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Price War Hurts Beijing's Gold Market
Recent cuts in the price of gold jewelry in Beijing have led to yet more calls for changes in the country's jewelry pricing mechanism, China Daily reported Monday.
Industrial insiders are worried about the cuts and want the government to get involved to stimulate the industry.
In the past three weeks, dealers in Beijing have cut their prices one after another as they struggle to sell their products and compete for market share.
Most gold jewelry prices in Beijing are down to less than 90 yuan per gram from more than 92 yuan. The lowest price is 87 yuan per gram.
Roland Wang, a manager of the World Gold Council (North China), said the price cuts are a move by dealers to promote sales off season.
But the move reduces the profits of both the dealers and producers, and is not a good way forward, Wang said. "From a long-term perspective, the price war is harmful to the future development of the gold jewelry producers and dealers."
He urged producers to make different types of jewelry that more people will want to buy.
And he said changes in the pricing mechanism are necessary to encourage the industry to produce more higher quality and expensive gold jewelry.
The prices basically fluctuate in line with gold bullion prices set by the People's Bank of China, the central bank. The current gold bullion selling price is 77.8 yuan per gram.
Wang said price reform would stimulate demand for the precious metal as the jewelry takes the lion's share of gold consumption on the Chinese mainland.
Government officials admit price reform is a pressing task.
Pilot reform has begun in east China's Jiangsu and Zhejiang provinces and in Shanghai Municipality.
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