Rio Tinto Diamonds branched into Greater China five years ago to develop the diamond fashion jewellery market. Rita Maltez, director of Rio Tinto Diamonds for Greater China, tells Hong Kong Jewellery the story behind the company’s China exploration, and shares with us her experience and observation.
HKJM: Hong Kong Jewellery
RM: Rita Maltez
HKJM: What prompted the establishment of the Greater China Representative Office? What were your team’s objectives?
RM: When we started to look at China’s diamond jewellery market some years ago, we quickly saw that the tremendous growth would eventually push demand beyond the traditional solitaire diamond and the bridal market.
There has been a structural change in consumer preference and Chinese consumers have increasingly considered diamond jewellery as an everyday fashion accessory. So we decided to focus our strategy on fulfilling the anticipated considerable growth with diamonds from our Argyle mine in Australia, a growing source of smaller, more affordable diamonds ideal for fashion jewellery.
I relocated to Hong Kong in 2010 to establish the first regional presence for Rio Tinto Diamonds, with the aim of introducing diamond fashion jewellery to China. We’ve seen incredible results since then, both in terms of the level of interest from the trade, and of the sales growth experienced by our retail partners. As a result we are now channelling a significant proportion of our Argyle diamonds into China market.
HKJM: Could you share some interesting observations in China’s market in the last five years?
RM: In the last five years I spotted the diamond fashion jewellery trend from our collaboration with major jewellery chains and our extensive market research. Our findings challenge the belief that Chinese consumers only appreciate large, high-quality, white diamonds, or gold jewellery. In fact it shows that when it comes to fashion jewellery, design is the most important factor that supercedes all other considerations including quality, colour or size of diamonds.
Diamond fashion jewellery is a completely different segment to the bridal or ‘status’ segments. It addresses the changing needs of China’s consumers who increasingly want to buy for themselves and to own different styles of jewellery so they can mix and match just like they do with other accessories. This desire represents the beginning of a long-term trend in consumption preferences; in other words, this is not a fad. Our research indicates that non-bridal diamond jewellery priced below RMB4,999 (US$810) represents the single biggest growth opportunity in China with a four-fold increase expected by 2020.
HKJM: Could you briefly describe your partnership with diamond retailers or manufacturers in China?
RM: Our strategy in every market is based on building trusted partnerships with key players along the value chain. For instance, in 2010 we helped Chow Tai Fook launch their first diamond fashion jewellery collection, the Australian Colours using Argyle diamonds. The collection achieved phenomenal sales results which proved beyond a doubt that Chinese consumers are hungry for this type of product and led to the development of several more collections now being retailed across over 2,000 Chow Tai Fook stores.
HKJM: What are your key business activities over the last five years?
RM: We launched the ‘The Fashion of Diamonds™’ initiative in 2013. Through this platform we provide retailers and manufacturers with a comprehensive support package including design, research, training and marketing. In particular we focus on providing jewellery design support, which is essential as the market for diamond jewellery develops.
In particular we have worked with leading designers to create collections based on selected themes (Enchanted Nature, Romance Inspired, Symbolism and Pattern Play) using Argyle diamonds. We incorporate insights from extensive market research to ensure the designs are in tune with consumer’s real needs so that they will be highly sellable.
In 2015 we commissioned leading trend and jewellery expert Paola de Luca to develop the latest range of designs which we introduced during the Hong Kong International Jewellery Show in March. We are already getting ready for the next range of designs to be launched in March 2016.
HKJM: How does China’s market compare to other markets when it comes to diamond fashion jewellery?
RM: In China, the diamond fashion jewellery market emerged in 2010. In comparison, other major markets such as the United States and Japan are no longer reliant on bridal jewellery, and have developed a robust fashion jewellery market over the years.
Focusing on market development, there are strong parallels between our market development initiatives in China today and our approach in establishing the US fashion jewellery market 20 years ago. In both cases we established an on–the-ground presence, partnered with key influencers at all stages of the diamond value chain, and invested in marketing initiatives to promote our products and our partners.
HKJM: What are your strategies to attract the millennials and younger consumers in China to purchase diamond jewellery?
RM: The younger generation in China is looking for ways to differentiate themselves, and this is driving jewellery purchases towards something more interesting, where the design has an inspiration or story behind it. They aspire to innovative designs at accessible price points. To understand the needs of consumers, Rio Tinto has spent considerable time on market research and been working with experts to provide trade partners with relevant and sellable designs.
HKJM: What is your outlook for the China market?
RM: We believe the current demand for diamonds in China is just the tip of the iceberg. Per capita jewellery consumption in China is still well below the world average and far below established markets. In fact, the average Chinese spends only one tenth of what the average American spends on jewellery. So the potential for increased jewellery spending is tremendous and the China story is only just beginning for diamond jewellery.
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