Hong Kong is a center for the world gem and jewelry trade. But its shine has been dulled by the global economic crisis. In Hong Kong, Kari Jensen has more.

Diamond rings and pendants set in 18-karat gold glitter in the showcases of Erica Jewellery Company Limited at a recent Hong Kong jewelry trade show.

Thomas Ko, the company director, says both sales and number of buyers at his booth were down 50 percent compared to previous years.

"For jewelry business now is very difficult. Because we are some kind of luxury goods," he said. "The economy is very bad so people don't want to buy this kind of thing. So we suffer a lot for this period."

Ko says jewelers struggle because it is not clear how soon the global economy will recover. He has weathered both the Asian financial crisis of 1997 and the SARS pandemic of 2003, but this recent economic tsunami is more far reaching.

Jewelry trade continues, at a lesser scale, even as major world economies succumb to recession. Hong Kong's economy is in recession for the first time in five years.

The territory is the world's fourth-largest jewelry exporter, with exports totaling $4.7 billion dollars in 2008, up about 10 percent from 2007. It is a leading center for both diamond and pearl auctions.

The United States and the European Union are Hong Kong's biggest markets, with growth seen from emerging markets, such as the mainland and Argentina.

But buyers who once were willing to spend more now are wary. Jewelry exports dropped 30 percent in January compared to the same month last year.

Raymond Yip, the assistant director of the Hong Kong Trade Development Council, says the decline may be due in part to reduced sales during the Lunar New Year holiday, which fell earlier than in other years.

Yip says sellers are cutting prices for various reasons. Demand for gold from jewelry buyers in traditionally strong markets such as India and China remains weak.

He says uncut, unpolished diamonds have dropped more than 40 percent in price since the financial crisis hit last year.

"Of course this is good news for more budget-conscious buyers and also for the designers because they work more liberally on different materials," said Yip.

Adem Edel, a diamond seller from Turkey, says his prices are low due in part to labor costs, which are lower in his country than in the European Union.

Edels says he sold more at this show than at the last Hong Kong jewelry show in September.

"For my company it's good, but I see from other way I just talked to the people who sell diamonds, diamond site holders, I heard from them that some of them they made 80 percent less sales compared to last March, compared to last September they made 90 percent," said Edel. "So it's huge.

The March jewelry trade show is among others spread throughout the year in Hong Kong.

In a recent study, the Centre for Exhibition Industry Research found that even though attendance and exhibit space may decrease in recessionary periods, key buyers continue to attend trade shows and the percentage of attendees that actually have plans to purchase remains high.

Close to 30,000 buyers attended the Hong Kong International Jewelry Show in March. Overall buyer attendance for the first four days dropped about five percent from 2008, with overseas buyers down 15 percent.

Anna Balkan is a fine jewelry designer based in the state of Georgia in the United States. She did not attend the recent trade show. But she says she buys most of her semi-precious gems from Hong Kong suppliers.

Balkan says during the past six months, gem prices have stayed the same, but the quality has decreased.

"The Hong Kong market that I shop with, they're trying to keep the prices as close to what we used to pay but what they're trying to do now is I know my stones and I can see what is coming now," she said. "You get all types of stories. 'Oh, the factories.' But it's back to the pricing."

Balkan says sellers do not want to raise their prices. She says she also is trying to keep her prices low. To do so, she now offers more pieces that are gold-filled instead of solid gold.