Launched in 2015, Guangzhou Diamond Exchange (GZDE) is devoted to becoming an international trading platform and a comprehensive service hub. Currently, as diamonds under general trade pattern can only be imported or exported through Shanghai Diamond Exchange (SDE) in mainland China, GZDE innovated in its businesses and launched bonded diamonds exhibition, online and offline trading, and other matching services and products, in order to increase supply from the upstream of the industry chain and push through the transformation and upgrade of China’s diamond industry.
In February 2017, GZDE joined hands with Gem & Jewellery Export Promotion Council (GJEPC) to organise the ‘Indian Diamond Week’ viewing in Guangzhou, bringing quality Indian diamantaires to China, among which are sightholders of the world’s main diamond producers. On 21 April, GZDE unveiled its first rough diamond trading and online bidding at the China International Gold, Jewelry & Gem Fair – Shenzhen. According to the exchange, the rough diamond display lasted for two and a half days and attracted over 300 buyers to the preview and conduct business. Some products have been allocated directly to GZDE’s comprehensive trading members. Claimed the first rough diamond online sale in mainland China, the sale drew five major diamond companies in the Mainland to bid online for several rounds.
GZDE’s general manager Liang Weizhang told Hong Kong Jewellery that diamond viewings connect Chinese enterprises with international high-quality suppliers seamlessly and offer them a platform to cooperate and exchange. Rough diamond trading is GZDE’s key business that allows local practitioners to purchase rough diamonds directly from suppliers, eliminating the intermediary procedures, reducing production costs and increasing profits. After the transaction, rough diamonds can be processed directly at factories in Guangdong.
Liang said that since the world’s major diamond producers have their rigorous selection mechanism of sightholders, at present only a few Hong Kong-funded enterprises in the Mainland are appointed. Besides, there are some inconvenience and problems for Chinese companies engaging in international purchasing, foreign exchange settlement, etc. For these reasons, China’s diamond industry is mainly a processing and manufacturing industry in the mid- and downstream of the supply chain, with a lack of participation in international raw material purchase and consumer market. “This ‘two ends are both outside’ contract processing mode prevents diamond processing companies from feeling the changes of the domestic and overseas markets, and divides the industry chain which should be coherent into domestic trade and foreign trade,” he stated.
According to GZDE, the labour cost of China’s diamond processing industry is triple that of India. Even though some processing companies in the Mainland have realised mechanisation, this is not the case for melee processing. Besides, facing the challenges of the downturn of international consumer market and the limited raw material supply channels, most Chinese diamantaires have lost their orders and experienced business shrinking in recent years. However, diamond trading centres such as Belgium and Israel had started transforming 30 years ago, and India has been researching and developing diamond processing instrument, taking advantage of technology. Regarding this, Liang explained: “India’s diamond industry has an integrative industrial pattern that drives the development of commerce and trade, finance, insurance and other industries. Therefore, India has maintained the world’s highest rough diamond processing volume for long and is the world’s largest exporter of polished diamonds.”
Based on the statistics from SDE, the volume of diamond transaction in mainland China in 2016 reached over 309.2 million carats or US$4.45 billion in value with year-on-year growth of 7.5 percent. The import volume of polished diamonds was over 1.8 million carats, increased 26 percent compared to the same period of 2015. While China is the world’s second-largest diamond consumption market, Liang commented: “The problem China’s diamond industry is facing is not the short-term demand, but mid- to long-term supply.”
In view of this, GZDE plans to launch collaborative projects of international diamond trading to offer consistent and high-quality rough diamond supply to the industry, by virtue of their strong relationships with international trade associations and enterprises. Liang Weizhang projects: “Once a convenient supply is realised, the enormous demand for diamonds in China market will release more vitality.”
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