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De Beers: 2016 will be ‘a difficult year’

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De Beers, the world’s leading diamond company, dubs 2016 a “difficult year” due to the economic slowdown in China and strong dollar.

China experienced a devaluation of the Yuan and a stock market crash that led to lower demand, which greatly affected the luxury industry and, more precisely, the precious stones market. Meanwhile, the US dollar has been witnessing a continuous surge in value.

“The continuous strengthening of the dollar against major currencies, coupled with a slowdown in economic growth in China, is likely to lead to a relatively sluggish demand in the global diamond jewellery [market] this year, compared with 2014,” said De Beers’ CEO Philippe Mellier in The Diamond Insight Report, the company’s latest internal bulletin. In August 2015, De Beers lowered its prices by nine per cent to avoid customer loss. Yet the CEO predicts strong growth once existing stocks have been cleared.

China still represents 16 per cent of the world’s diamond sales, behind the United States (42 per cent) and ahead of India (eight per cent). This economic crisis is a major problem for De Beers and for all jewellers.

Diamonds still have value

Nonetheless, the group notes that global demand increased by three per cent in 2015, exceeding, for the first time, the $80 billion mark, thanks to the rapid growth of the Indian market. This goes to show that, despite the economic crisis, diamonds are still a coveted commodity.

The largest diamond company in the world, De Beers was founded in 1888 in the diamond fields of South Africa. Today, the company is working on its brand image. It intends to hold back on audacious design in order to monopolise the entire industry and devote more energy to promoting its own brand, all the while developing its retail stores.

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