Editor’s Note
This article highlights two significant trends impacting the global diamond market: shifting demographics in China and the rise of lab-grown alternatives. It is based on a report from the South China Morning Post.
Global diamond market is facing significant difficulties due to a double blow from China. A sharp decline in demand caused by China’s plummeting marriage rate and the mass production of synthetic diamonds are fueling a drop in natural diamond prices, according to a report by the South China Morning Post (SCMP) published in Hong Kong on the 22nd (local time).
According to Bank of America Global Research, wholesale diamond prices have fallen by about 40% over the past two years. Notably, the Zimnisky Rough Diamond Price Index has shown a steep decline since hitting a record high in 2022.
The contraction of China’s diamond market is primarily attributed to the declining marriage rate. The number of marriages in China is expected to be less than 6.6 million in 2024, which is less than half the level compared to 2013. The downturn in China’s diamond market, the world’s second largest (USD 9 billion) after the United States, is having a major impact on the global market.
Adding to this, the rapid growth of the synthetic diamond market, led by China, is accelerating the decline in natural diamond prices. Henan Province in central China has emerged as a ‘global production hub,’ producing half of the world’s synthetic diamonds. According to the China Superhard Materials Association, as of mid-2023, China produces approximately 95% of the world’s synthetic diamonds.
The market share of synthetic diamonds is also surging. Economist Rajiv Biswas explained, “Synthetic stones currently account for 15-20% of global diamond jewelry demand, a significant increase from 1% in 2015.”
According to Research and Markets data, the global synthetic diamond market size reached USD 15.3 billion in 2023.
Price competitiveness is a strength of synthetic diamonds. Vivian Wu, CEO of the Shanghai-based diamond company Wei An Xiang Mao, conveyed, “Customers no longer need natural diamonds from luxury brands like Tiffany. Newlyweds are looking for smaller gems to fit their reduced budgets or choosing synthetic stones that cost only one-tenth the price of natural ones.”
Industry experts predict that synthetic diamonds will show strength in the fast-fashion style jewelry market. Chinese consumer in her 30s, Yu Jing, explained her actual purchasing experience, saying, “The cost-effectiveness of synthetic diamonds, which are difficult to distinguish from real ones, is good.”
This trend is expected to continue for the foreseeable future. Amid China’s ongoing economic slowdown and shrinking consumer sentiment, synthetic diamond production capacity is expected to continue expanding. Experts assess that the natural diamond market is facing structural changes.
Changes in China’s diamond market provide important implications for the Korean economy. In particular, Korea is expected to undergo similar changes in terms of declining marriage rates, shifts in consumption trends, and growth of the substitute market.
First, similar to China, changes in the luxury jewelry market appear inevitable in Korea due to declining marriage rates and consumers’ increasing focus on value consumption. This suggests that the domestic jewelry industry needs to develop products and services that meet new consumer demands.
Furthermore, the growth of China’s synthetic diamond industry is expected to impact Korea’s materials and components industry as well. Particularly in the field of advanced materials, China’s improving technological capabilities and price competitiveness could pose a threat to Korean companies. Korea will need to secure competitiveness through the development of high-value-added special materials and technological innovation.
China’s case demonstrates the need to proactively respond to the restructuring of consumer markets due to demographic changes and industrial structural shifts driven by technological innovation. It is time for Korean companies to establish strategies to utilize these changes as new opportunities.
