The sparkling stones are a new love in a country where gold and jade have traditionally signaled love. China’s love for the sparklers is high.
By Kishori Krishnan Exclusive To Diamond Investing News
China’s fascination with diamonds is growing by the hour. The sparkling stones are a new love in a country where gold and jade have traditionally signaled love.
Though the economic downturn ensured a slump in sales in Japan last year, the breed of diamond lovers has only grown in China. What has also aided sentiment is China’s boisterous economic growth in 2009, which reached 8.7 per cent.
Fueled by the growing popularity among young couples of diamond wedding rings, Chinese imports of polished diamonds rose 12.7 per cent over the first six months of 2009 to a record $300 million, according to the state-run Xinhua news agency.
By the end of the year, China had overtaken Japan as the world’s second-largest consumer of the precious stone, with trade on the Shanghai diamond exchange rising 16.4 per cent to more than $1.5 billion.
Japan’s polished diamond imports for the January through November 2009 period fell 21 per cent to $575.3 million, according to the country’s Finance Ministry.
“There is a certain fascination with diamonds in China,” adds Philip Claes of the World Diamond Center in Antwerp, Belgium, the world’s largest diamond polishing hub. “Now [that] they have the means to buy them, they are very eager.
China is becoming more and more important because of new consumers, middle-class, and rich people who can afford diamonds and other luxury items.
The United States is still numero uno. Both China and Japan currently account for about 13 per cent each of the world diamond market, still well behind the US, where half of all polished diamonds are sold.
Net polished imports in the US – imports less exports, representing the value left for the consumer market – dropped 45 per cent to $2.5 billion from January through November 2009.
The wedding industry in the world’s most populous country is worth about $82.5 billion a year, which amounts to 2.5 per cent of GDP, according to Reuters.
An account of how the wedding craze is boosting business is the statement of one family-owned jewelry shop in Beijing, that used to make the occasional bespoke diamond piece, but now sells hundreds of rings a month to meet demand.
Each year in China about 10 million couples tie the knot, and the figure is expected to reach 11.82 million this year, according to the People’s Daily, a state-run newspaper.
And what will that do for the diamond industry?
The answer to that lies in the fact that the largest diamond marketplace in Beijing, the Make Lumer Shopping Plaza, started operation during the New Year’s Day holiday, the China Daily reported.
Located in Solana in the M&L Plaza, the marketplace offers 20 times as many diamond categories as traditional diamond shopping centers as well as buyback services for diamonds.
Sandro Sze, director of manufacturing division at Brilliant Trading Company (1974) Ltd in Hong Kong is optimistic that 2010 will be a better year for China’s diamond industry and the global diamond industry at large.
Presenting a rosy outlook for the diamond cutting and processing sector in mainland China, the official believes the diamond factories in Hunan Province, which have a higher operational flexibility due to their small-scale production, will flourish further.
“These diamond factories, which have just dozens of workers who specialise in polishing diamonds from 30 points to 1 carat, are now developing rapidly in mainland China,” he has observed.
Chinese consumers are also expected to spend more in the coming 12 months, the latest MasterCard Insights report on household spending survey has revealed.
Followed by expected increases in income (51 per cent), an optimistic economic outlook (39 per cent) and households having paid off their housing loans (35 per cent), consumers will willingly shell out more.
And hell-bent on providing the favored gems to their customers, a senior delegation from Panyu, China has also visited the Israeli Diamond industry at the fag end of 2009.
Panyu houses over 400 jewelry manufacturers and employs 80,000 skilled workers. The jewelry and diamond hub’s exports are valued at $1.4 billion annually.
There is an update on the diamond trade tensions between India and China which came out into the open following the arrest of 21 Indian diamond merchants in Shenzhen, on suspicion of diamond smuggling.
Vasant Mehta, the chairman of India’s Gems & Jewellery Export Promotion Council (GJEPC) has denied reports suggesting that the GJEPC may pull its business out of China.
What could have helped ease tensions between the neighbors? The dragon appears to have set sights upon capturing the Indian markets for jewellery and diamond processing.
Currently, India is the reigning leader in global diamond polishing and export business, with an estimated global market share of around 90 per cent.
And though the GJEPC might insist otherwise, the fact of the matter is that China cannot do without the explicit help of the Indian market.
Eager to show off its prowess, India’s largest iron ore miner NMDC and top diamond producer De Beers have announced that they have found traces of diamond deposits in Orissa, Andhra Pradesh and Karnataka.
Both companies are also currently conducting gold surveys in these states.
According to a report in The Hindu, the two diamond companies’ explorations in the three states resulted in the discovery of 41 kiberlites and 13 lamproite pipes, which hint to the existence of possible diamond deposits underneath.
Kimberlite and lamproite are solidified volcanic magma and work as elevators to bring diamonds with other minerals to the earth’s surface.
Despite slow times last year, the exploration industry seems to be bouncing back to an extremely busy level. The current high price of gold has created a modern day “gold rush,” resulting in many surface diamond drilling projects getting underway.
Bradley Bros Limited, a local drilling company, has been kept extremely busy. “The mineral exploration industry is experiencing a recovery from the 2008 lows and commodity prices are expected to rise in the coming year.”
Not wanting to be left out in the cold, Chinese gemologists have said a large-scale diamond mine discovered in Wafangdian district, Dalian City, Liaoning Province last year, is estimated to contain 210,000 carats of precious stones and diamonds of higher quality than those found in South Africa.
The world’s total diamond output is about 100 million carats every year, and China produces 200,000 carats, among which Wafangdian stands at 50 per cent, said Xiong Xianzheng, chairman of the Dalian Jewelry Association.
Experts say 70 per cent of the diamonds in Wafangdian District are of a higher quality than precious stones, while those of Australia, the world’s largest diamond producer in terms of volume, only 5 per cent reaches the standard of precious stones.
Could the Asian country be eager to take on another competitor in its bid to reach the numero uno spot?