China’s diamond industry having a hard time, any way you cut it, as more consumers go for gold
- With consumption taking a hit in fraught economic times, safe-haven investments are outshining discretionary diamond purchases in the eyes of many Chinese buyers
- But China’s consumer diamond market remains the world’s second-largest, and analysts say long-term potential remains as middle class grows
Since a viral hashtag – roughly translated as “diamonds collapse as gold goes crazy” – racked up nearly 100 million views on Chinese social media earlier this month, some diamond owners have been trading stories of regret.
“I bought a diamond ring, but since the wedding, it has been sitting in its box gathering dust,” lamented one user on the widely popular Weibo microblog service. “Equating diamonds with love is just marketing brainwash.”
“The most confusing thing about the 21st century is treating diamonds as precious treasures,” wrote another.
But even as China’s consumer diamond market – the world’s second-largest – has been losing its lustre, the nation’s appetite for gold has been insatiable. The diverging trends can be seen as a response to the country’s economic troubles. Analysts point out that, in times of uncertainty and shrinking wallets, people look to gold as a haven to store their wealth, and they cut back on discretionary purchases like diamonds.
“Chinese consumers are looking for ways to preserve their wealth amid weaker confidence,” said Gary Ng, a senior economist at French bank Natixis. “Gold carries the dual nature of consumption and investment, and it has better liquidity when reselling and more transparent prices than diamonds.”
It is understandable why gold has been favoured by Chinese consumers as of late
Mainland China, buoyed by years of rapid economic growth, went from representing just 1.5 per cent of the world’s diamond-jewellery market in 2000 to 13.4 per cent by 2014, according to a report released in August by diamond giant De Beers. After that boom, the proportion remained relatively flat through 2019. And by the end of the pandemic in 2022, China’s global share had dropped to 10.2 per cent.
