Oversupply
However, the influx of more players has led to oversupply, according to Dai Weirong, head of Ming Feng Jewelry Co, which supplies several brands, including Chow Tai Seng, TSL and Luk Fook.
"The growth in demand for jewelry has been much lower than supply. The result has been increasingly fierce competition in the industry. Those who aren't innovative have been, or risk being, washed out of the market," Dai said, adding that the market for small and medium-sized jewelers will shrink in the future.
"The jewelry industry is currently undergoing a reshuffle. Roughly 80 percent of market share is in the hands of 10 brands. That trend will continue and the jewelry market will become more centralized."
Shrinking demand and market saturation have forced traditional jewelers to innovate, with some embarking on a journey of transformation into e-commerce businesses.
Pan Haiquan, CEO of Doido, an online platform for customized jewelry, said given the current backdrop, finding ways to stimulate consumer demand and create a new growth driver is now an essential issue for Shuibei's jewelers.
"Chinese consumers now have higher demands for jewelry products. Instead of spending thousands or even tens of thousands of yuan on a stereotypical diamond ring as they did years ago, they now prefer a personalized product that fits their own style," he said.
"The key to survival for Shuibei jewelers is to keep up with the market and meet the new demands of consumers."
E-commerce strategies
Moving into e-commerce is not an easy task, though, especially in an industry where people are used to the traditional method of visiting brick-and-mortar stores to make their purchases and like to examine goods before buying them.
"When it comes to buying jewelry online, consumer trust is still low. Moreover, the cost of online promotion is high," said Zheng, from the jewelry designers association.
The government is also offering supportive policies to help the industry out of the slump.
Every year, the Luohu government allocates tens of millions of yuan to support the development of Shuibei's gold and jewelry industry, according to an official surnamed Hu at the local economic promotion bureau, quoted by Nanfang Daily.
Regulations have been formulated on the upgrading and transformation of businesses, marketing and the protection of intellectual property rights to facilitate healthy, sustainable growth.
"The challenge is temporary and will not daunt Shuibei's jewelers. With a clear understanding of the market and strong willpower, they are going to get through and see a new dawn," Zheng said.
