Editor’s Note
The diamond industry faces a seismic shift as De Beers, once the undisputed price-setter for over a century, grapples with a $2 billion inventory backlog and a 50% plunge in wholesale prices. This report examines the pressures reshaping the global market.
The diamond industry is undergoing a transformation! De Beers, which monopolized global diamond pricing for 130 years, is now facing an unprecedented crisis. The latest financial report from its parent company, Anglo American, reveals that De Beers’ inventory backlog has reached $2 billion (approximately 14.6 billion yuan), hitting a record high since the 2008 financial crisis.
More severely, the wholesale price of natural diamonds has plummeted by 50%, and the price of polished diamonds has fallen by 35% compared to two years ago. Even a 20% production cut has failed to curb the decline.
De Beers’ predicament is no accident. Over the past century, it elevated diamonds to the status of luxury goods by controlling mining sources, hyping “scarcity,” and marketing them as symbols of love. However, the rise of lab-grown diamonds in China has directly punctured this “exorbitant price scam.”
De Beers has made efforts to salvage the situation. It implemented measures such as production cuts, price reductions, inventory auctions, and marketing campaigns featuring supermodels… Even its parent company, Anglo American, is eager to divest the diamond business but cannot find buyers due to the industry downturn.
These circumstances tangibly expose the trust crisis facing the natural diamond market. A 2024 survey by the American Gem Society indicates that 63% of young people aged 18-35 believe “value for money” is more crucial than brand storytelling. De Beers’ long-proud “natural” label has lost its effectiveness under the impact of lab-grown diamonds.
More fatally, the lie of natural diamond “scarcity” has been exposed. The global actual diamond reserves amount to 2.5 billion carats, while in laboratories in Henan, China, it takes only about a week to “cultivate” a 1-carat high-quality diamond at a cost merely one-tenth that of a natural diamond.
While De Beers is in trouble, Zhecheng County in Henan, China, is emerging as a new global hub for the diamond industry. This area produces 6 million carats of lab-grown diamonds annually, accounting for nearly half of the global production capacity, earning it the title “China’s Diamond Capital.”
Zheguang Diamond from Zhecheng has successfully carved out a development path in recent years amidst competition from major luxury brands. According to JD.com’s business intelligence data, it currently ranks second in transaction volume within the jewelry industry, second only to a certain overseas luxury brand.
By the end of September 2024, the brand had garnered attention from 400,000 users on Taobao, JD.com, and its official website, receiving nearly a thousand inquiries or custom service requests for diamond jewelry daily, with monthly transaction volume reaching millions of yuan. High-net-worth individuals in core cities contributed over 80% of the performance, and wealthy overseas clients from places like the Middle East also sought their services. The marketing department head revealed that custom orders for 5 carats and above account for 40%.
Bain & Company statistics show that in China’s lab-grown diamond consumer market, high-net-worth individuals with an annual income exceeding 500,000 yuan account for 41%, and their consumption decisions are very rational.
More crucially, Chinese technology has overcome quality barriers. Lab-grown diamonds are identical to natural diamonds in physical and chemical properties, with even fewer impurities. The U.S. Federal Trade Commission recognized lab-grown diamonds as “real diamonds” as early as 2018, completely eliminating any distinction in identity.
Industry analysts predict that natural diamonds may retreat to the high-end investment market, while lab-grown diamonds will fully integrate into daily consumption. Bain & Company data indicates that the retail scale of lab-grown diamonds will exceed 30 billion yuan by 2025, with market share significantly increasing from 6.7% in 2021 to 13.8%.
De Beers is not sitting idle. It launched a lab-grown diamond brand and aggressively entered the Indian market. However, local consumption power there is only 28% of China’s, while domestic production capacity grows at 300% annually. Ultimately, discussion volume for its “Value Revival Plan” plummeted by 41%, with negative evaluations exceeding 57%.
In contrast, Chinese brands continuously innovate to survive, with products like pet DNA diamond rings and luxury replica services gaining popularity.
130 years ago, De Beers linked diamonds to love through marketing; 130 years later, China is using technology to return diamonds to their essence as consumer goods. When diamonds are no longer bound by scarcity, ordinary people can also easily achieve “carat freedom.”