RAPAPORT... Three months after the successful participation by the Antwerp diamond industry in the Belgian-European Union (EU) Pavilion at the Shanghai World Expo, is it possible to assess the importance of China for Antwerp and Belgium’s position in China’s growing diamond market?
In a press release dated November 2010, the expo organizers said that during the six-month expo, six million people visited the Diamond Exhibition Corner of the Belgian-EU Pavilion. More than 800 HRD-certified loose diamonds and 1,100 International Gemological Institute (IGI)–certified jewelry pieces were sold. The most expensive diamond sold for approximately $90,000. On October 31, the last day of the show, 84 loose diamonds were sold, a record for the most diamonds sold at the expo in a single day. Visitors waited in line for more than an hour to purchase Antwerp diamonds.
Categories Opening
“The market is now completely open compared to what used to be before, when the Chinese orders were very specific, ranging from VS up and H to I or D to F,” said Stephane Fischler of Fischler Diamonds. “The whole range of diamonds can now find buyers. Over the many years of our presence in Hong Kong, our office has seen its sales increase, on average, by 10 percent to 15 percent a year — and that is a very conservative estimate. Antwerp was confident about the potential of the Chinese market before most other diamond centers, and we made the right decision to get involved there at an early stage.
“Furthermore, China is more open for doing business if you compare it to India, for example, because the Indian companies have a natural and inevitable advantage when it comes to operating in their country of origin,” continued Fischler. “It would be fair to say, I think, that in India, the non-Indian companies are present mostly during the major shows whereas, in China, our presence is on a more permanent basis. Antwerp-based companies have developed strong relationships with the local jewelers and importers in China and we are considered reliable. In fact, China and Hong Kong have become the market with the greatest potential for Antwerp. Even if the country accounts for only about 10 percent to 15 percent of world diamond consumption right now, I think it represents one-quarter or more of the turnover for many Antwerp-based diamond companies.”
Proper Marketing
Alon Garty of Windiam Hong Kong is similarly convinced of China’s potential. “We trust that the future is in Asia, so we opened our Hong Kong office right before the economic crisis, in May 2008,” he said. “Since then, our growth in sales there has been more than 100 percent a year.”
But Garty isn’t as convinced as Fischler that Antwerp has a definite competitive advantage in China. “As far as I’m concerned, I see many more Israeli and Indian companies in Hong Kong than Antwerp-based companies,” he said. “Also, the Israeli companies have the advantage of the different services of the Israel Diamond Institute (IDI). I didn’t feel any real changes in the way the Belgian diamond companies are perceived since the World Expo and the Belgian-EU Pavilion. It is true, however, that Chinese customers now buy a much wider range of goods than they did even a couple of years ago. But I believe that’s a normal evolution of a developing market that happens when customers learn more about what’s available from companies marketing to them.”
Roland Lorié, chief executive officer (CEO) of IGI, said, “It’s clear to us that the World Expo was a tool that helped enhance the awareness of the people in the city of Shanghai at least to the importance of the city of Antwerp on the diamond map.
“Chinese people are very eager to learn, which is why Shanghai is becoming the ‘Boston’ of China,” Lorié said, referring to Boston’s reputation abroad as a learning center because of the many colleges located there. “The Chinese won’t come to a shop and ask, as most Western customers do, ‘How much is a 1-carat diamond?’ Instead, they ask, ‘How much is a VVS1, E, Triple Excellent, with IGI or another reputable certificate?’ They know they know little about diamonds, so they want to be informed and trained. This is why IGI decided — and it’s a decision that dates back to well before the World Expo — to open a school in Shanghai. Today, we educate the people selling in jewelry shops, in retail chains and via internet shops. In China, internet sites are primarily windows to access brick-and-mortar shops. Indeed, 90 percent of the time, the Chinese still want to deal face-to-face at the real moment of buying.”
It is difficult to determine how much prestige the phrase “Antwerp-based” — or any city for that matter — carries in a market that is increasingly global. But, whether because of Antwerp’s presence at the Shanghai World Expo or because of aggressive marketing by Antwerp-based companies to the Chinese market, it appears that Antwerp has established itself in China as one of the major diamond centers and that it is well represented in the country.
The Marketplace
Polished:
• Generally speaking, there’s a lack of polished on the market. The shortages are due to high rough prices and shrinking margins, as well as shrinking manpower in India, resulting in fewer goods being manufactured.
• Especially in SI goods from 20-pointers to 90-pointers, demand is very strong and there are real shortages. Since the end of 2010, prices reportedly have risen by an average of 10 percent.
• In general, shortages exist in 4-grainers up and prices have risen by 2 percent to 7 percent or 8 percent since the end of 2010.
Rough:
• Demand is very strong for small goods and prices remain strong. The Diamond Trading Company (DTC) increase was lower than expected. Margins for manufacturers continue to be challenged.
Article from the Rapaport Magazine - February 2011. To subscribe click here.