Editor’s Note
This article examines the shifting landscape of the diamond industry, where economic pressures and changing consumer preferences are challenging the long-held dominance of natural stones.
The halo surrounding natural diamonds is fading. De Beers, the world’s largest diamond company famous for the classic slogan “A Diamond is Forever,” has, over the past year, cumulatively reduced the price of its mainstream product—the 2-4 carat rough diamonds used for engagement rings—by 40%, with a 15% drop in July this year alone. It’s not just De Beers; the entire diamond market is bleak.
Behind this trend, besides the economic slowdown, is the rise of lab-grown diamonds. A century-old diamond “myth” is facing unprecedented challenges. More and more people are saying diamonds are merely an incredibly successful marketing story, not a truly valuable asset like gold.
Yes, lab-grown diamonds are real diamonds. A simpler analogy is the relationship between ice made in a refrigerator and naturally formed ice. Both lab-grown and natural diamonds are crystals composed of carbon atoms. Natural diamonds formed under high temperature and pressure over millions of years through geological processes deep within the Earth, eventually brought to the surface via volcanic eruptions.
Their physical and chemical properties are identical, including optical properties: a refractive index of 2.42, a Vickers hardness of 90 GPa, and identical dispersion. In terms of brilliance, luster, fire, and scintillation, they are also the same as natural diamonds. What we call “fake diamonds” mainly refer to cubic zirconia and moissanite.
Lab-grown diamonds fully meet the 4C standards (Color, Clarity, Cut, Carat) used for natural diamonds. They are indistinguishable to the naked eye and difficult to differentiate with standard instruments.
Official bodies have endorsed them. In July 2018, the U.S. Federal Trade Commission (FTC) revised its definition of a diamond, removing the word “natural” and including lab-grown diamonds. Major grading institutions like GIA, IGI, and HRD have also adopted the 4C grading standards for lab-grown diamonds.
There are two main production methods for lab-grown diamonds:
1. **High Pressure High Temperature (HPHT):** The first-generation technology, it completely simulates the natural diamond growth process. Graphite powder is converted into diamond under ultra-high temperature and pressure with a metal catalyst. HPHT is characterized by fast growth speed and low cost, but slightly lower purity. China predominantly uses this method, contributing about 95% of global HPHT production.
2. **Chemical Vapor Deposition (CVD):** A mixture of carbon-rich gas and oxygen is excited to decompose into active carbon atoms under high temperature and low pressure. These atoms deposit and grow into diamond crystals on a substrate. CVD features longer growth cycles and higher cost but higher purity. This technology is mainly used in Europe, the US, India, and Singapore.
2018 was a significant turning point when mass production technology for gem-quality lab-grown diamonds achieved a breakthrough. Since then, with lower prices, more environmentally friendly processes, and avoidance of ethical issues like “blood diamonds,” lab-grown diamonds have moved from the bridal market to broader fashion consumption, capturing nearly 50% of the diamond market share in the US.
At its core, the high value of diamonds has been driven by monopolized upstream supply and universal marketing. De Beers, historically controlling up to 90% of global diamond production, famously reduced supply to maintain high prices during the 1929 financial crisis.
The iconic “A Diamond is Forever” campaign launched in the 1940s successfully linked diamonds with eternal love and commitment, cleverly discouraging the secondary market.
However, De Beers’ monopoly has eroded over the past decade due to major diamond discoveries in Canada, Australia, and Russia, reducing its market share. The industry also faces challenges from films like “Blood Diamond,” which exposed unethical mining practices. Lab-grown diamonds, being virtually free from such ethical and environmental concerns, appear more pure and sustainable.
While major natural diamond miners still form a price alliance to control supply, the lack of a new universal marketing narrative since 2011 and shifting consumer values have weakened the natural diamond story.
The lab-grown diamond industry chain follows a typical “smile curve”: higher profit margins at the upstream (raw stone manufacturing) and downstream (retail) ends, and lower margins in the midstream (cutting and polishing).
* **Upstream:** Dominated by China, specifically Henan province, which has the world’s largest production capacity, primarily using the HPHT method.
* **Midstream:** Dominated by India, which processes over 90% of the world’s diamonds, with Surat city known as the “World’s Diamond Cutting Factory.”
* **Downstream:** The US and China are the top two consumer markets. The US has a more mature lab-grown diamond market, accounting for about 80% of global consumption with over 10% penetration in 2022. China’s lab-grown market is nascent, with around 2% penetration.
Younger consumers are increasingly disinterested in the traditional narrative linking natural diamonds solely to marriage. Shifts in female perspectives and social status have made diamonds less of a necessity. Brands are adapting, using words like “freedom” and “independence” to market lab-grown diamonds for self-pleasure and everyday wear.
Awareness is growing that diamond rings are not good investment assets. Their high price historically depended on consumer acceptance of a crafted story.
Looking ahead, market disruption is certain, but coexistence is likely—similar to “Swiss watches vs. Apple Watches.” Lower-quality, smaller natural diamonds (e.g., below 30 points, I-J color) may be replaced. Natural diamonds will likely retain a niche for high-quality, branded pieces.
Lab-grown diamonds will move towards accessible luxury, decoupled from weddings, becoming more普及化 (popularized). Sub-10,000 yuan diamond necklaces, bracelets, or rings will cater to self-purchase trends. Technologically, lab-grown diamonds will likely be produced with consistently high color (D-F) and clarity (VVS) grades.
Especially during economic downturns, practicality and value retention become key considerations when buying jewelry. Significant depreciation in the secondary market for diamonds is becoming the norm.