Charm Oriental Luxury

Purpose of the research: Jade has a long history in China. Ancient times was a favorite of royal aristocrats. Nowadays, it is also sought after by many rich and wealthy people. It is an attractive luxury. However, due to resource constraints and the attributes of non-essential consumer goods, the jadeite industry is still a niche industry compared to other mass consumer products industries. There are not many people who know about it. We will launch an in-depth research subdivision report of the Jade segment industry in the near future. We hope that this series of reports will enable you to truly understand this attractive niche industry.

Investment Highlights: Question one: "Is there really a shortage of jadeite resources."

The most straightforward understanding of the shortage of resources is that demand exceeds supply. From the perspective of demand, the compound annual growth rate of the number of wealthy people in China from 2005 to 2011 was as high as 40.36%. The current stable social development and continuous improvement in the living standards of the residents. From ancient times to gold, there are arguments of “disposing gold in the world and collecting jade in the prosperous times”.

We believe that the demand for jadeite is still in a rising stage for a long time.

From the perspective of supply, the supply cannot meet the demand and it needs to satisfy two major factors at the same time. The first existing resource is limited. The second new resource has a long production cycle. Judging from the existing stock of jadeite jade, the old pit producing high-quality jadeite is very well developed. At present, even the new pit, which mainly produces middle and low-end jadeite, has been mined several hundred meters underground.

And the production cycle of jadeite should be more than 6500 years, which can be described as non-renewable resources. Therefore, the high-end jade resources with ornamental value are very scarce. The supply of medium and low-end jade is relatively loose.

Question 2: Emerald and Western mass luxury can be compared?

Western mass luxury goods mainly rely on the brand's influence in consumers to achieve high prices. As a luxury of this level, the core competitiveness comes mainly from the shaping of the brand. Assume that in the ideal situation of the consumer, the sales of the product can be huge. The increase in product prices is mainly due to the need for the brand itself to maintain the brand's noble image and actively raise prices.

Jadeite, as a luxury resource, is characterized by its high price. It mainly comes from the product's own quality, and the product's life cycle is longer. The premium, middle and senior products are unique and non-renewable. The core competitiveness of enterprise development is how to find a good source of supply.

With the scarcity of resources and the limited scale of the company's development, even if the consumer demand is not a problem, the sales volume of the product will be limited by the output. The supply has a certain degree of rigidity. The price rises and falls mainly due to changes in demand. Although they all belong to luxury goods, there are different sources of luxury attributes. There can be no simple category between them.

Question 3: The source of Jadeite's raw materials is its core competitiveness. What kind of company has a comparative advantage?

Burmese roughstone from Myanmar entered China mainly through the government's private trade with the border people. The suppliers of rough stone are mostly individuals. This market is a “many-to-many” market. There is a saying in the industry that “the jadeite industry has no experts, and the experts who earn money are experts.” This industry is a risky and profitable industry.

Individuals who can continuously make money in this industry in the medium and long term will have the ability to judge the original stone that surpasses others (the core ability to make money), and will also form a high reputation in the industry. The strong economic strength and high reputation will enable competent companies to become the first customers to see high-quality raw materials and obtain valuable sources of supply. In order to obtain the advantages of jade resources.