Pearls, Finer but Still Cheap, Flow From China

Pearls, Finer but Still Cheap, Flow From China

Wholesale prices for half-inch white pearls have fallen about 30 percent in the last several years, as the influx of high-quality Chinese farmed pearls — grown in former rice fields — has the industry in turmoil.

For two decades, China has been the world’s biggest pearl producer, flooding the market with small and cheap pearls of costume-jewelry quality. But now companies like Mr. Zhan’s are using new techniques to push into the lower reaches of the market for half- to almost one-inch gem-quality pearls.

“Competition from China has hurt, there’s no doubt,” said Robert Wan, whose company, Robert Wan Tahiti, dominates the production of Tahitian pearls, which are cultured in mollusks in saltwater and help set the world quality standard.

China’s pearl industry is a microcosm of how the country is moving beyond low-wage jobs and imitating foreign producers. Pearl farms, like other businesses across China, are starting to innovate and automate as wages surge, particularly for blue-collar workers.

A Chinese half-inch pearl now sells for $4 to $8 at wholesale, which is typically less than half of the retail price. A Tahitian pearl of similar size sells at wholesale for $25 to $35.

Mr. Zhan, the man who has grown ever richer on cheaper pearls, is chief executive of Grace Pearl, one of the largest companies in Zhuji, a town in Zhejiang Province. Grace grows pearls in Zhejiang and, as real estate and labor costs have risen, also in inland Jiangxi, Hunan, Anhui and Hubei Provinces.

More about Pearls, Finer but Still Cheap, Flow From China