Unperturbed by the recent arrest of 21 Indians for allegedly smuggling diamonds from Hong Kong to mainland China, Indian diamond jewellery manufacturers continue to actively explore the potential in the market of that vast country.
The arrests, in the second week of January, were in the southern China city of Shenzhen. These arrests, however, could not impact the sentiment of large Indian jewellery companies to expand in China. China has emerged as a large retail market and Indian companies wish to diversify away from the US market, as a de-risking move.
For the first time, the Gems & Jewellery Export Promotion Council, the apex trade body set up by the Union ministry of commerce, has prepared plans to participate in all exhibitions there. China hosts at least four mega gems and jewellery events every year and India had, so far, participated as a visitor. Now,GJEPC would encourage members to showcase products in exhibitions, said Vasant Mehta, chairman of the Council.
The Council is also looking for opportunities to organise road shows of Indian jewellery designs in all major cities, besides continuing its annual buyer-seller meet, scheduled for later this year.
Vishal Doshi, group executive director of one of the leading jewellery exporters, Shrenuj & Company Ltd, is exploring possibilities for retail chain acquisitions in China. However, when asked, he said, "It is premature to talk about the specific plans." The company may also set up independent retail jewellery stores for deeper market penetration. About two years earlier, city-based Suashish Diamond was planning a manufacturing unit at an investment of $5 million. The proposal was kept on hold due to the global economic recession, which affected jewellery sales. The company has renewed its effort for suitable locations.
Gitanjali Gems, the integrated jewellery manufacturer and retailer, Gems is also working out possibilities in China. Mehul Choksi, managing director, feels it is a market jewellers cannot ignore. The biggest attraction in China is the country's population and immense hidden potential in its middle class. Since their love for gold and diamond jewellery items has come up rapidly in the past one year, Indian jewellery manufacturers can make the most of the slowdown in the US and the EU, said Mehta.
Although, the US continues to be the undisputed market leader, consuming 40 per cent of global finished jewellery sales, the growing potential in China seems to pose a threat to the US.
"I believe China will overcome the US in jewellery sales in the next five to seven years," said Mehta.
GJEPC is also planning, for the first time, to invite a Chinese jewellery delegation to visit the India International Jewellery Show scheduled between August 19 and 23 in Mumbai.
In January, 21 Indians were among 33 foreigners arrested in Shenzhen on charges of smuggling diamonds worth millions of dollars from Hong Kong to mainland China to evade the 4 percent import duty.While being formally a part of China, Hong Kong is a duty-free import zone for rough diamonds, while imports into China attract a customs duty of four per cent. Therefore, not only Indian jewellery makers but also many others bring rough diamonds in millions of dollars into Hong Kong first and later supply to Shenzhen.