India and China are locked in a fierce race to corner the world’s diamond and gems market, says Shantanu Guha Ray
ROGER LORIE, Chief Executive of the International Gemological Institute (IGI) Worldwide, calls it a paradigm shift that is set to totally change the rules of the business. And it will be driven by India and China, who — in a decade’s time — are projected to corner more than half of the world’s diamond and gems market. The shift from the West to the East, Lorie reckons, could even happen sooner because of the global economic downturn, and the fact that diamond has gained at the expense of gold in the world’s two biggest economies.
Lorie has enough examples to back his argument. Barely two years ago India was the world’s largest gold consumer, with about 90 percent of the jewellery business in the yellow metal. It now stands at 50 percent. The rest is occupied by diamond, thanks to an ever growing domestic consumption fuelled by — says a Standard Chartered Bank report — India’s $22 billion wedding industry.
“India has an amazing capacity to put bad memories behind it and move ahead. The Surat diamond trade, which had pressed the panic button a year ago, is today moving full steam ahead with cutting and polishing units working overtime and actually facing a manpower shortage,” says Lorie. Between April 2009 and February 2010, Surat exported $16.2 billion worth of cut and polished diamonds and imported $8.6 billion worth of diamonds.
That’s India’s story. China, the world’s most populous nation that consumes more gems and diamonds than it manufactures and trades, is also on an excellent track. Consider the steady growth in the Shanghai Diamond Exchange, whose figures are truly mind-boggling. Trading volume in the exchange reached $1.521 billion, a 16.4 percent increase over the previous year. There are other figures as well. The total import volume of China’s general trade of finished diamonds stood at $699 million in 2009-10, an increase of almost 31 percent over the last year. With imports of finished diamond into China exceeding Japan’s, it has become the world’s second largest diamond consumer market. For the record, though, the US still remains the world’s largest market.
The widely circulated People’s Daily says the boom — like in India — is also triggered by the country’s burgeoning $82.5 billion wedding industry. Ten million couples tie the knot every year — that is around 2.5 percent of GDP. The newspaper further said that in the country, wearing a diamond is the most recognisable sign of achievement.
South Africa-based De Beers has most of the Chinese market, that also has other players like Rio Tinto, BHP Billiton and the Hong Kong billionaire Cheng Yu-tung. The last named, also chairman of real estate firm New World Development, has already started expanding his high-end jewellery business and is opening more than 100 new stores in mainland China this year. “The actual magic will be seen in just five years,” says an ecstatic Lorie. •