There is no doubt that India, the biggest diamond
manufacturing country, and China, the second-largest diamond consumption
market, have more and more interaction and influence with each other. It is
also no surprise that many Indian diamond merchants, especially those who live
in Shanghai and work in the Shanghai Diamond Exchange (SDE), can speak some
Chinese, and use local communication tools like QQ and WeChat, which are
popular in China.
India-based companies have been coming to China since the
establishment of the Chinese market and continue to maintain the strongest
presence in the SDE. Many Indian manufacturers specialize in cutting triple EX,
Gemological Institute of America (GIA)–certified round diamonds to cater to the
Chinese market, while others produce melees for sale to the jewelry
manufacturers in China, especially Shenzhen.
On the other hand, Chinese jewelers and dealers are taking
the initiative and sending an increasing number of buyers to Mumbai and Surat
to source polished diamonds firsthand, either certified goods or parcel goods.
Most go on short buying trips or visit the India International Jewellery Shows
(IIJS), while others position themselves as long-term resident buyers.
Chinese buyers work with local Indian buying agents, too,
who are much more familiar with the market. The big Indian suppliers, such as
Gitanjali, have not only gone into diamond wholesale and manufacturing in
China, but also have set up their own retail chains.
Both China and India have played important roles in the
development of each other’s market. But cooperation, competition and even
friction have always co-existed. The two countries account for one-third of the
world population, providing valuable resources from low-cost labor to emerging
consumers consisting of the newly rich and middle class.
With a workforce of approximately two million in the gem and
jewelry industry in India, and 11 out of 12 processed diamonds globally passing
through India, the country’s position as the biggest diamond polishing country
remains strong. China, as the second-largest diamond consumption market as well
as the second-largest diamond polishing country, must necessarily access
India’s diamond supply but at the same time wishes to develop its own diamond
industry. Inevitably, the two countries will be competing for manufacturing
business and such resources as rough diamonds. In the meantime, however, they
have to rely on each other to a certain extent if both are to prosper.
According to the data released by China’s National Bureau of
Statistics (NBS), on July 15, the gross domestic product (GDP) of China in the
first half of 2013 was $4 trillion, a year-on-year increase of 7.6 percent
calculated at comparable prices. The growth in the first quarter was 7.7
percent, and 7.5 percent in the second quarter. According to Sheng Laiyun, NBS
spokesman, the slower GDP growth was designed to create conditions for economic
restructuring and rebalancing of the economy for sustainable growth in the
future. Laiyun said China is capable of keeping its growth momentum steady for
the rest of 2013, even though the overall domestic economic environment is
expected to remain grim and complicated. Although expected, current GDP rates
reflect a significant decline from growth in recent years, which occasionally
reached double digits.
There has been heated discussion in a variety of sectors
since the release of the GDP data. JPMorgan Chase downgraded China’s yearly
growth forecast to 7.4 percent from 7.6 percent, citing weak manufacturing,
investment and overseas demand. At the same time, Michael McDonough, senior
economist at Bloomberg LP, predicted that the Chinese government is signaling
unprecedented tolerance for slower growth in the second half of 2013, as the
government is shifting from fast but low-quality economic growth into a mode of
more sustainable growth.
Yu Yongding, an economist at the Chinese Academy of Social
Sciences (CASS), said, “It is not necessary to be too pessimistic; the bottom
line in the government’s two previous five-year plans was 7 percent. We should
prepare for a fairly long, difficult period as that is the cost of reform.”
Article from the Rapaport Magazine - August 2013. To subscribe click here.