China Affair With Cheap Diamonds Heats Mass Market: Commodities
Before, the trend in China for the demand of luxury goods, such as diamonds, was that the consumers wanted the best of the best. Only the richest elite could afford luxury goods. However, a shift in the demand for diamonds specifically points towards a new trend of a growing middle class, both in size and in income. Lower quality diamonds are now being purchased, and although they are lower in price, they make a much higher portion of diamond makers’ revenues now.
“China surpassed Japan in 2011 to become the biggest diamond consuming nation behind the U.S.” The fact that most of these diamonds are now lower quality, the indication is that the majority of the population are buying them. Specifically, the urban population, of which China has seen a growth of 230 million people since 2000, “the greatest urbanization in history.” Also, income has seen a growth of 13 percent, or about $330 a month, allowing greater spending on luxury goods.
The long term view of the diamond industry is that the population and consumption of goods will only increase in China through 2020. This means diamond producers will have to expand their resources to try and ensure that their supply can meet demands.