China’s Diamond Market Rebound Sparks Optimism for Indian Exports

The Chinese diamond market, second only to the US, is showing early signs of recovery, sparking optimism in India’s diamond industry. According to the Gem and Jewellery Export Promotion Council (GJEPC), this shift could reshape the global diamond manufacturing landscape.

China’s economic slowdown and declining marriage rates had severely impacted its diamond market, valued at approximately USD 9 billion. In 2023, diamond sales in China generated around USD 5.7 billion, but analysts project growth to USD 7.2 billion by 2030. Over the past two years, demand has dropped by as much as 50%, with wholesale diamond prices falling 40%. This downturn significantly affected India, which exports nearly a third of its cut and polished diamonds to China.

The impact was evident in India’s February 2024 gems and jewellery exports, which declined by 23.49% to USD 2.42 billion (Rs 21,085 crore), driven by weak demand from both the US and China. To counter this, GJEPC participated in the Hong Kong International Diamond, Gem & Pearl Show (DGP) earlier this month, showcasing 71 exhibitors across 116 booths in categories such as Loose Diamonds, Lab-Grown Diamonds, and Fine Jewellery.

Hong Kong, a key hub for India’s diamond trade, played a vital role in strengthening global ties. GJEPC Chairman Kirit Bhansali noted that stabilising prices and renewed Chinese demand are promising signs for the global diamond industry. He emphasized that India’s strong manufacturing capabilities and adaptability put it in a favorable position for long-term growth.

After a prolonged slump, buyers are now accepting current price levels, leading to steadier sales. GJEPC Vice Chairman Shaunak Parikh believes this renewed demand could shift India’s diamond manufacturing back towards natural diamonds. Industry insights indicate a resurgence, particularly in smaller diamonds, though a full-scale revival is still some way off.

According to Ajesh Mehta, Convener of the Diamond Panel at GJEPC, this year’s Hong Kong trade shows marked the first positive development in four to five years. While Chinese demand hasn’t returned to previous highs, price stabilisation and increased movement in smaller diamonds are encouraging. “Confidence is slowly returning, especially in diamonds below 10 points and dossier sizes,” Mehta said.

A shift in Chinese consumer preferences is also influencing the market. Retailers are now incorporating smaller diamond accents in gold jewellery instead of featuring diamonds as centrepieces. However, Mehta believes this trend is temporary, predicting a gradual return of confidence in larger stones, such as 30 to 50 points.

Beyond China, emerging markets like Cambodia, Vietnam, Brazil, and Venezuela are showing growing interest in larger stones. While they cannot replace China’s dominance, they are contributing to new demand pockets.

Devansh Shah, Partner at Venus Jewel, observed an increase in inquiries at the Hong Kong trade shows from diverse markets, including Europe, Australia, the US, and the UAE. He noted that Chinese and Far East buyers remain highly quality-conscious, with round brilliant diamonds attracting strong interest, while larger fancy cuts and 3-carat-plus rounds were available on an order-only basis.

Although the Chinese market’s resurgence remains gradual, it presents growth opportunities for India’s diamond cutting, polishing, and export sectors. With strategic planning and market adaptability, India is well-positioned to navigate this evolving landscape and sustain long-term industry growth.

Source: DCLA

Swarovski bullish on lab-grown diamond business

Austrian jewelry brand Swarovski’s entry into the lab-grown diamond sector has seen a positive reception in the China market, signaling growing consumer acceptance and confidence in the product category, said a senior executive.

Since the launch of Swarovski Created Diamonds Swarovski’s lab-grown diamond product line in April, the company has found that Chinese consumers are gradually accepting the concept of laboratory-grown diamonds, which gives the brand huge confidence in the market, said Yvonne Chan, president of Swarovski Crystal Business Greater China.

Chan added that as the market has responded accordingly, the brand has seen a steady growth in sales figures. “In some of the better-performing stores, sales of Swarovski Created Diamonds jewelry can account for as much as one-fourth of the store’s jewelry sales,” she said.

The consumption of diamonds is diversifying and is no longer limited to bridal occasions, with an increasing number of female consumers showing interest in “self-rewarding “diamond purchases and usually more for daily wear occasions, Chan said.

“We believe lab-grown diamonds are ‘the diamonds of the future’, and that’s why they represent a strategic growth category for Swarovski,” she said.

According to data from consulting firm Bain & Company, China’s rough cultured diamond sales reached 1.4 million carats in 2021, with a market penetration rate of 6.7 percent. The figure is expected to reach 4 million carats by 2025, with a market penetration rate of 13.8 percent.

“We are delighted to be one of the first global brands to launch lab-grown diamonds in China in April, which marks a significant milestone in the company’s global rollout of fine jewelry collections,” Chan said. “China is undoubtedly one of Swarovski’s most important markets globally. Swarovski has long-standing ties of business and friendship with China that were forged three decades ago.”

Lab-grown diamonds, created by simulating the natural growth environment of diamonds, are high-quality synthetic gems with jewelry application value, said Sun Zhaoda, secretary-general of the superhard materials branch of the China Machine Tool and Tool Builders’ Association, adding that the emerging jewelry category is growing rapidly due to its eco-friendly and sustainable characteristics.

According to a recent white paper published by the association, the global cultured diamond supply chain is now largely concentrated in China, India and the United States. China leads in the production of rough cultivated diamonds, with over 22 million carats produced in 2023, accounting for more than 70 percent of global output. India dominates diamond processing, controlling 80 percent of the market, while the US remains the largest consumer market for cultivated diamonds.

“While China’s share in diamond processing is still relatively low, the country is exploring new green development models,” said Sun. “With increasing consumer acceptance of cultivated diamonds in China, the market for lab-grown gems is expected to grow significantly.”

Source: DCLA

Record Gold Prices Hit Chow Tai Fook Sales

Chow Tai Fook (CTF), the jewelry chain with 7,500 stores across mainland China, posted a 21 per cent plunge in retail sales value (RSV) in the three months to 30 September, as gold prices hit an all-time high.

The Hong Kong-based company warned that interim profits for the half year to September could fall by 42 to 46 per cent.

Gold prices have broken multiple records in recent months and currently stand at just over $2,700 an ounce.

Central banks, particularly China’s, have been aggressively buying gold to diversify their reserves and reduce reliance on US dollars, thereby forcing the price up.

Before the gold surge CTF reported a record high revenue (up 18.5 per cent) and core operating profits for the year to 1 March (FY 2024).

Core operating profit for the year surged almost 29 per cent to US$1.58bn (HKD 12.2bn) with the company saying business had been boosted by post-Covid improvements in mobility and retail activity, especially tourism from mainland China to Hong Kong and Macau, which saw retail sales values rise by 32 per cent and 53 per cent respectively.

But in its latest quarterly update, CTF says: “Macro-economic externalities, particularly record gold prices, continued to weigh on consumer sentiment, a phenomenon observed across the industry”.

Same store sales across its franchised stores on mainland China fell by 24 per cent, and by 31 per cent at its outlets in Hong Kong and Macau.

Source: DCLA

Jewelry Segment Sees Rebound in Recovering China Luxury Market

Jewelry was one of the strongest categories as China’s luxury market expanded in 2023 following the resurgence of tourism, according to a new report by Bain & Co.

The jewelry segment increased between 15% and 20% last year after the government lifted Covid-19 restrictions and travel resumed, Bain said last week. The fashion and lifestyle category also gained 15% to 20%, leather goods 10% to 15%, and beauty 8%. The watch market saw the softest rebound, up 5% to 10%.

While the growth was strong in 2023 compared to the previous year, which saw sharp declines due to restrictions on travel and extended lockdowns, it has still not returned to the record high of 2021. That disparity is primarily attributable to lower consumer confidence, a slower-than-expected economic recovery, and the return of Chinese consumers to purchasing luxury goods overseas.

Overall, China’s personal luxury sales rose 12% in 2023, Bain noted. The market is set to see mid-single-digit growth in 2024. Part of the issue with the slower market recovery is the pricing gaps between luxury goods in China and other markets. Jewelry is as much as 10% higher on the mainland than overseas, while watches cost up to 5% more.

Source: DCLA

Asian Star Sales Slip Amid Weak Diamond Demand

Sales slumped at Indian diamond manufacturer Asian Star in the final three months of the year amid a weak market and an oversupply in the midstream.

Revenue on a consolidated basis — which includes subsidiaries in the US, Dubai and Hong Kong — fell 13% year on year to INR 6.98 billion ($84.1 million) in the company’s third fiscal quarter, which ended December 31, it reported last week. Sales slid 24% compared to the previous quarter. Net profit grew 37% to INR 182.5 million ($2.2 million).

Those figures reflected weak demand for diamonds in the US and Chinese markets, which discouraged jewelers from restocking. In China, gold jewelry was more popular throughout the period than those set with diamonds, according to Hong Kong jewelry retailers Chow Tai Fook and Luk Fook.

Revenue from the company’s diamond segment dropped 17% to INR 5.7 billion ($68.7 million), while sales of gold jewelry increased 9% to INR 1.74 billion ($20.9 million).

Source: DCLA