China is the world’s second-largest diamond consumption market, the fourth-largest rough diamond trading centre, and the second-largest diamond processing centre after Mumbai, India. Guangdong province, China’s biggest regional hub for diamond, accounts for over 70 percent of the Mainland’s diamond processing activity. The province has built well-developed affiliate industries including diamond jewellery production, sales, export and related services.
Based on official statistics, in Guangzhou city alone, there are seven diamond processing companies with an import-and-export value of over US$100 million a year, and 24 others of over US$10 million. There are more than 400 companies engaging in jewellery processing and related businesses with a total number of over 70,000 workers. The value of Guangzhou’s diamond import and export in 2013 reached US$3.59 billion, or around one third of the national total.
Facing the challenges of the downturn of the global diamond market, the price imbalance between rough and polished diamonds, and the undisclosed synthetics in trades, which has threatened the market integrity, the Guangdong diamond industry is greeting a new chance of development.
Guangzhou Diamond Exchange (GZDE), the only state-holding diamond trading platform in Guangdong province was officially launched on 17 September 2015 in Hong Kong. The exchange is cofounded by Guangdong province, Guangzhou city state-owned assets, and jewellery companies including Chow Tai Fook (CTF), Lukfook, etc.
Liu Wen, president of Guangdong Assets and Equity Exchange Group said Guangdong is the centre of diamond industry in China where trades were based on personal credit. It was risky to do business without a convenient and credible trading platform. “GZDE will fully capitalise on the policy of China (Guangdong) Pilot Free Trade Zone and coordinate the resources along the ‘Belt and Road’ initiatives based on the ever-growing diamond trades and customs clearance demands in the area, connecting the global diamond industry chain and providing safe and accessible international trading services,” he said. “Thus an international diamond trading platform and comprehensive service hub will be operated in Southern China.”
Apart from main services including international trading, customs clearance, and industry services and promotion, GZDE will cooperate with international rough and polished diamond suppliers, trading platforms, industry centres and organisations. The aim is to push through the transformation and upgrade in China’s diamond import and export from a processing-oriented to an all-encompassing industrial chain, boost the international profile and the competitiveness of domestic enterprises, and enhance exchanges on diamond raw material, cutting technique and culture.
GZDE’s general manager Liang Weizhang told Hong Kong Jewellery that according to industrial statistics, among the total value of approximately US$80 billion of mainland China’s jewellery retail market in 2014, diamond jewellery accounted for over US$10 billion, whereas the country’s annual output value for diamond processing is no more than US$2 billion. “Obviously, diamond processing fails to meet the demand of the domestic market, revealing that China’s diamond industry lacks the initiative in raw material supply,” he said.
He stated that China’s diamond industry is more of a contract processing industry which relies overly on labour force and external orders without direct access to raw material and finished products market. “The establishment of GZDE will safeguard production and processing material supply, and help the diamond industry in Guangdong transform to high value-added technology and exhibition trade models,” he added.
As the first diamond import-and- export channel in mainland China, Shanghai Diamond Exchange (SDE) manages import and export of diamonds intensively under a preferential tax policy. Diamond Administration of China (DAC) is the administrative institution of SDE. Its vice chairman, Li Mu expressed that as national diamond trading platforms, SDE and GZDE have reached a consensus for serving enterprises, reducing their distribution costs, understanding practitioners’ voice, and promoting the development of China’s diamond industry. “China’s diamond market has great potential. We will work together to serve the jewellery industry, enhance its status and influence, and meet consumers’ growing demand for jewellery,” he said.
In addition to consulting with diamantaires from India, Israel and Europe, GZDE has partnered with online shopping website Taobao, owned by Alibaba and held ‘Branded Diamond Bidding for Investment’ online campaign, selling 20 pieces of diamond jewellery between 1.50 and 5.88 carats of over 22 million yuan from CTF on 11 November 2015.
Regarding the benefits of GZDE for Hong Kong jewellers, Liang Weizhang said: “The GZDE platform can strengthen the role of Hong Kong as an international diamond trading centre. Hong Kong jewellers can connect an international diamond supply with the processing, production and consumption market in the Mainland seamlessly, while reducing costs and increasing competitiveness.”
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