Mumbai: Escalating protests in Hong Kong have jewelers in India worried.
Shipments of gems and jewelry to Hong Kong, India’s biggest market, have declined 6.6% from a year earlier to $3.2 billion in the first four months of the year that started in April, according to the Gem & Jewellery Export Promotion Council. The fall could deepen if protests in Hong Kong continue, Sabyasachi Ray, executive director at the trade ministry-backed group, said Tuesday.
Shipments to Hong Kong, which comprised almost a third of India’s gems and jewelry exports, fell about 17% to $11.1 billion in the last fiscal year as the protracted trade war between the US and China sapped demand. The slide also comes amid a wider slowdown in global demand that saw De Beers offer almost unprecedented flexibility, allowing buyers to reject more diamonds at a sale.
If the unrest in Hong Kong “affects the flow of the buyers and the flow of trade, then the trend of these declining exports will increase," Ray said in an interview. Hong Kong acts as a conduit for goods to China, both for raw materials as well as finished goods, and the whole chain will suffer if the protests continue, he said.
The protests in Hong Kong began almost three months ago, when hundreds of thousands of people turned out to oppose the government’s proposal to allow extraditions to mainland China. The unrest has seen demonstrators hurl scores of petrol bombs and police respond with tear gas, water cannons and rubber bullets.
On Wednesday, Hong Kong’s leader, Carrie Lam, formally withdrew legislation to allow extraditions to China, a political retreat that may help ease — but not end — the unrest in the Asian financial hub. In addition to the demand seeking scrapping of the bill, the protesters have also called for an independent inquiry into police violence, an amnesty for those who have been arrested and universal suffrage.
Continued unrest could raise the possibility of a recession in Hong Kong, whose economy was already under pressure from the US-China trade war. It could also hurt the city’s retail jewelry sales as the number of tourists from mainland China slumps and gold prices surge, according to Bloomberg Intelligence.
A drop in the number of people attending a key trade fair in Hong Kong later this month following advisories against travel to the city could further weaken India’s exports, Ray said.
The protests and the trade war have raised concerns about the September Hong Kong Jewellery & Gem Fair, slated for 16 to 22 September. Russian diamond producer Alrosa PJSC Director Evgeny Agureev said last month that geopolitical tensions had raised concerns on the “efficiency" of the event.
An email and calls to the organizers of the Hong Kong trade fair weren’t immediately answered. A 2 September update on its website said the show will be held as scheduled.
About 100 exhibitors have paid to participate at the fair’s Indian Pavilion this year and “we are still in talks with the organizers to compensate exhibitors if some people may not be able to go there," Ray said.