Find your diamond
Find your jewelry
shape
carat
color
clarity

China on the Rise - New Article

Jim Summa

Shiny_Rock
Trade
Joined
Sep 9, 2009
Messages
176
John
Will the "experience store" show stones from only one diamond list?
Good story, I enjoyed it.
 

John Pollard

Ideal_Rock
Trade
Joined
May 1, 2008
Messages
3,540
Thank you Jim. I can't overstate the impression that was made on me. The business is thriving.

Jim Summa said:
Will the "experience store" show stones from only one diamond list?
Yes. The online-stores post their own inventory-lists, and possibly goods they have immediate access-to. Consumers browse the inventory, narrow selections to several diamonds and make an appointment to see those goods in one of the dealer's "experience stores" which might be placed in a few major cities. It may help to know that grading reports are currently the only assessments posted online there and, as we know from experience, a grading report/seller's label by itself does not typically inspire enough confidence in most consumers to make an unseen purchase.
 

Jim Summa

Shiny_Rock
Trade
Joined
Sep 9, 2009
Messages
176
John,
I recall when Japan began embracing diamonds that it had a profound effect on the US market, specifically rarer or "higher" color and clarity and the insistence of Ideal cutting.
Any predictions on the effects China could have on certain types/shapes etc?
 

AprilBaby

Super_Ideal_Rock
Premium
Joined
Jul 17, 2008
Messages
10,432
VERY interesting! Why are they now buying into the idea of engagement rings?
 

John Pollard

Ideal_Rock
Trade
Joined
May 1, 2008
Messages
3,540
Jim Summa said:
John,
I recall when Japan began embracing diamonds that it had a profound effect on the US market, specifically rarer or "higher" color and clarity and the insistence of Ideal cutting. Any predictions on the effects China could have on certain types/shapes etc?
Yes. See the response to AprilBaby's question, below.

AprilBaby said:
VERY interesting! Why are they now buying into the idea of engagement rings?
It has come with China's growing openness to western influence. Their diamond-engagement tradition is still young, with the most explosive growth happening over the last decade. As a result, both trade and consumers in China have not really known a time where cut quality was not an included-part of the "C" equation for engagement rings. When visiting stores in Beijing, Shanghai and HK I found the positioning of cut quality both obvious and interesting. For better or worse the "H&A" term is used like "ideal" in the states to imply cut quality (and definitions vary). Prominent chains have entire counter-displays full of "triple EX" and/or generic "H&A" diamonds. Some also feature a higher-end branded H&A line cut to more exacting parameters. With cut pedigree in China positioned this way, even among secondary options, the demand on factories (domestic and foreign) to supply them with "Triple EX" or "H&A" has become significant.

As wealth continues to shift to China and India the number of diamond consumers in those countries will increase. There are 20-30 million new luxury consumers in India alone. This shift in wealth was clearly evidenced by attendees at the 2010 JCK show coming from China and India to buy - not supply.
 

Cehrabehra

Super_Ideal_Rock
Joined
Jun 29, 2006
Messages
11,071
I'm horribly jetlagged at the moment, but a few quick comments - one, I'm not surprised at all that there is a reluctance to purchase online still, most people aren't even on the internet yet and thus don't have access (but this number is rising wildly, especially amongst the young-soon-to-be-married set) not to mention the cost of these stones is still very high relative to the *average* income here. Most people where I live earn about 5k yuan/yr and need to save outrageous amounts for homes etc. but there is a strata that has more money, especially if there is a generation of two of more successful early entrepreneurs (especially landlords or merchants). And it's true that the upper echelons show an even greater ratio than what we have in the states (though how they make THAT much money, I have no idea... me thinks trade, maybe in hong kong markets in the 60's and 70's??) Anyway, the average person WANTS a diamond now because that's what western culture has stated is "the norm" but the average person is still struggling to purchase .25carat. I know there are circles of very wealthy people, but I think where I live is pretty average overall and I am just not seeing diamonds on people. I think the market is still a bit of a niche, though I think the interest is more than a niche. My driver has a master's degree from England in IT and cannot find a job in his career choice and is making about 3500 rmb/mo and the rings I've seen in the stores that look okay are like 35k. So it's closer to 10x the monthly salary! They are way overpriced. I would love to see some of the stores you reference, I haven't seen them here. Of course being a city of only 6 million, this is a small city for china. Anyway, my head hurts from lack of sleep... I will revisit this when I can be coherent lol :) Glad you wrote this though, John! Kudos!
 

Art Nouveau

Brilliant_Rock
Joined
Dec 5, 2004
Messages
678
Thanks for the interesting article. I have a few comments just from my own observations. The middle working class in China may not be able to afford diamonds yet, but the nouveau rich are definitely into buying high end goods. Just look at the buyers at the recent Sotheby and Christie auctions in Hong Kong. The mainland rich Chinese are cleaning up at these auctions. They are buying Chinese paintings, antique chinese furniture, chinese antique collectibles, jade, diamonds and color diamonds. Imperial jade prices are at all time high. This group is also supporting the high end retail stores in Hong Kong. Used to be, sales people were required to know how to speak English. Now they are required to know how to speak mandarin. In order to avoid paying high taxes on luxury goods in the mainland, the rich ladies are coming to Hong Kong to buy name brand handbags, clothing etc. Now they are getting into jewelry. The casinos in Macau are doing better than the ones in Las Vegas. Six years ago, I suggested to a well known US jewelry designer that he should look into doing business in Macau. I got laughed at. If he had followed my suggestion, he may be laughing all the way to the bank instead of filing for chapter 11.

AN
 

Garry H (Cut Nut)

Super_Ideal_Rock
Trade
Joined
Aug 15, 2000
Messages
14,893
coatimundi said:
Art Nouveau said:
Just look at the buyers at the recent Sotheby and Christie auctions in Hong Kong.
Yep. The latest at Sotheby's HK linked below.

"Van Cleef’s $7.7 Million Pink Diamond Ring Shows Asian Demand"
http://www.bloomberg.com/news/2010-10-06/van-cleef-pink-diamond-fetches-7-7-million-as-asians-boost-record-auction.html
Last December, a 5.00-carat cushion-shaped vivid pink ring sold for US$10.78 million at Christie’s Jewels sale in Hong Kong. At $2.1 million per carat, it was the highest price per carat for any diamond. It too was bought by a private Asian buyer.
Great article Sir John
 

MakingTheGrade

Super_Ideal_Rock
Premium
Joined
Mar 2, 2009
Messages
10,902
It's definitely a growing trend, but still a young one. My cousins and I are the first generation to really have diamond engagement rings, and even then our group is split. My cousin and I both have diamonds, but we spent a lot of time raised in the Western world, whereas some of my other cousins who grew up exclusively in China just did 24k gold bands.

I go back to China very often since my family lives in Beijing, and I do notice more and more diamonds at the high end stores. That being said, my fairly modest .9ct diamond draws a lot of attention when I go shopping. A lot of shopping clerks I see will ask to see it because they've never seen a diamond over .25ct in size up close in their lives before.

I do think the younger generation is attracted to the diamond engagement ring because it would be a symbol of wealth and status, it's somewhat of a novelty, and of course, because they sparkle! I would still say the majority of the population won't be embracing this trend though since they simply don't have the income, and most either don't have "credit" or aren't comfortable with it in the same way that Westerners can be. In chinese tradition in our area, the man is actually expected to buy a house for the marriage, which doesn't leave much funds for a diamond too.
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
31,014
Cehrabehra said:
I'm horribly jetlagged at the moment, but a few quick comments - one, I'm not surprised at all that there is a reluctance to purchase online still, most people aren't even on the internet yet and thus don't have access (but this number is rising wildly, especially amongst the young-soon-to-be-married set) not to mention the cost of these stones is still very high relative to the *average* income here. Most people where I live earn about 5k yuan/yr and need to save outrageous amounts for homes etc. but there is a strata that has more money, especially if there is a generation of two of more successful early entrepreneurs (especially landlords or merchants). And it's true that the upper echelons show an even greater ratio than what we have in the states (though how they make THAT much money, I have no idea... me thinks trade, maybe in hong kong markets in the 60's and 70's??) Anyway, the average person WANTS a diamond now because that's what western culture has stated is "the norm" but the average person is still struggling to purchase .25carat. I know there are circles of very wealthy people, but I think where I live is pretty average overall and I am just not seeing diamonds on people. I think the market is still a bit of a niche, though I think the interest is more than a niche. My driver has a master's degree from England in IT and cannot find a job in his career choice and is making about 3500 rmb/mo and the rings I've seen in the stores that look okay are like 35k. So it's closer to 10x the monthly salary! They are way overpriced. I would love to see some of the stores you reference, I haven't seen them here. Of course being a city of only 6 million, this is a small city for china. Anyway, my head hurts from lack of sleep... I will revisit this when I can be coherent lol :) Glad you wrote this though, John! Kudos!
corruption money... ;)) the avg chinese citizen probably make less than $2500 RMB per month.
 

John Pollard

Ideal_Rock
Trade
Joined
May 1, 2008
Messages
3,540
In any discussion about China's potential influence in the global market the sheer number of people there becomes more significant than averages:

Cehrabehra said:
...most people aren't even on the internet yet and thus don't have access (but this number is rising wildly, especially amongst the young-soon-to-be-married set) not to mention the cost of these stones is still very high relative to the *average* income here. Most people where I live earn about 5k yuan/yr and need to save outrageous amounts for homes etc. but there is a strata that has more money, especially if there is a generation of two of more successful early entrepreneurs (especially landlords or merchants)...
Just so. In China "most people aren't even on the internet yet" (1 in 6 persons) and yet they already match the USA in number-of-users. If, in time, they bring the number to 2 in 6 persons they will have double the US population in number-of-users influencing e-commerce; in all areas not just this sector.

Similarly, a low average income isn't important to the growth of China's influence on the global market. It doesn't matter that the "average" is small. What matters is the sheer number of households considered at-or-above a luxury income level. In the USA that was 25% of households in 2005 (US Census figure). In China it's currently 3%, but you must multiply that by at least 4x for a comparison since China has over 4x the US population. Now consider that China's economic growth has huge overhead room to grow. Given how fast industry and commerce are evolving there it will not be long before the number of households influencing commerce at the "luxury" level in China (and India) exceeds the US, and possibly the West.

Regarding diamonds, and who will cause global prices to rise, the predictions are in-line with the above. Here is just one of the latest.
http://rough-polished.com/en/expertise/43630.html
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
31,014
JP...i understand what you are saying cuz you are staying in the Beverly Hill area of Shanghai.the next time when you visit Shanghai go to the getto side of town then tell me how many diamond rings you see there. if China doesn't find a way to stop "food inflation" soon 80% of the people will starve to death.
 

John Pollard

Ideal_Rock
Trade
Joined
May 1, 2008
Messages
3,540
Dancing Fire|1296015962|2833245 said:
JP...i understand what you are saying cuz you are staying in the Beverly Hill area of Shanghai.the next time when you visit Shanghai go to the getto side of town then tell me how many diamond rings you see there. if China doesn't find a way to stop "food inflation" soon 80% of the people will starve to death.
DF - Thanks for re-visiting this thread.

I was taken by my translator and some local gemology students to different areas of Shanghai as well as Beijing where I did research. Last year I visited Delhi and Surat in India, seeing numerous factories as well as Surat's public diamond district and very depressed rural areas. I do understand the economic situation. I also agree with you completely when it comes to "averages." But I don't think you're getting what I'm saying as it relates to the influence of China's growing, economically-equipped minority (not the average Chinese) on diamond demand in the West.

See if this makes sense... First of all, you're right. 80% of the people are not even equipped to buy a diamond of any sort. I expect another 15% are either not buying, or buying up to 0.30 cts as you say - if they even care about the diamond engagement tradition. That leaves 3-5% of the population (supported by China's GJTA figures) economically equipped to buy 1ct or over. That is a whopping 67,000,000 people influencing global demand. And while it's a mere 5% in China - a minority - that sheer number is equal to 22% of the USA population. When you factor-in all those people as well as the emerging buyers in India it absolutely explains the shift in demand which is influencing prices here.

What you are saying and what I am saying are not in opposition.
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
31,014
John Pollard|1296017646|2833260 said:
Dancing Fire|1296015962|2833245 said:
JP...i understand what you are saying cuz you are staying in the Beverly Hill area of Shanghai.the next time when you visit Shanghai go to the getto side of town then tell me how many diamond rings you see there. if China doesn't find a way to stop "food inflation" soon 80% of the people will starve to death.
DF - Thanks for re-visiting this thread.

I was taken by my translator and some local gemology students to different areas of Shanghai as well as Beijing where I did research. Last year I visited Delhi and Surat in India, seeing numerous factories as well as Surat's public diamond district and very depressed rural areas. I do understand the economic situation. I also agree with you completely when it comes to "averages." But I don't think you're getting what I'm saying as it relates to the influence of China's growing, economically-equipped minority (not the average Chinese) on diamond demand in the West.

See if this makes sense... First of all, you're right. 80% of the people are not even equipped to buy a diamond of any sort. I expect another 15% are either not buying, or buying up to 0.30 cts as you say - if they even care about the diamond engagement tradition. That leaves 3-5% of the population (supported by China's GJTA figures) economically equipped to buy 1ct or over. That is a whopping 67,000,000 people influencing global demand. And while it's a mere 5% in China - a minority - that sheer number is equal to 22% of the USA population. When you factor-in all those people as well as the emerging buyers in India it absolutely explains the shift in demand which is influencing prices here.

What you are saying and what I am saying are not in opposition.
yes it does and i'd agree with your post... :appl:
 

Valjean

Rough_Rock
Joined
Dec 24, 2010
Messages
60
What a great article and a fairly accurate and honest representation of China's current status and potential for the years to come. I was just in Hong Kong and Shenzhen last week and can attest to this. Although Shenzhen's glamour doesn't even compare to Shanghai's but I saw more Benz's, BMWs and Bentley's there than Hondas. I too just made my first high value purchase through WF for an ER last month. I was always skeptical but the experience was phenomenal and far better than dealing with any B&M I've dealt with.
 

John Pollard

Ideal_Rock
Trade
Joined
May 1, 2008
Messages
3,540
Valjean|1296080077|2834007 said:
What a great article and a fairly accurate and honest representation of China's current status and potential for the years to come. I was just in Hong Kong and Shenzhen last week and can attest to this. Although Shenzhen's glamour doesn't even compare to Shanghai's but I saw more Benz's, BMWs and Bentley's there than Hondas. I too just made my first high value purchase through WF for an ER last month. I was always skeptical but the experience was phenomenal and far better than dealing with any B&M I've dealt with.
Thank you Valjean (can I call you 24601?) =) During my visits I learned that the world's largest BMW and Sony factories are actually in China, but they produce product exclusively for the Chinese! There is an interesting corollary to this, however, which can be found in the third paragraph of my follow-up article:
https://www.pricescope.com/journal/china-rise-exploding-economy-fantastic-future-part-two

It explains a somewhat endemic "grass is greener" attitude experienced there which spans buying philosophy regarding many items, not just gems & jewelry.
 

Valjean

Rough_Rock
Joined
Dec 24, 2010
Messages
60
Thank you Valjean (can I call you 24601?) =) During my visits I learned that the world's largest BMW and Sony factories are actually in China, but they produce product exclusively for the Chinese! There is an interesting corollary to this, however, which can be found in the third paragraph of my follow-up article:
https://www.pricescope.com/journal/china-rise-exploding-economy-fantastic-future-part-two

It explains a somewhat endemic "grass is greener" attitude experienced there which spans buying philosophy regarding many items, not just gems & jewelry.
Yes sir you may call me 24601 :) glad to meet another fan. I read your second article and yes its very true. Being Asian myself, my parents have always had the mentality of buying abroad was deemed "better" although it was the same make and model. There was a time in the 1980s when everything made in Japan was supposed to be superior and that anything made in Taiwan was inferior and to be avoided. Talking about the demand in China, there is another thread running that pertains to the current high demand of diamonds this month and its high prices, and that China is buying up most of the supply. I saw your posts on there and thought I might share that link to the readers on this thread.

[URL='https://www.pricescope.com/community/threads/diamond-prices-increased-by-3-000-in-one-month.155549/']https://www.pricescope.com/community/threads/diamond-prices-increased-by-3-000-in-one-month.155549/[/URL]

I really hoped I went for a bigger rock for my fiance when I purchased the ring in December. ;-)
 
Be a part of the community It's free, join today!

Need Something Special?

Get a quote from multiple trusted and vetted jewelers.

Holloway Cut Advisor



Diamond Eye Candy

Click to view full-size image.
Top