Qeelin in China - a Competitor Analysis of the Chosen Market
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Marketing [pic 1]
QeeLin----
A Competitor Analysis of The Chosen Market
(China)
February 12, 2018
MSc Fashion, Design and Luxury Management
Fengshu Jiao – 161734
Competitor Analysis in The Chosen Market (China) JIAO Fengshu 161734
In order to analyse the competition situation for QeeLin in China, there’s no doubt to apply Porter’s five forces model to look into it more deeply. Before analyzing, it’s good to state this model’s concept clearly. Using this model could help a company have a crystal clear competitive overview about its whole industry as well as the strategy development. Furthermore, as Hanlon puts: “This model helps marketers and business managers to look at the ‘balance of power’ in a market between different types of organizations, and to analyse the attractiveness and potential profitability of an industry sector” (Smart Insights, 2016).
Although China is the home to the largest and fastest growing number of middle-class, there’s still a slowdown economic development in recent years due to the government’s anti-corruption policy, which results that the market demand for jewellery has declined (HKTDC, 2017). In addition, among different categories of jewellery, the luxury jewellery (which also QeeLin’s aiming category) sales totalled RMB13.2 billion in 2016, accounting for 2% of overall jewellery sales, an increase of 1% (HKTDC, 2017).
In order to have a clearer overview of Chinese jewellery industry, then helping QeeLin to analyse is necessary, especially for its development strategy which aims not only Chinese market but also becoming an international jewellery brand. As they know “The Chinese are beginning to embrace Western habits” (Reingold & Cendrowski, 2014).
Bargaining power of buyers: High
According to current situation, the competition among Chinese jewellery industry is generally fierce and high. Since there are more and more jewellery brands aim Chinese market as one of their profitable area, such as brands from US (Tiffany & Co) and Europe (Cartier), which are very popular among Chinese consumers. These brands already have high brand awareness to Chinese buyers. Therefore, customers could switch between one brand and another easily. QeeLin as a least known Chinese high-end jeweller, as well as a brand which was acquired by Kering recently (Thomson, 2014), it has a high competitive situation compared with those “Big Names” from foreign countries or some classical and long-history Chinese jewellery brand, such as Chow Tai Fook and TSL. So gaining a strong base of customers’ loyalty needs a long way to run for QeeLin. Under the Chinse jewellery market, if customers can not find products which could satisfy their inner needs or expectations, then they will choose to aim another brand in the same industry. Moreover, Chinese customers nowadays are also kind of price-conscious, they expect that products are cost-effective, especially for QeeLin this kind of brand which price itself in the “range from €500 to €100,000 averagely” per piece (Thomson, 2014). So above these, bargaining power of buyers in Chinese jewellery market is strong.
Bargaining power of suppliers: Medium-High
As we know, the raw materials for fine jewellery industry have high-quality and rare characteristics. For example, diamond, jade, gem etc. Especially those precious metal which have transparent, crystal clear pricing around the world. Also, the price fluctuation of precious metal could lead the whole industry’s development situation. For Chinese market nowadays, the majority artisans are all pursuing making jewellery with their high professional know-how skills into the whole process of making, cutting and polishing those precious raw materials no matter who are their partners, since this industry needs specialized knowledge to control. However, QeeLin is a brand which calls for blending Chinese tradition and French savoir-faire (Thomson, 2014), so emphasizing on these two aspects, the suppliers need to be highly-skilled. In China, numbers of jewellery manufactures are located in the south-east of China (Yujue, 2014), but the quality of these manufactures varies from each other. So it should be highlighted that finding a good supplier is not that easy to get QeeLin’s standards.
Threats of substitutes: Medium
From the jewellery consumption figures shown, nowadays, fine jewellery is an important component of fashion consumption for Chinese customers (HKTDC, 2017). So it could be concluded that Chinese people won’t abandon fine jewellery and even purchasing jewellery will become a popular trend. As one of QeeLin’s co-founders said about Chinese jewellery customers: “clients don’t look for the brand as a symbol of wealth, it is more about dreams and personal satisfaction so it is more about buying for oneself than about gift-giving” (Thomson, 2014). However, one thing could be taken into consideration is that since some of people are still hesitated to buy such high-priced jewellery like QeeLin, so they will go to choose some high-quality artificial diamond brands or even watches brands as a substitute. Since in this industry, fine watches and jewellery accessories can substitute to each other to some extent.
Threats of new entrants: Medium
Since Chinese shoppers’ attitude to fine jewellery equals to the fashion, which is fast changing, so those classical jewellery brands are not enough for them to seize the jewellery’s design beauty. Under this situation, more and more new designers’ jewellery brands are showing in the market in order to cater to customers’ satisfaction about unique or unconventional jewellery designs. Moreover, from the numerous and variability aspects, China is one of the biggest jewellery market in the world, including companies from foreign and domestic (mainland China and especially HongKong) areas. (World Gold Council, 2015) Under this situation, one or a few other competitors would like to enter and share the market share won’t affect the whole industry too much. Although they all need to find a strategy to attract Chinese consumers’ fast-changing purchasing decisions.
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