Tesiro unveils sparkling diamond strategy
By Jiang Jingjing (China Daily)
Updated: 2006-02-17 08:31

Belgian diamond brand Tesiro plans to spend US$100 million to open over 300 stores in China in the coming three to five years, in a bid to lead the country's jewellery market.

"With the latest European design, the best Belgian diamond cutting skills and the complete domestic distribution channels, we aim to bring our sales volume to 3 billion yuan (US$371.29 million) in China in five years' time," said Shen Dongjun, chief executive officer of Tesiro Jewellery Co Ltd, which is a joint venture between the world's largest diamond processing company, Eurostar Diamond Traders NV and domestic jewellery giant, Nanjing-based Tongling Group.

Shen told China Daily that 20 to 30 per cent of the stores will be wholly owned by the company, while the rest will be developed as franchises.

The wholly-owned boutiques will be located in first-tier cities Beijing, Shanghai and Guangzhou plus provincial capitals. Most franchises will be in second tier cities, Shen added.

So far, the company has over 40 stores, mainly in the East China's Jiangsu Province, more than a dozen of which are franchise stores.

Shen said a franchise Tesiro boutique needs the capital of about 5 million yuan (US$619,000), mainly for rent, advertising and staff training. But he declined to say the franchise fee.

"Tesiro has very close ties with franchisees, and offers effective support to help them increase their sales revenues," Shen said.

As for the wholly-owned outlets, Shen said the input will be approximately 20-30 million yuan (US$2.48-3.71 million) for a boutiques with a business area of 500 square metres.

About 70 per cent of the products sold in Tesiro stores are diamonds, which are manufactured in Eurostar's factory in Italy and in China's Guangdong Province.

The remaining 30 per cent of the products are jade and platinum jewellery.

"With the fast-growing economy and the rapidly improving living standard in China, the demand for diamonds will skyrocket in the coming few years," Shen said, adding that the company aims to take the golden opportunity to become the largest diamond provider in China.

He also revealed that the investment will be used not only on opening new stores, but also on brand building.

"We will also seek mergers and acquisitions in the market," he said, but declined to give more details. Last November, Eurostar Diamond Traders NV spent US$100 million to acquire 85-per-cent stake in Tongling Group.

Tongling is China's second-largest jewellery provider, while its jade products lead the market.

Eurostar Diamond Traders NV occupies over 5 per cent of global market share. It is the long-term diamond provider to luxury brands such as Tiffany, Cartier and Swatch Group.

(China Daily 02/17/2006 page11)