RAPAPORT... At 8 p.m. on the eighth day of the eighth month of 2008 — 08.08.08 — the opening ceremony of the Beijing Olympic Games began. The Chinese are fond of the number eight, much more than other people in the world, because “Fa,” the Cantonese pronunciation of eight, is the same as the word “prosperity.”
The number of couples who registered for marriage reached a record high on that day, with more than 16,000 couples registering in Beijing, 6,000 in Shanghai and 30,000 in Guangdong Province, a great number of them potential diamond purchasers. In the commercial sense, the phone numbers and license plates ending with the numbers 88, 888 or even 8888, are sold at premium prices. In recent Christie’s auctions, there have been a number of diamonds of 8.88 carats in different shapes and they all were popular among Chinese bidders.
The Beijing OlympicsFor the first time in Olympic history, nephrite jade, a traditional and popular jewelry material in China, was inlaid into more than 3,000 Olympic medals. The new design displays the noble quality of jade as a symbol of traditional Chinese culture. Meanwhile, Olympic-themed jewelry — gold and silver bars, coins, figurines and decorative items — also were popular. Retailers in Shanghai, including Lao Feng Xiang and Chenghuang Jewelry, reported satisfactory sales.
The Beijing Olympic Games was not only a spectacular sports event but also a national endeavor to promote the country and brand the name “made in China.” The aim was to show the world that the country is more than a “world factory” capable only of producing low-cost products with low-cost labor. Meanwhile, the extensive investment in infrastructure construction in Beijing in preparation for the Olympics, especially in the transportation system, will benefit the local economy, including retail, in the long run.
World’s Most NetizensThe China Internet Network Information Center (CNNIC) reported that the number of internet users reached 253 million in June, giving China the number one ranking in the world for the most netizens, or active internet participants. The number of broadband users in China was recorded at 214 million, which also tops the world listing. And, as of July 22, the “.cn” country code for China also is the largest in the world, with 12.18 million .cn domain names.
The CNNIC indicated in another report that the amount of online shopping in the first half of 2008 reached $2.36 billion, making the virtual world an increasingly important commercial marketplace and a new arena of competition. There is a clear trend for the large jewelry chain stores in China to develop their websites to show product information that will attract customers to view the jewelry pieces in their stores.
The emerging internet-oriented diamond and jewelry sales companies, such as 9diamond.com and zbird.com, are attracting more and more attention from the young generation of internet surfers. The pure online sales models like Blue Nile have not fully developed in China yet because most retail clients still prefer to physically view the product in a showroom or a retail store before they buy. But the internet is becoming more and more important in providing information and enticing customers to visit the stores. Statistics show that the online-induced sales account for approximately 20 percent of the jewelry retail sales in China.
Meanwhile, on August 8, 2008, RapNet announced the launch of www.RapNet.cn, the first multilingual Chinese and English B2B diamond trading network.
Market StatisticsA recent report from the Diamond Administration of China (DAC) indicated that 2007 diamond imports and exports on the Shanghai Diamond Exchange (SDE) reached $1 billion. For the first half of 2008, turnover is already up by 43 percent year-on-year to $652 million.
China’s diamond imports for domestic consumption rose 37 percent to $267 million, 99.4 percent of which is polished. Yu Huimin, secretary general of DAC, believes that the demand for diamonds in China remains robust. One reason is the reduction from 17 percent to 4 percent in the value-added tax (VAT) on diamond imports that took effect in July 2006. The new tax policy has also regulated the diamond market in China. The total VAT for diamonds imposed by customs at import reached $110.4 million in the first half of 2008, up 26 percent.
In another indication of the strength of the market, eight new members joined SDE in the first half of 2008, five of whom are foreign-invested, bringing its total membership to 217.
The Marketplace• The wholesale market is getting busy because preparation for the National Day Golden Week in October has begun.
• Olympic-themed jewelry, gold and silver bars, coins, figurines and decorative items are popular.
• Demand is good for round in 0.30 to 0.70 carats in D-G, VS.
• Demand is also good for round in 0.30 to 0.50 carats in I-J, VVS.
• Demand is strong for round G+, VS, 1⁄2-carat fine-make diamonds with Gemological Institute of America (GIA) certificates, especially triple EX goods.
• Demand is stable for larger, round stones in 1 carat+/VS+/H+, GIA-certified and fine make.
Article from the Rapaport Magazine - September 2008. To subscribe click here.