A tax-free policy on the importation of diamonds is one of several factors that gives Hong Kong that added sparkle for Israeli gems traders. The city is also seen as an ideal base from which to make inroads to meet the increasing appetite for luxury goods on the mainland. To facilitate all this, an Israeli Diamond Institute (IDI) office in Hong Kong helps develop local contacts for Israeli companies wanting to attend fairs or other business events and provides short-term office space, business services and conference rooms to smooth deals with potential buyers. 'Our local office provides a home base for small and medium-sized Israeli companies or those just beginning to reach out to Asian markets,' said IDI Hong Kong's managing director Orly Yaffe. 'These companies receive information and guidance in our office, contact details of buyers in Hong Kong and Asia, as well as important tips on how to do business in Asia.' Hong Kong is the second largest market for Israel's polished diamond exports. In 2006, Israel exported US$986million worth of polished diamonds to Hong Kong, accounting for 15per cent of polished exports. Last year, net exports from Israel of polished diamonds to Hong Kong stood at US$1.3billion, representing 19per cent of total global sales. IDI launched a Chinese-language portal site last year to reach out to the mainland market in its own language. It is geared specifically to the Chinese market and includes a search engine to locate Israeli diamond companies, and news and information on how to conduct business with Israeli companies. 'The portal has become an important vehicle for facilitating trade contacts between Israel and China,' said Ms Yaffe. 'Since we officially launched our Chinese portal in July last year, we have had hundreds of new people registered from China and the region.' IDI has also opened several Chinese-language courses in Israel for industry members, which are oversubscribed. Its presence at trade shows in China has been increased to include five shows, including two trade fairs in Hong Kong as well as Shanghai, Shenzhen and Macau. 'In Hong Kong and Macau we have pavilions that feature up to 50 companies under the roof of the Israeli Diamond Industry,' said Ms Yaffe. 'The China diamond industry is undergoing rapid expansion, with rising wealth and consumer demand. This growth further supports Hong Kong's role as a centre for diamond trading, design, certification and marketing - and will do for many years to come.' According to the Diamond Trading Company (DTC), China is now the fifth largest diamond consumer in the world, with sales soaring from US$230million in 1995 to US$1.2billion last year. If this trend continues, the mainland should overtake the United States as the largest diamond consumer market in the next few years. The value of high quality gemstones has been rising at an annual rate of between 10per cent and 15per cent in recent years, according to DTC figures which could make diamonds a more attractive investment than gold. Ms Yaffe said Chinese traditionally invested in jade or gold and it would require some education and publicity activities to open their eyes to the investment opportunities diamonds could provide. 'Big diamonds are popular with consumers on the mainland,' she said. 'Stylish and unique diamond jewellery pieces are in demand, with mostly the rich and famous representing the main consumer group for large diamonds. Now there is an increasing demand for diamonds of at least half a carat, or even several carats, in size.'