Royal Asscher Diamond Co., which cut stones set in Britain’s Crown Jewels, will open stores in China, competing with the Tiffany and Cartier brands as jewelry demand and production grow in the world’s most-populous nation.
Amsterdam-based Royal Asscher plans to have an outlet in Beijing by the end of this year and eventually expand to at least four locations in China with Hong Kong-based partner Sparkle Roll Group Ltd. (970), said Mike Asscher, head of business development in Asia and son of President Edward Asscher.
“Brand image is everything in China, and we have a very strong story,” said Asscher, a member of the founding family’s sixth generation. King Edward VII in 1907 asked his great-great- grandfather, Joseph Asscher, to cut the 3,106-carat “Cullinan Diamond,” the largest rough diamond ever found, to make the centerpieces of the British crown and scepter.
China’s spending on luxury clothes, bags, shoes, watches, jewelry, cosmetics and perfume probably rose 23 percent to 84 billion yuan ($12.8 billion) last year, consultants Bain & Co. estimate. Chinese demand helped boost polished diamond prices 10 percent last year, according to Rapaport Group, a provider of diamond prices. Cie. Financiere Richemont SA’s Cartier has 34 stores in the country and Tiffany & Co. (TIF) has 14.
Tiffany has gained 30 percent in the year through April 19 in New York trading. Geneva-based Richemont, the world’s largest jewelry maker and owner of brands including Chloe, Montblanc, Piaget and Shanghai Tang, climbed 31 percent in the same period.
Underpinning Asscher’s expansion is a jump in expertise and technology in China for cutting and polishing gem-quality stones, typified by Beijing Huapu Diamond Ltd., which turns as much as 35 percent of the Dutch company’s rough diamonds into jewels.
“The quality of workmanship there is now among the best in the world,” said Asscher in an interview at the Peninsula Hotel in Tokyo. He said 55 percent of work is also done in Russia, while stones larger than 2 carats are usually polished by the company’s most experienced craftsmen in Amsterdam.
Polishing quality in China has improved over the past 10 years as much of the work has become automated using computer- guided lasers, said Russell Shor, senior analyst at the Gemological Institute of America. “China has the expertise and equipment now” to produce high-quality cuts, he said.
While 90 percent of diamonds sold globally are cut in India, those stones are typically 1.5 carats or less, he said. A carat is one-fifth of a gram.
The wedding of Prince William and Kate Middleton, scheduled for April 29, has increased interest in merchandise related to Britain’s royal family. The occasion may boost U.K. retailers’ sales by 527 million pounds ($862 million) as consumers commemorate the occasion, Kelkoo shopping website said March 15.
China has 960,000 people with personal wealth of at least 10 million yuan each, 9.7 percent more than last year, according to the Hurun Report, the researchers who track the richest people in the world’s fastest-growing major economy. The nation’s luxury consumer is now No. 1 in either market share or growth, Hurun Report Chairman Rupert Hoogewerf said April 12.
Closely held Beijing Huapu polishes stones for 15 clients including top-tier European, American and Japanese jewelers, said the company’s owner, Zevi Klausner. He declined to name other customers, citing client confidentiality.
Beijing Huapu’s factory in the Tianzhu Export Processing Zone employs 230 workers handling diamonds, according to the company’s website.
Workers are paid between $300 a month to $900 a month, depending on experience and skill, said Klausner, who spent 25 years working in the diamond industry in Belgium. Labor costs didn’t drive Royal Asscher’s move to China, Asscher said.
Inside the factory, staff work with computers that guide diamond powder-coated steel polishing wheels revolving 2,500 times a minute. “You can only polish diamonds with diamonds,” Klausner said.
One of the most difficult shapes to master is the Royal Asscher cut, said Zhang Chunhua, the top polisher at the facility responsible for bottom halves of “fancy shape” cuts. Each facet requires as much as two hours of precision work and only workers with at least five years’ experience are allowed to work on the Dutch company’s signature shape, which has 74 facets, compared with 58 in the most popular round cut.
Reduced to Tears
“I’ve known workers who’ve quit because the requirements are so strict,” Zhang said, speaking through an interpreter as his co-workers played table tennis in the break area. With up to 60 days needed for a single stone, about double the time spent on round cuts, others have been reduced to tears, Klausner said.
Before being sent to store displays, finished diamonds are shipped back to Amsterdam for final quality control, Asscher said.
Founded in 1854, Royal Asscher is entering China later than competitors. Tiffany opened its first store in the Asian nation in 2001 and Cartier in 1997. Cartier was the most preferred jewelry brand of Chinese millionaires, according to Hurun Report last year.
Closely held Royal Asscher lacks the brand awareness enjoyed by larger global competitors, GIA’s Shor said. Still, “they have a good differentiated product that is difficult to replicate and a strong history.”
To contact the reporter on this story: Makiko Kitamura in Shanghai at email@example.com