We publish courtesy of Israeli Diamond Industry Portal
Author: Michelle Moshelian
Letitia Chow, Director of Business Development – Jewellery Group at UBM Asia, which publishes the Jewellery News Asia publication, kindly granted the Israel Diamond Institute an interview to discuss the state of the Chinese diamond and jewelry sectors.
Israel Diamond Institute: We hear all the time that China is market of the future. What is your opinion on this?
Letitia Chow: China isn’t the market of the future – it’s the market of today.
IDI: Do the people in China feel that, or is it an industry feeling?
LC: I suppose that for jewelers and people in the jewelry business inChina, they wouldn’t consider themselves important compared to suppliers in the rest of the world. This is because things are developing very rapidly in general in China, and the country’s economy is improving.
When foreigners visit China, I think they will feel the spirit – the feeling, the confidence – the very positive energy there. While the jewelry industry is developing and doing well… there are other sectors that are doing even better. Therefore, I don’t think they would say, “Oh, we are very important in the world market.”
Of course, there are certain industry associations that monitor the development of the sector and try to lead and help further the industry. These associations, which make contact with the global industry, are certainly aware that China is certainly exciting for many supplying centers.
IDI: Can you tell us about the Chinese jewelry and diamond consumer market – for example the size of the sector?
LC: It’s very difficult to put a figure on the industry. Such statistics are not readily available – not like in certain countries where they have been monitoring the numbers very closely for a long time. Many of these statistics were driven by organizations like De Beers and international trade, bodies which, because of their relationship with local industries, can set up panels to monitor the figures. Of course, there are jewelry trade associations in China that also try to do the job, but the availability of these statistics is limited. All the figures that people quote today are very rough estimates. However, the figures are certainly very interesting.
IDI: What kind of diamonds or jewelry are the Chinese consumers interested in? Is there a difference in taste in different areas?
LC: Absolutely – there is certainly a difference in taste according to region. There is a sizeable wedding jewelry market that uses a lot ofdiamonds. I think that we have to thank, again, De Beers for encouraging consumers to promote diamonds as a gift of commitment. The younger generation is certainly influenced by all this promotion. Although China is still a very important market for gold jewelry, young people have a very open mind toward diamond jewelry.
IDI: Are you talking specifically about the Forevermark campaign?
LC: No. De Beers started promoting diamonds in mainland China many years ago, and this helped establish the market that has been expanding. The younger Chinese generation likes diamonds – they prefer diamonds to pure metal jewelry. For a long time, the Chinese market only accepted a very narrow range of qualities of diamonds, but that has changed a lot. It has broadened, which is good news for everyone – for all the suppliers. After all, the very narrow range of fine quality diamonds is limited. So now the Chinese have opened their minds, and they accept a wider range. We’re talking about maybe lower color, lower quality. It’s actually a very good thing – it helps expand the market.
IDI: Are the Chinese interested in brand names? Which has moreappeal – Foreign brand names or Chinese?
LC: The Chinese are absolutely interested in brand names. Foreign or domestic, because I think consumer confidence is based on branding. They want to know that what they are buying is worth the money and offers good backup and support. A brand usually represents a guarantee of quality and service and the Chinese consumers appreciate that whether its fashion, or cosmetics or jewelry. The consumers feel a lot more comfortable when they have a sense of reassurance of buying from the supplier. That means that there’s some kind of branding behind it. Talking about brands, the Israeli Diamond Industry is also promoting its mark. I think it’s a very good move, but they need persistence. I think it’s very important. Obviously though, such a move , requires resources.
IDI: For what occasions do Chinese consumers buy diamond jewelry?
LC: There are a few high seasons. I think you are aware of, for example, Labor Day in May, because they have a long holiday, and there is the National Day on October 1, May 1, and October 1. On these occasions, nearly the whole country is on holiday, so people spend money, they celebrate, they take tours, and they also make big purchases. Obviously the most important season is toward the end of the year, around the Chinese New Year, when a lot of weddings take place. So there’s the wedding season. Meanwhile the Chinese market is also picking up some Western habits – celebrating Valentine’s Day, Mother’s Day, and of course, Christmas! As you know, so many international consumer brands have entered the Chinese market they are bringing in these Western celebrations. They will take any opportunity to push a sale! Chinese consumers are also learning, taking an interest and being influenced.
IDI: How big is the diamond industry in China?
LC: It’s very difficult to say. In manufacturing, we’re talking about 30,000 diamond cutters before the recession. Now, I think it would be closer to 20,000. The industry is certainly expanding because of the demand. Some of the big retail chains are also going into diamond cutting because of the control in mainlandChina and the complications of duties. Many Israeli companies are members of the China Diamond Exchange. Still, it’s a lot easier if Chinese retailers have the capacity to manufacture diamonds there for jewelry manufacturing and retail in mainland China.
IDI: What sort of diamonds do companies in China specialize in?
LC: They don’t cut very, very small diamonds because the labor cost is high and competitive. Also, for a better profit margin they would like to (I say would ‘like to’ because it sometimes depends on the supplier) handle a finish of 20 points and better quality.
IDI: Where are diamond imported from?
LC: Oh, everywhere. But I must say that the Indians are very active. What happened is that a lot of Indian suppliers have either established operations within mainland China or send people to China very frequently, so they are seen as very active. The main business is to sell to jewelry manufacturers in centers and hubs like Szechuan or Panyu. Of course, Chinese jewelry manufacturers and Hong Kongjewelry manufacturers who make jewelry for sale in mainland Chinause quite a fair amount of Israeli-supplied diamonds and even Belgian – it all depends on availability, who has the most suitable goods. Of course, because of the quantities of diamonds being cut by the Indians, they will always have the biggest share.
IDI: Do the Chinese people speak English and read English?
LC: Yes, more and more people are better-educated. In business, too,more people understand the language.
IDI: Would a consumer be put off by a Western English approach, or would it give more value?
LC: I would think that people would consider imported goods and like them, because there is a perception that imported merchandise are of good quality or more trendy.
Thank you Letitia Chow