Diamond Sales Get Huge China Boost

Xinhua Reports 12.7% Rise In Imports In First Half Of 2009 To $300 Million As China Eyes Top Spot In Global Diamond Consumption

Diamonds are becoming more popular -- and accessible -- every year in China

Good economic news in China this year has translated to good news for diamond producers, if figures released recently by China’s news agency, Xinhua, are correct. This year, following a nearly 50% decline in diamond sales in the US and 24% drop in Japan — according to China’s Global Times — China has become the world’s third largest diamond market with $300 million in sales through the first half of the year. Although this might sound like a lot, particularly in the context of the global economic slowdown, the Chinese market still has a lot of room to grow. Despite rough figures in the US over the past year, the American market still accounts for nearly half of world diamond sales, so the emerging Chinese and Indian markets will take several years of sustained growth to reach the capacity and consumer awareness of the established American and Japanese markets, a prospect that must please diamond producers immensely.

According to the Global Times, less informed middle class Chinese consumers are likely to be the easiest to reach for years to come, as diamonds are still relatively new to the Chinese market (about as new as the middle class itself). As younger Chinese buyers slowly become more informed about diamond grading and quality standards, the market is likely develop and mature:

Diamonds, once a luxury rarely owned by a Chinese family, has now become a must for Chinese newlyweds. According to [Wang Fei, researcher at the Cheungkei Research Center for Luxury Goods and Services (SITE) in the University of International Business and Economics,] the largest population of diamond buyers is newlywed couples born in the 1970s and 1980s.

Chinese Spending Buoys LVMH

Growth Among Chinese Luxury Customers Pushes Them Beyond Japanese, Americans To Become Top Consumers Of LVMH Brands

Chinese drinkers have made the country Hennessy's top market, surpassing the United States

LVMH Moët Hennessy • Louis Vuitton S.A., the mighty global juggernaut, has had a bit of a rough year in the traditionally reliable markets of North America, Japan and Europe. Despite cutbacks in spending in these established markets, however, there have been bright areas for LVMH, namely in emerging markets like China and the other BRIC nations and pockets of Southeast Asia. In regions where LVMH has only operated for a few years, or a few decades at the most, newly rich consumers are opening their wallets and flaunting their wealth in a way never seen before — and all of this translates to high hopes for luxury’s standard bearer.

In the wake of the global economic crisis, China has leapfrogged its developed-world counterparts in many high-end segments, driven mainly by the country’s second-tier urban growth, which — fueled mostly by commodity industries like coal which have not been as badly affected by the downturn — continue to grow and attract foreign investment. Second- and third-tier cities, which have seen high-end foreign boutiques opening up only in the last few years, have been a boon to major foreign brands because customers in these smaller cities present virtually no signs of “luxury fatigue” and feel that expensive luxury brands are an excellent way of conveying their newly found status — the flashier the better.

Earlier this year, China surpassed the United States as the world’s second-largest luxury market, and the country has Japan, #1, firmly in its sights. Many analysts believe that China, given current growth figures, should overtake Japan as the world’s top luxury market within five years. So what does this all mean for luxury brands? Today, the Wall Street Journal’s Matthew Curtin looks into LVMH’s “China Syndrome,” and make the case that where LVMH goes, so goes the luxury industry:

Chinese customers, both at home and on holiday in the shopping malls around the world, have become the biggest buyers of Louis Vuitton clothes and handbags and Hennessy cognac ahead of the Japanese and overtaking Americans.

Chinese Tap An Inner Dynamic To Drive Growth – FT

The Chinese Consumer Looks To Be One Of The Biggest Engines Of Global Growth In The Long Term

China's inland consumer is rapidly becoming the country's engine of change and growth. Image © New York Times

The Financial Times has an excellent article today about the rise of the Chinese consumer, once a virtually non-existent market but now the darling of the world’s multinationals.The article details how the Chinese government is trying to get consumers to make the shift “from export-oriented growth to a greater reliance on inner dynamism,” much like the United States did in the 19th century. Going along with observations I have made before, much of China’s current growth and transition is comparable to the same events in the US roughly 100 years ago — from the problems with quality control and political issues, consumer reluctance to spend, and business “grey areas.” The article is well-researched and focused, and includes many valuable insights into the monumental task ahead for the Chinese government — transforming the spending habits of over a billion individuals, who have been accustomed to high savings rates (for cultural reasons as well as China’s lack of a social safety net) and a lingering distrust of less established domestic brands (particularly since the reforms of 1978-79).

But the key to this article is its surprising (and incredibly significant) observation is its figures about the exponential growth of the inland, third-tier city consumer. This consumer segment has only now come to light, and as we have discussed before, inland Chinese cities look to be the future; not only for individuals, but for businesses and marketers as well.

Two Corners of the Globe, Two Chinese Art Exhibitions

Boston’s “Mahjong” Exhibition and Brisbane’s “China Project” Showcase Chinese Contemporary Art

Included in the Mahjong exhibition: Liu Xiaodong, "Eating", 2000

Two simultaneous exhibitions of Chinese Contemporary Art are bringing artwork from dozens of top Chinese artists to crowds in Boston and Brisbane, showing off the respectable collections of Uli Sigg (Boston show) and Nicholas Jose and Claire Roberts (Brisbane). The Boston Globe writes that the important works from Sigg’s extensive and exhaustive collection have provided guests with a great introduction to China’s thriving art world: