Synthetics – not the weak economy – are the main reason for sluggish diamond demand in mainland China, dealer and consultant Chen Shen told the Rapaport Diamond Podcast.
A drop in lab-grown prices has made the product more attractive to consumers in the country, Shanghai-based Shen explained in a conversation with Rapaport News Editor Joshua Freedman. A lack of design innovation has also hurt demand for natural stone, he added.
Even as the local economy recovers, “many people feel that the diamond [market] will not be the same as it was three years ago,” continued Shen, who himself has shifted much of his business from natural to synthetic.
“Five years ago, I was telling my friends in the US that lab diamonds were too expensive,” he recalls. “There’s no value. I said when the lab diamond [price] is about 20%, 30% of the natural diamond, then there’s a market. And that’s where we are now.
The president of gemstone dealer Skywalk Global reported slow trading at the important Jewellery & Gem World show in Hong Kong in September. Major Chinese retailers – a key source of sales at the show – have stopped buying for stock, he said.
But while the Chinese economy is weak, the overall state of luxury suggests that jewellers can succeed if they have smart marketing and offer the right products, such as gold and pearls.
“It’s a diamond problem,” he said. “It’s not a jewellery problem.”
