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Monday, 15 September 2014 09:03

The Chinese will be buying amber even in 5000 years' time – an interview with Udo Wilhelm

Written by  Anna Sado
Udo Wilhelm and his wife - the owners of Lamma Amber Shop Udo Wilhelm and his wife - the owners of Lamma Amber Shop Photo by: rawamber.com

From the Chinese perspective, the global amber market seems to look different than from the European perspective. Mostly because their perspective is a lot wider...

You have been trading amber for over 20 years. How has the global market market changed during that time?

Amber has always been a very good thing! It is enough to find a buyer, wealthy enough, who likes a particular block of amber – in this respect virtually nothing has changed since I started my activity on this market.... Of course, the world's economy has gone through various ups and downs, which were also felt on the amber market, but nothing has changed in the way this unique stone is perceived. The biggest breakthrough – in the economic sense – was opening the Chinese market to amber. Amber had been valued there for a long time, as we can see from the amber finds dating back to the Han dynasty, about 2,000 years ago, the Liao dynasty, about 1,000 years ago, and many many later ones. There is evidence that amber was valued even 5,000 years ago and that a kilo of amber was worth more than six kilos of pure gold. For centuries the most beautiful amber blocks ended up in China, and the Silk Route was what the Amber Route was for Europe. For centuries China was known as a wealthy country, but it changed when the communist government took over control there. The authorities deprived the inhabitants of private property, so for a few decades they couldn't afford to buy amber and products made of it. However, now it is changing: people are getting richer, they are buying again and will be buying amber – mostly Baltic amber, as they value it a lot more than Chinese or Burmese amber. China is going back to its normal state.

From the European perspective one may get an impression that the Chinese seem to have lost interest in Baltic amber. Is it possible that such a huge market has been saturated? Or perhaps it is just a temporary standstill resulting from very high prices?

The Chinese will always love Baltic amber and will always buy it. I don't think that their market is saturated. In my opinion it is very simple: in the situation when the demand for amber was much higher than its supply and the prices were rocketing, the Chinese were buying a lot more than they were able to sell, as they feared that in a moment prices would increase even further. There was an economic boom in China at the time, and in Europe people started to mine amber in many locations, including the ones that had been deemed not profitable enough before, in order to get as much amber as possible and sell it at the highest price possible. Chinese investors, who didn't usually produce amber goods, arrived in the Kaliningrad Amber Region and paid in advance for the whole year's worth of mining. Most of the raw material has been neither processed nor sold so far. The amber fever continued, in late spring the prices were increasing from one week to another. At the same time Chinese companies have huge supplies of amber, as they had been buying everything that was available on the market – some of them have so much amber that they will be selling it for the next few years... The currently drop in prices is also the result of the Chinese economic slowdown: house prices decreased in some regions even by 30%, there was also a visible drop in the amount of trade. Currently, this situation has reversed and there is a lot more amber on offer than there are people willing to buy it. While fighting for clients the sellers offer a lower price and higher quality, so as they could sell it. However, in the case of finished goods of good quality the prices have basically remained unchanged. I am convinced that in a while, when the prices have stabilized a bit, the market will revive and there will be many buyers with a lot of money at their disposal. Most of the Chinese hadn't even supposed that the prices of amber might reach such a high level. And this, in my opinion, proves that there is huge interest in amber, or even love for amber all over the world. And it assures me that the amber business will continue in China for at least the next 5,000 years. Of course, with all the ups and downs.
Are the Chinese producers able to satisfy all the needs of their market? What are the perspectives for the European producers?

The companies set up by the Chinese in the Kaliningrad Region, in the Ukraine and other Baltic countries are serious competition for the amber jewellery producers from Poland and other countries from the Baltic region, as those are the places in vicinity of amber sources, where it also is processed. The owners of those companies have also their own shop chains in China in order to eliminate all the intermediaries. The European dealers of amber raw material act in a similar way – they also open their own shops in the Middle Kingdom. In my opinion, as a result of this competition, the European producers of amber jewellery will gradually lose their market share in the next few years. The only chance for Polish companies to remain competitive in this global race is to start mining amber in their own country – everybody who takes amber seriously will try to get to the source of the raw material in order to remain independent. So far, only the Chinese have managed that.
What makes the European companies stand out on the Chinese market is the modern design. Of course, it is highly valued there, but we must bear in mind that the Chinese will always be able to understand the needs of their market better than the foreigners. Well designed jewellery will always sell – a professional designer or a creative artist can create wonderful work that becomes desirable, even if it's made of a low quality amber block. My advice for all amber makers and producers is always the same: make something authentic, something that is your own that will appeal to you. Even if you don't manage to sell it in China, it will be easier to find a buyer in a different part of the world. If somebody deals with amber only for the money, there are a few different ways of making faster, and even bigger money...

For the last few years the global market has become completely unpredictable. Is it possible to control it? At some point Wiktor Bogdan was dealing with it – as he claims – by distributing amber raw materials fairly between the Polish, Lithuanian, Russian, and Chinese.

It is not way, as generally everybody would like to buy all the available amber. And there more of it is bought the higher the prices become. Would you buy 10 or 100 tons of the raw material is higher than the price of finished goods with amber in the most expensive shops? This is exactly the situation that we have today. The market is controlled by those who have the access to the largest amber deposits in the world. However, if Kaliningrad asks for too high price, they will only encourage other countries to intensify amber mining locally. And the situation may change again...

How do you see the future of the global amber market? Will the prices stabilize in the next few months?

I am positive that they will. Everybody here thinks so.

Anna Sado

Anna Sado

Trade journalist specialising in jewellery related topics. Since 2007 has been co-creator of the amber portal amber.com.pl

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