A fascinating trend has emerged in the Chinese market for lab-grown diamond jewelry, as revealed by the International Smart Diamond Association (AIDI) think tank. Their review of sales data from major e-commerce platforms in the third and fourth quarters of 2024 found that the vast majority of lab-grown diamond jewelry products on the market were centered around 1-carat round white diamonds. Large carat stones, fancy shapes, and colored diamonds were noticeably absent.
Upon deeper analysis, it seems that Indian lab-grown diamond manufacturers are cleverly utilizing this market strategy for competitive advantage in China:
- Imports of 1-Carat White Diamonds: Most of the few lab-grown diamond jewelry retailers in China source their main diamond stones from India. While full import data is difficult to access, a comparison with quarterly data from Indian industry sources confirms that the 1-carat white diamonds being processed and exported from India are predominantly shipped to China.
- Competitive Pricing of 1-Carat Diamonds: The price of 1-carat diamonds is highly competitive, particularly when compared to locally sourced lab-grown diamonds in China. This price advantage attracts Chinese retailers who are focusing on aggressive pricing strategies. These 1-carat white diamonds fit perfectly with their product strategies.
- Strategic Low-Price Tactics by India: For Indian lab-grown diamond manufacturers, the U.S. market demands large carats, fancy cuts, and colored diamonds. By flooding China with low-cost 1-carat white diamonds, they achieve multiple objectives: reducing inventory, freeing up cash to invest in CVD (chemical vapor deposition) production for the U.S. market, and disrupting China’s lab-grown diamond cutting and processing industry. This strategy effectively weakens China’s local market and secures India’s position in the global supply chain.
- Long-Term Market Disruption in China: In the long run, this strategy undermines China’s lab-grown diamond retail market, particularly its emerging consumer base. By offering low-price, low-quality, and overly competitive products, Indian manufacturers are driving away the potential demand for lab-grown diamonds in China, hurting the industry’s long-term development.
The AIDI Think Tank, a nonprofit organization under the International Smart Diamond Association (AIDI), conducts objective and open research on the global lab-grown diamond industry, offering strategic consultation services for industry development. The views expressed above are solely those of the institute and should be carefully considered by lab-grown diamond professionals and investors.