Exports of diamonds up 55%14 April 2010 - The Wall Street Journal
Diamond Traders See Sparkly Sales in China
Antwerp gem dealers roll out trade incentives to capture expanding middle class as purchases slow in U.S., Europe
Thiscity's diamond district is recovering some of the shine it lost duringthe financial crisis thanks to a hungry new customer: China.
Exports of polished diamonds from Europe's diamond capital to China, including Hong Kong, increased 55% to $737 million in the first three months of 2010, the Antwerp World Diamond Centre said Tuesday.
Thatmakes China the biggest buyer of diamonds from Antwerp, knocking theU.S., traditionally its largest customer, into second place.
Thebooming Chinese market, fueled by the world's fastest-growing middleclass, is proving a strong antidote to slipping sales in moreestablished markets like the U.S. and Europe. A recent report byconsultants KPMG forecasts China will become the world's largestdiamond market next year.
For 2010, the AWDC predicted total sales to China of $3 billion, far above last year's $2.3 billion.
Antwerp'sdiamond polishers, sellers and traders have been suffering narrowingprofit margins as mining companies have cut back production at a timewhen retail prices have been falling. They have also seen cutting andpolishing work being outsourced to India, which then sells the stonesmore cheaply.
The Antwerp diamond industry, thetraditional center of the world's market for polished diamonds, isfragmented among 1,800 companies with combined sales of $45 billion ayear. As the labor-intensive business of cutting the stones has shiftedto developing countries, Belgian diamond firms have increasinglyfocused on the trading, marketing and final polishing of diamonds. Theytypically buy stones from miners such as De Beers and BHP Billiton.
"Antwerpis reasonably well situated to compete in China because it has theinfrastructure already set up as a trading hub," says Des Kilelea, aLondon-based diamond analyst for RBC Capital Markets.
Butthe Belgian city faces tough competition from other diamondpowerhouses. India sold $6.6 billion and Israel sold $2.2 billion worthof diamonds to China last year.
The AWDC, the Antwerpindustry's organizing body, Tuesday unveiled a full-scale effort toexpand in China. Banks, cutters, traders and polishers here say theyare courting Chinese diplomats, giving prizes to Chinese jewelrydesigners and spending millions on trade fairs in China.
"Wehave a lot of competition, so we must position ourselves toattack...and win in China," said Mickey Weinstock, an Antwerp diamondseller who says his company's $50 million of annual sales are nowalmost all to Chinese retailers.
In June, the AWDC willfinalize a joint venture with the Shanghai Diamond Exchange. TheBelgians will provide advice and consulting on the business in exchangefor more access to the Chinese market, said Freddy Hanard, CEO of theAWDC.
Last year, the Antwerp High Diamond Council gave 12of the 30 finalist places in its jewelry-design competition to Chinesedesigners.
The Antwerp-based International GemologicalInstitute, which trains gemologists -- the experts who analyze, gradeand price diamonds -- is expanding its staff in China to 200 in thenext few years from five, says Chief Operating Officer Deborah Pienica."We're seeing that the new generations in China are less conservativeand ready to spend money on diamonds," she says.
The AWDCtapped Mr. Weinstock to set up a wing of the Belgian pavilion at theWorld Expo in Shanghai, which runs from May to October and is expecting70 million visitors.
A stand staffed by 45 will show offseveral million dollars worth of stones cut in Antwerp, including apink diamond whose 8.8 carats will appeal to the Chinese love of thelucky number 8, Mr. Weinstock said.
The efforts are meantto help jewelers like Jean-Claude Muller, CEO of S.Muller & Sons.He already sells $25 million of diamonds, half his annual take, inChina but would like to sell more.
By John W. Miller
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