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Chow Tai Fook Says No to Synthetics

Chinese consumers are not interested in the category, argues Hong Kong-based retailer.
Sep 16, 2018 9:19 AM   By Avi Krawitz
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RAPAPORT... Chow Tai Fook, Hong Kong’s largest jewelry company, has ruled out introducing a line of lab-grown diamonds at its stores, noting that Chinese consumers are not interested in the category.

“We don’t have any idea to develop lab-grown diamonds at this moment because we don’t see any market for it right now,” Kent Wong, managing director of Chow Tai Fook Jewellery Group (pictured), said in an interview with Rapaport News on Friday. “Chow Tai Fook is a jewelry brand as well as a diamond brand, and our brand value is authenticity, so we have to live up to that.”

The emphasis on natural products being real and authentic is too strongly embedded in the local consumer mindset and Chinese culture, he explained.

To illustrate the point, he noted that Chow Tai Fook’s Monologue brand, which targets younger Generation Z consumers, saw a sharp increase in sales since it introduced a line of natural-diamond jewelry. When the brand first launched about a year ago, it excluded diamonds from the product line and focused on low-priced materials, such as crystal stones set in silver, so that it could sell at an average retail price of CNY 1,000 ($146) — compared to a group average of CNY 3,500 ($510).

However, sales stagnated, forcing the company to fine-tune the collection to include pieces with small diamonds and 18-karat gold, even if it meant the average price would go up. “The result is that sales have increased, and our diamond pieces now contribute 40% of Monologue’s revenue,” Wong reported. “So, it’s important to understand that Chinese consumers value natural as real, and there’s no grey area in China when it comes to man-made diamonds.”

In contrast, more US jewelers are moving into the lab-grown-diamond space. Earlier this month, Gina Drosos, CEO of Signet Jewelers, said the company was closely monitoring the category and would make sure it was well positioned to participate in the synthetics market if there was sufficient consumer demand. Similarly, De Beers is scheduled to start selling its line of Lightbox lab-grown-diamond jewelry in the US via its website this month.

Despite the growing interest in lab-grown, the Gemological Institute of America (GIA) has not seen a rise in the number of synthetic diamonds being submitted for grading at its labs, according to Tom Moses, executive vice president and chief laboratory and research officer at the GIA. “What we have seen, since we do a lot of testing of small diamonds, is an increase in finding synthetic diamonds mixed in those parcels,” Moses told Rapaport News.

Chow Tai Fook has teamed with the GIA to deliver secure, digital diamond-grading reports to consumers through the jeweler’s T-Mark brand. The program uses blockchain technology to secure the reports, which provide information about the diamond’s journey from rough to jewelry in addition to the GIA’s 4Cs data points. 
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Tags: Avi Krawitz, Chow Tai Fook, De Beers, GIA, jewellery, Jewelry, lab-grown, Signet Jewelers, Synthetic diamonds
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