At the recent South Sea Pearl auctions in Hong Kong, growers and wholesalers were bewildered by a sharp escalation in the price of finer quality round Australian pearls making industry insiders believe we’re seeing a bubble in the market.
Large Chinese retailers wanting to circumvent traditional pearl wholesalers, who tend to be Japanese, have been attending the pearl auctions and bidding up large parcels of round white Australian pearls.
Unfortunately, the Chinese retailers have a problem when it comes to product knowledge. Shop assistants in Chinese jewellery shops have trouble explaining why one strand is more expensive than another. They tend to cross their arms and tell customers ‘it’s more expensive because it is better’. Which isn’t quite true; round pearls are more expensive because they are rare and because Chinese retailers are bidding up the price.
It’s not even a case there has been a huge growth in demand for South Sea Pearls in China either. There has been a small spark of demand in this tiny segment of the Chinese jewellery market. Because the annual production of round South Sea Pearls is small and the Chinese jewellery market so huge, a small spark in a virtually insignificant segment of the market is enough to cause massive price increases.
If you step away from the round pearls then the price of South Sea Pearls has remained steady. Slightly off-round pearls are the same price they have always been making them appear exceptional value for money.
Pearl industry pundits shrug their shoulders. Its one thing to buy up the supply of round pearls but its something else to sell them. If the Chinese retailers are unable to sell their round Australian pearls then we might see them all back on the market before too long.
