China has been the main engine of demand growth for the diamond industry, with sales expected to double in the next decade, according to a private equity firm.

Bloomberg
Beijing
Wealthy Chinese who made their country into the world’s second-biggest market for diamonds are now increasingly travelling abroad to buy the stones, at a time when ostentatious purchases are frowned upon at home.
That’s the view of Tiffany & Co, one of the biggest jewellery outlets, and De Beers, the world’s largest diamond producer, which said sales of the stones have slowed in China.
Revenue from luxury jewellery worldwide is forecast to grow by 8% annually through 2018, according to Paul Gait, a London-based analyst at Sanford C Bernstein & Co. China has been the main engine of demand growth for the diamond industry, with sales expected to double in the next decade, according to Bain & Co, a private equity firm. Now, jewellers there are contending with an anti-graft campaign that’s already dented sales of luxury goods, including premium cognac and high-end watches.
“Patterns of buying by Chinese consumers are changing very fast,” said Bruce Cleaver, head of strategy and corporate affairs at De Beers, a unit of Anglo American. “They travel more, and they buy a tremendous amount more than they used to outside of China.” Xi Jinping, who became China’s president in 2013, is driving the toughest campaign against corruption since the days of Mao Zedong, targeting both high-level elites and people in less powerful positions. He’s seeking to curb a culture of bribery that’s seen as threatening growth. China’s economy is expected to expand 7% this year, the slowest pace since 1990.
The crackdown doesn’t “stop husbands and wives giving gifts to each other,” according to Cleaver. Instead it may have a chilling effect on those “who don’t want to be seen to be too ostentatious,” he said. The result: “a little less footfall in the Tier One cities in our stores.” Other factors may also be involved. The weak euro makes vacation shopping in places like Paris, where De Beers has two outlets, much more attractive, he said.
Meanwhile, Tiffany is seeing the same trend, according to Mark Aaron, vice-president of investor relations.
“We continued to experience softness in Hong Kong and Macau as we believe some Chinese tourists have been travelling to and shopping in other regions,” Aaron said during a conference call with reporters on Wednesday.
De Beers’s retail stores are a joint venture with the French luxury-goods company LVMH Moet Hennessy Louis Vuitton SE, and offer high-end jewellery that can fetch tens of thousands of dollars or more. There are six in China and 66 worldwide.