BEIJING — In a country that can't seem to change fast enough, old wedding and wealth traditions are being swept away by a growing national passion for diamonds.
Chinese consumers now have more disposable income, and they often want to show it to the world. A decadelong marketing blitz by the Diamond Trading Co. has paid off in sparkles, with young couples and, increasingly, younger, independent women investing in glittering stones to symbolize their romance, wealth and international taste.
The booming demand for stones has powered greater China, including Hong Kong and Taiwan, from practically zero diamond ownership a decade ago to being Asia's largest diamond consumer and the world's fifth-largest market — although it still accounts for a sliver of the global market.
"The Chinese middle class are great at absorbing international customs and making them their own," said Tom Doctoroff, Greater China head of J. Walter Thompson Co. and author of an oft-cited book on the country's new upwardly mobile, called "Billions: Selling to the New Chinese Consumer."
"The middle class, although they are not becoming Westernized, do want to be seen as modern and international," he adds. "Diamonds are being purchased now to project a contemporary attitude."
To that end, diamonds fit China's middle class like a glove. They can be showy and flashy, graceful or understated, but they always sparkle. They are virtually flying off the shelves in large and midsize Chinese cities, fast replacing the traditional gold bangles and jade adornments that once signified marital commitment and wealth.
In recent years, diamond sales in China grew by an annual average 7 to 8 percent, but the market soared by 18 percent last year, according to Christine Cheung, head of the DTC for Greater China. Cheung explained that DTC increased its spending on marketing in China by 75 percent, and specifically increased its focus on independent women.
"I think that really helped maintain the desire and interest for diamonds," Cheung said of the latest marketing push.
"Chinese women are very independent and they want to be able to show off their femininity," said Cheung.
For Guan Tianshu, a hip thirtysomething owner of a boutique in a trendy section of Beijing, diamonds are both a great accessory and a proper symbol of love. She has two diamond rings, both gifts from her husband, and isn't averse to buying more for herself. Guan, who dresses in funky, semicasual clothes, said she would consider buying diamond earrings or a necklace."If I see something and I particularly like the design, I might buy it," she said.
Still, she added with a smile: "It's better to get one as a gift."
While Guan's peer group is the newest emerging one among China's diamond consumers, weddings remain the primary force behind the boom. Most young couples preparing to marry now consider a diamond ring part of the wedding pact, just as in the West, and one that distinguishes them from previous generations, when marriage was often arranged by parents. Nine of 10 young Chinese women, according to one recent survey, said they expect a diamond from their fiancé when they marry.
"We have been building a kind of culture in China," said Cheung. "We are trying to build diamonds as the ultimate symbol of love."
DTC struck with its campaign in the mid-Nineties, at what seems to have been the right moment. In the past decade, China's middle-class has not only exploded in number, but upwardly mobile and wealthy young people are seeking new ways to distinguish themselves from the past. As in the rest of the world, diamonds have been positioned as a symbol of strength, wealth and endurance.
International jewelry brands have done well with diamond sales in China, but the most prominent on the Mainland are Hong Kong brands such as Chow Tai Fook and domestic giants like Hiersun. Stone sizes and prices remain well below Western averages, keeping the gems affordable as wedding gifts. The typical diamond wedding ring for a young couple here costs around $500, Cheung said.
Despite being a bright spot in the global diamond market, China's stone frenzy is not all rosy. Smuggling is a major component of the trade, and human-rights groups are critical of government efforts to boost the size of the domestic polishing industry. Diamond-cutting and -polishing jobs are notoriously low-paid and dangerous in China.
Until recently, as many as 99 percent of the diamonds sold in China were smuggled into the country without legal paperwork and taxes, allowing greater opportunity for the politically sensitive stones like "blood diamonds" that mature markets typically avoid. Polished stones have been the main focus of antismuggling efforts, because uncut stones are more likely to be declared since they are not subject to the same high luxury-goods tax as finished stones.In mid-2006, the Chinese government reacted to market growth in the face of widespread illegal trading and reduced the value-added tax from 17 percent to 4 percent on polished stones. Despite the luxury tax reduction, an estimated 85 to 90 percent of stones sold in China are smuggled ones.
Traders say that's because the process remains so complex that many prefer the more simple method of undeclared importation to China via unmarked luggage. If rough stones are polished here and then sold in China, for example, they are later subject to the 17 percent tax. Weeks of complicated paperwork cloud the process and dim enthusiasm for government procedures, traders say.
Lin Qiang, president of the Shanghai Diamond Exchange, said the Chinese government is committed to reducing smuggling. Still, he warned, the problem will never be eliminated globally. The diamond exchange — one of a handful in the world — was set up in 2000 to create a legal trading floor to ease trade of undocumented stones. Yet Lin admitted that change is slow to come.
"We can't eliminate the problem, but it is improving," he said.
As yet, there is little concern from consumers about the origin of their diamonds. Socially responsible consumerism has yet to catch on here, but may not be far behind. Meanwhile, the demand for diamonds isn't expected to subside.
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