Erasmus for all Luxury Jewellery Consumption in India and China and Impact of E-commerce in the Field

Author of the dissertation:

Abstract: E-commerce has greatly impacted the lives of consumers and incomes of the sellers. Economies have grown, and markets are expanding every single day with jewelry manufacturing being noted as one of the fastest growing consumer markets in recent times. Asia's e-e-commerce earnings are projected to be the highest in the world by 2020 with the fastest growing markets identified as China and India. This research sought to investigate the effects of this trend and the impacts it has on the two countries in terms of convenience for the consumer and quality of gems. Data was collected from luxury jewelry customers who shop online and physically in India and China. A qualitative approach was used in data collection and analysis since the data was based on opinions. The data collection methods used were interviews and questionnaires administered electronically due to the large distance between the respondents and the researcher. Data from secondary sources on numbers of internet users in the two countries was also collected. Journals and articles were reviewed for this. Descriptive statistics were used for data analysis and presented in the form of tables.

Keywords: LUXURY JEWELRY, E-COMMERCE, CELLULAR USAGE, INTERNET, CHINA, INDIA, ONLINE MARKETING SITES

Erasmus for all Luxury Jewellery Consumption in India and China and Impact of E-commerce in the Field

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 4
1.1. Background of the study 4
1.2 Definition and concepts 9
1.3 Research problem 13
1.4 Objective of the research 14
1.5 Research questions 15
1.6 Importance of the research 15
1.7 Research layout: 18

CHAPTER 1: INTRODUCTION

Background of the study

The sale of jewelry plays an integral role in the economy of both India and China. The gems and jewelry sector in India plays a massive role in its economy, contributing around 6-7 percent of the country's GDP (P. Chadha et al. 2006, p. 6). The industry also employs over 2.5 million workers, and it is one of the fastest growing sectors of the Indian and Chinese markets. India and China are the countries are part of the (Brazil, Russia, India, China, and South Africa) BRICS which are the fastest growing economies in the world (ONeill 2011). These emerging markets comprise of 20% of the world GDP. They are speculated to achieve more wealth than most of the present major economic empires in the next few years (Cathdra 2014). Most importantly, India and China have a specific pattern of Ecommerce statistics and luxury consumption behavior. The trends in Ecommerce of India and China is believed as a valuable combination because of long trade history.

Jewelry is one of the goods that register the highest number of sales in India with the online business currently attracting 65 million unique users in a month. This is according to a study by Bain and Company on Luxury goods markets worldwide. The massive growth of the industry is mainly attributed to e-commerce. The jewelry sector is labor intensive and export-oriented as shown by the high export figures and the high population of workers in the country.

The economy of China has also been boosted heavily by the sale of jewelry online. Chinas GDP is the second largest in the world currently and second on the retail market as well. China is one of the global hubs for jewelry manufacturing, and its consumer market on this product is increasing at an alarming rate (Ernest et al. un. p. 15). Despite labor being a significant challenge in the production and consumption of jewelry, the domestic market is a key role player in the growth of jewelry sales in China. E-commerce has also catapulted the sales of jewelry in China. Thousands of Chinese can now easily purchase jewelry products from the online retail stores.

India is well known for having a tradition of luxury (S. Sharma et al. un. p. 6). From the Nawabs and Maharajas who had great rich tastes in luxury items, the nation is referred to as the Golden Bird (Atwal et al. 2012). The luxury industry in India has garnered a lot of attention with the spending power of the country on jewelry being noted globally (Okwonkwo and Uche 2007). From lavish weddings to luxury Bollywood stars sponsored by rich maharajas, this nation is experiencing a democratization of sorts in the luxury industry. The main growth drivers in this market are the high net worth individuals in the country and middle-class households (Rathore and Vijaya 2013). The classification of the wealth class in India can be seen in Table 1 below. However, the biggest challenge in the Indian jewelry trade are the high tariffs and import duties.

Table 2: Classification of wealth in Asia

Classification Wealth (USD)

Sub-HNWI / affluent 100,000 - 1,000,000

HNWI 1,000,000 - 5,000,000

Very HNWI 5,000,000 - 30,000,000

Ultra HNWI 30,000,000 and above

China was top in the world with India coming in second in internet penetration as shown in Table 2 below. The key drivers of e-commerce in these two countries are; the rapid spread of 3G and 4g internet across the countries, growth of Smartphone usage, wide product ranges, rising living standards, and competitive pricing. In India and China, new entrants are rocking this market due to its high potential for growth (Kaur and Joshi 2012a p. 9).

Table 1: Cellular internet usage in India and China 2016Country Internet users 2016 Penetration in % of total population

China 721,434,547 52.2 %

India 462,124,989 34.8 %

In the current evolution, the internet serves as an essential medium for growth and development. It is now possible to reach international clients to promote a brands values and spirit to a broad group of customers (Hennings 2007). E-commerce has the potential for restructuring the business and trade industry by increasing competitiveness (GB Rossmann 1999).

The sale of jewelry in India has potentially added economic value and contributed to the economic growth of the government. As such, the Indian government has promoted the gems and jewelry sector as an export area (Atwal et al. 2012 p. 9). Additionally, the government has undertaken measures such as upgrading technology to promote the Indian Brand in the international market. The business here is booming with the country raking in hefty returns from high-profit sales on jewelry produced with low cost and highly skilled labor.

E-commerce refers to buying of goods and service over the internet (Homburg 2013). Chinas e-commerce transactions in 2015 were approximated at $540billion according to KPMG, an auditing firm (Ernest 2011 p. 12). India is slightly behind China, but the country is also growing very fast in terms of e-commerce. From 2009 to 2013, India recorded a growth of 300% in the e-commerce market. This is according to IAMAI (Internet and Mobile Association of India). This remarkable trend and growth can be attributed to the increase in phone and internet usage in these two countries. The e-commerce trend is fast gaining popularity across the world and figures in these two countries are most notable. This is due to the fact that India and China have the largest populations in the world (Wiedmann 2009).

China is an open market according to its E-Commerce policy. The online market in China is dominated by top firms like Weibo and Alibaba. Alibaba manages TaoBao market which accounts for more than 80% of the consumer-consumer online market and Tmall accounts or more than 50% of the business consumer market (Rathore and Vijaya 2013a). These two retailers control most of the trading in the country. Foreign e-commerce markets are also allowed to operate in the country since 2015 in the Shanghai Free Zone according to the Chinese MIIT (Ministry of Industry and Information Technology).

Liberalization of e-commerce in India is yet to occur. The country's E-commerce policy is not as friendly as that of China. The government has forbidden online selling, and most online stores are owned domestically (Kaur et al. 2012b p. 4). The presence of firms like eBay and Amazon is largely because they act as intermediaries for third parties thus do not operate on their own terms. This is the reason why e-commerce in the country is growing at a very slow rate. However, since 2014 the country has been trying to hold talks to try and introduce e-commerce in India.

Recently, the consumption of jewelry in China and India has increased drastically, and distribution of jewelry is mainly done through stores on the internet. Ahya (2013) and Dubey (2012) agree that through online marketing, consumers can order and purchase goods faster and it is a reliable technique since they can buy from anywhere. However, lack of general marketing skills still opens opportunities to the development of jewelry industry of China (Kaur 2012a p. 16).

The growth and development of electronic markets have changed the expectations of customers. Easy and fast internet connectivity and brand websites for various companies have given consumers avenues for online interaction to improve understanding of what companies have to offer (Standing 2009).

The researcher sought to understand how the growing trend of e-commerce has changed the customer perspective on luxury jewelry consumption. The research also looked at how e-commerce of luxury jewelry has led to the overall growth of both economies and how it has impacted the society at large. It also looked at the opportunity it has granted to the consumers.

The background looked at the history of e-commerce and jewelry in the two countries. It also looked at numbers for internet coverage and jewelry consumption, imports and exports to give a general look at the entire industry. There is also a summary of how they are positioned for e-commerce growth and the policies that support them.

Since e-commerce is a successful technique being used in both China and India, this paper looked at how people have changed their business operations. The affordable costs of labor and the readily available labor were reviewed as well. The literature review looked into the challenges faced on the manufacturing sector. Additionally, the paper addressed how the revenues of these countries have been impacted by domestic and export consumption of luxury jewelry.

Economic factors and trade policies promoting the jewelry manufacturing sectors in both China and India were researched from secondary sources as well. There is a need for government support for the industry in the two countries to ensure prosperity. As such, government input was also reviewed to analyze the levels of intervention in both countries.

Since the paper looked to determine the luxury concept for Indians and the Chinese, a thorough analysis of the opinions of most luxury products consumers was done. And because it is also important to have figures on the numbers and the dominance of India and China on the global luxury jewelry market, secondary sources were used to get recent statistics for this. However, the researcher experienced some limitations due to the lack of real-time data for recent years.

A qualitative approach was adopted for this study. Qualitative data is able to take into account the views and feelings of the respondents. Since the research was qualitative seeking to get the views and opinions, it was only right to use a method whose data cannot be manipulated.