China’s Diamond Market: lab diamonds are a girl’s (and guy’s) best friend

China’s diamond market has been the world’s second largest for over a decade. In particular, statistics from the Gems & Jewelry Trade Association of China reveal that the diamond jewelry market reached approximately 79 billion RMB in 2021. DeBeers Diamond Insight Report 2019 reveals that in China, love-related occasions account for 58% of the value of diamond acquisitions. Although less than 50% of brides in China acquire a diamond engagement ring, the number is rapidly growing, as 87% view diamonds as the main symbol of love. Love gifts are defined as presents given by one partner to another, before or after marriage. While diamond rings remain the most popular love gift, pendants and diamond studs together represent 30% of love gifts. An emerging trend in love gifting is complementary diamond jewelry for couples, who have a desire for reciprocity- rings again being the most popular. Another emerging trend is gifting diamond jewelry to celebrate a woman’s achievements, like a promotion.

In this article we will examine five emerging trends in China’s diamond market which include financially independent women buying diamonds for themselves, men looking to express themselves with diamonds and feminine jewelry, the shift to an affluent consumer profile after the Covid-19 pandemic, as well as the shift to online research and shopping, and lastly, lab-grown diamonds and reactions to them.

China’s Diamond Market is breaking stereotypes: Forever (self) love

One of China’s diamond market’s main trends is buying jewelry for oneself. Financially independent women buy diamonds to reward themselves for their achievements. DeBeers 2019 diamond insight report found that 28% of diamond purchases in China were self-purchases. Women like to buy diamond rings, earrings and necklaces as a status symbol showcasing their hard work and success. International advertising agency J. Walter Thompson found that 40% of Chinese women regard financial independence as more important than marriage.

Most women participating in the trend of buying themselves jewelry are Millennials. Chinese Millennials account for 68% of diamond sales in China- making it crucial for the diamond industry to tailor to their needs. When searching the word ‘diamond’ on Xiaohongshu, one of the first search results is an account with custom-made jewelry, with 8 million followers, followed by a similar account of 7 million followers. DeBeers 2019 diamond insight report found that Millennials would acquire more diamonds if there was innovation in design, once again revealing the need for self-expression through diamonds.

Lab diamonds vs real diamonds: feng j creations
Source: Barrons, ”Diamonds by Chinese contemporary jewelry designer, Feng J ”

Men like diamonds too

The idea of diamonds as a self-purchase and form of self-expression is not limited to Chinese women. China’s diamond market is unique in that men are interested in buying diamonds for themselves. Chinese men are not satisfied conforming to traditionally masculine jewelry like chains, gothic styles, so they turn to diamonds and unisex pieces. China’s ‘Little Fresh Meat’- young, handsome, male celebrities with an androgynous style- and KOLs , have made feminine aesthetics a fashionable and desirable look for men, breaking conventional stereotypes about men’s fashion. In 2020, Tiffany&Co. appointed the Chinese actor Jackson Yee, who wore rose-gold jewelry in the campaign, as brand ambassador for China.  Jackson Yee was nominated Most Popular Actor at the Weibo Movie Awards 2021 bringing great exposure to Tiffany&Co who later promoted him to global ambassador. However, big brands have been slow to pick up on the trend of male consumers buying feminine jewelry, thus male Chinese consumers have now no choice but to shop from the female categories.

Diamonds market in China: Jackson Yee Tiffanys
Source: WWD, “JacksonYee wearing rose-gold jewelry for a Tiffany’s campaign”

Covid-19 pandemic effects on China’s diamond market

The Covid-19 pandemic changed China’s diamond market- particularly affecting the demographics of consumers. The DeBeers 2020-2021 diamond insight report found that there has been a 30% increase of both average carat weight and price for diamond jewelry acquisitions in China in 2020. This was a result of the demand for diamonds declining for the average consumer but increasing for affluent consumers that demanded larger, higher quality diamonds. In the aftermath of the pandemic, this fact could be considered for future strategies and product launches in China.

Besides the demographics of consumers, the pandemic also caused a big increase in online research and purchases of diamonds. The DeBeers 2020-2021 diamond insight report found that diamond jewelry online sales on Tmall, Taobao and JD increased in the first quarter of 2021 by 49% year-on-year. In addition, 35% of consumers conducted research on diamonds online in 2020 compared to 25% in 2018. The Bain 2020-2021 diamond industry report found that only 25% of Millennials and Generation Z consumers bought diamond jewelry in store without researching online. These young consumers are mostly researching on Douyin, Xiaohongshu and WeChat. According to McKinsey, in China, a consumer engages with an average of 15 different touchpoints before making a decision, and 50% of them are digital. The importance of a strong online exposure and e-commerce for a brand has only increased since the pandemic.

Lab diamonds vs real diamonds in China’s diamonds market

China’s diamond mines have been the largest industrial diamond producers globally. As of 2016, the mines began producing gemstone quality diamonds using the HPHT (High Pressure High Temperature) method. These gemstones meet the 4C criteria: cut, color, clarity and carat, thus are able to be used for jewelry. Globally, 6-7 million carats of jewelry-grade rough diamonds are produced every year and 3 million of them are produced in China, of which 80% are produced in Henan province. On its Initial Public Offering (IPO), Henan Liliang Diamond’s (a manufacturer of synthetic diamonds) shares opened with an issue price of 20.62 RMB, and closed at 229.38 RMB.  Their net profit in 2021 surged past 271% year-on-year.

Chow Tai Fook, the world’s second largest jewelry retailer by market value, released a line of lab-grown diamonds on TMall through a brand called Cama as a ‘research project’. As soon as Cama was publicly linked to Chow Tai Fook, Cama disappeared from Tmall. Chow Tai Fook’s response was that they fully support the natural diamond industry and only sell natural diamonds, but they always conduct research projects on emerging trends to stay ahead of the curve. Chow Tai Fook’s defensive reaction may reveal negative attitudes towards lab-grown diamonds used in jewelry, especially engagement rings.

Are natural diamonds an ‘IQ tax’?

The Chinese often refer to diamond engagement rings as an ‘IQ tax’. This expression generally means that when you don’t make smart decisions you have to pay for them. China’s social media platforms present an ongoing debate on whether buying diamonds is an IQ tax or not. Although many men understand synthetic diamonds, they simultaneously fear their girlfriend’s reaction to receiving one. After all, you only buy an engagement ring once. In a video on Xiaohongshu, a man asks a woman if she would accept an artificial diamond ring- she replies, “definitely not”. The man then shows her photos of a lab-grown diamond and a natural one and asks her to guess which is real. She guesses wrong, but later comments on how the imperfection of the natural diamond makes it real and valuable, while the artificial one looks too perfect, and too good to be true.

Positive reactions to lab-grown diamonds

Surprisingly, most posts about lab-grown diamonds on Xiaohongshu are very positive, praising their cheap price- on average 1/3 less than natural diamonds’, and the fact that both chemically and physically, lab-grown diamonds are identical to natural diamonds. Many Xiaohongshu users like that they can afford a bigger, higher quality synthetic diamond than they would have been able to if they were to purchase a natural diamond.

In a post that shows a woman showcasing a large 6 carat synthetic diamond she custom-ordered for herself, a part of the long caption reads, “Who doesn’t like a big sparkling diamond? Looking at it every day makes me happy. Women should spoil themselves, not to please anyone. Confident women are the most attractive”. This post reinforces most of the points discussed in this article. She is a financially-independent, empowered woman who treats herself with a diamond ring, she shops and researches her acquisitions online, she prefers higher carat and quality diamonds, and she supports the emerging lab-grown diamond industry.

lab diamonds vs real diamonds: diamond jewelry worldwide market value
Data source: Statista, designed by daxue consulting, market value of lab-grown diamonds worldwide

With market value of lab-grown diamonds steadily increasing since 2018, and predictions expecting it to reach 185 billion RMB in 2025, the trend of lab-grown diamonds is not one to ignore. Synthetic diamond’s affordability will play a big part in their increasing popularity, while for those strongly against synthetic diamonds on engagement rings, synthetic diamonds could offer an affordable option for pendants and earrings used as accessories.

Major trends in China’s diamond market

  • China’s diamond market is the world’s 2nd largest.
  • Although less than half of brides in China receive a diamond engagement ring, the proportion is growing and most view diamonds as the ultimate symbol of love.
  • China’s diamond market ‘s emerging trend is women buying diamonds for themselves to celebrate their achievements and financial independence.
  • China’s diamond market is dominated by Millennial consumers.
  • Fashion-conscious men in China inspired by ‘Little Fresh Meat’ and KOLs are looking to express themselves and experiment with unconventional jewelry designs- through diamonds and gender-neutral pieces.
  • Most Chinese consumers research their options on social media platforms- before purchasing them in-person. However, many choose to fully shop online.
  • The Covid-19 pandemic has shifted the customer profile to more affluent customers who demand higher carat and quality diamonds.
  • China produces about half of the world’s lab-grown diamonds- most of them produced in Henan.
  • There are hesitations about lab-grown diamonds by famous jewelry houses as well as people on social media, although they still acknowledge and observe the trend.
  • Chinese refer to buying diamonds as an “IQ tax”- meaning you have to pay for your unwise decision.
  • Most Xiaohongshu users, both men and women, are happy to avoid the ‘IQ tax’, while also being able to afford a higher carat and quality diamond by purchasing lab-grown diamonds which cost about 1/3 of a natural diamond.

Author: Nefeli Georgiou


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