Rapaport Magazine

Antwerp

By Marc Goldstein
SHANGHAI BOUND BY DIAMONDS

The Antwerp World Diamond Centre (AWDC) hosted a country pavilion at the Shanghai Jewelry show from May 9 to 13 that was attended by 12 Antwerp-based diamond companies. It was Antwerp’s first appearance at the show and attendees said the reason the city never participated before is because the Shanghai market is considered a relatively difficult one. Sales taxes are high in Mainland China so Chinese buyers prefer to do their luxury goods shopping — and buying — in Hong Kong because of the tax advantages. However, this may be changing.

Diplomatic Perspective
   Lin Qiang, president of the Shanghai Diamond Exchange (SDE), told the Antwerp visitors that “diamonds not only bind AWDC and SDE together, but also bind Antwerp and Shanghai — two beautiful cities — together. As the diamond capital of the world, Antwerp has been admired for its remarkable diamond history, culture and technology, and thanks to AWDC, we get a real sense of its charm and beauty through the videos and graphics displayed at this exhibit.”
   Ludo Van Campenhout, Antwerp’s deputy vice mayor in charge of diamonds, agreed, noting that “For decades, there’s been a tradition of friendship between our two cities, and diamonds crystallize it further. Starting with our mayor, Bart De Wever, Antwerp’s government is fully aware of the importance of the diamond sector.”
   “We’ve come to Shanghai for various reasons,” said Stéphane Fischler, president of AWDC. “The Shanghai fair is important and we want to reinforce our presence here. Furthermore, it’s essential to strengthen our relationship with SDE and the local Chinese industry on a personal level. Last, but not least, we need to measure the market temperature and identify the new opportunities that exist for Antwerp in this market.”
   Ari Epstein, chief executive officer (CEO) of AWDC, concluded, “It’s essential that AWDC creates added value for Antwerp. China’s growth rate is 7 percent to 8 percent. It’s the natural outlet for Antwerp. We think that the Shanghai show will attract more and more buyers and our expectations are that the domestic market in Mainland China is becoming big enough that Shanghai, as the Mainland’s major outlet, will begin to become profitable.”

Market Size
   Caroline Yuan, SDE director, elaborated. “Our market is growing and evolving rapidly. If a few major Chinese cities are already in the hands of the big players, there are many other cities that may need a diamond supply. If you remove those huge cities, there remain about 600 other cities. This is where we see room for the small- and medium-size diamond companies.”
   Cathy Buggenhout, General Consul of Belgium in China, added “We are very supportive of the diamond industry here in China. The reason is obvious. Diamonds represent 10 percent of the total exports from Belgium to Mainland China and 54 percent of Belgium’s total exports to Hong Kong. Diamonds are our flagship product and our goal while promoting diamonds is that it will encourage other Belgian exports. Today, China represents a middle class of 200 million people. And this figure is rising. The government plans for 300 million by 2015, which is totally realistic. Just imagine what this means in terms of size! All of these people will want a house, a car — and diamonds. We’re looking at a population equivalent to Europe’s, but with the purchasing power of an even wealthier population.”

B2B Versus B2C
   The Belgian exhibitors in Shanghai had different expectations, depending, among other things, on the size of their operations. Nicolas Barsamian of Barsamian Diamonds explained, “We’re already in a partnership in Hong Kong, and we’re interested in figuring out whether it would be possible and reasonable to set up a branch in Mainland China. For the time being, our idea is to focus on our presence at fairs and see where we should go from there. Whatever the vehicle, what we’re looking for is manufacturers with jewelry chains. This is the direction in which our model would be most profitable.”
   At the same time, Alpesh Gabani from Dharm Diam, a DTC sightholder, insisted “It’s our first time in Shanghai in years. We see a huge potential here. We’re already selling to Chinese companies, but through our Hong Kong office. Since we have no office here, the pavilion organized by AWDC was an opportunity we didn’t want to miss to see the market from the inside at a reasonable cost. This is helping us a great deal in our decision-making process on whether or not it would be profitable for us to open our own office in Shanghai. From the meetings we’ve had during these three days, we got the strong feeling there’s room to do something.”

Article from the Rapaport Magazine - June 2013. To subscribe click here.

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