Wholesale pearl jewelry sets : Trading with China in Jewellery
Along with expansion of bilateral trade between India and China, trade in gems and jewellery has also gone up. India enjoys reputation in China as the premier processing base for diamond and gold jewellery. In 2003 Gems and Jewellery was the fifth largest item of India’s exports to China. India occupies the number three position among nations exporting precious stones and metals to China. India’s exports of gems and jewellery to China, the bulk of it being diamond, increased by 62.1% in 2003 demonstrating the vibrancy of the trade market. It is essential to understand the trade patterns in jewellery as well as trade channels available for any successful trade deal. (reference: wholesale pearl jewelry sets )
This chapter contains information on the following:
1. Foreign Trade system in China
- Role of FTCs o Getting to know the right contacts
- China’s trade with the rest of the world on gems and jewellery
- China’s exports
- China’s imports
2. China’s Gems and Jewellery trade with India
- Detailed trends of India’s exports
- Main competitors for India
- India’s imports from China

photo & reference: wholesale pearl jewelry sets
I. Foreign Trading System in China
Before reforms and opening up in 1979, China’s foreign trade policy was determined almost wholly by political objectives. Trade policy was characterized by insistence on ‘self sufficiency’ and import-substitution. Authority to import and export was centralized in fewer than 20 foreign trade corporations (FTCs) under the Ministry of Foreign Trade. Each of these FTCs dealt only with specified commodities, under quota. The FTCs turned all foreign exchange earned from exports over to the Bank of China. Importers of consumer goods were minimal, and jewellery imports were nil. (reference: wholesale pearl jewelry sets )
Under reforms programmed, the policy of self sufficiency was replaced by a strategy of importing advanced technology to promote a rapid expansion in exports of manufactured goods. At the same time, the foreign trade monopoly of the FTCs was broken. The number of domestic companies with trading rights jumped from 900 in 1985 to 16000 in 2000. Moreover, the restrictions regulating the FTCs were gradually relaxed in terms of foreign exchange reserves requirements and product lines etc. Autonomy of the FTCs was also enhanced, as was their responsibility for profit and loss. In 1999, private domestic companies were given permission to apply for foreign trade rights. The competitive arena was further widened by replacing the application and permission-based system with one requiring only registration and ratification. (reference: wholesale pearl jewelry sets )
Before 1994, internal unpublished administrative measures and regulations governed China’s trade. The Foreign Trade Law of 1994 codified reforms and set principles for China’s trade regime more in line with WTO requirement for transparency. Under the 1994 law, FTCs became the agents of Chinese enterprises wishing to import or export goods. Large FTCs have a great deal of experience with international markets and practices. A new Foreign Trade Law has come into effect from July 2004, which substantially liberalizes foreign trade and enables producers/manufacturers to trade directly with a foreign entity. (reference: wholesale pearl jewelry sets )
Before China’s accession to the WTO, foreign invested manufacturing enterprises, including jewellery manufacturers and processors, were only allowed to import raw materials required for their production processes, and could only export their own finished products. Foreign companies had no choice but to trade through FTCs. In the run-up to the WTO, trade was allowed through wholly owned foreign enterprises (WOFE) operating in bonded zones, which could and export third party goods. Under WTO, China began the gradual extension of trading and distribution rights to foreign enterprises. Equity limits on foreign ownership of distribution companies will be phased out by December 11, 2004. (reference: wholesale pearl jewelry sets )
For foreign vendors without a presence in China, especially those selling their products into China for the first time, appointing an agent in Hong Kong can be a relatively easy and hassle-free method for importing into China. However, care should be exercised in choosing an agent. The exporter needs to check what kind of presence the agent has in China, and whether his other products conflict with the exporter’s products. In sectors like jewellery, smuggling used to a major problem in the past, but with the establishment of SDE and SGE, the incidence of smuggling has come down a lot. Trade in gold and diamond can now be conducted directly at the exchanges, rather than going through agents. (reference: wholesale pearl jewelry sets )
For trade with FTC directly, a foreign exporter can take recourse to any of the following means to identify and locate them:
- Internet: Several internet sites have database of Chinese FTCs, usually indexed by both region and business scope (Customs HS Code). One example of such free internet-based database is the China Business Guide of Ministry of Commerce (www.ccn.mofcom.gov.cn )
- Letters of introduction to overseas branches of FTCs or to their head offices.
- Trade fairs: Guangdong trade fair held twice every year in April and October is a mega event with the aim of promoting Chinese exports to the rest of the world. A number of Indian companies have been participating in the fairs regularly. This apart, there are product specific exhibitions. A list of major jewellery-related exhibitions is given at appendix D in the resources section.
Embassies/Consulates: The Embassy of India in Beijing processes trade inquiries from India, both for prospective exports and imports. With the Embassy having its own website and e-mail facility, traders/businessmen in both India and China are being encouraged to communicate with the Embassy through e-mail. The trade queries received by the Mission are not only replied within a time-frame (3-4 days) by culling the necessary contact details of Indian exporters from an updated data base but are also sent to the respective Product councils, Chambers of Commerce and Associations in India which in turn publish the same in their newsletters thereby generating greater publicity and promoting business opportunities. The Embassy also organizes trade promotion events, provides support to export promotion councils and participates in and organizes exhibitions etc., e.g. the “Made in India” show co-organized with Confederation of Indian Industries in October 2003, which is planned to be repeated in 2004. (reference: wholesale pearl jewelry sets )
In dealing with smaller FTCs, it is advisable to ensure that it has the specific authority to deal with the goods in question. Under Chinese contract law, any contract by companies without trading rights in a particular product is null and void. Therefore, in cases of trade dispute arising with Chinese parties in the course of a trade transaction, whether or not legal recourse will be available will depend on whether the FTC is allowed to trade. In reality, however, most FTCs exceed their authority in a routine manner. A legitimate FTC should be able to supply a copy of its business license indicating its trading rights. A cautious approach is in order to secure one’s business and financial interests with a Chinese FTC. (reference: wholesale pearl jewelry sets )
Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing. (reference: wholesale pearl jewelry sets )
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