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Tough Ride to the Great Wall of China
While China is one of the strongest growth markets for polished diamonds and jewellery sales but along with the benefits of expand market, trading diamonds in the country encounters faces many challenges like-import tariff, language barriers, red tape and many other.
By: Diamond World News Service
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Jun 18 2012 3:41PM
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Reference: 7032  

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China's position as a significant player in the consumer market for diamonds is unquestionable. Many diamond dealers conduct their trade in Hong Kong for the convenience of its proximity to China, but lately there has been a tendency to operate in China itself, directly and formally. Despite the potential, the diamond and jewellery trade in China is complex and encounter much bureaucracy.

Fool-proof Vigilance : Legal Hassles Galore

First of all, it must be emphasized that diamonds and jewellery must be imported into China legally. If caught with merchandise brought in otherwise, Chinese officials ‘shoot first’ - metaphorically - and ask questions later. Punishments are very stiff and are likely to result even in jail terms. Authorities carry out spot checks in jewellery stores from time to time to see if they have documentation for all the diamonds in stock.

Marginal Options for non SDE Members :

Only companies registered at the Shanghai Diamond Exchange (SDE) are permitted to bring diamonds and jewellery into China to sell. This process requires paperwork of one or two days. However, for the non-members of SDE who wish to sell despite the legal setbacks, the options available are few. Diamonds in China regardless, there are a few options available. There are companies registered with the SDE that offer administrative services for selling diamonds in China. The service will cost between 1-2% of the sale price, depending on the type of merchandise.

Delivery companies Brink's and Malca Amit offer administrative services before and after a sale. They will take care of the entire bureaucratic process for the transport of the diamond or jewellery and dealings with the customs officials. The merchandise enters China legally, and the diamond dealer can travel throughout China in order to sell the diamonds for a period of four months.

All the paperwork is in the name of the delivery company. And after the sale is made, the delivery company takes care of the rest of the paperwork, including paying the required taxes, and transferring funds between the local buyer and the seller outside the country. Rappaport offers a similar after sale service.

Ensuring Timely Delivery :

Extensive precautions and care must be taken when delivering diamonds. Nothing can be added to a package of diamonds, not even tiny tweezers or anything else connected to diamonds. However, if the back of the delivery documents lists the serial number of the document that is sent to the SDE, this document must then be included in the package. Chinese officials are very strict and any small deviation will result in delay in delivery plus fines.

Time Consumed for Gemological Verification :

When the merchandise goes through customs, it is analyzed by a local gemologist. Every single diamond is checked separately with its documentation. There are negotiations with the local gemologists over the classification of the diamonds. This process takes several hours. Releasing the merchandise from customs takes about two to three business days. If the diamonds are arriving for the purposes of an exhibition, a longer waiting period should be taken into account, approximately four to five business days.

Although it is possible to deal in diamonds without documents, in these cases, the SDE gemologists tend to judge harshly and assign a lower valuation to the diamonds. GIA documents are recognized everywhere, as are documents from large international labs such as HRD, IGI and EGL. Legally, it is possible to sell diamonds without a Chinese document, but many consumers trust them and see it as a safety net.

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