Rapaport Magazine - September 2017

Vol. 40 No.9 September 2017

THE YEAR OF THE DIAMOND King Opinion of Bling Meet celebrity India is on the rise in jewelry designer the jewelry sphere Stephen Webster

Special Auctions Report Retail RetailRap Trends Strong sales Is thereGeneva a real consumer for Sotheby’s and demand for synthetics?

Christie’s

Challenges What should and you stock opportunities for the holiday of season? customization

Style Legacy

Trade Style Report

Animal jewelry is alljewels TheLook impact new minechic for ofspace-age Carved-gemstone the this season. on the in nextKué year’s designs are rage still fetching top dollar Gahcho Go wild in your store rough market

NOTE FROM THE PUBLISHER

Taking a stand on synthetics

IMAGE: Ben Kelmer

The story of synthetic diamonds could not be more unromantic: reactors, greenhouse gases and industrial efficiency, the awe-inspiring billion-year pregnancy of a natural diamond boiled down to a two-week chemical reaction.

The end result may have the same molecular composition and physical properties as a natural diamond, but a synthetic diamond is simply not the real deal. Trying to suggest it is the same would be more palatable if our industry were simply selling a collection of carbon atoms.

But natural diamonds represent far more than chemistry.

Each natural diamond has been on an incredible journey, forged hundreds of miles beneath the earth’s crust and delivered into our world by the violent fury of volcanoes.

The rarity and billion-year history of natural diamonds has made them symbols of love, commitment and wealth.

Their story, for centuries, has been one of romance, intrigue and allure.

But if the story behind natural diamonds is of no consequence, and beauty and price are all that matter, why not buy your true love moissanite? It is a fraction of the cost, has greater brilliance and fire, and is tough to distinguish from diamonds.

The truth is, we don’t sell chemistry and lumps of carbon.

We sell the story, the romance and the wonder. All of this should make it clear: Synthetic diamonds cannot and should not compare to natural diamonds.

Still, at seemingly every opportunity, synthetic manufacturers try to convince customers their products are absolutely real diamonds. This is fundamentally dishonest.

They are beautiful carbon copies, but carbon copies nonetheless, with little or no resale value. If they are truly to succeed, synthetic manufacturers need to start weaving their own story, rather than continuing to masquerade as something they are not.

Rapaport Magazine is a champion of natural diamonds.

So while we will continue to give balanced editorial coverage, like this month’s special report (Page 24), to the ever-evolving synthetics sector, we will not carry advertising for synthetics companies due to their misleading marketing material. Synthetic diamonds are not eco-friendly. They are not more ethical. They have no scarcity and are not a store of value. The industry that produces them would have you believe they are the genuine article. That is simply a lie.

John Costello Publisher john.costello@diamonds.net diamonds.net

September 2017

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IMAGES: Graff Diamonds; Sotheby’s

CONTENTS

IN-DEPTH

RETAIL

MARKETS & PRICING

16 News

50 Retail profile

74 Trade report

Industry & Retail: Analyzing Signet and Tiffany results; Sarine makes the grading space more competitive.

Movers & Shakers: A look at who’s coming, who’s going.

Mining: De Beers’ first-half results.

Tailoring the traditional Indian wedding necklace to today’s brides is the specialty of online retailer Sampat Jewellers.

Dealers hope the Hong Kong show will boost business ahead of the holiday season.

52 Retail insight

77 US wholesale

Setting up a business where others vacation can be glamorous, but poses its own set of risks and benefits.

78 US retail

55 RetailRap

82 Israel

What are you planning to stock for the holidays?

85 India

34 Opinion: A new chapter for India

56 Retail showcase

86 Russia

The country’s jewelry market is bracing for growth as the trade swiftly overcomes teething pains from new government policies.

Thinking outside the box to appeal to millennials

88 Antwerp

24 Special report: Synthetics Investigating the natural diamond industry’s marketing campaigns, the latest detection developments, and consumer demand for labgrown stones.

COVER 36 Land of opportunity China is the world’s largest emerging market for luxury, and global retailers are clamoring for a piece of the pie.

39 Year of the Diamond

STYLE & DESIGN 59 Jewelry Connoisseur 60 Style

118 Calendar

From futurist designs to ladylike palettes – the key trends for Spring/Summer 2018.

120 In the heart of Surat

66 Designer

42 The Great Web of China

68 Legacy

E-commerce potential in the Eastern market.

Mughal-style carved gemstones captured the minds of Art Deco-era designers and are only gaining value with time.

46 Reflections An expert’s tale of how fancy shapes bring out the rich hues of colored diamonds.

diamonds.net

97 Price List 109 RapNet Price Sheet

Sarah Ho presents her new floral-inspired collection, the Wisteria Suite.

Designers from the Land of the Red Dragon are gaining momentum.

90 Polished data

Brooches are once again in vogue.

China’s bridal market is expanding along with its middle class, but there’s still room to grow – and the jewelry industry is ready to step up.

44 Mandarin expression

81 Hong Kong

70 Colored gemstone Does it make business sense for American retailers to buy in the East?

ON THE COVER

This striking artwork is part of the Chinese Bride series by Andre Tan, who kindly let us feature it on our cover this month. To discover more work by this artist, visit SaatchiArt.com

September 2017

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NEWS/INDUSTRY & RETAIL

Gemologists?

Who needs gemologists?

Sarine joins the grading game with reports based on its devices Suddenly, the diamond grading space has become competitive. With the GIA expanding internationally in recent years, and De Beers opening up its labs to generic diamonds to supplement its Forevermark grading, the industry has already taken note.

Now, Sarine Technologies has ventured into the grading field by expanding its signature Sarine Profile diamond report to include the 4Cs — information it will get through its own automated grading tools. In fact, the company has claimed its color- and claritygrading devices are yielding more reliable results than human graders.

“Sarine’s new reports can provide consumers with a more reliable and coherent way to buy diamonds and diamond jewelry, and can support the entire diamond pipeline with a new level of accuracy, objectivity and repeatability,” said CEO David Block.

The standard Sarine Profile report provides data on a diamond’s light performance and the quality of its hearts-and-arrows pattern, and offers advanced 3D diamond imaging. However, the new one will include the diamond’s cut, color, clarity and carat weight, making the digital service a valid grading report, the Israel-based diamond technology firm explained. It will also have an optional section stating whether the diamond is synthetic or treated. Further details will be unveiled at the Hong Kong Jewellery & Gem Show.

NEWS BRIEFS c Authentic Brands Group (ABG), a New York-based brand development company, acquired a majority stake in fine jeweler Neil Lane. ABG plans to expand Neil Lane into the home, travel and fashion sectors, while maintaining jewelry as its flagship product. c Fancy blue diamonds outperformed other colored-diamond categories in the second quarter, as supply shortages and solid Asian demand kept prices stable, the Fancy Color Research Foundation (FCRF) said. The group’s Fancy Color Diamond Index for blue diamonds rose 5.5% year on year, while prices of fancy pinks slipped 0.4% and yellows fell 2.5%. c Bonhams will feature a pear-shaped, 4.03-carat, fancy intense blue diamond at its London auction on September 20. The stone has sat in a private collection for more than 30 years and is expected to fetch between $1.5 million and $1.9 million when it goes under the hammer. c Rio Tinto unveiled the Argyle Everglow, the largest red diamond in the history of its annual Argyle tender, at a preview in New York. The radiant-cut, 2.11-carat, fancy red, VS2-clarity polished diamond is the centerpiece of this year’s Argyle sale, which features 58 diamonds weighing a combined 49.39 carats.

A ‘masterpiece’ of Russian diamonds Alrosa unveiled a collection of five polished diamonds, all manufactured in-house from the same 179-carat rough stone. The largest of the set is a 51.38-carat, D-color, VVS1-clarity diamond named The Dynasty, which Alrosa claims is the most expensive diamond ever cut in Russia.

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c The International Diamond Monitoring Committee has been set up to protect natural diamonds against the threat of synthetics. It will primarily work to eradicate illicit mixing of synthetics with natural diamonds by making detection machines more accessible. diamonds.net

Movers & shakers Patrick Evans, who until recently headed Mountain Province Diamonds, was named CEO of Dominion Diamond Corporation, another Canadian miner. The appointment follows the recent acquisition of Dominion by the Washington Companies for an estimated $1.2 billion.

De Beers has expanded the role of Stephen Lussier, its executive vice president of marketing.

Lussier oversees all of De Beers’ downstream activity, which now includes De Beers Diamond Jewellers after the company took full control of the retail operation from LVMH in March.

Alrosa named veteran banker Evgeny Agureev to head the United Selling Organization (USO), the miner’s sorting and sales division. He will work to make rough sales more efficient and transparent, and will oversee preparations for the upcoming three-year sales-contract period that begins in 2018.

Jewelers of America (JA) has elected John Henne as chairman of the trade organization.

Henne is president of Henne Jewelers, which his greatgrandfather Rudolf Joseph Henne established in 1887.

Members of the Shenzhen Rough Diamond Exchange (SRDE) elected Wang Ning as chairman. Ning, who is also the exchange’s CEO, will serve a renewable two-year term at the SRDE, a trading platform for diamonds, jade and gemstones.

Frank Everett returned to Sotheby’s after a brief stint at Graff Diamonds. Everett’s new role as senior vice president and sales director encompasses the auction house’s entire luxury and lifestyle division, expanding on his previous position as director of jewelry sales.

IMAGES: Alrosa; Bonhams

Pallinghurst Resources has appointed Sean Gilbertson (pictured) as CEO of coloredgemstone miner Gemfields.

Gilbertson replaces Ian Harebottle, who resigned from the position after Pallinghurst bought full ownership of Gemfields in early August.

The Company of Master Jewellers (CMJ) appointed Michael Aldridge (pictured) as its new chairman following the resignation of long-standing chairman Stephen Hughes and CEO Willie Hamilton. Aldridge told members that CMJ would refocus its strategy to return to its roots as a buying group.

IN MEMORIAM Fred Leighton, founder of the jewelry brand that bears his name, has died at age 85. Born Murray Mondschein, Leighton built a reputation for marrying vintage jewelry with fashion, seeing the potential for this market already in the 1960s, when it wasn’t too fashionable. Leighton is widely credited with today’s popularity of vintage and estate jewelry. diamonds.net

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SPECIAL REPORT/SYNTHETICS

FORCE OF NATURE The mined-diamond industry is reporting progress in convincing the trade – and the public – that lab-grown falls short of the real deal.

By Joshua Freedman For an industry frantically trying to relate to millennials, it’s striking that so many jewelers are skeptical about the movement that has burst onto the scene promising an ethical, sustainable alternative to mined diamonds. So far, it seems, the retail sector is still not convinced by the phenomenon of synthetics.

Most retailers will “definitely or probably not” sell synthetic diamonds in the coming year, according to a June survey commissioned by the Diamond Producers Association (DPA). Store owners and their employees gave a number of reasons for this, from the potential impact on their brand’s reputation to the fear of plunging price points.

The trade doesn’t think lab-grown stones are about to replace natural diamonds, if the survey is any indication. In fact, the numbers suggest leaders in the natural-diamond industry are having some success in persuading people that diamonds are only the real McCoy if they came from the ground.

Jean-Marc Lieberherr, CEO of the DPA, believes only natural stones deserve to be called “diamonds,” and he aims to shape both public and industry opinion with that claim. While synthetics are chemically identical to their natural counterparts, the value of a diamond comes from its billion-year history, he argues.

“The fascination that man has had with diamonds started well before diamond marketing started,” says the former Rio Tinto executive. “There was always a mystery around the origins of a diamond, something divine about it. They’re beautiful and hard, but were always much more than that.”

miners set up in 2015 as a marketing body to enhance consumer demand. So far, its “Real Is Rare” video and print campaigns in the US have tapped into millennial consumers’ desire for natural and genuine products.

The organization expects to intensify the US print efforts in the fourth quarter, and to launch campaigns in India this month and China next year.

As for policing the trade itself, the DPA is setting up a testing program to evaluate synthetics-detection machines. It is also a founding member of the International Diamond Monitoring Committee, which launched in July at the India International Jewellery Show (IIJS) in Mumbai. The committee works to ensure that natural and synthetic diamonds stay separate throughout the pipeline.

“There was always a mystery around the origins of a diamond, something divine about it”

Get real Synthetics, Lieberherr maintains, are reproductions of the real thing, but cannot claim to be the same product. “To suggest that is to suggest that a diamond gets its value from its molecular structure,” he asserts.

Defending the natural-diamond trade is one of the raisons d’être for the DPA, which a group of leading 24

September 2017

Conflicting views There are, however, threats to the natural-diamond business. Synthetics companies aim to attract consumers by offering lower prices, and claim to be selling a more sustainably sourced product. Suppliers such as Diamond Foundry — which counts Blood Diamond star Leonardo DiCaprio among its investors — have attempted to paint natural diamonds as unethical, and lab-created stones as the alternative for the socially conscious. But these claims lack basis, Praveenshankar Pandya, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), said at IIJS. “Natural diamonds are a much greener product,” Pandya argued. “Conflict diamonds are no longer an issue. [The industry] supports millions of jobs and livelihoods.”

Industry figures’ efforts to communicate the dangers synthetics pose to the trade are still at an early stage, but are showing signs of success, says the DPA’s Lieberherr.

“I’ve seen more and more people [in the industry] concerned about the declining value of synthetics,” the marketing chief observes. “It’s important we talk about our great product. I’m seeing a change.” c diamonds.net

WHAT’S IN A NAME? When a customer enters a store and asks if a synthetic diamond is “real,” how do you answer? That’s essentially what the trade is trying to determine when it debates what makes a diamond a diamond.

For Jean-Marc Lieberherr of the Diamond Producers Association (DPA), a block of carbon is only a real diamond if it was formed underground. It’s this story of a billion years or more that has fueled the industry — and sometimes supported entire economies — with the aid of effective marketing, he argues.

“How could that have happened if [a diamond is just] a piece of crystallized carbon?” he asks.

Guidelines from the International Organization for Standardization (ISO) as of 2015 seem to support this, defining a diamond as having been “created by nature.” Synthetic diamonds, meanwhile, are an “artificial product” that must be prefaced with a term such as “synthetic” or “laboratory-grown,” despite having the same molecular structure.

Tom Chatham, CEO of Chatham Created Gems & Diamonds, takes issue with labeling lab-grown stones as artificial.

“Lab-grown diamonds are identical to natural diamonds,” asserts Chatham, a founding member of the International Grown Diamond Association. “End of chemistry lesson.”

On the other end of the spectrum, some industry groups prefer to drop the term “natural” altogether, on the basis that all mined diamonds are natural. However, this practice doesn’t help retailers communicate with consumers, even if it makes sense to marketing theorists, argues former London Diamond Bourse president Harry Levy.

“We have to use the language the people understand, not our language,” Levy insists. diamonds.net

WHAT RETAILERS REALLY THINK “There’s growing awareness [in the industry] that you need to be careful before you embrace the syntheticdiamond category — that you do it in a way that will not impact your high-value natural-diamond business,” says the DPA’s Jean-Marc Lieberherr.

So how do retailers feel about selling lab-grown stones? c 61% of retailers will absolutely not sell synthetics over the next 12 months, according to a June survey conducted by 360 Market Reach on behalf of the DPA. c Of those naysayers, 45% fear stocking lab-grown diamonds would hurt their company’s reputation, while 36% cite a lack of consumer interest, and 25% are concerned about lowering the average value of customer transactions. c If you add those who said they were “not likely” to sell synthetics in the coming year, you get a large majority, the DPA reported.

Diamond Foundry jewelry (from top): Fiume necklace; diamond halo studs; Three Stone Tiny Frame ring; Emerald Pavé rose gold ring; Halo Pavé yellow gold ring. (diamondfoundry.com)

c The 250 sales associates, jewelers and sales managers at chains and independents who took part in the survey generally had strong awareness of synthetics but shaky knowledge of how they are made. Many did not know it only takes a few weeks to culture a diamond.

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COVER/EASTERN PROMISE

THE GREAT WEB OF CHINA

Liz Flora, Asia Pacific editor at New York-based market research company L2, talks e-commerce in the Eastern market What retail trends will be strong for luxury goods in China in the coming years?

Luxury brands will become more invested in e-commerce in China across a wider range of channels, as we’ve seen a significant number of brands, such as Gucci, Louis Vuitton and Chopard, launching new initiatives this summer.

WeChat commerce in particular will be an area to watch as it becomes more popular with luxury brands. The adoption rate [of this Chinese social media app] is still low, but we saw an increase in the number of luxury brands holding special WeChat sales for the Qixi Festival this year. Cartier has been a leader among jewelry brands, with a full-time WeChat boutique and unique promotions such as a free helicopter ride for the first 77 customers ordering Qixi Festival gifts through WeChat this year.

22% in 2016 to 33% in 2017.

It is crucial for brands to take control of their online sales presence in China, because they can bet there will certainly be gray-market sellers out there offering their products online if they aren’t doing so themselves.

competence. In this year’s report, Tiffany & Co. was in the “Gifted” category, with strong engagement on Weibo thanks to its online promotions featuring Chinese celebrity Xu Weizhou. Meanwhile, Harry Winston fell into the “Challenged” category due to a lack of digital basics that could help the brand reach Chinese consumers. c

Adoption of e-commerce

Which jewelry brands are the channels in China luxury most popular?

2014 2016 2017 Fashion brands Cartier was ranked second Watches & jewelry 2014 for digital performance 2016 2017 in L2’s “Digital IQ Index: DTC-ENABLED BRAND SITE Luxury China” report, which benchmarks brands’ digital performance across four key dimensions that include indicators that can show a brand’s popularity, such as social engagement or search volume. As the top jewelry brand, Cartier had the secondmost popular post [on social media site Weibo] among all brands in the watches and jewelry category, and received Is e-commerce the most record WeChat sales through TMALL STORE powerful tool today to reach an omni-channel promotion the luxury consumer in China? featuring celebrity Lu Han. E-commerce is becoming Bulgari rose to fourth overall increasingly important in in the ranking this year, thanks mainland China as the domestic in large part to its successful luxury market rebounds. While livestreaming promotion with most luxury purchases by celebrity brand ambassador Kris Chinese consumers still take Wu, which received 24.8 million place abroad, the return of views and caused the brand’s growth in mainland China’s daily Weibo Index to spike to 30 WECHAT STORE luxury market is prompting times its average. The brand’s brands to invest more in China Weibo post about the campaign e-commerce initiatives. was the most popular out of L2 found that the portion those by all Index luxury brands, of brands in the watches and including all fashion labels. jewelry category with online L2 has found that US shops in China increased from jewelers vary widely in digital Source: L2 “Digital IQ Index: Luxury China” report, May 2017 42

September 2017

diamonds.net

COVER/EASTERN PROMISE

YEAR OF THE DIAMOND

China’s bridal market is expanding along with its middle class, but there’s still room to grow – and the jewelry industry is ready to fill that niche. By Anthony DeMarco

Chow Tai Fook introduced its new Soinlove brand to expand its share of the wedding market in mainland China.

With the rise of a burgeoning middle class in the world’s most populous country, Chinese citizens are spending more on weddings and adopting more Western practices in traditional ceremonies.

Hollywood has certainly played a role in this cultural shift, as has China’s own celebrity culture, where high-profile weddings mixing Chinese and Western traditions can cost millions of dollars.

Tracking this “explosive growth” in the middle class, research firm McKinsey & Company has predicted that by 2022, more than 75% of China’s urban consumers will earn between $9,000 and $34,000 — up from only 4% in 2000 and 68% in 2012. People in this demographic also spend less than 50% of their income on necessities, and “display distinctive consumer behavior,” according to a 2013 report by the group.

The combination of this middle-class economic boom and the increase in Western influences has diamonds.net

transformed the wedding-services industry, which reached approximately $24.6 billion in 2016 and showed an annual growth rate of 3.9%, according to research group IBISWorld. This trend has opened up huge opportunities for the diamond jewelry industry as well.

Tapping into bridal Approximately 48% of brides in China acquired diamond jewelry for their weddings in 2012, compared with only 1% in 1994, according to De Beers’ 2014 Insight Report. They also paid more for it than other segments did: The average spend on bridal jewelry was $1,700, compared with $1,500 on pieces for alreadymarried women, and $1,000 for singles. In terms of carat weight, the bridal category had the highest average carats per piece.

Of course, consumers vary widely in what they’re willing to pay. ▶ September 2017

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COVER/EASTERN PROMISE Chow Tai Fook — China’s largest jeweler, with more than 2,200 retail outlets — says its bridal customers usually spend between $600 and $2,550, while US-based e-tailer Blue Nile has reported an average spend of about $3,000 in its Chinese market.

Despite these strong numbers, many in the diamond and jewelry industry see untapped potential in the bridal market as diamond engagement rings become more popular with millennials. In 2012, far fewer Chinese brides were acquiring jewelry than their US and Japanese counterparts, and the amounts they were spending were lower as well. But this means there’s room to grow, many believe — and De Beers’ Insight Report from 2016 considers millennials a key component of that growth.

“Bridal continues to be the dominant share of the Chinese diamond market,” says Nancy Liu, chief operating officer of De Beers diamond brand Forevermark.

“There are about 20 million people getting married per annum in China, which fuels the huge bridal market. The fast-growing, high-income middle class and the millennials have become the main forces in increased diamond consumption. Millennials are the core generation for bridal diamond jewelry, and the segment most resilient to economic volatility.”

What Chinese consumers want Blue Nile, the largest US online diamond and diamond-jewelry retailer, first entered China in 2012, and the region has quickly become the company’s secondlargest market.

“It’s far lower than where the US is today, but there’s a lot of longterm potential, and it’s one of the fastest-growing diamond markets in the world,” says Jon Sainsbury, Blue Nile’s chief revenue officer.

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Jewelry preferences in China differ in some ways from those in the US and other Western markets, Sainsbury notes. For example, hand sizes — and therefore ring sizes — are generally smaller in China, and mountings are lighter to accommodate this. Diamonds are also smaller, as Chinese customers are willing to sacrifice size for quality. Whereas US consumers will go for a larger diamond in H or I color, their counterparts in China will value smaller stones with F and G color and VS to VVS clarity, frequently requesting an ideal cut.

Among Chow Tai Fook customers, most diamonds run in the 0.2- to 0.4-carat range, and the simple solitaire is by far the most popular style, according to a company spokesperson.

Cultural differences also come into play. In China, the engagement ring isn’t a surprise purchase like it often is in the West, but something the bride, groom and even other family members may purchase together, Sainsbury explains.

One thing Chinese consumers do share with the US bridal market is a desire for white metals — especially platinum — and round diamonds, he reports. He attributes this to promotions by the large industry players, particularly De Beers and Platinum Guild International. “It’s very much Western style,” he says.

The desire for diamond jewelry has been predominantly centered in tier-one cities, according to Sainsbury, but it is expanding throughout the country as the wealth spreads. Style trends, too, tend to begin in urban markets and influence the rest of the country from there.

Diamond engagement rings (from top): Riviera Pavé Heirloom Cathedral; Monique Lhuillier Marquise; Colin Cowie Cathedral Solitaire Plus (bluenile.com).

Playing the market Blue Nile’s approach to marketing and gaining a presence in diamonds.net

China is similar to its strategy for other markets, Sainsbury says. However, there are several significant differences there as well.

For one thing, social media influencers have much more sway in China than in Western areas, making this a particularly important marketing channel. Blue Nile works to utilize these influencers to a degree, and often partners with social media outlets.

Another opportunity that Chinese wedding culture provides is “wedding fairs,” Sainsbury continues. These events take place in convention-center-type venues, and vendors from every part of the wedding industry present their products and services to newlyweds.

Blue Nile hosts a branded pop-up store at these fairs.

“It’s a full-service wedding experience,” he says.

“Jewelry, dresses, wedding venues, reception venues, honeymoon locations. About 30,000 to 60,000 people enter over the course of the weekend, and 3,000 to 5,000 customers will come into my storefront. We’ll close some sales, and there are good transactional prospects, but it’s really good from a marketing and brand perspective as well.”

Meeting millennial demands While the potential is vast, a market as big and diverse as China also poses challenges. For example, while millennials in China, like elsewhere, are more willing to eschew tradition and go for the Western-influenced styles the industry has to offer, they also bring a new set of demands that retailers must work to meet.

Millennials “value trustworthiness, brand experience, craftsmanship and the unique story behind the jewelry,” the Chow Tai Fook spokesperson explains. “Jewelry retailers thus have to capitalize on the escalating demand for authenticity and transparency.”

To that end, the company launched the Chow Tai Fook T Mark diamond brand, which allows customers to follow their diamond’s path from the mine through the design and manufacturing process to its final setting. The company further diversified its bridal offerings specifically for the Chinese market with a branded jewelry line called Soinlove.

In 2014, the retailer acquired US diamond jewelry brand Hearts On Fire, and has been incorporating the brand’s designer-focused products into its stores to capture “a more sophisticated group of Chinese customers who are willing to pay a premium for exquisite craftsmanship and design,” the spokesperson says.

Another challenge in China is economic instability.

In 2015, sudden volatility in the country’s stock diamonds.net

market led to an economic slowdown and weaker consumer sentiment. This caused a 14% decline in polished-diamond imports, bringing them to $6.69 billion. In 2016, polished imports increased 4.9% to $7.02 billion.

De Beers expects this trend to continue. “The gradual adjustment of China’s economy away from investment-led growth to consumer-driven growth is still under way, and volatility in Chinese demand can be expected in the short term,” the diamond producer said in its recent report.

However, most people invested in China expect that the continued growth of the middle class and the willingness of millennials to adopt Western practices in traditional Chinese wedding ceremonies will continue to create demand for diamond bridal jewelry.

“Among Chinese millennials, diamond jewelry is the most desired fine-jewelry item to own, with 52% placing it at number one, compared with 43% for older generations,” says Forevermark’s Liu. “In the future, it is likely that an increasing proportion of the wider, more affluent population will follow in the footsteps of the elites, and marriages will continue to grow.” c

CHINA’S BRIDAL MARKET IN NUMBERS c About 20 million people get married per annum in China c 48% of brides in China acquired diamond jewelry for their weddings in 2012, compared with only 1% in 1994 c How much is the average spend? $600-$2,550 (Chow Tai Fook) to $3,000 (Blue Nile) c What is the most popular style?

Solitaire rings White metals, especially platinum Round diamonds, often in the 0.2to 0.4-carat range c Diamond jewelry is the most desired fine jewelry, according to: 52% of millennials 43% of older generations

September 2017

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GLOBAL/ISRAEL

Questioning Israel’s cutting edge The nation has fallen behind India as the biggest polished exporter to the US. The bourse is trying to change that. By Joshua Freedman

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Exports still strong To try to keep this business in Israel, the bourse plans to open two cutting factories mainly for 3-carat-plus stones — one in the coming months and a second next year. It has also set up programs to attract rough suppliers to the bourse, in the hope that this will have a positive effect on production levels.

“We don’t feel the Israeli market is weakening,” said Shai Schnitzer, president of S. Schnitzer Diamonds and chair of the IDE’s rough committee. The export trade is stable, and the global nature of the industry means it is not a straight competition with India, he added. “Some Israeli companies are active in India, and some Indian companies are active in Israel,” he pointed out.

However, there are other factors outside most Israelis’ control. Many Indian cutting firms can get bank credit without providing proof of actual diamond sales, explained Orit Samet, CEO of Israel-based EZ Diamonds.

This enables them to offer attractive terms, making it almost impossible for Israelis to compete.

“Our whole industry could go to the Indians if nothing changes with the financing system,” Samet warned. c Polished exports to US $ Billion 10 9 8 7 6 5 4 3 2 2017

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Sizing up the market Israel’s defenders give two related retorts. One is that the nation is still the leader in manufacturing and supplying stones above 3 carats, even if India has pinched other work. The other claim is that the industry is too international for just one or two trade routes to dominate how we assess the state of the market.

“Most of the big stones, 3 carats and up, are selling now in the Far East,” said Yoram Dvash, president of the Israel Diamond Exchange (IDE) and owner of Y. Dvash Diamonds. “The US is mostly buying the medium-sized goods.... For me, it’s a shock, because most of my [own] business was built on the US.” Yet the finer points of the data show India is making inroads in the larger categories, too. In goods above 0.50 carats — including those destined for the allimportant 1-carat engagement rings — India’s stateside exports have taken off since 2007, jumping from $2.03 billion to $7.48 billion. Again, Israel reached its high point of $9.12 billion in 2008, but has failed to get

back to that level, and last year lagged behind India.

What’s more, India’s average export price for the larger diamonds has kept on growing, suggesting it is cutting bigger and higher-quality goods — so India may slowly be creeping up on Israel’s forte.

“You will see in another few years, the bigger sizes will also go to India,” predicted one large Israeli exporter.

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Indian Prime Minister Narendra Modi didn’t talk diamonds when he came on a much-hyped visit to Israel in July. This was partly because there were bigger trade matters for him to negotiate, such as defense and technology agreements. But then, India barely needs special deals to boost its diamond sector. For the past two decades, India has been sawing away at Israel’s polished-diamond business. Now numbers show it has knocked it off the top spot in the most important consumer market: the US. Polished exports to America have more than doubled from both Israel and India since the late 1990s, according to US government figures, but the two nations have seen subtly different trajectories. Israel’s US trade peaked at $9.48 billion in 2007 before stagnating.

In contrast, India’s shipments have grown consistently since 1997 and took a flying leap in 2010, going from $5.17 billion to $8.62 billion in the next six years.

Last year, a sharp increase helped India overtake its rival for the first time on record. The extra $1.25 billion of American business that India gained that year closely matches the $1.24 billion that Israel lost, suggesting this was a case of one country grabbing another’s market share. Israel’s polished exports to the US in the first half of 2017 dropped 6% year on year to $3.11 billion.

Source: US government data

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GLOBAL/INDIA

IIJS brings progress on trade issues With diamond jewelry gaining popularity in the local market, industry leaders tackle synthetics. By Zainab Morbiwala There’s heavy demand for round brilliant cuts across India

J-K,SI

J to K, SI stones are most in demand nationwide

G-H,VS,VVS

2 ct. ▼

South India specifically is showing demand for G to H, VS and VVS

Stars, melee and stones smaller than 2 carats are popular throughout the country Source: Mehul Choksi, Gitanjali Group chairman

The 34th edition of the India International Jewellery Show (IIJS) this summer gave the industry the opportunity to discuss major issues it is currently facing.

It proved to be a success in spite of the ongoing goods and services tax (GST) and post-demonetization crises challenging the country’s economy.

Dealing with synthetics Since the appointment of Praveenshankar Pandya as chairman of the Gem and Jewellery Export Promotion Council (GJEPC), dealing with the problem of synthetic diamonds getting mixed in with natural diamonds has taken top priority. The council has installed detection machines at the Bharat Diamond Bourse (BDB) in Mumbai and at some places in Surat, so diamond manufacturers and traders there can have their diamonds checked.

During IIJS, the World Federation of Diamond Bourses (WFDB) expressed its support for the establishment of an International Diamond Monitoring Committee by the GJEPC and BDB, a move announced earlier this year.

“All the major diamond industry bodies, including the WFDB and the Diamond Producers Association (DPA), took part in exhaustive discussions on the subject,” said WFDB president Ernie Blom, who attended the show.

The new panel, he added, “will have comprehensive objectives, including the monitoring of trends and instances of non-disclosure of synthetics, threats to the polished diamond sector, and agreeing on the most effective detection devices for trade members.”

Going their separate ways Mehul Choksi, chairman of the Gitanjali Group, stressed the importance of keeping synthetic and natural diamonds separate. diamonds.net

Synthetic diamonds ”should be marketed as a new category without impacting or interfering with the natural-diamond business. We are clearly against any type of illegal mixing or non-disclosure of these diamonds,” he said.

Choksi considers it a priority for his brand to educate customers about the difference between the two products. “All the jewelry sold by our brands comes with a certificate from a well-known international diamond lab, and we have always encouraged customers to view the certificates before making purchases,” he stated.

Fast-growing diamond market Meanwhile, the industry was upbeat about demand as the Indian festive season kicked off, just a month before the Diwali shopping boom.

“The diamond market is one of the fastest-growing sectors in India,” said Gautham Chand, managing director of Navrathan Jewellers. “The sale is witnessing changes in consumer preferences due to adoption of the Western lifestyle. Consumers are demanding new designs and varieties in jewelry and are showing a willingness to amplify traditional demand for gold jewelry with purchases of diamond jewelry.”

The shift to more profitable diamond jewelry has been smooth, continued Chand, because India is the world’s dominant processor of rough diamonds, and the country has a near-monopoly on processing small and lower-value diamonds.

Though diamond jewelry is gaining in popularity, there is a challenge in terms of consumer education, Chand pointed out. “Selling diamond jewelry is comparatively complex, because it requires consumers to have at least passing knowledge of the 4Cs of a diamond — color, clarity, cut and carat.” c September 2017

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CALENDAR of EVENTS

SEPTEMBER

OCTOBER

1- 4 JAS 2017, JAIPUR, INDIA jasjaipur.com

8-11 JEWELERS INTERNATIONAL SHOWCASE (JIS), MIAMI BEACH, FL jisshow.com

2-4 MIDORA LEIPZIG, LEIPZIG, GERMANY midora.de 3-5 INTERNATIONAL JEWELLERY LONDON, UNITED KINGDOM jewellerylondon.com 3-6 AUTUMN FAIR BIRMINGHAM, UNITED KINGDOM autumnfair.com

12-15 ISTANBUL JEWELRY SHOW, ISTANBUL, TURKEY october.istanbuljewelryshow.com 16-17 DUBAI DIAMOND CONFERENCE 2017, DUBAI, UAE dmcc.ae 27-30 NEW YORK CITY JEWELRY & WATCH SHOW, NEW YORK, NY nycjaws.com

13-16 ASIA’S FASHION JEWELLERY & ACCESSORIES FAIR, HONG KONG exhibitions.asiafja.com/9fj 13-19 HONG KONG JEWELLERY & GEM FAIR, HONG KONG jewellerynetasia.com 20-24 MADRID JOYA, MADRID, SPAIN ifema.es 23-27 VICENZAORO – FALL, VICENZA, ITALY vicenzaoro.com The Rolex Daytona “Paul Newman” (1968) and the Patek Philippe Perpetual Calendar (1951) are some of the outstanding timepieces Onlyvintage will display at the New York City Jewelry & Watch Show.

NOVEMBER 3-6 TAIWAN JEWELLERY & GEM FAIR, TAIPEI, TAIWAN taiwanjewelleryfair.com 8-12 BAZAAR BERLIN, GERMANY bazaar-berlin.de Unoaerre will display its jewelry at Vicenzaoro, including these glitter brass earrings.

23-27 PALAKISS SUMMER, VICENZA, ITALY palakisstore.com 27-OCTOBER 1 JUNWEX MOSCOW, RUSSIA restec.ru

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September 2017

8-12 VIETNAM INTERNATIONAL JEWELRY FAIR, SAIGON, VIETNAM jewelrytradefair.com 15-18 VOD DUBAI INTERNATIONAL JEWELLERY SHOW, DUBAI, UAE jewelleryshow.com 24-26 MINERALIS, BERLIN, GERMANY mineralis.de

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