China Market Report

RAPAPORT… The grand parade celebrating the sixtieth anniversary of the founding of the People’s Republic of China (PRC) was held in Beijing on October 1. In his speech at the parade, which was televised live nationwide and throughout the world, President Hu Jintao said the Chinese people are full of confidence at the bright prospects of their rejuvenated nation, and that the country is fully capable of continuing its development and making a contribution to the world. President Hu further pledged that China will pursue a path of peaceful growth and work to develop friendly relations in a spirit of cooperation with all countries. In reporting on the speech, the foreign media commented on China playing an increasingly important role in the world.

Holiday Week
The National Day Golden Week of 2009 from October 1 to 8 was a day longer than usual and continues to be a very important season for retail, feasts, traveling and weddings. The Shanghai Wedding Trade Association estimated that the number of marriages recorded in China during the eight-day holiday exceeded 40,000, the highest in three years. The diamond wholesale market was busy before the holiday, and was closed during it, but retail sales continued throughout the eight days.

Caroline Yuan, director of the Shanghai Diamond Exchange (SDE), said that China’s diamond sector has been riding the wedding craze among young people, who have particular fondness for diamonds, and is reporting robust retail sales of diamond jewelry. In spite of the global financial crisis, China is a relatively stable consumer market for diamonds and the anticipated wedding rush is likely to keep diamond imports rising.

 More than 228 million of the 1.3 billion Chinese traveled within the country during the holiday this year, spending $14.74 billion, 26.4 percent more than during the same holiday in 2008. Retail sales of consumer goods during the eight days totaled $83.5 billion, with average daily sales up 18 percent compared with the same period in 2008, according to the Ministry of Commerce.  Sales of household appliances soared, as did sales of jewelry and automobiles. Jewelry sales at Caishikou Department Store in Beijing approached $15 million, up 30 percent year on year.

Antwerp Welcomes China’s Vice President
China’s Vice President Xi Jinping visited the Antwerp World Diamond Centre (AWDC) on October 9 as part of his official three-day visit to Belgium, and was welcomed by Prince Philip of Belgium and other government officials. The vice president visited the AWDC diamond office, the inspection office for Belgian diamond imports and exports and the HRD Antwerp Diamond Lab.

Two days earlier, Lin Qiang, president of SDE, had signed an Agreement of Collaboration with AWDC in Brussels, in the presence of Vice President Xi and Belgian Prime Minister Herman Achille Van Rompuy. The agreement strives to strengthen the cooperation between the diamond industries of the two countries and boost Belgian diamond export to China. SDE will organize a group of its members to visit AWDC in 2010, and Antwerp trade members also will visit SDE.

The agreement was just one more sign of increased attention being paid to diamond trade between Belgium and China.  Freddy J. Hanard, chief executive of AWDC, said the October 9 visit “underscored the importance of the Antwerp diamond sector for China. Diamond exports to China reached a record high of $300 million in the first half of 2009. This represents an increase of 12.7 percent compared to the same period of 2008. Exports of polished diamond from Antwerp to China increased by 34.23 percent in carat volume in September 2009, compared to September 2008. While the international diamond market is facing sluggish demand, China has strong domestic consumption, especially in the wedding market, and is now the world’s third-largest diamond consumption market. We therefore want to enhance and stimulate further the diamond trade and encourage a common ‘diamond culture’ between both diamond centers.”

Continued Growth
According to the annual World Wealth Report published by Capgemini and Merrill Lynch in June, China’s population of high-net-worth individuals (HNWI) — those worth $1 million or more — surpassed Britain in 2008 for the first time. North America, Japan and Germany together still accounted for 54 percent of the global total of millionaires, but the authors of the report also predicted that Asia-Pacific would surpass North America by 2013. The latest listing compiled by Hurun Report, a research and publishing house based in Shanghai, showed that the number of known U.S.-dollar billionaires in China increased to 130 from 101 in 2008.

China was ranked as the largest car market in 2009, and Credit Suisse forecast in September that China’s share of global consumption would overtake that of the U.S. by 2020.  In the luxury market, expensive cars, watches, gemstones, wines and leather goods, etc. sell very well.  Meanwhile, auction houses Christie’s and Sotheby’s are paying increased attention to Asia, including Hong Kong and Mainland China.
The Marketplace

• The Shanghai Diamond Exchange (SDE) relocated in October to its new premises at the China Diamond Exchange Center.
• The wholesale market was busy before the eight-day National Golden Week holiday and the retail market was booming during the holiday.
• The most popular goods remain round 0.30- to 1.10-carat, D-J, VVS-SI, Gemological Institute of America (GIA)-certified goods, preferably EX cut.