48 | JNA November/December 2023 MARKET INTELLIGENCE 市场情报 “Thankfully, today, we have customers that understand the importance of quality versus price. Some customers only look at the certificate and the 4Cs and simply want the best price based on that. Others look at the beauty of the diamond: The level of intensity of the colour or the uniqueness of the shape. And then, there are those who combine the two standards and keep an eye on the investment value or resale value of the diamond,” revealed Blik. Li Shiqi, president of Ming Qi Jewelry, said buying fancy colour diamonds comes with a learning curve for Chinese consumers. He remarked, “In the early days, they favoured bigger and less expensive fancy colour diamonds. With the market becoming more mature, customers no longer pursue carat size and now prefer diamonds with higher colour saturation.” Chinese consumers also pay greater attention to the resale value and appreciation of the fancy colour diamonds they buy, noted Chen of Rosy Clouds. The country’s high-networth individuals therefore gravitate towards high-quality stones with good value prospects such as reds, blues, pinks, oranges, greens and purples. While blue, pink and yellow diamonds are currently the most favoured in China, regional preferences exist, Chen continued. “In the northern regions, consumers are more inclined to buy big fancy colour diamonds and are less stringent about colour and clarity. They can accept stones with a lighter colour or secondary hues. Consumers in southern areas such as Shanghai, Shenzhen, Yangtze River Delta and Pearl River Delta cities are more particular about the quality of the diamonds and seek top colours. Smaller sizes are acceptable so long as the colour is exceptional,” he shared. Level of specialisation China’s fancy colour diamond market also comes with a high bar for the trade. Grading and trading in this field requires specialised knowledge and skills as well as higher capital requirements than the white diamond business. Li of Ming Qi Jewelry remarked that fancy colour diamonds are graded and rated differently, with its own set of colour ranges. Prices are also less straightforward than colourless diamonds, with various factors such as colour and rarity coming into play. Prices therefore cannot be assessed solely from the grading report. Instead, the diamond has to be viewed personally to ascertain the nuance of colour and quality. In addition, capital requirements are exorbitantly high since high-end fancy colour diamonds, especially top-colour stones, are extremely valuable, Chen commented. As percarat prices of red, blue and pink diamonds can often be a hundred times more than that of colourless diamonds, most merchants are unable to operate in the field. The few who do survive and thrive in China’s fancy colour diamond sector are thus experts and trustworthy specialists, he said. Evaluating the quality and prices of fancy colour diamonds likewise requires a specific set of skills, Chen noted. Unlike white diamonds that are relatively homogenous and can be priced on a standardised and transparent system, prices of fancy colour diamonds depend on various factors, including colour and rarity. Some categories such as reds, purples, violets, blues, pinks and oranges are extremely rare. According to Chen, there are fewer than 10 violet diamonds with full carat sizes in the world. And only 20 to 30 red diamonds over 1 carat are trading globally. Such rarity makes it impossible to set a standardised evaluation system for fancy colour diamonds, and prices often can be determined only through records established at the big auction houses such as Sotheby’s and Christie’s, Chen disclosed. Challenges and opportunities Given their rarity, high prices and unique selling points, fancy colour diamonds only gained traction in China in recent years. Li of Ming Qi Jewelry thus believes the category has plenty of room to grow in the domestic luxury jewellery market. “Since fancy colour diamonds command high prices, the market curve often overlaps with the overall economic situation in the country,” he added. Blik likewise sees endless possibilities for the category in one of the world’s biggest markets, but he cites lack of market confidence as the biggest hurdle at present. “The challenge is convincing buyers that, even during uncertain times, buying fancy colour diamonds is a safe haven. Another issue is educating buyers on understanding how to value a fancy colour diamond and filter for themselves real, relevant information from the fake news,” he commented. Price hikes have also tempered buyer enthusiasm. Blik noted that prices of fancy colour diamonds rose substantially from 2020 to 2022. While there was strong interest in April and May in China, customers have been hesitant to make purchases due to the new, higher prices compared to 2020 and 2021. He stated, “Now that we are getting used to the new market reality, and coming out of the very slow summer months, I hope that the dynamic will result in more demand and sales. We can see that the consumer has more interest in fancy colours and understand that these are to be evaluated differently from white diamonds.” Chen, for his part, said tougher competition has been trimming profit margins as fancy colour diamond dealers seek to make a sale. The market is, however, still big enough to accommodate all players, and professional top-level merchants will eventually prevail. The Fancy Color Research Foundation (FCRF) attests to the bright prospects for fancy colour diamonds in China. FCRF CEO Miri Chen said, “Our data suppliers and members report that the last two quarters were robust for fancy colour diamonds across all markets, with yellow fancy colour diamonds in the intense and vivid category, in all sizes, performing especially well. The Chinese market exhibited superior performance in other colours, such as pink and blue. However, we believe there is more potential for growth compared to the period before Covid.”
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