The Growing Importance of Cultivated Diamonds in the Global Jewelry Industry: An Industry Chain Analysis

China, India, and the United States are respectively the largest markets for cultivating diamond production, processing, and consumption. A considerable number of cultivated diamonds in the world have also gone through the process of "China → India → the United States." In 2020, China produced over 40% of the world's cultivated diamonds, of which 70-80% ultimately flowed to the US market; India polished 90% of the world's diamonds; and the United States consumed 80% of the world's cultivated diamonds.

Introduction
The cultivation diamond industry has been rapidly developing in recent years. This report analyzes the cultivation diamond industry chain from the upstream to the downstream, including the production of cultivation diamond raw materials, processing, and sales.

Upstream Production
The cultivation diamond industry is mainly concentrated in China, with the "982" project and other major projects being launched to cultivate diamond production capacity. Leading enterprises such as China North Industries Group Corporation, Yellow River Cyclone, Power Diamond, and Kemei Abrasives have rich experience and technology in cultivating diamond production. Currently, the total investment of key projects under construction exceeds 14 billion yuan, with a construction period of 2-4 years. We predict that the raw diamond production capacity can be increased by approximately 10 million carats.

Midstream Processing
The midstream includes a series of processes such as cutting, processing, polishing, and grinding. The industry is mainly concentrated in India, where about 700,000 people are engaged in the diamond processing industry, accounting for nearly 90% of the world's raw diamond cutting and processing business. Compared with natural diamonds, cultivation diamonds can bring more profits to the midstream. Surat in India already has 10% of diamond factories processing cultivation diamond products. According to GJEPC data, the import and export data of cultivation diamonds increased significantly at the end of 2019, with high growth rates after a brief decline due to the pandemic. In March 2022, India's import of cultivation diamond raw materials was 203 million US dollars, a year-on-year increase of 157.10%, and the export of cultivation diamond raw diamonds was 137 million US dollars, a year-on-year increase of 59.45%. The penetration rate of imported cultivation diamonds is 9.06%, and the penetration rate of exported cultivation diamonds is 5.87%.

Downstream Consumption
The United States is the main market for global diamond consumption, accounting for 80% of the market. In 2020, the global raw diamond market was about 23 billion US dollars, with the US, China, India, and Japan markets accounting for 120, 30, 20, and 10 billion US dollars, respectively. From 2018 to 2020, the proportion of raw diamond consumption in the US market in the global market was 46%, 48%, and 51%, respectively. We predict that the US will remain the main market for diamond consumption for a long time. The large diamond consumption in the US market drives the demand for cultivation diamonds. According to MVEye statistics, in 2020, 80% of US consumers were aware of cultivation diamonds, and 8% of consumers had purchased cultivation diamond jewelry. Currently, the cultivation diamond brands are mainly concentrated in the US, such as Lightbox under De Beers and VRAI under Diamond Foundry, as well as Pandora and Swarovski. Many Chinese brands are also entering the cultivation diamond sales market, such as Yuyuan Jewelry, the parent company of Lao Feng Xiang, and emerging brands such as Xiaobaiguang. Under the drive of profits, various links in the upstream and downstream of the industry are beginning to penetrate each other. Recently, Power Diamond announced that it will invest with Tse Sui Luen Jewelry to establish a sub-brand, and other enterprises such as China North Industries Group Corporation and Yellow River Cyclone have also set their sights on the cultivation diamond jewelry market.

Currently, there is no unified industry quotation for cultivation diamonds, and prices are anchored to natural diamond prices, with sales based on a certain discount ratio. As the price difference between natural diamonds and cultivation diamonds widens due to the significant increase in natural diamond prices, it creates space for the penetration rate of cultivation diamonds to increase. We predict that by 2025, the global market space for cultivation diamond jewelry will be 13.1 billion US dollars, and the demand for raw diamonds will reach 4.4 billion US dollars.