| The pearls start at a farm. Most farmers then sell to a factory. The pearls are then sold to local traders. These traders will either sell pearls at jewelry trade shows (such as in Hong Kong) or to local merchants such as those at the pearl market in Beijing and Shanghai. These local merchants then sell to consumers and other retailers.
From the trade show the pearls are purchased by wholesalers mostly and at times piecemeal by actual retailers (at a much higher price).
These wholesalers will then sell in the USA, either directly to retail stores, or to retailers who come to the tradeshows such as those in Tucson and Las Vegas.
I would say the most common (because as you see there are several variables) way the pearls make their way into the hands of consumers is:
Farm
Factory
Trader
Local tradeshow – sold to wholesalers
International tradeshow – like those in the USA on Inhorgenta in Germany
Jewelry stores (and at times even more wholesalers buying for smaller stores that cannot make the trip to a show).
Most pearls pass though 5-6 levels before going retail. The biggest markup is retail, of course, where the selling markup averages about 300%.
On this last trip out to Asia I spoke with a very good friend of mine in Hong Kong whose family owns a freshwater pearl processing plant in Zhuji, and a large pearl farm. She travels the US selling directly to (will not name the actual stores) retail outlets, where the pearls are marked up 20 times on average. One of her very large customers – a very recognizable name – purchases one strand of freshwater pearls consistently for $20, and retails them for $400 per strand. I am sure this is because they are now skipping many of the layers they once traversed to bring the pearls to market by purchasing from her instead of a trade show. So instead of dropping prices they are simply raising margins. |