|
|
Profile: Michael Huang
Mar 23, 2014 4:29 AM
By Rapaport News
|
|
|
RAPAPORT... Diamond Index Group is a high end supplier of diamonds and diamond jewelry in China.
 Name: Michael Huang
From: Hong Kong & Shanghai
Company: Diamond Index Group – Managing Director
Rapaport News: What prompted you to pursue a career in the diamond industry?
MH: My family started the business in the late eighties and I was invited to join after completing my education in Europe. Growing up, I didn't envision myself in the family business, but after returning from Europe about eight years ago I saw something changing in the market – we saw good potential in China.
It occurred to me that although the Chinese market was still young and just opening up to diamonds, we do have a history in the industry. I realized that people attach value to diamonds, so there is great potential in the market.
Rapaport News: Do you have a philosophy that guides you in your work?
MH: We put 100 percent passion and effort into our work because we believe that we are giving the best to the best. In China, if you are buying diamonds, you have to be doing quite well in your field. So, given that we only focus on the high-end Chinese market, all of our clients and distributors or retailers are selling to the highest earners.
Rapaport News: What has been the most notable change in the diamond jewelry industry over the course of your career?
MH: Asia is coming up in importance. During the eighties in Hong Kong, the jewelry business was focused on exporting to the U.S. and Europe, and then the local Hong Kong market started catching up, then Japan and Taiwan, and now Mainland China.
Mainland China is not a mature market yet, but more people are beginning to understand what diamonds are. Ten years ago, diamonds were just an idea and relatively few people would find it important to buy a diamond engagement ring, but now they have been more widely accepted. In addition, more wealthy people in China now understand that diamonds are a good way to store wealth.
Rapaport News: What has influenced the growth of the idea of giving a diamond engagement ring in China?
MH: Chinese people have a strong sense of family, so marriage is important to them. Given that background, and with the marketing efforts of De Beers and the influence of U.S. culture, more people are now buying diamonds. Not everyone can afford it, but everybody understands that when they get married, they need a diamond ring.
Rapaport News: What do you consider to be the biggest challenge facing the industry today?
MH: I think that synthetic diamonds and diamond treatments are severely harming the market and consumer confidence in diamonds. I don't think synthetic diamonds are ethical because they take advantage of the hard-working people who have been working to build up the industry’s reputation and create trust in diamonds for hundreds of years, for short-term profits only. Synthetic or treated diamonds only make money because they take advantage of the existing natural diamond market share. People don't understand what they're buying.
The result will be that, at first, a few people will get cheated. They’ll buy synthetic diamonds and subsequently find out that this is not what they thought they were buying. Then more people will get caught and in the end it will break people’s belief in diamonds.
I feel that the diamond laboratories should ban any kind of certification of synthetic diamonds because in my view a synthetic diamond is not a gem, it's an industrial product. A gem is natural, taken from the earth, then polished, cut and presented to human beings. Certifying synthetic diamonds just gives them credibility.
Rapaport News: Wouldn't a certificate increase awareness and give confidence that consumers know that it is a synthetic diamond that they're buying?
MH: I don't believe so. I think if people are buying natural diamonds, the certificate only gives more confidence to what it represents. Every diamond is different, and that's the reason why we have a third party to tell us how good a diamond is. But if it's man-made, why do you need a certificate?
If you show people a GIA certificate, they automatically believe it is referring to a real, natural diamond. They’re not aware of synthetic diamonds, so providing a certificate from the same institute is only going to confuse them. And that's the tricky way that synthetic diamond manufacturers use certificates to confuse the market and take advantage of diamonds.
The second challenge we face is that there is sometimes too much polished production coming to the market. We know rough prices have increased by a lot so we should be slowing down on production in order to allow polished prices to rise. Currently, there is too much polished production. We should produce according to demand and not because rough prices are rising.
Rapaport News: How has the Chinese market evolved regarding the types of diamonds that are in demand and how the trade and consumers are buying diamonds?
MH: In the past five years we’ve seen that dossiers, or diamonds from 30 points to 70 points, make up the majority of demand in China, but it's diversifying. More people in the high end are buying larger goods over 5 carats. In 1999, a 2-carat stone was considered a big size, but now they’re much more common.
In the very early stage of the Chinese market, people wouldn't consider jewelry made from small diamonds like melee to be diamond jewelry. They'd only regard diamond jewelry as pieces that have a single larger stone. Now, more people want diamond jewelry for daily use, so demand for products with smaller stones are in greater demand.
Consumers are buying a more diverse range of diamonds today, which is a sure sign that the market is maturing, and I think the trend will continue.
Rapaport News: What about the way in which diamonds are being traded? Is the Chinese market dealing more on memo or consignment, or is it more of a cash-on-delivery industry?
MH: Cash business still plays a very important role in our market because of the lack of credit inspection, as China is still not as mature as the west in terms of due diligence. There has been more memo business done in the past five years, but it depends on what kind of client you’re dealing with. For a business like ours, if we're selling big diamonds it's impossible for us to do every deal in cash. Memo transactions are more common for small diamonds or dossiers. The large companies can generally get terms from their supplier, but it doesn't necessarily mean that the supplier is fully insured.
Rapaport News: What's the most important thing to know about the market in China and what differentiates China from other markets?
MH: You have to find your role and added value in China because it's a completely different diamond market. The cultural background is different and the way people buy diamonds is different. Our market structure is different – we don't have hundreds of thousands of small jewelers selling expensive diamonds; we only have foreign brands and a few local brands.
We don't have many independent jewelers like in the U.S. You might be able to find one or two in a first-tier city but not in the rest of the country. Most of the independent jewelers are dealing with small inventory. So you either need to understand the market very well, or you need to find a trustful, local partner to explain the market, someone you can give memo to, who can give 30 day terms and collect cash, things like that.
Rapaport News: How are the government’s economic reforms affecting the diamond market in China?
MH: The government is trying to make the economic structure healthier and more sustainable for development for the next 30 years. It will eliminate a lot of demand in the short term and affect the sales of luxury products, but that demand was unsustainable from the very beginning.
I see this as an opportunity to correct the unsustainable development that we’ve had until now. The government is taking reform measures to build up a more sustainable economy and market structure.
I'm still confident in the market. In China, the society is growing and the structure needed to be corrected in many ways, so what the current administration is doing is good in the long run.
Rapaport News: What differentiates you from other companies?
MH: We see ourselves as an international diamond company with a solid understanding of the local market and strong international resources. We focus on the high end of the Chinese market. What differentiates us is our people. We supply and deal with one of the most beautiful things we can get from nature and work hard to make it presentable to people. So our team of people is very important. The only reason why we could be more successful than others is because we have better people.
Rapaport News: What role does innovation and technology play in your business?
MH: We have an internal network to manage our stock system and an advanced system to evaluate our retailers, customers and direct clients. We don’t have a presence online because we don't want to grow ourselves like companies like Blue Nile because we don't envision ourselves as that kind of company. It’s not our market.
We use new technology to improve the efficiency of our internal operating systems and to evaluate any individual or company that we're dealing with. I think a quick response to trends in the market is also a kind of innovation that is very important to us.
Rapaport News: What advice would you give to someone starting out in the diamond industry in China?
MH: This is a business which might look like a good and elegant business, but it is tough and getting tougher every day. But if you really think you're good enough to add value to the business, then you have a chance to succeed.
Rapaport News: Where do you see your business in 10 years for now? What's the long-term strategy?
MH: We hope to grow with the Chinese market and serve the best clients in China. I believe that with the development of the Chinese market, there is opportunity for the emergence of new important players, we see ourselves as the Chinese Harry Winston 10 years from now.
|
|
|
|
|
|
|
|
|
|
Tags:
Rapaport News
|
|
|
|
|
|
|
|
|
|
|
|
|