The demand for luxury goods in China is continuing to expand at a rapid rate according to new analysis, with the jewellery industry set to be one of the main beneficiaries of a growing affluence.

A Hong Kong industry official told Jewellery Network Asia that the middle class in the country was expected to grow at a rate of ten per cent or 10 million people each year.

This growth is being touted as major incentive for jewellery companies to enter the Chinese market, which will host a middle class of more than 200 million people by 2015.

"These are the people who can afford to buy the more expensive goods. The market's potential, therefore, is excellent," said Frederick Lam, executive director of the Hong Kong Trade Development Council.

"Now is the right time to go into the China market. A lot of Hong Kong companies are beginning to develop their own brands and distribution networks in the Guangdong area. Some jewellery retailers are already there and they are beginning to spread out. We aim to help them to go into China and develop their brands and distribution networks there," he added.

Mr Lam said that the growth of a ready-made market meant that Hong Kong could be an ideal base for firms seeking to exploit the demand.

The development of the Closer Economic Partnership Arrangement - which exempts Hong Kong-made products in 270 categories, including jewellery, from import duty when entering the Chinese mainland - should also facilitate firms seeking to take advantage of the new market.

China boasts the world's largest platinum jewellery demand, although last year the purchase of platinum for jewellery manufacturer dropped by 19 per cent as rising prices squeezed the market.