DIAMOND may popularly be called "a girl's best friend," but for global gem traders it's now China that's proving to be the best friend of an industry hit by the world financial crisis.
As China's middle class expands and millionaire ranks swell, the demand for diamonds has put the nation into second position in the market for the gems, after the United States.
"China's appetite for the glittering stone is set to keep up rapid expansion, backed by growth in demand from newlyweds, by government support and by economic growth in general," said Li Mu, deputy director of the regulatory Diamond Administration of China.
That was certainly the sentiment at the two-day China Diamond Conference that ended on December 1 in Shanghai. The event drew diamond interests from across the world, with all eyes on the prospects of the host nation.
"The emerging middle class in China is an ideal entry point for affordable diamond jewelry," Jean-Marc Lieberherr, general manager for sales and marketing of diamonds for mining giant Rio Tinto, told the conference. "Increasingly, Chinese consumers will be seeking to differentiate themselves through fashion and fashion jewelry, and this will be the driver of future growth in retail diamond demand."
China and India, two economic powerhouses in Asia, are leading global demand for diamonds this year. In China, diamond jewelry sales last year rose 14 percent to 57 billion yuan (US$8.5 billion), overtaking Japan as the world's second-largest market. Sales of diamonds have soared 10-fold in the past decade.
That contrasts with a more subdued picture overseas, where Western consumers hit by austerity measures and high unemployment, have restrained their purchases of precious stones.
"The greatest force of change empowering the diamond industry over the next decade will be the emergence of hundreds of millions of new middle class consumers and tens of millions of new millionaires," said Martin Rapaport, chairman of the Rapaport Group. "With higher concentration in India and China, these new consumers will fuel unprecedented global expansion and prosperity," he predicted.
Luxury jewelers have been quick to seize the trend.
Cartier, Tiffany & Co, Van Cleef & Arpels, and other big-name luxury jewelry boutiques are everywhere on the high streets of Shanghai and Beijing. For the broader middle-class pockets, mid-market jewelers like Hong Kong's Chow Tai Fook and the mainland's Laofengxiang are also expanding retail outlets.
The data underpinning this trend are encouraging indeed.
The number of millionaires on the Chinese mainland rose 6.1 percent to 875,000 last year, according to the Hurun Wealth Report, whose minimum threshold for inclusion was 10 --million yuan.
Shanghai came in third in the number of millionaires, with 122,000, after Beijing and Guangdong Province. The number of the super-rich in the three places accounted for 48 percent of mainland millionaires, according to the China Rich List.
Small wonder, then, that China's main diamond retail centers are also based in big -cities and along the prosperous eastern coastal area.
The emergence of diamonds has been as rapid as the nation's economic growth.
Diamond jewelers first appeared in the modern Chinese market in the 1980s. At that time, the notion of luxury living for most Chinese families was a color television set and a fixed-line phone.
Nowadays, with those appliances, as well as phones, watches, cameras and other coveted consumer goods already in their possession, Chinese consumers are turning to the same idea of luxury as their foreign counterparts. Younger, affluent Chinese now consider a diamond ring a necessary part of any wedding.
In Shanghai, Nanjing and Huaihai roads and the Yuyuan Temple shopping center are the biggest retail areas for precious jewelry.