Xinhua Reports 12.7% Rise In Imports In First Half Of 2009 To $300 Million As China Eyes Top Spot In Global Diamond Consumption
Good economic news in China this year has translated to good news for diamond producers, if figures released recently by China’s news agency, Xinhua, are correct. This year, following a nearly 50% decline in diamond sales in the US and 24% drop in Japan — according to China’s Global Times — China has become the world’s third largest diamond market with $300 million in sales through the first half of the year. Although this might sound like a lot, particularly in the context of the global economic slowdown, the Chinese market still has a lot of room to grow. Despite rough figures in the US over the past year, the American market still accounts for nearly half of world diamond sales, so the emerging Chinese and Indian markets will take several years of sustained growth to reach the capacity and consumer awareness of the established American and Japanese markets, a prospect that must please diamond producers immensely.
According to the Global Times, less informed middle class Chinese consumers are likely to be the easiest to reach for years to come, as diamonds are still relatively new to the Chinese market (about as new as the middle class itself). As younger Chinese buyers slowly become more informed about diamond grading and quality standards, the market is likely develop and mature:
Diamonds, once a luxury rarely owned by a Chinese family, has now become a must for Chinese newlyweds. According to [Wang Fei, researcher at the Cheungkei Research Center for Luxury Goods and Services (SITE) in the University of International Business and Economics,] the largest population of diamond buyers is newlywed couples born in the 1970s and 1980s.
They are heavily influenced by western culture, where diamonds are seen as a token for love and loyalty. The second-largest customers are couples born in the 1960s who are financially more capable of affording a diamond than they were 20 years ago. The last group to buy diamonds are those who see the investment value in diamonds, which becomes clear in the economic downturn where currencies are depreciating faster than ever.
Although a rapidly growing market, Liu of GAC points out that the current diamond market is not a mature one, saying diamond consumption in China is still for sensational reasons. A true mature diamond market should be one driven by the diamond’s investment values, Liu said.
The maturation of high-end markets in China really is shaping up to be one of the big potential stories of the next 10-15 years, as articles about everything from diamonds to automobiles indicates. It seems that the key factor in the development of China’s luxury market is the dual growth of consumer education and home-grown luxury companies. As Chinese consumers become more familiar with diamond standards and Chinese companies increasingly gain market share by appealing to the cultural design aspects most coveted by the domestic audience, we should see not only more diamond purchases in China, but also more diamond appreciation — on par with, or possibly exceeding, the appreciation of traditional stones like jade.
No matter what the Chinese middle class ends up buying, high-end consumers still remain some of China’s most devoted diamond fans — a distinction that apparently extends all the way to the top brass in business and politics. From the Christian Science Monitor:
Young married couples are not the only Chinese to show an interest in diamonds. Last week Xi Jinping, China’s vice president and expected successor to President Hu Jintao, visited the World Diamond Center. He walked away with gifts of a two-carat diamond laser-engraved with the Chinese flag and a Chinese flag pin made of 60 rubies and five diamonds.
High-end jewelers are also expected to seek to expand in China as traditional markets elsewhere flag as a result of the economic slowdown. Cartier, a French jeweler and watchmaker, expects that China will become its biggest market within three or four years, CEO Bernard Formas said last month. The firm plans to double the number of its outlets by 2014, according to Mr. Formas.