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Pearl jewelry wholesale: South Sea pearls

Pearl jewelry wholesale : The challenges and opportunities of growing and marketing South Sea cultured pearls

wa mj ar pearls wholesaleOver the last 50 years, the cultured pearl industry has undergone a significant transformation. It has changed from a period when Japanese and (later) South Sea cultured pearls were effectively the only cultured pearls in the marketplace to the situation today, where there are a large variety of cultured pearls available from many different localities and of many different types. (Details info: pearl jewelry wholesale)

In the pre-culturing era, all oceanic (saltwater) pearls were classified as Oriental pearls and South Sea pearls fell into this generic category. With the advent of pearl culturing, however, pearls became more accurately known for the type of oyster that produced them and the region in which those oysters grew — hence the term South Sea pearls. Naturally occurring pearls from the Pinctada maxima oyster native to the South Seas have been traded for thousands of years. But in past centuries, many natural South Sea pearls were undoubtedly traded simply as Gulf pearls. Because of its spectacular nacre, the South Sea pearl oyster historically has produced some of the most significant natural pearls in the world. Therefore, it follows that this oyster has the ability to produce magnificent cultured pearls as well. (Details info: pearl jewelry wholesale)

However, the competition for market share between gem producers as well as between different pearl types is fierce. At the same time, there are significant gaps in the expertise required to grow pearl oysters and conduct pearl farming compared to many other fields of knowledge. There are very few experts today who have a broad knowledge on a comprehensive range of pearl and pearl farming issues. The challenge for the South Sea cultured pearl industry today is twofold: to produce pearls of a superior quality, on the basis of which they can be differentiated in the wider pearl market, and to improve the level of knowledge and understanding of pearls in the market place. (Details info: pearl jewelry wholesale)

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Chinese freshwater cultured pearl evolution

Seven years ago, we presented “Chinese Freshwater Cultured Pearl Revolution” at the last GIA symposium. In a very controversial session, we predicted the enormous impact China would have on the pearl markets. Nearly a decade later, the entire industry has changed. Huge quantities of affordable cultured pearls now are harvested annually — by conservative estimates, more than 1,200 tons of freshwater cultured pearls were harvested in 2005 — putting pressure on other pearl-producing countries. The pearl industry is now in a Darwinian “survival of the fittest” mode. Rounder and brighter cultured pearls from China (Fig. 2) have totally altered Japan’s previous dominance as the major pearl power. Large sizes are beginning to affect the South Sea markets. Even golden and Tahitian pearls are not immune to China’s fury, as improved color enhancements allow freshwater cultured pearls to mimic colors from all over the globe. (Details info: pearl jewelry wholesale)

What does the future look like for the next decade? With 11–14 mm bead-nucleated freshwater pearls beginning to show up in the marketplace, China appears to be taking even sharper aim at South Sea producers. And while the quantities harvested in China continue to rise, can anything be done to support pricing? Are more affordable cultured pearls a good thing for the market as a whole?

Interestingly, China’s exports are rising dramatically, but total revenues have not kept up. Falling prices have badly hurt many of the growers, creating a “sell it before it drops further” mentality. All this continues to put financial pressure on the country’s market. While China produces 95% of the world’s cultured pearls, pearl associations estimate it keeps only about 8% of the revenue they ultimately generate — an amazing statistic. (Details info: pearl jewelry wholesale)

To keep prices up, China needs to tackle the issues surrounding the low image of its cultured pearls. Better processing, improved marketing and elimination of low-end products are vital to support higher values for the market. (Details info: pearl jewelry wholesale)

The Tahitian cultured pearl

The Tahitian cultured pearl industry is the second largest industry in French Polynesia and the primary source of foreign currency from direct exports. It has a major socio-cultural and economic impact on the nation. With more than 7,000 Polynesians earning their livelihood within the pearl industry, it is an integral part of the fabric of Polynesian life. (Details info: pearl jewelry wholesale)

The meteoric popularity of the Tahitian cultured pearl in the 1980s triggered a veritable boom in the industry. For many years, this market demand made pearl farming a lucrative endeavour, but the industry reached its saturation point in the year 2000. Flagrant overproduction and slack quality control, combined with a slowdown of the world economy, dealt the Tahitian pearl industry a serious setback. Suddenly, pearl farming was no longer a viable activity. (Details info: pearl jewelry wholesale)

According to the official figures from the French Polynesian Pearl Culture Bureau, this glut caused many pearl farms to close and others to consolidate. In only seven years, the number of pearl farming operations decreased from 2,700 registered in 1998 to only 800 remaining in activity at the end of 2005 — half of them shell producers, the other half pearl producers. (Details info: pearl jewelry wholesale)

Drastic measures had to be taken to ensure a stable production and a quality standard for the Tahitian cultured pearl. Consequently, the French Polynesian Government established the Pearl Culture Bureau in 2001. This organization aimed to enforce strict quality controls and production regulations on the supply side of the spectrum. (Details info: pearl jewelry wholesale)

These included the following measures:

  • Limit the number of pearl farming concessions
  • Limit the number of production and export licenses
  • Shut down pearl culturing activity in certain lagoons
  • Establish a firm classification system aimed at ensuring that only high-quality product enters the world market
  • Strictly control a minimum required nacre thickness in all exported cultured pearls
  • Destroy all rejects to prevent their commercial use.

All these regulations combined with an effective marketing program, conducted by the non-profit GIE Perles de Tahiti, resulted in a marked increase in the total value of Tahitian cultured pearl exports of 14% in 2004 and 16% in 2005, accompanied by trading price increases of 30% from 2003 to 2004 and 20% from 2004 to 2005. Confidence has been restored to the market and production in 2006 has remained stable to date. (Details info: pearl jewelry wholesale)

Maintaining the viability of Tahitian pearl culturing activity is the principal objective of Perles de Tahiti. The specific objectives include:

  • Export cultured pearls and cultured pearl jewellery totalling $200 million in 2012
  • Limit the number of active producers on the island to 1,000
  • Perpetuate the pearl-bearing oyster resources
  • Improve the quality of production.

The future of the Tahitian pearl industry is critical to French Polynesia and its direction will dictate the future social, cultural and economic well being of the islands. Protection of the environment is a pivotal aspect of this. The life of a Polynesian and his family depend on his livelihood. The islands and their lagoons are our heritage and our future, worth every bit of our protection. Pearl culture is indeed a miracle of nature and of man. We must give back to nature what she has so graciously given us. (Details info: pearl jewelry wholesale)

Branding cultured pearls: From a retail perspective

Over the years, the retail landscape has undergone many changes. Consumers have become savvier and more demanding, retailers have created an “environment” or buying experience to attract these sophisticated consumers, and manufacturers and suppliers have developed appealing “brands” to set themselves apart from the competition. The most prominent examples can be found in the apparel industry where leading fashion designers have truly captured the hearts and wallets of the high-end consumer with strong brand identities and distinct product assortments. More recently, apparel retailers have created their own brand significance by setting themselves apart from the high-end fashion world with innovative store concepts and individually developed product lines. (Details info: pearl jewelry wholesale)

Critical factors

  • Companies must clearly define and market their brand essence, strive for differentiation and target their audience with precision.
  • Defining one’s brand essence can take many forms, but it must remain clear and consistent over time. There are many examples of established houses that have successfully reinvented themselves (Burberry) and well as newly created brands that are aggressively targeting Generations X and Y (Abercrombie and Fitch).
  • Creating differentiation is crucial in today’s retail environment. There are too many look-alike products or generic copies that offer no value added and consequently are not appealing to an affluent audience. In today’s highly competitive marketplace where product life cycles are getting shorter, it is imperative that successful brands strive to create a point of difference.
  • Finally, attracting a well-defined audience will ensure that companies achieve increasing sales and sustain a profitable business model. Generational marketing (including psychographic profiling) is one aspect of defining and attracting the most appropriate audience for your product. (Details info: pearl jewelry wholesale)
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Cultured pearls in the 21st Century: A free market and new looks

Cultured pearls in the 21st Century: A free market and new looks

wa mj ar pearls wholesaleThe cultured pearl industry has experienced a dramatic transformation during the past 15 years, from a single commodity dominated by one country to a multi-colored array of goods and an ever-expanding group of producers (Fig. 1).  Japanese dealers relinquish control For many decades after pioneering the cultured pearl in the early twentieth century, Japanese companies maintained tight control over its technology, production and distribution (Fig. 2).

In the 1960s, however, large, white South Sea cultured pearls from Australia and black cultured pearls from French Polynesia began entering the market alongside the traditional white Japanese akoya.

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The French Polynesians initially struggled to gain acceptance for their products, as many believed they were treated-color. A breakthrough came in the early 1970s when GIA researcher Robert Crowningshield determined their black color was indeed natural. Meanwhile, the South Sea cultured pearl was becoming a branded fashion item, though the Australians still marketed their output solely through Japanese wholesalers.

The real changes began in the 1990s, when the nearly century-long grip of the Japanese loosened due to a combination of factors: aggressive marketing efforts for South Sea and black French Polynesian pearls; the rise of lower-cost, fine-quality Chinese freshwater cultured pearls (Fig. 3); and the outbreak of a disease that devastated much of Japan’s pearling industry. The Australians and the French Polynesians (now selling under the “Tahitian” banner) began marketing their products as distinct from Japanese akoyas: the South Sea goods as luxury items that were not subjected to treatments, the Tahitians as exotic fashion pieces. Producers of both types of cultured pearls embarked on multi-million-dollar consumer campaigns to promote their goods and the images they wanted them to convey.

By the mid-1990s, Chinese farmers, who for years had produced small, irregularly shaped and very inexpensive goods (dubbed “rice krispie pearls”), were successfully growing round, akoya-like cultured pearls. The quantity of Chinese goods entering the market threatened to inundate Japanese distributors. The Japanese entered talks with the Chinese government in an effort to control production and exports of such goods, but they failed on both fronts.
Then, in 1996, reports began filtering in that Japanese pearl farms were suffering the massive mortality of their oyster crops. By year’s end, an estimated two-thirds of the akoya oysters under cultivation in Japanese waters had died from infectious disease — a blow from which that country’s cultured pearl industry has not yet fully recovered.

As a result, Japanese producers no longer had the financial resources to control supplies and distribution, thus creating a true free market within the industry. Market instability meets fashion revolution The first test of the new free market came at the end of the decade, when the large amounts of Chinese goods depressed prices for some categories and the production of Tahitian black cultured pearls skyrocketed with little control over quality. Prices
for lower-quality black cultured pearls in particular plummeted, a situation that took several years to reverse as the French Polynesian government imposed stricter controls on exports. The Japanese attempted to move akoyas more up-market by concentrating on larger sizes, while the South Sea producers increased their luxury marketing and advertising campaigns.

At the same time, cultured pearls in pastel shades of green, violet, pink and blue began showing up in designer pieces in the late 1990s, while a producer in the Philippines launched a marketing campaign for gold-colored goods. Within the past few years, “chocolate pearls” have become a fashion item. Once rejected by pearl producers and distributors who thought only in terms of black and white, such fancy-colored cultured pearls started a fashion revolution that still continues. As some of the world’s top designers began working with cultured pearls and the major producers increased their spending on branding and advertising (Fig. 4), large retailers took a much greater interest. Indeed, Tiffany & Co. created an entire chain of retail stores (Iridesse) based on pearl jewelry, because they could now offered a diverse array of products across a very broad price range.

In the future, the success of these many ventures will undoubtedly attract new enterprises in other nations, particularly around the Pacific Rim — but also in Mexico and the Middle East — while existing producers will continue to experiment with new products. Recently, one designer partnered with a Vietnamese farm to culture black pearls around gemstone bead nuclei. Identifying treatments will remain a challenge, and retailers and consumers alike must beware of the many techniques that can be used to enhance the appearance of cultured pearls, especially irradiation
and dyeing, and the methods that can be used to identify them.
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This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
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Corporate taxation in China

Corporate taxation in China

wa mj ar pearls wholesaleCurrently, domestic enterprises and foreign enterprises (FE) and foreign investment enterprises (FIE) are governed by two different sets of enterprise income tax legislation, thereby profoundly affecting the way enterprises consider investment decisions. However, with WTO accession, China is mandated to dismantle some of the preferential taxation policies adopted in relation to foreign enterprises to attract FDI.

FIEs include Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly foreign-owned enterprises established in China. FEs include foreign companies, enterprises and other economic organizations which have establishments in China and are engaged in production or business operations or which, although without establishments in China, have income from sources within China. Establishments refer to management offices, business organizations, representative offices, factories, places where natural resources are exploited, places where contracted projects of construction, installation, assembly and exploration are carried out, places where labour services are provided and business agents. FIEs are subject to income tax on their worldwide income whereas the FEs are generally liable to income tax in respect of their China-sourced income.

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Income tax on resident enterprises
Generally the national income tax on FIEs and FEs with establishments is levied at 30 per cent while local income tax is 3 per cent on the net taxable profit. FIEs are eligible for various tax holidays and other tax reductions and exemptions under the tax law, depending on their locations and nature of operations.

The following are the preferential income tax rates for income derived from production and non-production operations carried on by FIEs and FEs located in various special tax regimes:

  • Income from production or non-production businesses obtained by FIEs and FEs with establishments located in Special Economic Zones (SEZ) in Shenzhen, Zhuhai, Shantou, Xiamen and Hainan is subject to tax at 1 5 per cent.
  • Income from production businesses obtained by FIEs located in the designated Economic and Technological Development Zones (ETDZ) is also subject to tax at 1 5 per cent.
  • Income obtained by FIEs located in Coastal Economic Open Zones (CEOZ) and in the old urban districts of cities where the SEZs or ETDZs are located, and are engaged in production operations, is subject to tax at 24 per cent.
  • Income obtained by FIEs located in Coastal Economic Open Zones and in the old urban districts of cities where the SEZs and ETDZs are located, and are engaged in the following projects, is subject to tax at 1 5 per cent:
    (a) technology- intensive or knowledge- intensive projects;
    (b) projects with a long investment return period with foreign investment of not less than
    US $30 million; and
    (c) energy, communications or port development projects.
  • Income obtained by FIEs located in Shanghai Pudong New Area and engaged in productive operations, energy and transportation construction projects is subject to tax at 1 5 per cent.
  • Enterprises located in certain free trade zones and export processing zones and in certain Western and Central areas may also be subject to a 1 5 per cent reduced income tax rate.
  • In order to induce reinvestment of profits by foreign investors, a 40 per cent tax refund is granted to the foreign investor that reinvests its share of distributed profits in the same or a new FIE for a period of more than five years. Profits reinvested by the foreign investor in the same or in a new export-orientated enterprise or technologically advanced enterprise for a period of more than five years may be granted a 1 00 per cent tax refund.
  • On repatriation of after-tax profits, no income tax is levied. In addition, dividend income received by FIEs in China is also tax exempt but any relevant loss or expenses incurred are non-deductible.
  • For FIEs engaged in encouraged projects that purchase China-made equipment within the total investment or FIEs purchasing China-made equipment beyond the total investment but for the purpose of technological upgrading or for producing hightechnology products, 40 per cent of the costs of the domestic equipment may be used as a credit to offset the increment in the enterprise income tax liability in the year of equipment purchase as compared with that of the previous year.
  • If the expenditure on technology development of an FIE increases by 1 0 per cent or more over that of the previous year, the taxable income of that FIE for the current year, with the approval from the tax authority, will be offset by 50 per cent of the actual amount of the spending on technology development.
  • Newly established software production enterprises will be eligible for two years of exemption and three years of 50 per cent reduction of Enterprise Income Tax (EIT) from the first year they make profits.

Tax holidays and incentives

In addition to the preferential tax rates mentioned above, FIEs are entitled to the following   and incentives:

  • Production FIEs scheduled to operate for a period of more than 10 years will be entitled to two years’ tax exemption and three years’ 50 per cent income tax rate reduction commencing from the first profit-making year.
  • After the expiry of the tax exemption and reduction period, a production FIE exporting 70 percent or more of the value of its production output in a year may pay income tax at a 50 per cent reduction rate for that year subject to a minimum rate of 10 per cent.
  • After the expiry of the tax exemption and reduction period, a ‘technologically advanced FIE’ may pay income tax at a 50 per cent reduction for a further three years subject, again, to a minimum rate of 10 per cent. The ‘technologically advanced’ status requires special certification from the local government.
  • Preferential tax exemption in a given year will have EIT levied at the reduced rate of 10 per cent. FIEs in the Central and Western areas and under the encouraged category of the Investment Guidelines will enjoy an extension of the normal tax holiday for three years. That is, on top of the normal tax holiday of two years’ exemption and three years 50 per cent reduction of EIT, the reduced EIT rate of 15 per cent will be applicable for another three years after this five-year normal tax holiday. An extended 15 per cent reduced EIT rate will be available provided that the projects fall within the key encouraged projects category and satisfy other conditions.

Other Taxes

Business tax is applicable to enterprises in the service, transport and other non-production industries as well as the transfer of intangible assets or immovable properties. Business tax rates range from 3 per cent to 20 per cent, depending on the category of the business concerned. Consumption tax is levied on the production, in China, of 11 categories of goods including cigarettes, alcohol, cosmetics, jewellery, gasoline and motor vehicles. Importation of taxable goods is also subject to consumption tax but export is exempt.

Turnover tax paid, except for value-added tax, is deductible for foreign enterprise income tax purposes, because both business tax and consumption tax are considered as costs to the business or enterprise concerned. Value-added tax, however, is a tax which is borne by the end-user of taxable products and services and would not be deductible for income tax purposes. Local income tax is levied at three per cent of net taxable profit. Exemption or reduction in local income tax may be granted to FIEs located in SEZs, ETDZs and the old urban districts of cities where an SEZ is located, at the discretion of the local tax authorities.

Effective 1 January 1994 a turnover tax system consisting of value-added tax, consumption tax and business tax was introduced by the Chinese authorities. Value-added tax, consumption tax and business tax are indirect taxes charged on the gross turnover of businesses and enterprises operating in China. Under the turnover tax system, FIEs will pay either value-added tax or business tax, depending on the nature of their businesses. Value-added tax is levied on the sales of tangible goods, provision of processing, repairs and replacement services and the importation of goods within PRC. The general value-added tax rate is 17 per cent on products and imports and a lower rate of 13 per cent is levied on certain specific products, mostly necessities. Export sales are exempted under VAT rules and an exporter who incurs input VAT on purchase or manufacture of goods should be able to claim a refund from the tax authorities.

Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
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This is my name, my phone number and my address, as a sender (written by FedEx)
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Post-Entry Marketing Strategy in Chinese Market

Post-Entry Marketing Strategy in Chinese Market

wa mj ar pearls wholesaleAfter a foreign enterprise enters the Chinese market following after a process of tough negotiations and approval tests, its success will depend, apart from sound business relations with its JV partner, on various marketing strategies. While the theories of marketing applicable elsewhere can be replicated by and large in the case of Chinese consumers, certain structural characteristics of the market and traditional and typical habits/customs of the average Chinese consumers need to be kept in mind for any successful business venture. This is especially true for luxury products like jewellery.

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Pricing practices
Most Chinese consumers are sensitive to price and will usually choose less expensive products. Price competition is the practice most frequently employed by enterprises to compete for market share. There have been ‘price wars’ on VCRs, microwave ovens, television sets and food products such as packaged milk. Jewellery industry is characterized by low-level price competition, thereby affecting at times the overall development of the industry and cutting into the profits. Many Chinese companies believe in the strategy of Bo Li Duo Xiao, which means low profit margin and volume sales.

This belief has lead to a diverse range of pricing practices, including Shi Dian Li (10 per cent profit), ex-factory price, zero wholesale mark-up, etc. All of these tactics are based on the assumption that lower price will increase the speed of turnover and eventually generate high profit. While low price strategy is widely adopted, some marketers use a high-price strategy, taking advantage of the conventional wisdom that Pian Yi Wu Hao Huo (cheap is no good) and Yi Fen Qian Yi Fen Huo (each additional cent paid is associated with additional value). This strategy is often associated with prestigious products or products that are intended to establish reputation. Foreign branded products or imported products are generally high-priced and perceived as superior products.

Other pricing strategies common to developed markets are also used by Chinese marketers including ‘price lining’, ‘skim-the-oil’ pricing, ‘odd-even’ pricing, ‘was-is’ pricing, ‘special event’ pricing and so on. Some Chinese people have a superstitious belief in lucky numbers. Marketers price their products in such a way that the numbers denote good luck. For example, a piece of jewellery may be priced at 1199 to indicate Chang Chang Jiujiu (long and lasting), or 4451 meaning Shi Shi Ru Yi (everything is as you wish). Other examples include: 518 (Wo Yao Fa, meaning I will have a fortune), 888 (Fa Fa Fa, meaning fortune, fortune and fortune), 1688 (Yi Lu Fa Fa – endless fortune down the road), etc.

Advertising practices

Advertising is an important means of marketing. Many Chinese enterprises in one way or another believe that advertising will automatically generate sales. Terms such as gross rating point (GRP) or cost per thousand (CPT) in advertising theory seem to be unknown to most advertising decision makers. Consequently, few have given thought to an integrated and holistic approach to communication. For many years, most advertising dollars have gone to television media, as they are seen as the mosteffective channels of communication to create product awareness among potential consumers in China.

Over 50 per cent of the media have agency agreements with advertising companies and nearly half their business is given to advertising agencies as a result of the agency agreements. Advertising agents normally receive 15 per cent commission on advertising sales. The majority of the media requires advance payment, while advertisers are left with little recourse if the advertisement is not aired or published at agreed times. The lack of reliable ratings data is another problem that makes it difficult for advertisers to make decisions and evaluate the effectiveness of their advertising efforts.

Comparison advertising is not permitted under the Advertising Law, nor is the use of superlatives. All advertising copy must be reviewed and approved by the regulatory authority, the State Industrial and Commercial Administration, before going into media. Claims such as ‘No 1’ or ‘Top selling’ need to be supported by documentation, such as certificates issued by the relevant government agencies or authoritative survey organizations. Higher prices used to be charged to foreign companies but this price discrimination has been removed and all companies, both foreign and local, now pay the same price. Advertising rates are reviewed and published on an annual basis.

Promotion practices

Both retailers and producers use consumer-oriented promotion techniques. These practices range from coupons, premiums and deals to prizes, lucky draws, contests and sweepstakes. When employing promotion techniques, it is important to develop appropriate consumer insights which are extremely critical in a market that is large in territory, diverse in consumer preferences across regions and rapid in its pace of change. Some research results have indicated that consumers are pragmatic in their attitudes toward promotion exercises. Buy one and get one free, price reduction or discount, discount coupons and premiums seem to be favored by consumers.

However, marketers need to be very careful when designing promotion strategies and extreme situations should to be taken into consideration. The practice of free product offers against advertisement slips from newspapers has caused chaos in some instances when unexpected numbers of people besieged the site to claim free products that could not be offered. The guarantee of 100 per cent refund for unsatisfied consumers needs to be carefully thought out to prevent exploitation of the guarantee.

Branding practices

The lack of well-known brands is considered to be one of the weaknesses of Chinese consumer products manufacturers, most visibly in jewellery, where products lack distinctiveness. A ‘famous brand strategy’ has been advocated by the government in a bid to improve the brand images and marketability of locally produced products. Painstaking efforts by local marketers have yielded some results, with some brands having established national recognition. The majority, however, has not yet made much progress in breaking away from the images of a local brand. Worse still, many brands are still unknown to their intended consumers.

Creating brand image and brand equity is an essential element of market entry in the jewellery segment. Even though China has emerged in a relatively short period of time as a major player in the gold jewellery market, her products often lack distinction. Brand marketing has only now started in China, and the Chinese consumers are more aware of foreign brands in China than their own domestic brands. Thus, brand promotion through advertising, information dissemination and innovation in design are essential to establish brand image in a market, where the concept has just started in practice and thus, the potential remains high.

Local marketers have a tendency, as they do with numbers, to favor brand names that convey goodness, luck, happiness, longevity and prosperity. In some cases, brand names are associated with historical events. Few have tested their brand names before affixing them to their products. Because of the reputation of foreign products as premium quality, many local marketers even go so far as to give brand names that read and sound foreign. Local brands are often unrelated to product content or attributes, and therefore brand communications tend to be weak. In fact until recently, little effort was invested in developing a name or product image using integrated and holistic approaches. Clever marketers skipped brand name testing by putting out advertisements inviting consumers to give names for their products, but whether the arbitrarily chosen ones are liked by consumers is still unknown. While some local marketers are trying to use brand names that have a foreign touch, foreign marketers are struggling to find a proper Chinese name for their brands. Indeed, it is often very difficult to translate a western brand name into Chinese. The usual approach is either to take on a new name and create new meaning, or give a similarly-sounding phonetic name.

Whichever way you go in adapting your brands to the local conditions, it is important that the Chinese brand names should be easy to read and to remember, and not too long. Brand names longer than four Chinese characters will be difficult both to read and remember. The name chosen should be commonly used words. Strange words will cause difficulties in brand recognition. For example, the last word of the two-Chinese-word brand for Del Monte is difficult to find in a regular dictionary. Another factor that should be taken into consideration when adopting a Chinese brand name is the diverse dialects. A brand name that reads well in Mandarin may be read very differently in different dialects meaning very different things. A normal exercise of brand name testing would cover at least three cities such Guangzhou, Shanghai and Beijing to make sure that the name does not carry undesired meanings.

However, a good brand name does sell itself on the merit that it has a good meaning. Effective branding means more than Chinese labelling. A brand image manifests itself in many ways: in a memorable brand name and well-designed logo, attractive packaging, in the quality and services associated with the brand, and, importantly, in integrated marketing communications.

Retailing Practices

Several changes have taken place in retailing since the start of reforms and opening-up in China, and jewellery retailing is no exception. Domestic jewellery sales, apart from in the materials trading centres based in Shanghai, are mainly conducted through two channels: large and medium-sized shopping malls, and franchise stores. Shopping malls are usually located in city centres and attract large number of customers; they are also better known. Promotional activities can also be better conducted in the malls, where the demand base can be expanded. However, the cost of entry into the market is prohibitively high, and includes various charges. Moreover, the practice of offering discounts in the shopping malls based on sales volume is increasing, thereby cutting into the profit margin of the producer or processor. Thus, only the biggest enterprises and large foreign jewellery firms have taken to the shopping malls option. Second, a certain time lag is involved between sales and settlement of accounts, thereby affecting the flow of funds. Third, once a product is committed to the shopping alls/departmental stores, no independent promotion is possible. The interests of the producer and the management of the shopping mall are not always identical, thereby giving rise to principal-agent problem. This also affects brand-building, and all products look the same. Therefore, sales through departmental stores and malls should be only an interim or additional measure.

In contrast, franchise stores retailing products are of great help in brand promotion. Management charges are also comparatively fixed, and enterprises can choose the location and scale of their franchise stores in the light of their financial strength. Those retailing through franchise chains are the most advanced forces. As brand consciousness increases and consumers become more and more mature, the prospects for marketing through franchise stores, by foreign enterprises either on its own, or through a reputed Chinese partner with existing network, becomes more promising and is worth giving a consideration to.
Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
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Joint Venture Contract Negotiations and Approvals with Chinese Partner

Joint Venture Contract Negotiations and Approvals with Chinese Partner

wa mj ar pearls wholesaleJVs, either equity or cooperative, have dominated FDI projects into China till very recently, when with China’s WTO accession, foreign companies, encouraged by the increasingly rule-based foreign investment regime, started preferring wholly owned enterprises for conducting their operations. However, for many segments of the economy, including jewellery, JVs have been successful and remain an important vehicle. For labour contracts and provision of land and real estate, the Chinese partner in a JV can play a major role, as in liaising with the Chinese authorities. It is important, therefore, to learn how to conduct negotiations for successful Joint Ventures with a Chinese partner. The following is an indicative approach:

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From MOU to joint venture agreement

Initial discussions for a joint venture with a selected Chinese partner, if fruitful, will result in a Memorandum of Understanding (MOU) signed jointly. The MOU should contain a clear
statement of intent to develop together a feasibility study for a joint venture and to negotiate the terms of the joint venture to the mutual benefit of the parties. The MOU must be filed by the
Chinese party together with a ‘pre-feasibility study’ (in reality a checklist of the major parameters for the proposed JV) with the authorities to whom it reports. More detailed negotiations cannot proceed until the reporting authorities have given a preliminary indication of approval to the project.

Formal MOUs in China, in a joint venture context, are not legally binding but are considered to be a commitment to continue discussions and to carry out a serious feasibility study. Therefore, it is considered to be a breach of good faith for a foreign company to enter into negotiations for the same project with another Chinese enterprise once a formal MOU has been signed, unless it is first terminated by the mutual consent of the two original parties. It follows that the initial choice of preferred partner is crucial. Signing an MOU in haste with an ill-chosen potential partner imposes a major impediment to further progress. If in doubt, the foreign company should confine itself to a simple minute which records that discussions have taken place which will be reported to the boards of the two companies which will decide mutually within an agreed period of time whether or not to continue studying the project.

The pre-feasibility study

The pre-feasibility study usually takes the form of a standard checklist of the main parameters for the joint venture, some of which may be mentioned in the MOU but most of which are an expression of the initial ‘ballpark’ numbers which the parties may have discussed together. The checklist is not a joint declaration of the Chinese and foreign parties, but foreign partner input will certainly be requested.

Key elements in the pre-feasibility checklist include:

  • scope of business
  • total investment in the JV in US dollars
  • amount and shares of registered capital to be subscribed by the partners in US dollars
  • form of contribution for registered capital by each partner: cash, equipment, patented
    designs, technology, land use and buildings (proportions not usually quantified at this
    stage)
  • nature of technology; must be to international standard, preferably advanced
  • planned production capacity (unit/volume output rather than value)
  • proportion of output to be sold in export markets (normally not less than 20 per cent)
  • surface area of facility and of covered factory space (existing or new building)
  • in what proportions equipment is to be imported or sourced within China
  • workforce to be employed (provisional numbers)
  • foreign partner’s commitment to training and continuing technical support

There is a ‘chicken and egg’ element in specifying these parameters at such an early stage, since most of this detail cannot be quantified with certainty in advance of a full-scale feasibility study. Indeed, it is advisable that the foreign party distances itself, as far as possible, from the pre-feasibility process so that responsibility for any major changes to the parameters which have to be identified to the authorities is limited.

The feasibility study

Assuming that the authorities’ response to the pre-feasibility study and MOU is positive, the
parties may now move forward jointly to a full-scale project feasibility study. It is quite possible that the authorities may reject one or more of the parameters in the pre-feasibility checklist — perhaps the form in which contributions to registered capital may be made, or a demand for a higher proportion of export sales. By this time, the relationship between the prospective partners should have advanced to the point where such obstacles are addressed together in the spirit of trying to find a solution which will satisfy the authorities and be acceptable to both sides.

The complexity of the feasibility study will be determined by the nature of the project, its technical content, procurement issues in respect of equipment, raw material and locally sourced components, quality assurance standards and sales potential. It is recommended that all phases of the study be carried out by a joint team and that the data provided by either side should have
maximum transparency. In the course of the study, the Chinese members of the team will certainly want to visit the foreign partner’s facilities and to inspect technology, equipment and manufacturing processes.

The amount of detail which the Chinese partner will require to complete the feasibility study for
its purposes and the scope of the study will be broadly similar to the foreign partner’s requirements. The Chinese side will focus particularly on the detailed specification and performance of any equipment and tooling to be imported, and if used equipment or tooling is involved will need to satisfy itself fully as to condition and market value.

Market studies are a necessary part of the overall feasibility study to satisfy both partners that the products which the JV is targeted to manufacture are saleable in both export and domestic markets in the proportions and at the prices planned. In the early days of JVs in China, Chinese partners were often content to rely on a commitment by the foreign partner to take full responsibility for exports with the amounts to be exported in the early years specified in the JV contract. Chinese partners increasingly demand a fully researched market study which demonstrates in which overseas markets and in what proportions the JV’s products can be sold at the projected export sales price.

Conversely, foreign partners, attracted by the pull of billion-plus Chinese consumers, used to be
content to rely upon government institutes’ published statistics or projections and the Chinese partner’s assurances of marketability. Increasingly today prospective foreign JV partners demand studies of key regional markets in China by professional research organizations.

The business plan

The feasibility study should culminate in the preparation of a business plan by the two parties
jointly. This is not a formal requirement by the authorities to whom the feasibility study must be submitted with the JV agreement or draft JV contract, although the Chinese partner needs to
include an income and expenditure plan showing profit projections for the first three to five years of the JV’s life. However, from the foreign partner’s perspective, the addition to the feasibility study of a business plan (in the western sense) and a draft budget for the period from company registration through start-up is strongly recommended. In particular, the business plan should include a cash-flow statement, as well as a profit and loss statement, and operating statements including analyses of fixed and variable expense and a manpower plan which specifies maximum staffing at each stage of development in the JV. In this way, the business plan becomes a financial blueprint, subject to review and amendment by the board of the JV after the company is formed, but a clear reference point for management discussion.

Negotiating the joint venture agreement

In the 1980s it was common for the designated JV partners to negotiate the detailed terms of the
JV in the form of a non-binding joint venture agreement which was then submitted to the local
reporting authorities for approval, together with the Chinese version feasibility study. Following approval, possibly with some amendment, the two sides would then reconvene, convert the joint venture agreement into a draft joint venture contract and, at the same time, draft the articles of association (or ‘statutes’ as they were sometimes called) for the joint venture company.

As the incidence of JV negotiations multiplied and the pace of joint venturing quickened, many
local authorities, notably the Commissions of Foreign Trade and Economic Cooperation in major cities, relaxed the procedure and permitted the partners to proceed direct to the drafting of the
joint venture contract and articles of association. Today, use of the preliminary joint venture
agreement is generally limited to very complex or contentious projects where some intermediary
clarification is helpful or the parties prefer a more protracted negotiation. In the sections which follow, it is assumed that the parties proceed direct to the contract stage.

At this point, the senior management of the foreign party entering into formal JV contract negotiations needs to select its negotiating and drafting team and to decide how it will conduct
the negotiations within the framework of standard Chinese practice. Normally, the principal Chinese party (always referred to as ‘Party A in the documents) will prepare a first draft of the
joint venture contract and the articles of association which it will submit, in advance of negotiation, to the principal foreign party (invariably referred to as ‘Party B’ in a bilateral
agreement).

Perhaps the first issue to address is the force and practice of Joint Venture Law. The principal
applicable law on equity joint ventures (and other forms of foreign investment also) is published
in Chinese and in English in a single volume, entitled Investment in China, compiled jointly by the Foreign Investment Administration and China Economic and Trade Consultant Corporation of MOFCOM. The laws set out clearly (and generally, unambiguously) the content and principal clauses which must be included in both a joint venture contract and the articles of association.
Many of the detailed clauses which appear in the first drafts submitted by Party A are culled
direct from these laws, but the English language is usually not identical. One reason why the wording is often different is that copies of Investment in China with the official English translation are not generally in circulation among Chinese companies.

Variations of substance to the standard clauses of the Joint Venture Law, other than those dealing with the scope of the business, investment and registered capital contributions, scale of
production, export content and the specific responsibilities of the parties, are not generally
allowed by the authorities. Therefore, a commonsense approach to these secondary clauses is to
incorporate them in the joint venture contract and articles of association as drafted, and translated, in the law unless either party has some major objection. Taking this approach to its
logical conclusion, foreign companies negotiating a JV for the first time may be tempted to conduct the negotiations on a ‘do it yourself basis without external advisers, but such a course of action exposes the investor to unnecessary risk.

At the other extreme, the foreign investor may wish to engage a law firm to advise on the legal
documents and to participate in the negotiations. There are a number of leading international law
firms with offices in China, with experienced foreign and Chinese staff authorized to practice law in China. However, involvement of western law firms in joint venture negotiating sessions can be counter-productive and an ‘offstage’ involvement may be preferable. In most JV negotiations the Chinese party will not involve an external Chinese lawyer unless a western law firm is introduced. Mega-projects involving billion dollar investment, international financing or major infrastructure projects are a different matter where the contractual documents are susceptible to western legal drafting, but the routine equity joint venture does not involve international law and the contracts are rigidly controlled by the standard Chinese framework.
Joint venture contract negotiators are well advised to concentrate on substance rather than form.
However forcefully they may seek to interpose tightly drafted clauses in western legal language,
the final product will still contain wording through which the proverbial ‘coach and horses’ could be driven in a western court of law. Essentially, what matters is that the joint venture contract and articles of association are written in transparent business language, which is as unambiguous as possible to both parties.

The success of the JV will depend on a strong, enduring relationship between the partners. If
mutual understanding and respect fail, the joint venture firm should question what the remedies
are. Chinese contracts always provide for ‘the resolution of disputes through friendly consultation’ and, if that fails, by arbitration. Arbitration in China has a reasonable record;
however, many find third party arbitration attractive. Under a judicial system such as China’s
where there are no formal case law precedents to which courts can refer, litigation is hazardous
and an unattractive course of action. If the partnership relationship fails in China and becomes
confrontational, the ultimate recourse is to walk away. However, in the context of negotiating an
acceptable joint venture contract and articles of association drafted in layman’s language, the
foreign partner can benefit from the services of external advisers in language interpretation,
business consultancy and institutional intermediary. During the course of the negotiations, the foreign partner may also need to take advice on taxation or accountancy issues. The bigger international accountancy firms all have audit offices in China, mainly in Beijing and Shanghai, and their expert advice is readily available.

The negotiation process

JV contract negotiations are best conducted in the same city as the approving authorities to
whom the draft contract and articles of association have to be submitted for preliminary approval. Therefore, if the Chinese partner is part of a national corporation the negotiations are better held in Beijing where the relevant ministries are located so that informal opinion may be sought on the issues of substance. Whatever other ministry may be involved in the subsequent approval process, MOFCOM for major joint ventures or the appropriate local authority will certainly be involved, since all foreign investment projects require ultimate MOFCOM endorsement.

Assuming that the foreign party has studied the draft contract and articles of association (and
taken advice where appropriate) in advance of discussion, the actual negotiating sessions are
likely to take less than seven days. The negotiating procedures are well defined. As for the
original set of meetings, the representatives of the two parties will be ranged on either side of a meeting room table with up to ten Chinese representatives present. The composition of the
Chinese team may vary from day to day, but the same key members are likely to attend each
session under the leadership of a designated chief negotiator.

In spite of the apparent formality, the climate of the discussions should be quite relaxed. If the parties have reached a high degree of unanimity on the structure and financing of the JV during the joint feasibility study work together, there will be a presumption on both sides that the JV will go ahead. This does not mean to say that no serious differences of opinion will emerge in the course of formal negotiation, but a conducive atmosphere of mutual sincerity and flexibility will have been created. On many points of detailed drafting, the focus of discussion is more likely to be on satisfying the legal requirements and state policy guidelines, rather than resolving differences between the parties.
Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
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abdurrachim miss joaquim pearl send via fedex 1
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

abdurrachim pearl fedex
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

This is my name, my phone number and my address, as a sender (written by FedEx)
This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

one sample of inside the box of parcels abdurrachim missjoaquim pearl
one sample of inside the box of parcels

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