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China: Incremental Jewelry Demand Driven by New Jewelry Stores

Diamond analyst Paul Zimnisky explains Chinese expansion
Hong Kong
Credit: Lewis Tse Pui Lung

In a recent interview with Mathew Nyaungwa from Rough & Polished, diamond analyst Paul Zimnisky said that China is opening new jewelry stores “at a relatively aggressive pace”, and that this is driving incremental demand for diamond jewelry. The new stores, Zimnisky added, were “crucial for the diamond industry as this means a brand-new source of recurring demand.”

 

Chow Tai Fook store in Hong Kong
Credit: Iris Hortman

 

Zimnisky said that diamond prices will continue to recover. When asked what is driving the continued recovery, Zimnisky said: “[…] I think the trajectory might normalize, but I think the general, overall trend of higher prices is more sustainable this time because the industry has a much more balanced supply position than it has had in the years past. I think that is sustainable in the medium term. On the demand side, demand is quite strong in the US right now, and I think it will remain relatively strong during the ever-important holiday season and quite possibly into next year.”

 

In China, as mentioned above, jewelry stores are being opened “at a relatively aggressive pace,” which is driving incremental demand. In Europe, Zimnisky said, the market “finally seems to be reopening, and the Middle East is starting to see some tourism return.” So, he concluded, “[…] the risk to diamond demand in the near- to medium-term is more macro in nature, but at the moment, the coast seems relatively clear, so we should enjoy it.”

 

Joey Wong LuLu Tung
Credit: Chow Tai Fook

 

When asked about what is driving the exponential growth in jewelry shops in China, the analyst referred to the robust growth of the consumer economy in China. He then talked about the importance of the aggressiveness of the major jewelry brands in China for the entire industry “because when new stores are opened they have to buy stock to fill inventory and then once the store is open, you have a brand-new source of recurring demand.”

 

Read the full interview here.

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