Courting Chinese VIPs, Auction Houses Tap Formula 1 To Flog Diamonds

“You Cannot Invite A Mainland Chinese Client To Come Look At Diamonds Without A Draw”

This 50.52-carat diamond went on display in Singapore during the Formula 1 races this weekend (Image: Sotheby's Diamonds)

This 50.52-carat diamond went on display in Singapore during the Formula 1 races this weekend (Image: Sotheby’s Diamonds)

Since its introduction to mainland China in 2002, Formula 1 (F1) racing has seen its Chinese fanbase and viewership swell from around 10 million to close to 90 million. With an industry that lends itself to partnerships with the luxury industry, it’s no surprise that F1 racing has become a magnet for high-end partnerships in China, and as the profile of F1 has risen in recent years, we’ve seen Swiss watchmakers in particular sign endorsement deals with Chinese racers and sponsor an ever-increasing number of cross-promotional events. Recently, though, F1 looks to be attracting not only the watchmakers and producers of high-end leathergoods, it’s becoming a target for auction houses eager to sell some of their best diamonds to key clienteles.

As the Wall Street Journal reported this weekend, at the Singapore Formula 1 Grand Prix — “where the region’s high rollers come to let their hair down” — Sotheby’s Diamonds organized a private exhibition of its best and brightest, including a nearly 66-carat stone, aimed at the wealthy Asians (or, more specifically, Chinese) who are becoming some of the most voracious diamond buyers in the world.

From the WSJ:

Sotheby’s Diamonds, a partnership between the auction house and the Steinmetz Diamond Group, has organized smaller local exhibitions, but events of this scale have only been held in New York and Monaco, said Patti Wong, chairman of Sotheby’s Diamonds.

Citing insurance concerns, Mrs. Wong wouldn’t disclose how many diamonds were brought to Singapore, nor their value. But the highest listed price among the diamonds on display at the Fullerton Bay Hotel on Friday — not all the gems went on display at the same time — was $2.3 million.

Mrs. Wong cited the Grand Prix for the event’s size. “You cannot invite a mainland Chinese client to come look at diamonds without a draw,” she said.

Monaco, which some regard as the most glamorous F1 locale, was too far away for her Asian clients, she said. “Everybody said yes when they were invited to Singapore.”

Although diamonds are still relatively new to the mainland China market — compared to gold and jade, which have appealed to jewelry buyers there for centuries — it’s clear why auction houses are keen to tap growing demand among the nation’s elite, going so far as to fly them out to Singapore to gawk at a exhibition cases. According to the Shanghai Diamond Exchange, imports of polished diamonds in mainland China rose 75.2 percent year-over-year in the first 10 months of 2010, exceeding the US$2 billion threshold for the first time. Major diamond retailers like Harry Winston, Van Cleef & Arpels, Tiffany & Co. and others have geared up for massive expansion in mainland China over the past two years, as diamond engagement rings have become a “must” for young couples, luxury consumption has surged, and wealthy urbanites have started to see the precious stones as good “portable investments.”

Having surpassed Japan in 2009 to become the world’s second-largest diamond market, recently Bruce Cleaver, CCO of De Beers, estimated that demand from China, along with the Middle East and India, will collectively account for 40 percent of global diamond consumption, eclipsing long-time leader the United States.

 

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