Bengbu's jade industry on rocky road

Traditionally, Spring Festival is a time of good luck and prosperity, but global economic uncertainty and the government's crackdown on extravagant officials are making this a less-than-happy new year for retailers of the precious stone, as Zhu Lixin reports from Bengbu, Anhui province.

In Chinese, the word yu, or "jade", is often used to refer to the most beautiful and precious things. People who know the language well will recognize the word because it appears in many idiomatic old saws, usually those expressing wishes for prosperity and good luck.

"Almost as a part of our belief system, we Chinese think jade can bring us happiness and good luck, so love and pursuit of the magic stones has lasted for thousands of years", said Li Jiaxi, chairman of the Bengbu Jade Society.

In ancient times, jade was regarded as a symbol of admirable qualities, and only high-end or righteous characters were allowed to wear jewelry adorned with the stone, which was far beyond the price range of ordinary people.

Now, though, owning jade is no longer a privilege reserved for certain social classes. The development of the Chinese economy has helped the jade industry to grow rapidly since the 1990s, but in the past two or three years the sector has faced tremendous and unprecedented difficulties.

The downturn is primarily the result of two factors: an anti-graft campaign launched by the central government, and the global economic slowdown that has devastated many industries across the world.

As one of China's best-known jade-trading centers, Bengbu city in East China's Anhui province has witnessed the changes firsthand.

A citywide industry

It's estimated that there are about 4,000 to 6,000 jade businesses in Bengbu, but it's hard to tell because most are unlicensed and look like family workshops rather than centers of production.

Officials from the Bengbu municipal government estimate that about 60,000 of the city's 1 million urban population work in the industry, which has an annual gross output value of more than 2 billion yuan ($320 million).

"The exact numbers are very hard to determine because people won't show outsiders everything, but the jade industry is certainly one of Bengbu's most important economic sectors," said Xun Yiran, deputy head of the municipal government's publicity department.

Although Bengbu lacks raw materials, the city's craftsmen are famous for their proficiency and high standards. The raw materials mainly come from famous mining areas in West China, such as the Xinjiang Uygur autonomous region and Qinghai province, and neighboring countries, including Myanmar and Russia.

While the shops on well-maintained streets are Bengbu's focal point, most of the trading and carving takes place in shabby areas such as Xingfucun, also know as the "village in the city".

Yang Guilong ran a jade business in Xingfucun ("Happiness Village") in the city's Longzihu district for more than 20 years, but last year he moved his shop to a better-maintained, prosperous district reserved exclusively for the jade trade. He's kept his workshop in the village, though, and the carving and processing of artifacts for the shop still are done there.

The 50-something bought the three-story building in 2011 when ground was broken to signal the start of the construction process, and the area now has about 300 jade shops.

However, building work began on an even larger business development, the China Bengbu Jade Culture & Creativity Industrial Park, in 2012. The project, which was conducted in three phases and required total investment of about 1 billion yuan, is expected to have space for nearly 2,000 jade businesses when work is completed in April.

Miao Zengling, chairman of the park's developer, Bengbu Miao's Investment Ltd, said he'd originally planned to build a steel market on the site, but visits to Bengbu and surveys of the jade industry prompted a change of plan.

After spending more than 5 million yuan to buy his shop, Yang has little collateral left, but he still has a large number of jade pieces. "During the peak period, around 2010, I had about 20 workers. Now I have less than half that number, because the business no longer needs so many people." he said, adding that the "current (situation) is probably the hardest time the industry has seen".

Yang's business, mostly trading pieces of decorative jade weighing several hundred kilograms, is one of the largest in Bengbu. Given that most of the articles are priced at several hundred thousand yuan, it's hardly surprising that they are usually bought as decorations for luxury facilities.

His shop contains a masterpiece made of jadeite, a type of jade typically found in Myanmar, adorned with delicate carvings of lotus flowers and fish. In 2010, the raw stone cost Yang more than 700,000 yuan, while the carved decorations took a skilled craftsman nearly two years and cost more than 200,000 yuan. Although the piece was finished three years ago, it still hasn't sold.

"Since jade is very precious and resources are becoming increasingly scarce, the longer I stock them (the artworks), the more precious they may become", said Yang, who admitted that he'd rather not hold such a large amount of stock.

Now, he has no alternative but to scrape by as best he can because "the whole industry is now facing a hard time and a lot of challenges". To keep the business afloat, Yang refuses to bargain with customers - he simply charges for the cost of the stone and the work undertaken, plus his profit margin of 20 to 30 percent.

His clients are rarely individual customers. Most are jade brokers from across China who visit Yang's shop, ask the weights and prices of various pieces and then send photos of the goods to their clients.

Yang said that once pieces have been sold, he has no idea where they go, but items resembling the ones he sells can often be seen in hotels, restaurants and private clubs nationwide. Most are large decorative pieces featuring Buddha figures, characters from mythology and history, and natural scenery such as mountains and rivers, animals, birds and flowers.

Curbing extravagance

As part of its anti-graft drive, the central government launched an "eight-point regulation" aimed at curbing extravagant behavior by officials, in late 2012.

The regulation banned officials from using public funds to pay for visits to high-end hotels, restaurants and private clubs. The move spelled bankruptcy for many businesses in the luxury sector because officials have become wary of eating in expensive restaurants, wearing expensive luxury jewelry, or designer clothing and accessories for fear they might be exposed in the media and draw enormous criticism, or even be removed from their posts.

Although he considered his connection with the luxury sector to be minimal, Yang was convinced that the cleanup campaign has affected his business, too.

That opinion was seconded by Xu Yi, a professor at the University of Science and Technology of China, in Hefei, capital of Anhui province. "Large decorative articles are not the only type of jade products to have seen bleak sales recently. It's much the same for small personal jade ornaments," said Xu, a member of the university's school of management who began researching the luxury industry in the 1990s.

Xu also works as a consultant for Anhui Baoruiyuan Jewelry Co, the largest jewelry brand in Anhui, which mainly produces items "for regular, individual consumers", according to Zhang Yali, the CEO.

Despite the downturn, Zhang remains buoyant. "Although the industry faces a lot of difficulties and challenges, the potential market remains large, so I am quietly confident about the future growth of my business," he said.

Xu found it hard to share Zhang's upbeat attitude. "Traditionally, Chinese people like to give each other gifts on happy occasions, such as a wedding or work promotion. Sometimes, the presents are just given in the hope they'll bring good luck," he said, adding that less than 50 percent of small jade ornaments sold are worn by the purchasers themselves.

"The anti-graft campaign has made many people reluctant to celebrate happy events, let alone give and receive presents. The change has not only affected officials, but also entrepreneurs and the general public," he said.

Li, of the Bengbu Jade Society, said: "The campaign has had a widespread and profound influence on many aspects of society, but we can't really prove that most of the jade items were bought by officials."

In his opinion, the parlous state of the global economy and the slowdown in China have affected the industry just as much as the anti-graft campaign because people are now far more cautious with their money.

Xu said: "When people have enough money, they might buy jade for personal use, but in addition to their decorative function, these articles also have great potential to appreciate in value."

The downturn is affecting everyone, not just officials, according to Yang Guilong: "Many enterprises, like real estate developers, who are among the biggest buyers of jade products, are short of money nowadays. As a result, fewer and fewer of them are willing to spend money on jade, especially large decorative articles, than they were when money wasn't a problem."

Looking forward

While Yang said he has no idea how to cope with the current situation except to wait for the market to recover, others, such as Li, have made other plans.

Li has founded a museum containing almost every type of jade from around the world. Meanwhile, the Bengbu Jade Society often organizes events to popularize the stone and teach people how to recognize the different varieties in the hope it will spark interest and lead to potential buyers becoming consumers.

Li said he's currently looking at ways to expand his product catalog, so that both high-end and regular customers will be able to find items that suit both their taste and, just as important, their budget.

Contact the writer at zhulixin@chinadaily.com.cn