With the idea that diamonds represent a lifetime of love taking root in China, a country that traditionally preferred gold and jade, it is swiftly gaining as a vital international diamond jewelry market.

 

Luxury companies Cartier and Bulgari are just two high-end retailers who have recognized the potential of the vital new Chinese market and are aiming to expand operations.

 

Almost without trace, China has jumped into third place in worldwide diamond jewelry consumption after the United States and Japan, helped by clever advertising by De Beers and a booming middle class.

 

China consumes about 9 percent of the world's diamond jewelry, trailing The United States, which accounts for 42 percent, and Japan with 11 percent.

 

The Chinese diamond jewelry market, which was worth around $1.2 billion last year, is expected to grow 15-20 percent in 2004, according to official figures.

 

The overall jewelry market, including gold and platinum as well as diamond jewelry, is estimated to be worth $12 billon, with annual growth in the double digits. China’s jewelry makers consume annually 75,000 pounds (34,020 kg) of platinum along with 250 tons of gold.

 

It is no wonder, then, that Cartier flew in from Paris its Star of the South, a 128-carat diamond mined in Brazil in 1853, for the opening of its new China flagship store on Shanghai's historic Bund waterfront earlier this month. Meanwhile, Italy's Bulgari opened its first store in Shanghai last year and plans to open three to five stores in the next few years.

 

Although most of China's vast population of 1.4 billion cannot afford a flawless diamond set in platinum, the sheer number of potential buyers has attracted investment from South African, Israeli and Belgian diamond companies.

 

Within a decade, China's market is expected to overtake Japan’s, after already becoming the second-largest cutting center after India, importing 11.44 million carats of rough diamonds and exporting $803 million of polished diamonds in 2003.

 

This year the Asian giant exports are projected to total over 3 million carats, worth an estimated $1 billion.

 

Indeed, analysts say China may soon exert the same influence on the world diamond market that it has on commodities, precious metals and crude oil, thus keeping the price of diamonds on an upward trend.

 

Demand from China, Russia and India has been a factor in boosting diamond prices by 20 percent worldwide this year, according to industry experts and retailers.

 

With economic reforms continuing apace and Western influence growing, the Chinese diamond jewelry market is certain to grow further as the popularity of such jewelry spreads from the major cities to the rest of the vast Chinese hinterland.

 

But, for the time being, the potential for high-end goods is clearly limited, meaning that a range of price points is called for - especially less expensive jewelry. Having seen China's response to luxury goods, retailers selling at considerably lower prices are likely to feel encouraged that they, too, have a strong future in the world's remaining Communist superpower.

 

Meanwhile, more than 20,000 people work in diamond polishing in China, with an annual volume of 3 million carats.

 

And, as with the retail sector, and in fact many other industries too, China's polishing industry is also seen growing due to an increasing number of diamond firms preferring to polish diamonds in China rather than India. This is due to the higher quality of work in China but comes at the cost of higher wages.