Platinum

1
Platinum
2
Platinum in China

• Due to the tight control by the central govt on
  gold, Platinum is seen filling the market gap.
• Growth from a zero base market in China in 1996
  and climbing up to a 40 tonnes market.
• Producing only 0ne tonneof platinum, supply all
  smuggled from HK

3
Platinum in China

• World No. 1 Pt consumption
• Market
• Seen as fashionable
• Consumers favour Pt as it seen as the most
  precious metal in the world

4
Platinum in China

• Heavy promotion by PGI since 1996, using
  celebrity Maggie Cheung to endorse Pt which was
  well-accepted by the consumers

5
Platinum Demand in Major Markets
Source Johnson Matthey 2002 Interim Report
6
Platinum Demand in China and Japan
Pt demand in China increased by 13 1.47m oz
(45.7tonnes)
Source Johnson Matthey 2002 Interim Report
7
Historical Platinum Demand in China
Johnson Matthey
Source Johnson Matthey 2002 Interim Report
8
Platinum in China

• Platinum supply mostly smuggled from Hong Kong

2002 Hong Kong Platinum Imports
Unwrought or in power form 58.5 tonnes
Semi-manufactured 1.6 tonnes
Total 60.1 tonnes
Source HK Census Statistics Dept
9
Platinum Net Imports in Hong Kong Unwrought,
in power form and semi-manufactured
Pt imports in HK which is mainly destined to
China amounted to almost 24.8 tonnes from
Jan-July, down by 28.1.
Month/Year 2002 (KG) 2003 (KG) Increase
January 5,878 3,042 -93
February 3,187 4,105 29
March 4,218 4,155 -1.5
April 6,577 5,446 -17.2
May 5,167 2,055 -60.2
June 3,705 3,180 -14.2
July 5,901 2,890 -51
Total 34,633 24,873 -28.1
Source HK Census Statistics Dept
10
Platinum Finished Jewellery Exportfrom Japan to
Asian countries
kg
Pt jewellery import into HK in the 2002,
estimated metal value of US16.6m, contributed by
the use in HK and China markets
11
Platinum Finished Jewellery Exportfrom Japan to
Hong Kong 2003
Pt import into HK in the first 6 months 53.1,
estimated metal valued at US14m contributed by
the use in HK and China markets
KG
Source HK Census Statistics Dept
12
Platinum Jewellery import from Italy to HK
1999-2002
HK import US2.4m worth of pt jewellery from
Italy in 2002
USM
Source HK Census Statistics Dept
13
Import of Pt Jewellery from Italy to HK Jan
July 2002 2003
HK import HK 5.9 m (US0.76 m) worth of pt
jewellery from Italy from Jan July 2003, -
48 vs same period last year.
HK000
Source HK Census Statistics Dept
14
Diamond
15
Diamond Market in China

• It is estimated that China has over 80 diamond
  processing enterprises, which process 2.4 million
  carats of diamonds a year.
• Total diamond sales value 2002, 9.5 billion yuan
  (Euro 1.07 billion).

16
Diamond Market Highlights

• 80s-90s Development Stage
• Retail sales US1m only
• 1993-1998 Rapid Development Stage
• 500 domestic manufacturers
• 1,000 export possessing manufacturers
• 10,000 retail outlets
• 2000 Market Consolidation
• Growth slow down, with an average growth rate of
  1.8
• Rank 8th in the world demand

17
Diamond in China

• Diamond which position as the Eternity love
  symbol, well dominated the bridal market. Its
  small diamond products also make entry into the
  self-purchase market for young consumers
• The heavy promotion by DTC in the last ten years
  have set the foothold in China which is seen as
  the most desirable and eternal products.

18
Diamond Sales Volume
Year Sales RMB (US) Total no. of pieces
1990 1.4 billion (0.17 b) 300,000
1995 4.6 billion (0.55b) 800,000
2001 8.9 billion (1.07b) 2,000,000
2002 9.5 billion (1.14b) 2,120,000
Source DTC, China
19
Mainland Tourist Market in Hong Kong
20
Jewellery Tourist Market in Hong Kong

• Data from the Hong Kong Tourism Board revealed
  that sales of jewellery to tourists reached
  US942 million in 2001, accounting for about 24
  percent of their total shopping expenditure.
• 4.5 million of Mainland tourists visit HK last
  year and grew to 6.8 million up to 2002, increase
  53 vs same period last year.

21
Mainland Tourists Spending on Jewellery in HK

• Mainland Chinese tourists alone last year spent
  US637 million
• on jewellery, accounting for 34 percent of their
  total shopping
• spending.

Source Hong Kong Tourism Board
22
Mainland Tourist in HK Jan-July 2003
Month 2003 Mainland Tourist Arrival Growth
Jan 750,929 65.1
Feb 713,489 51.3
Mar 666,948 43.2
Apr 322,216 -38.7
May 311,821 -42.7
June 470,562 11.0
July 693,008 22.6
Total 3,928,368 13.9
23
Mainland Tourist Spending on Jewellery In Hong
Kong
Average spending of mainland tourist on
jewellery US141.5
3.9 Million Mainland Tourist from Jan-July
2003 Projected Jewellery Sales of US 556 Million
24
Mainland Tourist Individual Traveling Permitted

• Individual traveling permitted under CEPA
  starting July 28 for 4 Guangdong cities Foshan,
  Dongguan, Zhongshan, Jiangmen
• Residents from Beijing, Shanghai, Guangzhou,
  Huizhou, Shenzhen, Zhuhai can apply travel permit
  from Sept 1
• 300,000 people have applied for the travel permit
• Allow to take US5,000 for holiday trip sharply
  higher than the previous ceiling of US2000 and
  RMB6,000(US720) remains unchanged.

25
Mainland Tourist Future Outlook

• Jewellery retail sales in Hong Kong are expected
  to growth further when residents of more cities
  in Guangdong, Shanghai, Beijing, Shenzhen are
  allowed to visit Hong Kong on individual basis,
  and not as part of a tour group.
• The move to further ease visa restrictions is
  expected to bring an extra 10 million mainlanders
  to Hong Kong.
• A potential market of US1,415 million.