SARS Disrupts Pearl Supply

May 6, 2003

SARS Disrupts Pearl Supply

There has been a big drop in world pearl distribution and sales due to the Severe Acute Respiratory Syndrome outbreak, pearl industry sources told Reuters. SARS hit Hong Kong and China's Guangdong province hardest and buyers have been frightened away from the region. China produces 96% of the world annual pearl production by weight, and is home to a booming cultured freshwater pearl industry. Hong Kong is also an important pearl manufacturing base, due to the quality of its products and low labor costs, according to Reuters.

"This is a big mess, the whole industry is being affected, definitely," Sonny Sethi, president of New York City pearl importer Tara & Sons, told Reuters. "I think the pearl industry will go down by 30% this year because of SARS."

"Chinese companies are very important to the U.S. market," said Devin Macnow, executive director of the Cultured Pearl Information Center, a trade organization in New York City. "We estimate that by the third or fourth quarter, there will be 30% fewer pearls in the general trade pipeline because of SARS."

Imperial-Deltah Inc., one of the top five U.S. importers of Chinese freshwater pearls, told Reuters it is feeling the pinch. "SARS has created a lot of problems, we cannot go to Hong Kong and China and we won't be able to see new designs," said Banice Bazar, president of the East Providence, RI, company.

One of the problems for the pearl industry is buyers want to see the product before buying, so teleconferencing and other long-distance options for purchasing are impossible. "Dealers like to see with their own eyes before they buy, they want to look at the material, touch it, and negotiate a deal face-to-face," said Macnow. "It's not something that you can get on the Internet, or via e-mail or fax."

Zale Corp., the largest U.S. specialty jewelry retailer, told Reuters SARS has had no impact on shipments so far because it deals mostly with wholesalers, not the smaller vendors in the region. High-end jewelry retailer Tiffany & Co. uses more expensive pearls from Japan and Australia, which produce akoyas and South Sea cultured pearls and haven't been hit with SARS. Analysts said Tiffany is less likely to be affected.

Experts said it's still too early to judge the impact of SARS on world prices for pearls, because of lower demand due to the economic downturn, but current supply is definitely being affected.

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