Those affected jadeite processors

Dealer Dilemmas

"It's getting harder and harder to survive in the low-end jade retail business," said Lao Wang, a retailer who has been dealing in both gold and jade jewelry all year round. Facing the rising prices of jade wool, he sighed. "This year, the price of jade products has gone up too fast. Whether we buy from brand owners or through other channels from wholesalers, it's becoming really tough."

Lao Wang pointed to a group of newly arrived jade bracelets. "At the beginning of the year, this type of bracelet cost around 1,000 yuan. By the end of the year, the price had nearly doubled to 2,000 yuan. There’s a jade street in Guangzhou where prices change almost monthly." He added, "Many of my regular customers have asked why the price has increased so much in just one year. I explained that it's due to the rise in wool prices, which naturally pushes up finished product costs. But they don’t seem to believe me—they feel like they're being taken advantage of now, and the business is much tougher than before."

"For millions of retailers like us, we can't pass on the rising wool costs to consumers immediately. And with limited capital, many of us couldn’t afford new stock last year. A lot of shops closed down. If jade prices stay high this year, I’m afraid I’ll have to follow in their footsteps too," Lao Wang said.

According to data from the China Jewellery and Jade Industry Association, the average price of jadeite rose by about 18% per year between 2000 and 2009. From early to mid-2010, the average jade price surged nearly 30%, showing a sharp upward trend.

Opportunities in the Price Surge

"Last year, the skyrocketing prices of jade wool had a huge impact on the market. But for seasoned players in the industry, there were also more opportunities," said A Qiang, owner of a franchised jade jewelry store. "In 2010, our revenue was clearly better than previous years because we had stockpiled both raw materials and finished products. We benefited from the overall market premium, and the influx of new players gave us more room to manipulate profit margins."

"In this business, newcomers always pay a heavy price before they can truly get the hang of it. Fudging the facts is common," joked Lao Li, a shop owner on Pingzhou Jade Street with annual sales of about 10 million yuan. "Newcomers are buying at inflated prices, while veterans take advantage. It's a chaotic situation where everyone is 'fried' in the market."

"There are a lot of new players entering the market. As veterans, we naturally push up the prices. The more expensive the products become, the more people want them. It turns into a cycle," he added.

The Changing Landscape

He Naihua, executive chairman of the China Benelux Chamber of Commerce Jewelry Committee, offered a different perspective on the challenges facing jade enterprises due to rising wool prices. "In the past, jade was hot, and everyone rushed in. Good and bad players mixed together. Veteran sellers often took advantage of newbies, and outsiders were easily misled. Now, the industry chain reaction caused by rising raw material prices is actually a positive development—it's a process of optimizing the industry environment."

He pointed out, "Jade has two key value aspects: collection and decoration. Last year, everyone focused only on its value-added and preservation functions, ignoring its decorative role. Now, with the scarcity of high-end wool, business owners are forced to shift their attention back to the decorative aspect."

"Many jade companies have overlooked the decorative function of low-end jade products. With the current scarcity of medium and high-end materials, ordinary materials are pushing them to enhance the design and aesthetics of lower-end products to attract more consumers. This shift aims to draw attention away from the collection function and toward the decorative one."

Regarding the risks of continued price increases, He Naihua warned that speculative money will eventually leave the market, and the temperature will cool down. "Liang Huanglin mentioned that factors like inflation and hot money are currently entering the market. Emerald wool prices won't fall anytime soon. It's hard to predict how high the high-end wool could go. This process is more complex than expected. Even though Pu'er tea prices were once crazy, they still went wild. The biggest fear is that we might all end up in a dead end."

While the rise in ordinary materials may bring short-term profits, in the long run, finished jade products made from low-quality wool may not offer significant value. If wool prices keep rising, the final burden will fall on ordinary consumers, who may not be willing to pay higher prices. For most small merchants, jade jewelry is more of a decorative item than a collectible. "I'm not worried about the future of the jade market," said Lao Li. "But it's hard to tell when the bubble will burst."

Describing the current jade market, it feels like another version of real estate—no one can stop the momentum, and you just have to keep going forward. No one knows when the hill will come, and the whole thing might crash down at any moment.