RAPAPORT... Compared with its thousands of years of history in using and trading jade, China’s diamond market is still in the toddler stage. Therein lies its great potential for growth. Until as recently as 1990, diamonds were scarce in Chinese retail stores. Customers knew very little about diamonds and could hardly afford them, so diamonds rarely showed up on bridal shopping lists.
All that began to change in the late 1980s, when the Diamond Trading Company (DTC) broke the ice by airing its TV commercials in China using its proven slogan of “A diamond is forever.” Since then, diamonds have grown to dominate other gemstones as a token of love in China, especially in major cities. In the rural areas, however, 24-karat gold jewelry still is more popular.
In recent years, China’s diamond jewelry sales have been increasing at an average rate of 15 percent to 20 percent annually, and bridal diamonds are no doubt the backbone of the Chinese diamond market. According to David Liu, manager of Forevermark China, approximately 8 million to 9 million couples get married in China each year, and the percentage of ownership of wedding diamond jewelry in major cities reached 55 percent in 2005 and has been increasing every year since.
Due to significantly increased income, some middle-class gentlemen in their 30s and 40s, who didn’t purchase diamonds or bought very small diamonds when they first got married, are deciding to buy their first diamond or a bigger diamond to “make up” to their wives. Those purchases provide further support to the diamond market.
In discussion with
RDR, Rocky Wong, chief executive officer (CEO) of DEFdiamond.com, said his company attends as many as 14 wedding shows in China every year and believes in the great potential of the country’s bridal diamond market.
Good Year for WeddingsThe Year of the Ox is believed to be a good year for weddings. In the midst of the world financial crisis, the bridal diamond purchase is considered vital to the market confidence in China. The members of the Shanghai Diamond Exchange (SDE) were worried whether the market could hold up after the Chinese New Year sales season. However, the customs inspection station located in the SDE is still frequently crowded with members presenting imported diamond parcels.
Trade members from Mainland China visited the 26th annual Hong Kong International Jewellery Show, which ran from March 4 through March 8. Many of them were hunting for Gemological Institute of America (GIA)-certified diamonds rated triple EX, with no fluorescence. These stones are increasingly popular for bridal diamonds in China, but dealers soon realized they are not so easy to find. Meanwhile, some exhibitors noted that it was getting difficult to sell Chinese buyers the triple VG goods.
According to a survey by Polytechnic University’s Asian Centre for Brand Management in the third quarter of 2008, the Mainland Chinese visitors who purchased jewelry in Hong Kong retail stores spent an average of more than $683 apiece. Hong Kong is also a very important diamond market targeting Mainland Chinese buyers in both retail and wholesale.
Working Closer With Dubai
The Dubai Multi Commodities Centre (DMCC) hosted a high-profile government and trade delegation from Shenzhen, China, on March 9, 2009. The delegation discussed the scope of bilateral trade, particularly for diamonds, jewelry, pearls and colored stones. The meeting followed the first Middle East-China Diamond & Jewellery (MECDJ) Summit held in November 2008, which was designed to bring together two of the world’s fastest-growing regions.
“Both Dubai and Shenzhen have risen over the decades from once-small fishing villages to global economic centers. In that sense, the two cities share a common history,” said Ahmed Bin Sulayem, executive chairman of the DMCC. According to figures from the statistics department of Dubai World, a global investment group, gold and gold jewelry trade between Dubai and China exceeded $112 million in 2008 and more than $2.5 million of gold and gold jewelry was re-exported from Dubai to China during the year.
Panyu Seeks Support
Financial support and services have been pledged to Panyu, a major jewelry manufacturing center in southern China. On February 26, Luo Jian, general manager of the Bank of China’s Panyu branch, signed a Memorandum of Understanding (MOU) with Paul Goris, chairman of the Antwerp Diamond Bank, to work closely to develop new financial services for the jewelry industry in Panyu and to provide more efficient financial support to the manufacturing center. Johnny Chan, chairman of Worldmart Jewelry & Gems Emporium in Panyu, said that the Antwerp Diamond Bank has a wealth of experience in financing the diamond and jewelry industry and can be used as a model from which the Chinese banks can learn.
The Marketplace• The diamond wholesale market warmed up again after the Chinese New Year holiday, while the retail market for bridal diamonds held up well.
• 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.
• Demand remains strong for 0.3- to 1.10-carat round, D-H, VS, GIA-certified diamonds, triple EX and with no fluorescence. The prices for such stones rose slightly, due to temporary scarcity in the market.
Article from the Rapaport Magazine - April 2009. To subscribe click here.