Chinese silver producer China Silver Group Limited has decided to enter the retail and e-commerce business.
On the cards are an e-commerce platform in China, promoting silver jewellery, as well as a series of retail brands.
China Silver Group, one of the largest silver producers in China in terms of annual production volume expects to launch the platform and brands next month in a bid to leverage its sales off of its existing silver production business.
Chief executive of the China Silver Group Chen Wantian said the company was interested in opportunities that could secure raw materials to increase production. Speaking about the e-commerce potential, he added that there is strong demand for silver jewellery in China, with consumers viewing it has offering value for money.
The idea to develop an e-commerce platform for silver has come about given the high demand for silver jewellery, he added. The rapid pace of urbanisation in China, coupled with high disposable incomes were the other factors underscoring the decision.
The company is looking to expand annual production capacity of silver ingots by 60% to 400 tonnes by the end of 2013. The refiner said it would be able to produce and sell more than 300 tonnes of silver ingots in 2013. It sold 211 tonnes of silver ingots last year.
By 2014, plans are afoot to continue to increase production capacity to 550 tonnes a year, and to 650 tonnes the following year.
E-commerce in China totalled about $710.94 billion in the first six months of the year, up 24.3% from a year ago as more companies and consumers turned to online shopping.
According to a report by the China e-Business Research Center, business-to-business (B2B) sales increased 15.3% year on year to about $555.6 billion. Online retail sales, including business-to-consumer (B2C) and consumer-to-consumer (C2C), grew 47.3% to about $123.24 billion.
E-commerce transactions are estimated to reach about $284.33 billion by the end of the year, the state news agency Xinhua reported.
Guangdong, Zhejiang and Beijing topped the three spots among all provincial-level regions with the largest number of companies engaging in e-commerce.
What has also helped sentiment is the fact that jewellery sales in Guangdong Province surged on November 11, known as China’s Single’s Day holiday, given the strong demand for gold and silver jewellery, and the recent drop in gold prices.
Chinese official newspaper Guangdong Daily reported that gold rings were among the hot sellers on Single’s Day, which is represented by the figure 11/11, and a day when young Chinese celebrate being unattached.
Chinese zodiac signs related jewellery products and silver bars were also highly popular on that day, reporting brisk sales. Wang Chaoyu, a currency analyst with Guangdong Yuebao Gold Investment Company told the newspaper that online shoppers purchased gold and silver jewellery from the e-commerce portals of major jewellery retailers.
E-commerce company Alibaba said its online sales on Single’s Day totalled about $5.75 billion, an increase of more than 83% over the previous year.
Retail sales of gold and silver jewellery in the Liaoning Province have also increased by 32% in the first 10 months of the year, which has proved to be a main driver of the province’s overall consumption during the period.
The category recorded the highest growth rate among all consumer goods during the period, thanks to the drop in gold prices earlier this year in April. Since the size of the urban middle class population in China now exceeds the entire population of the United States, the growing consumption power in China, along with the recent downward trend in the price of silver, has driven up demand for silver jewellery adornments.
Moreover, recent figures released by the National Bureau of Statistics of China has shown that retail sales of gold and silver jewellery in China increased by 14% to about $3.6 billion in October, compared to the same month last year.
Retail sales of gold and silver jewellery in the first 10 months of the year totalled $40.6 billion, a 28% increase over the same period last year.
For the China Silver Group, the absence of influential silver jewellery brands in the Chinese market has presented an opportunity to expand its silver business. As the only professional silver producer in mainland China, the group has decided to establish a professional and integrated silver jewellery brand.