LJ International is a Chinese company, but a non-Chinese brand. Residents of the big cities in China walk by ENZO jewelry stores every day since there are currently over 150 of them, and will be opening many more soon. But how many of us know that the brand, that sounds and looks so European, is actually of Chinese (Hong Kong) origin? I would never guess! How is that even possible? Rough&Polished has talked to the company's CFO Ringo Ng and Investor Relations Executive Jennifer Zimmons to learn more about the company that is successful in two of the world's biggest jewelry markets, the United States and China. LJ International designs, brands, markets, retails and distributes a full range of exquisite jewelry to fine jewelers, department stores, national jewelry chains and electronic and specialty retailers through its "mine to market" strategy.
Please give us an overview of LJ International.
Jennifer Zimmons: Lorenzo founded the company in 1987. He started off as a wholesaler, he was doing "mine to market" strategy, so he would actually go and get the stones, then create beautiful jewellery. They were selling wholesale to Zales, QVC, Sterling Jewelers etc. About 6 years ago they realized that there was a lot of growth in the disposable income and consumer spending in China, so they started making their price point for affordable luxury in China. Not cheap, but affordable, around a thousand dollars. Lorenzo opened his first store in China in 2005, this is when they started retail brand ENZO which is sold exclusively in China.
The colored stone is something rather unique to China, originally it was all gold and a little bit of diamond, so that was very innovative. The way the company markets itself is very European, hence the ENZO name, it’s 'Lorenzo' chopped in half. We market ourselves as a non-China company.
The stones come from Brazil, Africa and LJ has two factories an hour away from Hong Kong, one for wholesale one for retail. LJ International has recently (in April, 2011) brought in Omar Torres who used to design for Bulgari, Movado and other big names. So now he's going to be introducing some of his concepts to the company as its Creative Director. Torres will supervise ENZO's design team and launch his own luxury jewelry collection in ENZO stores.
The company's symbol is JADE, but we don't sell any jade in the ENZO stores, they really focus on the colored stones, a little bit of gold and a little bit of diamond. But we're going to introduce opal which is crafted to look like jade because jade is much more expensive.
Another thing that LJ has done in China is that the company really started to capture the wedding market which is a huge industry. We have some new designs for that market. These include the 88-faceted ENZO 88 Diamond Collection, symbolizing eternal love. It is a premium diamond cut with 88 facets, offering more sparkle. Number “8″ is a symbol of prosperity in China. If you turn it on the side, it becomes a symbol of eternity, it stands for infinity of love.
What kind of presence do you have in the United States besides your wholesale activities?
Ringo Ng: we are listed in the United States, the company is publicly traded on the NASDAQ, it gives us a lot of credibility and strength when we go into the malls to position ourselves for good store locations.
How would you describe your position in the Chinese market?
Jennifer Zimmons: We're called the "Baby Bulgari" within China. Enzo stores are pretty much all within the shopping malls because that's the traffic driver. Because if you have a stand alone store, it’s a little harder to get as much consumer traffic.
The leading Chinese business publication, CBN Weekly, ranked ENZO along with major foreign brands in two categories - "brand recognition" and "demonstrated buyer preference". ENZO placed fourth in each category, among a group that included Cartier, Tiffany and Bulgari.
Do you do online sales?
Jennifer Zimmons: Not so much. We have our website, but a lot of times with jewellery you want to touch it and feel it. Most of our products are going into the stores, because it really is a salesperson who sells it to a customer. Salespeople have a three-month training program where they learn all about it.
Please tell us more about your training program.
Ringo Ng: We send sales people to our headquarter for a three-day training and we go through all the manufacturing and cutting process with them. We want them to know our corporate culture and to understand gemstone. Then we send our salesmen to the existing stores in Shanghai, Tianjin or Beijing for three month. So they are trained for another three month before they can face an actual customer.
What is your brand message for the Chinese customers?
Ringo Ng: What we are trying to develop is to grow the colored jewelry market, to become a "Tiffany" of colored stones jewelry in China. ENZO is currently the largest foreign retail jewelry brand in China.
Are you going to expand your retail brand EZNO outside of China?
Ringo NG: Not today. We started from Shanghai, Beijing and all the way north to Harbin. Now we're going to develop the southern part of China, such as Guangzhou, Shenzhen. Next we will go up to Fujian Province. Once we capture Fujian, we'll head to Taiwan.
Maybe Singapore and Malaysia after that, as well. We primarily focus on the Asian region. Probably one day we'll have our store open on the Fifth Avenue in New York. We see ourselves as an international brand in the future.
How do you market your brand in China?
Jennifer Zimmons: LJ International is very strategic about the way that they do their branding and media. They advertise in many high-end publications. In the cities, they have like 20 posters in the subways to get visibility that way. The company also organizes jewelry parades and other shows, they also had a couple of events where they invited makeup artists or fashion designers to come in and talk about the jewelry and the outfit. It really helps create a whole presence.
Which pieces of your collection were most welcomed by visitors at JCK Las Vegas this year?
Ringo Ng: Green opal which represents jade, they also liked tourmaline a lot. Opal is a modern substitute for jade which is much more expensive. Not many people can afford to buy jade, and we stand for affordable luxury. Besides, there are a lot of fake or inferior jades these days.
What are your major expectations this year in terms of finance, marketing and sales?
Ringo Ng: On the wholesale side we want to achieve at least a 10 percent growth and secure a launch of a new line. LJ International has currently over 150 retail stores in China (ENZO brand), and I believe we will have up to 200 stores by the end of the year. Ultimately, our goal is to have a thousand. We will keep opening about 50 new stores per year in China. The company's strategy in China is to deepen footprint in Tier 1 cities and expand presence to Tier 2 and Tier 3 cities.
Olga Patseva, Editor in Chief of the American Bureau, Rough&Polished
