Despite the fact that they are competitors, India has played
an important role in the development of China’s diamond market and industry. In
the past few years, as international sourcing has become more important, many
Chinese have gone on buying trips to Mumbai and Surat, or have visited the
India International Jewellery Show (IIJS). The more experienced Chinese buyers
go to India on a regular basis to source polished diamonds firsthand.
As the frequency of Indian purchases increases, some Chinese
buyers work with Indian purchasing agents who have an advantage in
communicating with local traders, while other dealers send their own buyers to
India to source goods. Polished diamonds, cut by Indian manufacturers,
typically in sizes from melees to 1 carat, are sold to Chinese buyers through
different channels by Indian, Belgian, Hong Kong and even Israeli diamond
traders.
In the past two years, more Indian companies also set up
branch companies in Hong Kong, a gateway to Mainland China. From thousands of
miles away, Indian companies communicate via telephones, emails, Skype and even
QQ, a popular online chat program in China. Currently, a considerable number of
the Indian traders in the Shanghai Diamond Exchange (SDE) speak Chinese, some
of them fluently. India-based traders have been active in SDE since its very
beginning and have the strongest national presence in the exchange of any
foreign country.
COOPERATIVE AND COMPETITIVE
Cooperation, friction and competition have accompanied the
growth of both China and India. The fact is that the diamond industry in each
country would not have reached its current level without the contribution of
the other country. The combined population of China and India — approximately
one-third of the global population — provides low-cost labor for both
countries’ domestic manufacturing operations in a variety of industries, as
well as a large and formidable new consumer base for the emerging middle class.
With more than two million people employed in the gem and
jewelry industry in India, and 14 out of 15 of the world’s diamonds processed
there, India ranks as the largest diamond-polishing country. At the same time,
China has grown to be the second-largest diamond-consuming market after the
U.S. and the second-largest diamond-polishing country. Despite that number-two
position, however, China has far fewer diamond industry employees and far less
production volume than India.
As the two neighboring countries develop further, they will
be competing for polishing jobs as well as rough diamond supplies. Inevitably,
there will be arguments and frictions, but mutual understanding and cooperation
will be necessary for the continued growth of both countries’ diamond
industries. “China and India — the two Eastern giants — are now a formidable
force to reckon with. When the Gem and Jewellery Export Promotion Council
(GJEPC) looks toward the future, we expect to see the two giants taking center
stage globally in gems and jewelry,” said Rajiv Jain, GJEPC’s chairman.
CAUTIOUS AND CONSERVATIVE
The weather in most parts of China has been very hot, but
the wholesale market has been cool in June and July, with very conservative and
cautious buying activity. The Hong Kong show in June was “disappointing” for
lots of diamond exhibitors, who rarely use such a word. They wondered where the
Chinese buyers were at the show. For their part, Chinese buyers said they did
visit the show but left early because they were hesitant about buying.
Retailers said they only sourced what they absolutely needed and resisted
stocking up, even though the asking prices in Hong Kong reportedly were low.
The uncertainty of the global economy, the decline in the exporting and
manufacturing sector in China and the cooling-down of economic growth
domestically, as well as worldwide, have cast a shadow over consumers. “What is
happening in the retail market makes me worry and it is difficult to predict
the second half of this year,” said a Chinese retailer who preferred to remain
anonymous.
NEW COLORED STONE CENTER
A recent phenomenon in China is that more and more jewelers
are beginning to deal in colored gemstones, largely in reaction to the
competition and price pressures in the diamond sector. Colored gemstones, which
have been winning more acceptance in China, offer more diversity and often a
much higher profit margin than diamonds. In response, the International Colored
Gemstone Association (ICA) has signed a letter of intent with the government of
Hunan Province to establish a national manufacturing and training center for
colored gemstones and jewelry in Changsha, the capital city of the province.
The center plans to promote colored gemstones, jewelry and minerals throughout
China.
“This is an extremely significant breakthrough for the ICA
and the colored gemstone and jewelry industry,” said Wilson Yuen, ICA
president. ICA’s Annual Congress in 2013 will also be held in Hunan Province.
The Marketplace
- Diamond retail sales significantly cooled in July, and
wholesale trading slowed, with retailers showing great caution in buying
inventory.
- There is continued demand for round, .30-carat to
1.10-carat, D-H, VS-SI, Gemological Institute of America (GIA)-certified
diamonds in triple EX and double EX cut grade, with none to faint fluorescence.
But the demand is much more conservative compared to 2011 and many diamond
wholesalers said business in recent months has been quite difficult.
Article from the Rapaport Magazine - August 2012. To subscribe click here.