Recently published De Beers Diamond Insight report puts a lot of focus on China as the fastest growing consumer market for polished diamonds and diamond jewelry.
Chinese demand for diamonds is increasing at a rapid pace. Diamond jewelry sales to Chinese customers grew at a CAGR of 21% from 2003 to 2013. During this period the Chinese share of global polished diamonds consumption increased from a mere 3% to 13% and consumers paid on an average 32% higher prices.
The increasing demand is fueled by two reasons – growing number of consumers that can afford to buy diamond jewelry and increase in the average diamond price and size affordability. Diamond jewelry ownership in top urban cities in China, as per De Beers survey, is 20% – far below than US ownership rate of 70%, indicating that despite the boost in consumption there is still a lot of potential in the Chinese diamond market. Rio Tinto also holds a similar view – along with India, China will drive the diamond demand growth.
Chinese market is bound to grow further as target consumer base grows. The 2013 Wealth Report by Credit Suisse estimated an increase in the number of Chinese millionaires by 90,000 to 1.1 million from 2010 to 2013. The surge in demand may lead to the Chinese diamond market matching US market size by 2020.
According to Capgemini, China has the fourth largest number of High Net-worth Individuals. A 2014 study by consultancy WealthInsight shows that Beijing (sixth in the list of the top 10 cities with most millionaires) and Shanghai (ninth on the list) together have more USD millionaires (excluding the value of their primary residences) than London.
The growth potential is also reflected in the growing number of jewelry retailers in China. In past three years, from 2010 to 2013, the number of stores offering diamond jewelry has grown by 29%.
Diamonds although rare are not a single purchase item and after the first purchase consumers find multiple occasions to buy diamonds again. With growing importance of China in the diamond industry, players will now focus more on the Chinese consumers, their choices, cultural preference and buying behavior. No diamond industry player can afford to ignore the Chinese market anymore.