Diamonds
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As U.S. business slips, India's eyes wander
By Michelle Graff
November 17, 2008
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| Mumbai, India-based Venus Jewel, an online seller of solitaire diamonds like these, sees growth potential in India, as well as in Hong Kong and China. |
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Mumbai, India--Amid the hustle and bustle of the India International Jewellery Show (IIJS) this summer, one thing was clear: Other countries are learning to live without the U.S. demand for diamonds.
According to figures from the Gem and Jewellery Export Promotion Council (GJEPC), polished-diamond exports increased 30.3 percent between the fiscal years 2006-2007 and 2007-2008, jumping from $10.9 billion to $14.2 billion.
While there is no denying the United States is important to India, Hong Kong is actually the No. 1 market for India's polished-diamond exports and has been since it surpassed the United States in 2004-2005.
In 2007-2008, according to the GJEPC, 35 percent of India's polished-diamond exports went to Hong Kong, followed by the United States, at 24 percent, and the United Arab Emirates--a market that is growing in importance to India--at 13 percent.
Though the United States is no longer No. 1, Sanjay Kothari, the former GJEPC chairman who left his post at the end of September, acknowledged that the U.S. downturn has hurt the Indian manufacturing sector, especially companies located in the specially taxed export zone--Santacruz Electronics Export Processing Zone, or SEEPZ for short.
"They are suffering," Kothari said at the show, held Aug. 7-11 at the NSE Complex in Goreagon, Mumbai.
Some companies in SEEPZ, where U.S. exports are down 30 percent, have had to lay off workers, while others have chosen to move outside the zone and cater to Indian consumers, Kothari said.
Still others are turning their attention to countries such as China, and to the Middle East. The importance of the Middle East, particularly the United Arab Emirates, to India has risen steadily in the past decade, GJEPC statistics show.
Back in 1990-1991, the GJEPC did not even keep data on polished-diamond exports to the United Arab Emirates.
Starting in 1994-1995, the federation started to make its mark with India, and the dollar amount of polished exports to the United Arab Emirates has steadily risen ever since, outside of a drop-off in demand between 2004-2005 and 2005-2006.
Kothari said the GJEPC considers the Middle East second only to the United States in importance, and it is the region that the promotion council is focusing on for growth.
In fact, the United Arab Emirates is where the GJEPC plans to launch its new "Made in India" campaign by the end of the year.
Made in India will be a line of branded jewelry that the GJEPC hopes will call attention to the high-end, design-forward jewelry that India produces.
Kothari said the promotion council wants to dispel the idea that India is a place that only manufacturers "Wal-Mart-type jewelry."
"We definitely want to change that perception," he said.
GJEPC Vice Chairman Vasant Mehta said India already supplies high-end jewelry to the United States, but consumers aren't always aware that their upscale jewelry is from India, and the campaign would seek to change that perception.
"That's the point of Made in India," Mehta said.
The Indian branding campaign is slated to launch by the end of the year, starting with Dubai, United Arab Emirates.
At press time, no date had been set for when U.S. retailers might expect to see the first Made in India pieces.
Just like the GJEPC, Mumbai-based IIJS exhibitor Venus Jewel, a Diamond Trading Co. sightholder and online seller of solitaires, is working to polish its image.
Venus Jewel Partner Anil Shah, who reported traffic at his booth was "good" during the show, said when the U.S. economy recovers, he expects demand for higher-quality stones to skyrocket.
"We are confident this can be a temporary phase and the U.S. economy can definitely bounce back from this situation, as we have witnessed earlier in the dot-com phase," he said.
Shah said consumers are becoming more aware that large, well-cut diamonds have better luster, cut and symmetry, and they don't hesitate to pay more for such stones.
Meanwhile, Venus Jewel isn't turning its back on the economic possibilities that are opening up in other parts of the world. Going forward, Shah said, Venus Jewel sees India, Hong Kong and China as "promising markets."
The company is also focusing on manufacturing larger diamonds, given that demand for bigger sizes has skyrocketed in recent years. That is a trend that Shah sees for customers worldwide.
Editor's note: This story first appeared in the October 2008 print edition of National Jeweler in the Your Store section.
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