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A few days ago, Huang Yaqiong of the Chinese "Ya Si Combination" won the mixed doubles badminton final at the Paris Olympics. Her boyfriend, Liu Yuchen, also a badminton player, knelt on one knee and proposed to her in front of the audience. On that day, the Chinese badminton team won "one gold and one diamond" and became a hot search.

Soon after, the diamond ring brand DR posted a Weibo post, claiming that the diamond ring used in the proposal was its product, and quickly launched the "same style as the one used by world champion Huang Yaqiong in her proposal" on the e-commerce platform. However, the reporter of the Daily Economic News noticed that behind the event marketing, the performance of DR Diamond Ring's parent company Dia shares has been declining for two consecutive years, and its stock price has fallen by 90% in less than three years since its listing.

Not only Dia shares, in recent years, due to changes in the consumer environment and the substitution effect of gold, the diamond ring market has shrunk rapidly, and the sales of inlaid products of comprehensive jewelry brands such as Chow Tai Seng and Chow Tai Fook have declined, and the overall product structure has tilted towards gold jewelry. And Laisen Tongling, which mainly sells diamonds, is expected to suffer losses in the first half of this year due to the slow effect of its transformation to gold.

The idea that "diamonds are forever" is being abandoned by the public. On August 6, Zhu Guangyu, a senior diamond jewelry industry expert, told reporters that for diamond jewelry companies, only by maintaining product and service innovation, effectively expanding sales channels, and getting closer to young people can they have a chance to survive in the sluggish environment.

DR flagship store promotional page

The company's performance is under pressure

Olympic champion Huang Yaqiong was proposed to during the competition, which became a legend both at home and abroad. DR, the brand of the diamond ring used in the proposal, launched a marketing campaign on e-commerce and social platforms, promoting "the same diamond ring that world champion Huang Yaqiong proposed with", with a starting price of 10,329 yuan.

DR often uses a marketing model to collaborate with sports stars for exposure. Previously, Su Bingtian and Wu Minxia used DR products in their proposals or weddings, and they also cooperated with the brand in publicity. On DR's official website, the company also specially opened a "Star Stories" column to showcase star cases.

On August 6, Zhu Guangyu, a senior diamond jewelry industry expert, told the reporter of the Daily Economic News: "There is nothing wrong with cooperating with sports stars, and it can effectively enhance brand trust and improve brand image, which may promote brand sales. However, companies need to strike a balance in their operations. In today's highly developed Internet, excessive commercial traces will cause consumers to have negative emotions. In addition, other risks such as marketing costs, consumer aesthetic fatigue, and the durability of sports stars in terms of performance and reputation are also areas that need to be considered."

The reporter noticed that DR diamond rings are well known to the public for their business model of requiring an ID card to purchase and can only be purchased once in a lifetime. Its parent company, Dia shares, also landed on the Shenzhen Stock Exchange in 2021. However, after listing, Dia shares did not develop smoothly, and then encountered a cooling of diamond consumption, and the company's performance declined for two consecutive years.

The financial report shows that Dia's operating income in 2023 is about 2.18 billion yuan, less than half of that in 2021; the net profit attributable to the parent company in 2023 has shrunk to about 68.96 million yuan, and after deducting non-operating items, it will be the first loss since its listing, while it made a profit of 1.3 billion yuan in 2021. In 2023, Dia optimized and closed 184 stores.

In the 2023 annual report, Zhang Guotao and Lu Yiwen, the founders of Dia Co., Ltd., published a letter to shareholders stating that "in 2023, we experienced the biggest winter in history. The cyclical adjustment of the industry was superimposed on the impact of false negative information about the brand, and the company's performance was under pressure." They stated that they would increase investment in product design and research and development of related categories, and optimize and improve products, vision, public relations, content, and communication. This marketing move of taking advantage of the sports star's proposal may be one of the ways for the company to reverse its brand image and performance.

Gold is replacing diamond rings as a necessity for marriage

"Chinese consumers pay more attention to the value of goods than before, so they are more likely to choose products like gold," said Zhu Guangyu. Reporters have noticed that more and more people believe that diamond rings, as high-priced non-essential items, do not have the risk-avoidance and value-preserving properties of gold, and are gradually being abandoned by the mass wedding market.

An article published by the China Gem and Jade Association in July last year cited data from a survey by the China Gem and Jade Association Fund, showing that the average monthly sales of diamond-encrusted products in stores generally ranged from 50,000 yuan to 100,000 yuan, and there was a possibility of further decline, and store operations were under great pressure. The poor performance of diamond-encrusted products in terminal sales also caused the midstream diamond wholesale link to fall into a "dilemma", with the prices of some products even falling by more than 20%.

The increase and decrease of diamond ring and gold consumption has been reflected in the financial reports of major jewelry listed companies. In 2023, Zhou Dasheng's revenue from gold products increased by 62.01% year-on-year, while the revenue from inlaid products (such as diamond rings) decreased by 29.4% year-on-year; in the 2024 fiscal year (the year ending at the end of March 2024), Zhou Dafu's gold jewelry and product turnover increased by 22.5% year-on-year, while the turnover of jewelry inlay, platinum and K gold jewelry decreased by 13.3% year-on-year.

The above-mentioned comprehensive jewelry companies can still cope with market changes by adjusting their product structure, but for companies that rely on diamond jewelry, the road to transformation is not easy. In addition to the continuous decline in the performance of Dia shares, Laisen Tongling expects a loss of 30 million to 43 million yuan in the first half of the year. The company said that it continued to increase its efforts to expand its gold business, but the gross profit margin of the gold business was low, resulting in a significant decline in the company's overall gross profit margin and failure to achieve profitability.

"Consumers' perceptions and demands are now diversified, so if diamonds want to remain at the top as before, they need to put a lot of effort into marketing." Zhu Guangyu said: "For diamond jewelry companies, they have a chance to survive in a sluggish environment only if they maintain product and service innovation, effectively expand sales channels, and get closer to young people. Of course, it is also possible to temporarily change their product structure, but it may affect the brand image. This needs to be cautious."

Regarding how to deal with market changes, a relevant person in charge of Dia shares told reporters on August 6 that due to the influence of the overall environment, the company's performance fluctuated, and its revenue and net profit were consistent with the industry cycle. In the future, the company will continue to upgrade its brand image, channel experience and business model, strengthen the main DR brand, and achieve "expanding product categories and multiple brands" through investment and mergers and acquisitions. "Although diamonds are our main product, we are also actively exploring other categories to enrich our product line while maintaining the core value of the brand." The person said.

(Reporter Du Wei of Meijing also contributed to this article)

Daily Economic News