RAPAPORT... The year 2009 is the Year of the Ox, or Niu in Chinese, which comes as the second in the 12-year cycle of the Chinese zodiac. It signifies the virtue of diligence, something much needed in the current economic climate. Many believe that the Ox represents the strong and silent type, just like the hard-working Chinese. As the past year of the Mouse snitched away too much cheese around the world, everyone is hoping for a bullish market in the “Niu” year.
The National Bureau of Statistics of China recently announced that the gross domestic product (GDP) for 2008 was $4.4 trillion, up by 9.0 percent. It was the first time the growth rate fell below the double-digit level since 2003. The central government wants to keep this year’s GDP growth rate at 8 percent. In Shanghai, where economic growth was 9.7 percent in 2008, the GDP per capita reached $10,529. In Beijing, it exceeded $8,000.
Initial reports were that retail sales of general merchandise in anticipation of the Chinese New Year were satisfactory for early January 2009, although eventually all retailers have to face the ever more challenging period after Chinese New Year. One well-known retail mall in Shanghai reached record sales of $39.2 million in a single business day on December 31, 2008.
In 2009, the Chinese New Year started on January 26, earlier than the usual February date, which may explain why very few buyers from Mainland China visited the Macau Show from January 8 to 11. Most of them already had placed their orders for the holiday. Many engaged couples scheduled their wedding ceremonies during the Chinese New Year Golden Week from January 25 to 31. A wedding is the primary reason for a diamond purchase in China. Meanwhile, Ox-themed talisman jewelry, gold bars and figurines of various sizes were purchased for investment, collecting and gift-giving in celebration of the year of the Ox.
Unaffected by Israel
The political and security situation in Israel has barely affected diamond shipments to China. On the other hand, there are more Indian, Hong Kong and Belgian-invested member companies in the Shanghai Diamond Exchange (SDE) than Israeli-invested firms. The World Federation of Diamond Bourses (WFDB) postponed its 2009 WFDB-Asia Summit meeting, originally scheduled for January 7 in Hong Kong, and said it would be rescheduled at a later date. In a message to the leadership of all WFDB-affiliated bourses in Asia — i.e., Bangkok, Hong Kong, Mumbai, Shanghai, Singapore and Tokyo — Avi Paz, WFDB president, explained the postponement was “due to the security situation” in Israel.
HRD Antwerp Kicks off Road Show
In another initiative in its decade-old effort to strengthen its relationship with and increase its presence in China, HRD Antwerp, known for its diamond certification lab, gemological training and other specialized services, launched a “diamond road show” on January 17. The traveling exhibit features the famous ECC (European Community Championship) Diamond Trophy, also called the ECC Racket of the Antwerp Diamonds Cup. The trophy is made of 13.23 pounds of fine gold, set with 1,600 Antwerp-cut diamonds with 150 carats total weight and is valued at $1.34 million. It has been offered to the Antwerp Diamonds Cup tennis champion since 1985.
Beginning in Beijing, the trophy will visit 20 major Chinese cities during 2009, giving millions of Chinese visitors an opportunity to view the masterpiece, in what exhibit organizers hope will increase Chinese consumer awareness for diamonds. “China’s consumer base is growing, and along with it, the market for luxury goods. It is clear that for diamonds, now and in the years to come, China is the place to be,” explained Georges Brys, general manger of HRD Antwerp.
Hope for 2009
The diamond wholesale market improved due to the Chinese New Year retail sales season. Wholesalers were quite busy in the beginning of January, although most of them admitted that the sales were not up to the level of the same season in 2008. Many wholesalers, having adjusted their expectations, rated the sales as “acceptable under the current market situation.” Lin Qiang, SDE president, welcomed “a hopeful 2009” after the “unforgettable 2008” at the SDE annual dinner on January 14. It was also announced at the dinner that the trading volume on SDE exceeded $1.3 billion in 2008, compared with approximately $1 billion in 2007.
Jitu B. Shah, partner of J.B. & Brothers-Yaelstar group, expressed great enthusiasm after visiting China recently. “It is definitely a very interesting market,” Shah told RDR. “The decoration and presentation in the jewelry stores are nice, and I can see that more and more people are becoming educated about diamonds and are starting to buy diamonds. I believe the future is in China.”
The Marketplace
• The wholesale market has improved due to the Chinese New Year sales season.
• Most in demand are rounds in 0.15- to 0.69-carat G+, VS and in 0.15- to 0.69-carat I-J, VVS.
• Ox-themed talisman jewelry, gold bars and figurines of various sizes are popular.
Article from the Rapaport Magazine - February 2009. To subscribe click here.