International trade members are focusing more on China, not only as the second-largest diamond polishing country, owing to its low-cost labor, but also as an important market with a growing class of wealthy consumers. In fact, the “factory of the world” is becoming one of the most promising shopping centers in the world. The attention to China is no longer as skin-deep as a Chinese character tattoo on the ankle.
Realizing the importance of “manufacturing locally and selling locally,” the Russia-based EPL group recently began cutting operations in Shanghai, and launched its retail sales shortly afterward. LJ International (LJI) has embarked on an aggressive expansion into China, more than doubling its ENZO stores to 93. According to China Gold newspaper, Tiffany also announced it is planning to open additional stores in China.
Gold Futures’ Strong DebutGlobal gold prices surged more than 30 percent in 2007, the biggest increase since 1979. The China Securities Regulatory Commission (CSRC) approved the launch of gold futures trading in December 2007. The contract offers China an opportunity to become a key player in the global gold market, and to serve as a hedging tool for gold producers and as a means to absorb excess liquidity. Gold topped $881 an ounce on the eve of the futures market launch. With a strong debut on the Shanghai Futures Exchange (SFE) on January 9, 2008, the key contract for June delivery was the first to take off, surging 9.98 percent to approximately $31.65 (230.95 yuan) per gram, followed by the rise of other contracts for July-to-December delivery. Gold for February delivery on New York’s COMDEX briefly touched $900.10 an ounce the same week.
Meanwhile, platinum has benefited from demand in China as another popular jewelry material, as well as a metal used in automobiles. Chinese consumers are buying autos at an incredible rate, with 8.5 million new automobiles expected to hit the roadways in 2008. Platinum is up 36 percent from one year ago and closed January 4, 2008, at $1,541 an ounce. Credit Suisse predicts that troubles on the supply end will cause the metal to breach $2,000 this year.
Preparing for Holidays
Local manufacturers and wholesalers have been busy filling orders for the upcoming Spring Festival celebrating the Chinese New Year and for Valentine’s Day, prime times for family gatherings, gifts and weddings. The Year of the Mouse, which begins February 7, will lead off a new 12-year cycle in the Chinese zodiac.
“We have just fulfilled the orders from the retailers for the Chinese New Year, and the wholesale amount is much better than last year,” Denis Semenov, general manager of EPL Diamond Shanghai told RDR. “The overall payment collection is satisfactory, but due to several memo frauds in 2007, we still need to be cautious.”
With expectations high for the Beijing Olympics starting August 8, 2008, the Chinese economy is expected to remain strong this year. Forecasts are for the Chinese yuan to surge up to 10 percent against the U.S. dollar in 2008. International diamantaires are increasing their efforts to enter China to hedge sluggish activity in the U.S.
As a country where the manufacturing base is close to the consumer market, China is trying to create a new and more important role as an economic powerhouse by inviting more players into its markets and by taking on the globalization challenge in the “new world order.”
WGI Appoints First Far East ChairmanThe World Gemological Institute (WGI), an Israel-based nonprofit gemological research center and diamond grading laboratory, announced the appointment of Rafael Aharoni as its first Far East chairman, covering Mainland China, Hong Kong and Macau. Yinon Feldheim, chief executive officer (CEO) of WGI said, “This appointment will strengthen our position in the China, Hong Kong and Macau area as well as in other countries in Southeast Asia, and it is a significant milestone in our strategy to invest here.” The announcement was made at the Macau Jewellery & Watch Fair held at the Venetian Macao from January 10 to 13.
Another trade show, with many more exhibitors, will be held in Macau from February 28 to March 2. Although no match for Vegas shows and with a long way still to go before becoming truly competitive with Vegas, Macau shows are delivering a new message.
The Marketplace • Demand is good for 0.30 to 0.70 carats in G+/VS+.
• Triple EX stones certified by the Gemological Institute of America (GIA) are gaining in popularity.
The goods most in demand in the market:
• 10-per-carat, good make, VS+/H-I, are selling at approximately $620 to $650.
• 6-per-carat, good make, VS+/H-I, are
selling at approximately $830 to $870.
• 4-per-carat, good make, VS+/H-I, are
selling at approximately $1,040 to $1,050.
• 3-per-carat, good make, VS+/H-I, are selling at approximately $1,250 to $1,350.
The market also accepts:
• 10-per-carat, good make, VS+/I-J, are selling at approximately $550 to $580.
• 6-per-carat, good make, VS+/I-J, are
selling at approximately $770 to $800.
• 4-per-carat, good make, VS+/I-J, are
selling at approximately $920 to $1,000.
• 3-per-carat, good make, VS+/I-J, are selling at approximately $1,150 to $1,250.
• 3 to 7 points, SI/G-I, are selling at approximately $350 to $400.
• 10 points, SI/G-I, are selling at approximately $400 to $480.
• 15 points, SI/G-I, are selling at approximately $500 to $550.
Article from the Rapaport Magazine - February 2008. To subscribe click here.