A historic new working agreement between the Industrial
Commercial Bank of China (ICBC) and the Antwerp World Diamond Centre (AWDC)
provides the Antwerp diamond industry with a powerful new source of financing
and represents a huge step forward in Antwerp’s efforts to market its diamonds
in China. As the only partnership ever negotiated between China’s largest bank
and a diamond center, the agreement gives Antwerp an undeniable advantage over
other world diamond centers in tapping into the promising potential of the
robust but relatively undeveloped Chinese market.
Under the terms of the agreement, signed October 24 in the
Great Hall of the People, in Beijing, “ICBC will provide AWDC with professional
first-class financial services. Through its global network and advanced IT
system, ICBC will provide various services to the Antwerp diamond companies, such as trade and product financing, global cash
management, bank card acceptance, Chinese yuan–based international settlement,
capital transaction and investment banking,” according to a joint press
release. One section of the agreement reportedly specifies that small, medium
and large Antwerp-based diamond companies will be offered equal opportunities
to access ICBC services.
For its part, the AWDC will provide ICBC with entry to the
world of diamond financing, especially in Belgium, which has until now been
completely dominated by the Antwerp Diamond Bank (ADB) and ABN AMRO. It is
understood that the Antwerp diamond industry will advise, assist and support
ICBC in establishing its Antwerp operations. As an indication of the importance
of the agreement to Belgium, the country’s Prince Philippe and Princess
Mathilde were among the high-ranking government and industry representatives
from both China and Belgium who attended the signing.
A Personal Accomplishment
The signing also is considered a great personal
accomplishment for Ari Epstein, who has made finding new sources of financing
for the Antwerp diamond industry a primary goal since he took over as chief
executive officer (CEO) of AWDC in January 2011.
“This is a premier event for the diamond industry as it’s the
first time that a major diamond industry center has been able to bring in a
bank able to cope sizewise with the two existing moguls — ADB and ABN AMRO,”
says Epstein, who notes that the agreement also is an indirect result of the
painstaking process by which Antwerp has become one of the world’s most transparent
diamond centers.
“It is understood that ICBC intends to be here for the long
term and to play a decisive role in terms of business financing for the diamond
industry,” continues Epstein. “Furthermore, it’s important to realize that with
its 270 million clients, ICBC represents a wonderful opportunity for the
Antwerp diamond industry to develop itself in China, a market that has great
potential, especially since it is not yet at all a mature market. In terms of
its diamond industry, everything still has to be built in China, because the
market size is still in its infancy stage.”
On the Road
Immediately following the signing ceremony, a group of
Antwerp diamond industry representatives began a so-called “road show” through
China. Beijing was actually the first stop in a ten-day, five-city itinerary
designed by AWDC, ICBC and China National Arts and Crafts, a state-run
enterprise charged with promoting arts and crafts in the country, including
jewelry. Representatives of 15 Antwerp-based diamond companies visited Beijing,
Taiyuan, Jinan, Hangzhou and Guangzhou to showcase and, in some instances, sell
from the inventory of $200 million worth of high-quality polished diamonds they
had brought along for the trip. In addition to focusing media attention on
Antwerp diamonds, the purpose of the trip was for the Antwerp diamond industry
to be put directly in touch with a select group of private investors from among
ICBC clients who might be looking for diamonds as an investment.
The 15 companies were selected by lottery, with five
companies each representing small, medium and large businesses. During the
first two days, assessments were quite mixed, and the participants had little
clear idea of how the trip would evolve. “We’ve brought 2 carats up, well cut stones,
which is our specialty. But the value of this trip for the money we have
invested isn’t yet clear. It depends on which ICBC clients come, and what kind
of contacts we make here for the future,” Alain Spira of A.S. Diamonds
commented early in the trip.
By the fourth day of the trip, participants were feeling much
more positive. Daniel De Belder of Diamond Trading explained, midway through
the road show: “We’re in Jinan today, and there were more sales than during
previous days. The day before yesterday, in Taiyuan, a fancy yellow $1 million
diamond was sold. On the other hand, we’re learning to understand the mentality
of the Chinese consumer, who is still not familiar or informed about the
diamond market. In terms of educating them, this experience is very positive
for us. It’s also obvious that the market has tremendous potential, given the
presence of all the major brands we have noticed in the many U.S.–style
shopping malls in all the cities we have visited.”
In his overall assessment of the road show, Epstein says that
“ICBC has done its absolute best to help us. They are in this for the very long
term, and they want us to work together and help them make Chinese consumers
more knowledgeable about diamonds. They bring VIP clients to us who sometimes
buy diamonds for huge amounts. It is clear that AWDC will bring extra knowledge
and education about diamonds to the Chinese Mainland, which will be beneficial
to all parties involved.”
Investing in Tomorrow
The signing of a historic agreement in the Great Hall of the
People, with the blessing of the Chinese government and under the auspices of
the Belgian government, was in every way an unprecedented event. The result is
new financing and new potential clients. The process of taking advantage of the
huge opportunity of a lifetime that exists in China undoubtedly will be
fine-tuned during the upcoming road shows.
Nishit Parikh, president of AWDC, concludes, “This step is
essential for us and for Belgium.” Victor van der Kwast, CEO of ABN AMRO’s
diamond division, adds that “China is now similar to where Japan was some 20
years ago. ICBC’s clients are a totally new client database. You can’t enter
the Great Hall of the People without recognizing the importance of this event.
China is the future but it also is already the present. And its market is an
opportunity no one wants to miss out on.”
Article from the Rapaport Magazine - December 2011. To subscribe click here.