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Buyers Enthusiastic at JCK

China July Market Report
Jul 1, 2012 12:47 AM   By Julius Zheng
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The JCK show has become more attractive to Chinese buyers in recent years, although most of them still attend only the Asian shows. In 2012, a record number of Chinese buyers visited
JCK Las Vegas, including a Rapaport China Buyers Group of
17 Chinese companies, who were attending for the third consecutive year.

There’s no denying that the Hong Kong shows are easier and more convenient for sourcing goods than JCK Las Vegas. Las Vegas is a 13-hour flight from Shanghai, and Hong Kong only two and a half hours. However, the eagerness to learn more about foreign suppliers and source internationally has increased buyers’ interest in coming to the U.S.

Those who attended the 2012 Vegas show said that they had the opportunity to meet with the familiar suppliers exhibiting at the Hong Kong and India shows, as well as with new suppliers. Because vendors at the U.S. show exhibit fewer triple EX and double EX goods, some Chinese buyers asked JCK exhibitors to bring those goods to the June Hong Kong show running from June 21 to 24 so they could view them there. The buyers are interested in large white and fancy color diamonds over 1 carat, and colored stones like tanzanite.

Many buyers also were intrigued by the design of the high-end jewelry exhibited at JCK and some commented that coming to Las Vegas expanded their jewelry vision, while giving them an opportunity to enjoy the city at the same time.

The China Hong Kong Pavilion, a major international pavilion at JCK, housed approximately 200 Hong Kong–based companies, most of which have manufacturing facilities in Mainland China, along with several companies based directly in Mainland China. The pavilion has been organized by the Hong Kong Jewelry Manufacturers’ Association (HKJMA) since 1992.

SYNTHETIC DIAMONDS DETECTED

The Shanghai Diamond Exchange (SDE), together with the National Gem Testing Center (NGTC), issued an important statement in late May on the recent appearance of chemical vapor deposition (CVD) synthetic diamonds in China. According to the report from the
NGTC laboratory, two batches of diamonds were imported from Hong Kong and sold to domestic buyers on a wholesale basis as natural untreated diamonds, at a price approximately 10 percent lower than the market price for natural diamonds.

Stones in the two batches have very similar features, around 0.50 carat each, I to J color and VS clarity with black inclusions. The inclusions were said to have no metallic luster and are difficult to differentiate from inclusions of natural diamonds under microscopes. After DiamondSure and DiamondView examinations raised suspicions, NGTC used additional laboratory equipment to confirm the stones were synthetic.

With the discovery, SDE is calling on the bourse members to be well informed about their sources, to be cautious in their transactions and to disclose information properly. It also reminded its members that any intentional nondisclosure of synthetic and treated diamonds will be subject to severe punishment.

The recent incidents of selling synthetic and treated diamonds without proper disclosure concerns dealers, who fear that purchasing diamonds will become more risky, especially purchases of noncertified goods. The general news media also have reported the presence of CVD synthetics in the market, leading trade members to worry that consumer confidence might be affected because the internet can spread news very quickly.

CASHING OUT OF DIAMONDS

While there is increasing propaganda circulating in China promoting diamonds as a good vehicle of investment, there are limited channels for Chinese consumers to resell those diamonds domestically. Currently, there are only three ways of cashing out a diamond: through a buy-back service, through consignment stores and at pawnshops.

Several big diamond retailer chains offer buy-back services, promising to buy back their own diamonds at a specific price after a certain period, very often matching the original sale price. But those dealers are not willing to buy back diamonds sold by other retailers. The buy-back service is based on the retailer’s expectation that diamond prices will keep rising in the future and its assumption that, in reality, only a small portion of consumers will ask the retailer to buy back goods.

PAWNING PRICE DISCOUNTS

Consumers can also get cash for their diamonds through consignment stores and pawnshops, but very often at a substantial discount from their original purchase price. Recently, the pawnshops in Beijing raised the price they pay for diamonds — the pawning price — by 10 percent to 30 percent. Generally, the bigger the discount, the cheaper the diamonds. Huaxia Pawn Shop, located in Beijing, offers a pawning price for a 1-carat round diamond with H color, VS clarity and double EX cut at 30 percent off Rapaport list price. Under-1-carat stones with low color, clarity and cut grades have been 40 percent to
50 percent off the Rapaport price. 


THE MARKETPLACE

  • Retail sales cooled in June, and wholesale trading softened, but demand is still steady, which is customary at this time of the year in China.

  • Demand is stable for round, .30-carat to 1.10-carat, D-H, VS-SI, Gemological Institute of America (GIA)–certified diamonds in triple EX and double EX cut grade, with none to faint fluorescence. But demand is not as high as in 2011.

  • Many wholesalers in China describe business in 2012 as “challenging.”
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