Shanghai gold jewelers are planning to change pricing methods to reflect the value of their pieces’ designs and craftsmanship. Photo: CFP

Local jewelers are preparing to modernize Chinese mainland gold retail sales by adopting the pricing practice used in developed countries, which essentially determines the cost of each piece by "intangible worth" rather than by weight in gold - a move expected to push up the prices of gold jewelry in the city.

Shanghai Gold and Jewelry Trade Association announced the decision Wednesday, before the opening of the 9th Shanghai International Jewelry Festival tomorrow, and days ahead of the Labor Day holiday (April 29 to May 1), when gold sales typically rise. Though the change is unlikely to take form over the long weekend - when customers could be well-advised to take advantage of existing prices - the association said that the switch is "urgently needed" if local gold jewelers are to bolster their competitive edge in the market.

Currently, jewelry stores across the country charge customers for pieces based on their weight in gold, before tacking on a "processing fee," which is typically less than 10 percent of the cost of the jewelry's total amount of gold.

The approach allows stores to ask for fees that appreciate the design aesthetic and brand value of each piece, a concept that has been missing from the craft for too long, said Xu Wenjun, secretary-general of Shanghai Gold and Jewelry Trade Association, which has more than 140 members.

"Renowned international luxury brands have successfully wooed customers with excellent designs of their gold products," he told the Global Times Wednesday. "We also want people to value our designs and craftsmanship, which are in some ways worth much more than the cost of a precious metal."

Laofengxiang, the city's most established gold store, believes the new approach will allow local brands unprecedented opportunities to be more creative in the development of gold products.

"Buying jewelry based on the amount of gold used in a piece is really a thing of the past," Laofengxiang's spokesman Wang Ensheng, told the Global Times Wednesday. "It has prevented us from building our brand in a manner that other established jewelers have."

Wang declined to speculate how the new pricing system would impact gold jewelry prices at its shops, which was selling a simple 6-gram gold bracelet Wednesday for 2,790 yuan ($442). A similar piece at Hong Kong's Chow Sang Sang, meanwhile, was going for 3,000 yuan, and for more than 10,000 yuan at Cartier.

While local gold jewelry prices are unlikely to jump to the likes of the latter anytime soon, shoppers should expect up to a 20 percent price hike once the situation changes, said Chen Jie, a gold analyst for Southern Securities.

"While a price hike could initially dampen consumer incentives to buy gold jewelry from local stores, it's unlikely to have a lasting effect," he told the Global Times Wednesday. "Hong Kong and other countries made the transition years ago, and their jewelers have not suffered for it."

Given that gold prices have also risen rapidly in the past two years - by roughly 60 percent to 420 yuan per gram today - customers are also more inclined to expect volatility in prices for gold jewelry, he added.