Better a diamond with a flaw than a pebble without - Confucius

Last year’s news that China, having outstripped even the Japanese market, turned to be the second largest consumer of polished diamonds had a quick repercussion around the world. Trade turnover of the Shanghai Diamond Exchange in 2009 went up 16.4% to about $1.5 billion.
 
Incidentally, Shmuel Schnitzer, President of the World Federation of Diamond Bourses, in 2003 said: “If there is any place in the world where we can speak optimistically about the diamond industry, it is China.”
 
Surprisingly, but China is already the world's largest consumer of platinum, jade, greenstone, pearls and gold. It is now also one of the current leaders in the diamond market. There are all kinds of evidence that the Chinese jewelry industry is opening a new era in which  this “Middle Kingdom” deeply involved in the globalization process will have inevitable influence on world markets. To understand the Chinese diamond market phenomenon and what may be expected from this dynamically developing country in the near future, it is necessary to cast a glance into its history. In what way did the diamond market develop here? What are diamonds for the Chinese people?
 
Modest start
 
Undoubtedly, the mother land of diamonds is India. From there diamonds were brought to China as well. It is possible to say that the diamond industry of China is a very young trade, especially if it is compared with the jade culture which totals a thousand-year history. According to the existing and rather poor ancient sources which have reached us, diamond jewelry in China first appeared as mosaic made of rough diamonds during the epoch previous to the dynasties of emperors Ming and Qing. In the opinion of many scientists, one of the most ancient Chinese collections of verses and hymns, The Book of Songs (Shih Ching), probably mentions diamonds in the poem titled “Stones from Other Hills.” Besides, there are preserved Suzhou’s ancient records “about three diamonds” (222-280 A.D.). And the earliest data on diamond mining in China appeared in the City of Taoyuan, Hunan (1840-1850).
 
In China, the diamond industry and the consumer diamond market were pushed forth in their development after the opium war in 1840. Guangzhou, Shanghai, Tianjin and other seaside cities started to adopt Western and European fashions in gold and diamond jewelry at an ever increasing scale. So gradually, diamonds made their way to inland China. And if all that began with several families which were pioneers in jeweller fashion, during the last two decades of the 19th century diamond jewelry extended across the country spurring sales upwards. However, later on, all the jewelry industry of China and its consumer diamond market in particular lapsed into stagnation. For more than 80 years the jewelry industry stood idle and there was no development. One may say that until the 1990s the Chinese people had no time for diamonds…
 
Revival and development
 
Demand for diamonds in China began to recover only in the 1990s when De Beers started to pay attention to the country populated with 1.3 billion people and having launched a global advertising campaign placed its stake on the desire of Chinese to follow Western fashion. From the mid-1990s, De Beers began to popularize such slogans as “Diamond is a symbol of eternal love” and “Diamond is the genuine display of love” using the mass media and ads in China. And it worked! Diamond jewelry, especially wedding rings, turned to be an obligatory attribute of Chinese weddings. Now many young Chinese women do not imagine weddings without diamonds conceived as a special “gift of love.” No diamond, no wedding. It was wedding diamond rings which laid the basis of the diamond market in China in the end of the 20th century. Then it was followed by an active advertising of diamond jewelry as a recipe for female appeal and self-confidence. And again there was a period of fast development in the diamond market. In the end of the 1990s De Beers undertook to promote diamond jewelry for men, especially in Shanghai and the Guangdong Province. The slogan “Diamonds are a symbol of success for men” quite predictably pushed up demand for diamond jewelry among Chinese men and brought tangible results in sales. Certainly, in the end of the 1990s the Chinese market saw the advent of other foreign companies, such as Chow Tai Fook, Tse Sui Luen (TSL) Jewelry, Chow San San and Luk Fook Holdings, etc. Gradually there emerged own Chinese brands.
 
So, within ten years, from 1990 to 2000, the jewelry industry and market in China really entered their “golden” phase of a fast and unprecedented rise and expansion. Then between 2000 and 2008 the jewelry market there reached a rather stable period of development. In 2000, there emerged the Shanghai Diamond Exchange. In 2002, the government of China gave a new impulse for developing the diamond market in the country essentially reducing taxes in the jewelry industry. And in 2004 the Shanghai Diamond Exchange turned to be the member of the World Federation of Diamond Bourses (WFDB).
 
And then came a new record which turned China into the world’s largest consumer of diamonds making 2009 an important milestone in the jewelry history of this country probably once again triggering a powerful move to strengthen the Chinese diamond market. Although its rapid development comes as a surprise to the world community, China considers this as normal succession of events. In fact, 7 years ago during the Diamond Summit in Shanghai the representatives of the Diamond Exchange announced their plans for the future saying they were going to bring their diamond sales to $5 billion by 2010 and become the main trading hub in Asia by 2015. At least, the second goal has been reached ahead of time.
 
What is the secret of success of the diamond market in China?
 
While the rest of the world is scrambling out of crisis, the economy of this nation continues its stable development improving the well-being of its middle class and thus boosting consumer demand for jewelry, especially diamond jewelry. Not the last role was played in all this by the successful advertising campaign launched by De Beers in the 1990s due to which diamond jewelry remains an integral part of wedding ceremonies in China up to now. Besides, the government of China is also interested in developing the jewelry market taking appropriate measures to support the industry and decrease taxes. Rather cheap labour, state-of-the-art technologies and strict quality control have undoubtedly made China one of the leading manufacturing centers and a major trading floor in the world.
 
Nadezhda Shagrova for Rough&Polished from Shanghai