11 March 2008
A Passion For Pearls(HKTDC Jewellery, Vol 01,2008)
Fung Yuen Jewellery Co Ltd
Two years drilling and processing Chinese freshwater pearls for necklace strands convinced Sze Siu Shan that he wanted his business to grow, and the most logical path was to expand into pearl jewellery.
So he began turning out simple pieces of freshwater pearl jewellery in 1993 under the name of his new company, Fung Yuen Jewellery Co Ltd, but found that making the transition to jewellery manufacturing was a major challenge. "It was difficult in the beginning as we didn't have money or customers," recalls Mr Sze.
"We attended jewellery fairs and joined the Hong Kong Trade Development Council database to find buyers and to send out catalogues to our existing pearl customers."
Persistence paid off and the company's fortunes rose, thanks to Fung Yuen's strategy to focus on rice- and potato-shaped and free-form pearls in 3-8mm sizes, rather than on more expensive round pearls.
The company mainly used white or naturally coloured pearls with base metal settings to keep prices low, while semi-precious stones such as amethyst, citrine and blue topaz added colour and enlivened designs.
Between 1993 and 2000, Fung Yuen grew step-by-step, Mr Sze says. "We had only a few hundred designs, but by 2000 there were a lot more competitors so we needed to add more," he explains. "Now we have more than 2,000 designs for necklaces, bracelets, earrings, bangles, chokers and pendants."
Eight years ago the company switched to sterling silver settings to gain a value-added advantage over some of its competitors, and also opened a second factory to manufacture sterling silver components to reduce material costs. "Instead of buying sterling silver jewellery, we made it ourselves," Mr Sze remarks, adding Fung Yuen also offers 14K and 18K gold, gold-filled and gold-plated jewellery settings.
Today, pearl strands account for about 60% of the firm's business and jewellery 40%, both exported to global markets with Europe absorbing 45%; the US 30%; Hong Kong 15%; and Japan and South Asia 10%.
Most items are sold in department stores, although premium orders are also accepted. "We make US and European-style jewellery since those are our biggest markets," Mr Sze notes, adding that typical prices range from US$8-30 FOB Hong Kong per piece.
Subtle, understated styles vie for attention with more assertive, fun-loving designs in appealing to the firm's core clientele of women who are 40 years of age and older. "One of our main strengths is that we follow world fashion trends," he maintains. "We always keep an eye on what's new in fashion."
For example, a lushly colourful bracelet packed with white, purple and peach pearls, agate and beads featuring a flat, silver lobster clasp is particularly eye-catching.
Equally entrancing is a pair of up-to-the-minute fashionable earrings with four slithery silver waves of 4.5-8mm-sized peach, purple, silver, grey and white pearls hanging from silver, rhodium-plated hooks.
Besides its design style, Fung Yuen's good quality, reliable craftsmanship and attention to customer service have enhanced its international reputation.
The company's orders have increased steadily over the years, with overall production up from 30,000 pieces per month in 1993-94 to about 80,000 pieces per month last year and its skilled labour force rising from 80 to 250 workers.
Mr Sze concedes that the OEM/ODM firm's orders tended towards simple designs in the early years. "But now our customers want more complicated pieces, often with semiprecious stones," he says, adding that a minimum order is 50 pieces with delivery about three weeks after order confirmation.
Next on Fung Yuen's agenda is the introduction of its own FY brand later this year, which the company plans to test with sales in Italy first.
"We've invested in machines to manufacture silver chains and want to sell pearl pendants on sterling silver chains," Mr Sze explains, reasoning that the market for silver chains is very big in Italy. "If they do well in Italy, we'll expand sales of the brand to our other markets."
He wants to eventually include all types of pearl jewellery under Fung Yuen's brand umbrella, including necklaces, rings and earrings, and concedes that the burgeoning production of freshwater pearls in China is having a beneficial effect on the company's inventory.
"Pearl prices are coming down because of the large volume," Mr Sze notes. "The high volume also means we can buy better quality pearls at the same price."
Mr Sze predicts there will be greater demand for freshwater pearl jewellery combined with semiprecious stones such as turquoise, amethyst, citrine, peridot and garnet in future.
The new creations that will bear the Fung Yuen Jewellery Ltd name will also be found in fresh markets, although he is happy with the current distribution of his firm's jewellery.
"We want to sell more to Italy and Germany, and we're also looking at Russia," Mr Sze admits. "We want to try Russia because this is a new market and we hope it will be a very big one."
TEXT BY ANDREA PAWLYNA
Fung Yuen Jewellery Co Ltd