The recently established China Diamond & Gem Exchange Center has received today the first batch of rough diamonds certified under the Kimberley Process, a US$284,000 (MOP2.2 million) batch of rough diamonds from Russia weighing over 600 carats and imported by Hong Kong-based conglomerate Chow Tai Fook.
“More than 600 carats is what we called ‘commercial size’, suitable for the market […] The most important [of adhering to the Kimberley process] is to be closer to the sourcing, manufacturing, and wholesale retailing,” the Managing Director of Chow Tai Fook, Kent Wong, told the media at the exchange center.
“I believe China will be the second-largest diamond consumption market in the world in the coming 10 years […] if we can source rough diamonds here […] of course we have the benefit of the proximity.”
The Macau government enforced new rules for the import and export of diamonds that came into force on October 1, bringing the territory into line with the rules of international trade, since without certification under the Kimberley Process diamond-producing regions were not able to export rough stones to Macau.
Created in 2003, the Kimberley Process aims at certifying the legal origin of diamonds sold on the international market, with the aim of preventing trade in so-called “blood diamonds” mined in war zones.
The China Diamond & Gem Exchange (MDGE) was established in 2018 in Macau, and signed an agreement with Shanghai Diamond Exchange to take over operational management of the MDGE trading platform for its first five years in activity, and another with the Industrial & Commercial Bank of China, which will offer professional financial services to global diamond and gem dealers coming to MDGE to do business.
“The Kimberley Process is extremely important for international diamond trade [… ]In the future, Macau will be in a key strategic position for the Asia global [diamond business],” the chairman of China Diamond & Gem Exchange (Macau0 Company Limited said today.
The Macau Economic Bureau (DSE) indicated that it has so far issued licenses to six companies to operate economic activities connected to rough diamonds, including Chow Tai Fook.
According to the company’s Managing Director, before Macau would sell diamonds sources in knowns diamond trade centers in Belgium or the Middle East and know the company will be able to shorten sourcing, polishing, and manufacturing of diamonds and gems to its about 3,200 jewellery stores in China
“We have our factory in Chunda, about two hours drive from Macau so once we purchase the rough diamonds we have a short distance to the factory […] We then allocate them to the over 3,200 stores. It gives us a much more flexible and agile business schedule,” Mr. Wong noted.
With Hong Kong already being a large diamond and gem sourcing center and with Chow Tai Fook already well established in the SAR, Mr. Wong considered that Macau would not compete with Hong Kong but complement it in this sector, especially in terms of diamonds from mining companies based in Portuguese-language countries.
“Traditionally Hong Kong is one of the hubs for trading polished diamonds, but now that we have a new diamond exchange in Macau it gives us a new option in terms of sourcing,” he noted.
Chow Tai Fook currently sources most of its diamonds from renowned large diamond mine companies such as Rio Tinto, DTC from the De Beers Family, and Rose, with a small percentage coming from Lusophone sources.
Concerning the impact on the jewellery business due to the current economic downturn suffered by the Chinese economy, Mr. Wong stated that impact was “only temporary” and would improve the long term thanks to the growing middle class in the country.
Watches, Clocks & Jewellery sales represented 20.5 per cent of the total retail sale volume – the largest share by any product category – but with sales falling 3.4 per cent year-on-year between January and September to MOP11.6 billion.
“China will still be a very important diamond consumption market in the long-time,” he added.
