection, processing technology, and product design, and there is a clear gap with the advanced level of foreign countries." He Tieyuan suggested that the next step could be to adopt government-led enterprise participation and other methods to jointly build a germplasm resource center to promote industrial upgrading.
History will not repeat itself in details, but the process will always repeat itself. Mike Dash once asserted: "Tulip fever is a virus that will never completely disappear." Having experienced ups and downs, the people of Yamashita Lake believe that as long as they move forward, the pearl industry will always have a new future.
