China's blushing brides-to-be follow simple rules when shopping for diamond rings. "The bigger, the better, of course!" said May Yi, a Beijing professional, sitting down with her fiancee for a day of temptation and agony at a jewellery store in the capital. The idea that diamonds symbolise a lifetime of love has taken root in China, a country that traditionally prefers gold and jade, and where precious stones were unimaginable luxuries just 10 years ago.
Driven by savvy advertising from South Africa's De Beers and a booming middle class, China has vaulted into third place in world-wide diamond jewellery consumption after the United States and Japan, according to the Diamond Administration of China.
"Maybe it's because I've been influenced by Western ideas, but diamond rings are really popular," Yi said. "It's become normal for everyone I know to buy them when getting married."
The China market should overtake Japan within ten years and will also become the world's second-biggest cutting centre after India, De Beers estimates.
Most Chinese can't afford a flawless stone set in white gold or platinum, but the sheer number of potential buyers is enough to draw investment from South African, Israeli and Belgian firms.
"Japan, for the diamond business, is yesterday. America is today, because they take a big percent. But I think China will be tomorrow," said Liu Yansheng, China chairman of Michael Diamonds, a partner of Cape Town-based Transhex.
The United States currently consumes about 42 percent of world's diamond jewellery, compared to 11 percent for Japan and nine percent for China, he said.
The domestic diamond jewellery market, worth about $1.2 billion last year, is expected to grow between 15 percent and 20 percent in 2004, according to official figures.
The retail market is fragmented, but the wholesale market is dominated by De Beers, 45-percent owned by mining conglomerate Anglo American.
De Beers, blasted by critics for what they call unfair pricing policies, has been selling diamonds in China for industrial use since the 1950s. Some 80 percent of all diamonds are used as cutting or drilling tools.
But China's market for industrial diamonds -- used in energy, electronics and medical applications -- is relatively small, at between 70 million yuan ($8.5 million) and 80 million yuan ($9.7 million) a year, with flat growth, executives say.
Its own production of diamonds is tiny, so it relies on imports. Analysts say China may soon exert the same pull on the world diamond market that it has on commodities, precious metals and crude oil.
Demand from China and Russia has helped boost diamond prices by 20 percent world-wide this year, experts and retailers say.
Voracious domestic demand has already caused a shortage of small but high-quality stones, says Inez Ding, president of Antwerp-based China Diamonds Manufacturing.
The wholesale price for a near-flawless, 10-point diamond (one-tenth of a carat) has soared 40 percent in just two years due to Chinese demand, she told Reuters.
China set up the Shanghai Diamond Exchange in 2000 to meet demand, but diamond executives say trading has been stone cold since its launch, with the vast majority of rough stones smuggled into the country to evade high taxes.
The exchange said it traded $80.8 million of diamonds in the first quarter.
Similarly, a 17 percent value-added tax has hurt efforts to create a diamond cutting industry, said Michael Diamonds' Liu. Most of the diamonds now are cut in India, Israel or Belgium.
More than 20,000 people work in diamond polishing in China, with an annual volume of three million carats, De Beers estimates. China's official wholesale market in polished stones was worth $377 million in 2003, it says.
De Beers is increasingly turning to China in order to reduce its dependence on diamond processing giant, India, analysts say.
"China is already the world's biggest jewellery manufacturing centre. I think it will take us about 10 years to catch up with India," Liu said, against the din of workers hammering and polishing rings.
Michael Diamonds plans to set up a cutting centre with several hundred workers, attracted by diamond workers' wages of just $60 to $120 a month.
At US diamond trader Galace's sleek, 50 million yuan ($6 million) Asian flagship store in Beijing, diamonds set in platinum are the flavour of the day.
Most customers are couples looking for wedding rings, but there's no shortage of people trying on pieces for themselves.
"When we looked around Asia to open our first store, we pinpointed China as the place with the fastest growth," Jerry Pei, vice general manager of Galace China, told Reuters. Luxury jewellers Cartier, a unit of Richemont, Bulgari SpA and LVMH are looking to expand in the Chinese market.
Cartier flew in from Paris its Star of the South, a 128 carat diamond mined in Brazil in 1853, for the opening of its new China flagship store on Shanghai's historic Bund waterfront this month.
Posh Italian design house Bulgari, which opened its first outlet in Shanghai in 2003, plans to open three to five stores in the next few years.
The retailers are counting on the likes of 27-year-old Yi, who finally decided to spend a princely sum of $6,000 on a rock.
"The diamond for my ring will be very big. My fiancee's will be very small," she said with a hearty chuckle.
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