FOCUS 20 | JNA November/December 2022 Trading diamonds Huang Weiming, president of Zuan Ming Diamond, said majority of diamond dealers are experiencing a considerable decline in wholesale volume and profit margin in 2022 compared with the past two years. Zuan Ming Diamond is one of the top five diamond importers in China based on Shanghai Diamond Exchange’s (SDE) 2021 listings. Data from SDE showed that polished diamond imports from January to September 2022 amounted to US$1.588 billion, down by 31.4 per cent year on year. The slowdown occurred primarily in the first half of the year. In June, diamond imports reached US$441 million, up 48 per cent from 2021. Imports in the third quarter however remained flat. According to Huang, China’s diamond import and wholesale sectors are closely related to the world diamond market. Diamond prices were on the rise in 2020 and 2021, giving dealers the confidence to build a larger inventory. They eventually benefitted from such price hikes, but the situation changed the following year. “In 2022, the wholesale market suffered from lockdowns and reduced bridal jewellery sales, exacerbated by a halt in diamond importation and wholesale fromMarch to May,” explained Huang. “Weaker polished diamond prices, foreign exchange fluctuations and diminished polished diamond supply from overseas contributed to dealers’ reduced inventory levels.” The certified diamond market is still dominated by diamonds of 0.50 carat to 1.99 carats, with F-I colour and VS-SI clarity grades. An increase in the wholesale of 2-carat to 5-carat diamonds, which account for less than 6 per cent of total sales, was likewise observed. Zuan Ming Diamond has worked with banks to provide innovative financing services for qualified clients to encourage importation of diamonds and coloured gemstones through the company’s platform. Unlike typical financing schemes, the service does not require a collateral, which could deter potential participants. Instead, the company mitigates risks through strict processes, careful assessment and close monitoring, revealed Huang. He remarked, “With our innovative financing service, we are able to maintain our total sales value and profit this year, while other dealers suffered a sharp decrease in business.” China prospects Other segments of the gemstone and jewellery sector are also seeing signs of improvement post-lockdown. Prices of rubies, sapphires and emeralds – the so-called Big Three in the gemstone trade – continued to rise in 2022, with rubies experiencing an even higher price surge of around 30 per cent. Prices of top-quality sapphires also rose in China, owing to tighter supply resulting from the economic situation in Sri Lanka. “The jewellery business in Shanghai, a city that accounts for 40 per cent to 50 per cent of the country’s high-end coloured gemstone jewellery market, was disrupted in April and May,” explained Lin Xifeng, president of the Guangdong Colored Gemstone & Jewelry Chamber of Commerce. When restrictions were eased, the high-end market remained virtually unaffected while the middle and low-end segments contracted due to lower consumer confidence. Brick-and-mortar shops, WeChat sales channels and e-commerce also experienced a decline in sales, Lin added. Retail sales of coloured gemstone jewellery reached US$4.9 billion last year, representing 4.4 per cent of total jewellery sales in 2021. It was the fifth biggest sector after plain gold, diamond, jadeite and nephrite jewellery. Lin stated that potential for growth remains as China is essentially a new market for coloured gemstones. Prospects in 2023 however are hinged on the country’s economic situation. The pearl business is another promising sector of China’s jewellery trade. Pearl jewellery sales stood at US$2.5 billion in 2021, accounting for 2.2 per cent of total jewellery retail last year. At the 2022 World Pearl Conference in September, the mayor of Zhuji – China's pearl capital – said the total value of Zhuji's pearl industry reached US$6.2 billion in 2021. In 2022, both the retail and wholesale pearl industry rose steadily, according to Tu Xingcai, president of the Shenzhen Pearl Trade Association. “More and more young consumers are buying pearls in malls. Pearls are also increasingly sold through livestreaming,” noted Tu. “This indicates that, compared to other jewellery categories, pearls are extremely suitable for personal consumption and adornment, and can be bought by consumers as daily accessories.” Pearl retailers, meanwhile, are increasingly incorporating both online and offline models in their operations. For instance, new products launched by sellers via online platforms such as WeChat Moments, Xiaohongshu or the Little Red Book, among other e-commerce channels, can be viewed by consumers in person or through online transactions. Diamond jewellery by Shining House 钻石世家设计的钻石珠宝
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