Tesiro plans broad mainland expansion

By Huang Ying (China Daily)
Updated: 2011-03-29 13:25
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BEIJING - Tesiro Jewelry Co Ltd will open 80 to 100 stores a year on the Chinese mainland in the coming years aided by investment from Eurostar Diamond Traders NV.

Eurostar is one of the world's largest diamond processing companies. Tesiro was established in 2006 as a joint venture between Eurostar and the Nanjing-based Tongling Group, whose founder was Shen Dongjun.

In 2010, jewelry sales reached 250 billion yuan ($38 billion) in the domestic market, up 13.6 percent from 220 billion yuan in 2009, and it is expected to reach 300 billion yuan in 2015, according to the Gems & Jewelry Trade Association of China (GAC).

"The jewelry market in Europe and the United States is getting close to saturation now, but the Chinese market shows huge growth potential," said Shen, chief executive officer of Tesiro.

The company currently operates about 200 stores in China, of which 75 percent of them are wholly owned and the rest are franchises.

The expansion plan aims to explore the market in inland regions, such as Jiangxi, Hubei and Shaanxi provinces.

Its existing retail network is mainly spread along the eastern coast, including Beijing, Shanghai, Hangzhou, and Qingdao.

Approximately 10 million couples get married in China every year, and 65 percent of those in large and medium-sized cities consider a diamond ring an indispensable item for marriage.

However, Tesiro doesn't have cities in Southwest China on its agenda.

"We are not going to open stores there in the short term because there will be difficulty in forming a cluster effect geographically for us," said Shen.

The wholly-owned stores will be in provincial capitals, while newly opened stores in small and medium-sized cities are expected to be developed as franchises, he said.

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Shen said that the jewelry market, except for gold, dropped 20 percent while Tesiro's business rose 30 percent year-on-year in 2010.

He attributed the rapid sales growth to the company's brand-building efforts since it opened. "Brand-building is very important because it helps consumers to recognize your products immediately when they see many products of the same category," Shen said.

Tesiro built a partnership with the Berlin International Film Festival (BIFF) three years ago when an increasing number of movie stars and celebrities asked for custom-made jewelry to wear at premieres or other show business events.

The Chinese actress Zhang Ziyi is a fan of Tesiro and has worn its jewelry at many film festivals and premieres.

"The cooperation with the Berlin International Film Festival helped to strengthen consumers' confidence in our brand as well as encouraged us to further improve the quality of our products because of the Germans' limitless pursuit of perfection," Shen said.

Tesiro is not the only jeweler undertaking an ambitious expansion plan on the Chinese mainland.

Tiffany & Co, the US jeweler, intends to open more stores in China than in any other country - an expected 25 to 30 - over the next three years.

As a close partner of Eurostar, Tesiro gets most of the diamonds it sells from the company. The diamond processor is also a long-term jewel provider to luxury brands such as Tiffany and Cartier, Shen said.

"Eurostar also developed some unique diamond products for us," Shen said.