April 20, 2021

Pearls, Finer but Still Cheap, Flow From China

The man, Zhan Weijian, runs a large company in the emerging capital of the world’s freshwater pearl farming industry, and it is far from Tahiti and other traditional saltwater pearl havens in the Pacific. Mr. Zhan works here in east-central China, where his white pearls cost a fraction of the saltwater variety.

Wholesale prices for half-inch white pearls have fallen about 30 percent in the last several years, as the influx of high-quality Chinese farmed pearls — grown in former rice fields — has the industry in turmoil.

For two decades, China has been the world’s biggest pearl producer, flooding the market with small and cheap pearls of costume-jewelry quality. But now companies like Mr. Zhan’s are using new techniques to push into the lower reaches of the market for half- to almost one-inch gem-quality pearls.

“Competition from China has hurt, there’s no doubt,” said Robert Wan, whose company, Robert Wan Tahiti, dominates the production of Tahitian pearls, which are cultured in mollusks in saltwater and help set the world quality standard.

“Prices are soft,” Mr. Wan said, “and if in one or two years, they have a huge increase in supply, we will see what happens.”

China’s pearl industry is a microcosm of how the country is moving beyond low-wage jobs and imitating foreign producers. Pearl farms, like other businesses across China, are starting to innovate and automate as wages surge, particularly for blue-collar workers.

“The U.S. has worried about China producing cheap goods — they really should be worried about China producing better goods,” said Bruce Rockowitz, the chief executive of Li Fung, the largest trading company supplying Chinese consumer goods to American retail chains.

A Chinese half-inch pearl now sells for $4 to $8 at wholesale, which is typically less than half of the retail price. A Tahitian pearl of similar size sells at wholesale for $25 to $35.

The price gap reflects lingering differences in hue and luster. It does not take a jeweler to discern those differences when Chinese pearls are placed next to saltwater pearls.

Joel Schechter, the chief executive of Honora, one of the biggest Manhattan-based importers of Chinese pearls, recently walked into the steel vault at his offices just off Madison Avenue and selected two costly strands of some of his best, blemish-free, half-inch pearls.

The strand from Tahiti, with a wholesale price of $14,000 without the clasp, gleamed silvery white in his hand. Next to it, a strand from China also glistened with perfectly round, blemish-free pearls, but they had a more chalky hue.

At $1,800 wholesale, the Chinese strand also had a much less lustrous price. China’s arrival in this segment of the market, Mr. Schechter said, “has made pearls affordable for the average working woman.”

Mr. Zhan, the man who has grown ever richer on cheaper pearls, is chief executive of Grace Pearl, one of the largest companies in Zhuji, a town in Zhejiang Province. Grace grows pearls in Zhejiang and, as real estate and labor costs have risen, also in inland Jiangxi, Hunan, Anhui and Hubei Provinces.

Mr. Zhan picked up a visitor to Zhuji in his chauffeured brown Maserati Quattroporte sedan.

“When I drive myself, I prefer the Ferrari 360, it’s more fun,” he explained on the way to dinner. The meal included a soup made from wild lake turtle, a delicacy that has become increasingly rare. More people in this part of China can now afford the delicacy, and that has led to overfishing.

Article source: http://feeds.nytimes.com/click.phdo?i=a6407e504032d8ffe3d9ab0b1205d0d4