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Mon, May 12, 2003 - Page 12 News List

Another victim of disease is the pearl supply

TAKING A DIVE Over one-third of the world's pearls come from markets in Hong Kong and China's Guangdong Province, but SARS has scared away foreign buyers

REUTERS , NEW YORK

It may take an oyster years to form a lustrous pearl, but just a few weeks for SARS to disrupt the global pearl supply.

The outbreak of SARS has frightened away foreign buyers from Hong Kong and China's Guangdong Province, which supply about 38 percent of the world's pearls.

Chinese vendors have also been barred from several major exhibitions, resulting in a 40 percent drop in the world's pearl distribution and sales, said experts.

"This is a big mess, the whole industry is being affected, definitely," said Sonny Sethi, president of New York-based pearl importer Tara & Sons. "I think the pearl industry will go down by 30 percent this year because of SARS."

Asked about the impact on his profits, Sethi said: "I don't think we are working for profit this year, all we are trying to do is stay above water."

The SARS outbreak in Asia has shocked the world's jewellery industry. China, which produces more than 1,200 tonnes of pearls, or 96 percent of the world's annual total, is by far the world's largest pearl producer in terms of weight. Pearls from China are less expensive freshwater ones costing US$10 to US$1,000 wholesale per string. The more expensive, up to US$10,000 per string, are Australian South Sea pearls and Akoya pearls from Japan and China.

Hong Kong has become the most important pearl manufacturing base because of its quality products and low labor costs.

Experts said it is too early to tell the impact of SARS on world prices for pearls because of various factors, such as the economy, affecting demand, but supply is likely to be reduced.

"Chinese companies are very important to the US market," said Devin Macnow, executive director of the Cultured Pearl Information Center, a trade organization in New York. "We estimate that by the third or fourth quarter, there will be 30 percent less pearls in the general trade pipeline because of SARS."

As fear of SARS -- which has killed nearly 500 people worldwide -- grabbed headlines, Switzerland this month barred exhibitors from China, Hong Kong, Singapore and Vietnam from the 2003 Basel world trade show, the largest jewellery show in the world. The order has banned 386 of the 786 exhibitors, with 317 from Hong Kong.

The OroAreezzo international gold, silver, and jewelery trade exhibition in Italy also canceled all scheduled delegations from SARS-affected Asian countries. But the JCK Las Vegas Show, the largest US jewellery show set for next month, said that, at least as of now, it will not be prohibiting exhibitors or those attending from SARS-infected regions.

Imperial-Deltah Inc, one of the top five US importers of Chinese freshwater pearls, is feeling the pinch.

"SARS has created a lot of problems, we cannot go to Hong Kong and China and we won't be able to see new designs," said Banice Bazar, president of the East Providence, Rhode Island-based firm.

Unlike technology and clothing companies which are increasingly using video conferencing to clinch deals, jewellers still prefer the old-fashioned way of doing business.

"Dealers like to see with their own eyes before they buy, they want to look at the material, touch it, and negotiate a deal face-to-face," Macnow said. "It's not something that you can get on the Internet, or via e-mail or fax."

Zale Corp, the largest US speciality jewellery retailer, said SARS has had no impact on shipments so far because it deals mostly with wholesalers instead of smaller vendors in the region. Up market jewellery retailer Tiffany uses more expensive pearls from Japan and Australia, and is unlikely to be affected, said analysts.

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