Rocks on a roll
Global market for cheaper diamonds heats up as China's middle class rapidly buys into the flawed beauty of a range of less-expensive stones
China's burgeoning middle class is buying diamonds so quickly that the price of mass-market stones is rising faster around the world than for top-quality jewels affordable only to the super-rich.
"The Chinese consumer's fascination with luxury goods has grown dramatically, along with their pockets," said Angelito Tan, founding partner of Robert, Tan & Gao, a consulting firm on luxury market strategy with offices in Shanghai and Beijing.
The price jump in more flawed diamonds benefits producers such as Russia's Alrosa, the world's biggest by volume with 30 per cent of output in 2011, and De Beers, the largest by revenue. Chow Tai Fook Jewellery Group, a retailer with a US$13.5 billion market value, said its average selling price dropped in the last six months as it sold more pieces.
Even as shoppers go down market in China, the world's second-largest diamond buyer since 2011, the gap to top-flight stones is still large: a flawless one carat "top white" round diamond would cost about US$28,800, according to online retailer Blue Nile, while a benchmark middle-market SI1-category diamond of the same size and colour would cost about US$7,200.
China's market was initially fuelled by a rich elite pursuing the best diamonds available. As the economy grew, a new wave of buyers emerged, opening the market to lower-quality stones that form the bedrock of US and European demand.
"The cultural taboo of having to buy the finest diamond is broken," said Anish Aggarwal, a partner at industry consulting firm Gemdax in Belgium. "Really high quality was the sacred thing. You needed to buy fine diamonds, there was a snob effect. That has just disappeared."