Israel targets 150pc increase in diamond sales

PUBLISHED : Monday, 09 July, 2007, 12:00am
UPDATED : Monday, 09 July, 2007, 12:00am

Former envoy heads regional office

Israel aims to export 150 per cent more diamonds to the mainland by the end of next year, a mission to be accomplished by a former Israeli envoy to Hong Kong.

Eli Avidar, the former Israeli consul-general, said his country would export US$250 million worth of diamonds to the mainland next year, up from US$100 million last year and representing 1.5 per cent of Israel's diamond exports last year.

To do this, the Israel Diamond Institute, a private company jointly owned by the Israeli government and diamond traders, is opening a regional office in Hong Kong today and has launched a Chinese website to allow business-to-business orders from mainland diamond wholesalers to Israeli diamond traders.

Mr Avidar, the managing director, said his institute wished to help small and mid-sized Israeli diamond companies reach the mainland market.

In a move aimed at combating diamond smuggling, Beijing reduced the value-added tax (VAT) for diamonds a year ago in July. The VAT for uncut diamonds entering the mainland through the Shanghai Diamond Exchange was cancelled, while that for polished stones was reduced from 17 per cent to 4 per cent.

Diamond trading countries, including Belgium and Israel, said they have benefited from the tax cut.

Marc Brauner, the chief executive of Belgium's International Gemological Institute, said that in the first five months of this year, diamond exports from Belgium to the mainland rose by more than 50 per cent.

Mr Avidar said that 15 mid-sized Israeli diamond traders had established offices in Hong Kong since the more favourable tax scheme took effect. Israel obtains most of its diamonds from South Africa.

One of the institute's objectives is to 'educate' Chinese consumers that diamonds are appropriate for celebratory occasions, including weddings. He said the main competitive items against diamonds on the mainland were luxury items such as jade and handbags.

Mr Avidar said Israel had in recent years transformed itself from a diamond-processing base into a diamond trading centre.

A KPMG report on the global gems and jewellery market published last year predicted the mainland diamond-processing industry would blossom 'with China emerging as a strong player with 21.3 per cent share of [global] diamond processing'.

The report also forecast that the value added by cutting and polishing would increase from 29.3 per cent in 2005 to 34.1 per cent in 2015.

Polished diamonds accounted for more than 20 per cent of Israel's total exports last year with the United States being its largest market, accounting for 63 per cent, followed by 16 per cent or US$1 billion worth taken up by Hong Kong.