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CHINA

DIAMOND JEWELLERY SECTOR HAS MORE THAN TRIPLED IN SIZE WITHIN A DECADE

DIAMOND JEWELLERY DEMAND GROWTH 10-YEAR COMPOUND ANNUAL GROWTH RATE CHINA 12% CHINESE DIAMOND JEWELLERY DEMAND (US$BN) 2006 2016 3.1 9.7

The Chinese diamond jewellery sector has been the fastest growing in the world.

DEMAND FOR NECKLACES AND EARRINGS IS INCREASING

Traditionally, Chinese demand has been dominated by solitaire-type diamond jewellery, which accounted for 81 per cent of pieces in 2016.

Necklaces and earrings have gained share of the total number of pieces. This trend is likely to continue, as repeat purchasing increases in the future.

TYPES OF DIAMOND-ONLY JEWELLERY ACQUIRED (% OF ALL PIECES) RINGS NECKLACES/ PENDANTS EARRINGS OTHER (INC WITH OTHER PRECIOUS STONES) 2016 2014 49 28 13 10 67 18 5 10 74% OF DIAMOND JEWELLERY PIECES IN 2016 WERE PLATINUM – THE MOST PREFERRED METAL AMONG CHINESE WOMEN

OPPORTUNITIES TO CREATE NEW DIAMOND ACQUISITION OCCASIONS EXIST

The main reasons for women not acquiring diamond jewellery in 2016 point to an opportunity for the creation of occasions for gifting, self-purchase and wearing diamonds.

MAIN REASONS FOR NOT ACQUIRING DIAMOND JEWELLERY (% OF WOMEN NOT ACQUIRING IN 2016) Not being gifted 33 Failing to find appealing designs 32 Not experiencing an appropriate event to acquire 21 No opportunities to wear diamonds 17

FOUR DRIVERS OF GROWTH

Brides and Millennials drove Chinese diamond jewellery demand growth in 2016.

01 DIAMOND DESIRE

Desire for diamonds among Chinese women has remained consistently strong and is the highest of any leading diamond region in the world.

68%

More than two- thirds of women choose diamond jewellery as first or second preference for a gift out of a list of high value luxury items

02 BRIDAL DEMAND

As Chinese women – Millennials in particular – hold an image of diamonds as symbols of love and enduring romantic relationships, diamonds are becoming an essential part of Chinese weddings. Almost half of brides in Tier 1 to 3 cities acquire a piece of diamond jewellery.

CHINESE BRIDES ACQUIRING DIAMOND JEWELLERY IN TIER 1-3 CITIES (% OF ALL BRIDES) 50 40 30 20 10 1990 2000 2010 2017 Source: De Beers-commissioned diamond acquisition studies, 2005-2016.

03 MILLENNIAL DEMAND

The younger Millennial generation (aged 18–29) acquires diamond jewellery at a considerably higher rate than older women (45–54), not least because half of brides are in this age group.

PROFILE OF DIAMOND JEWELLERY ACQUIRERS IN CHINA (% OF AGE) VS TOTAL FEMALE POPULATION 2016) AGES 18-29 30-44 45-54 DIAMOND JEWELLERY ACQUIRERS FEMALE POPULATION 39 49 12 30 43 27

04 TIER 3 CITY DEMAND

With demand in Tier 1 and Tier 2 cities reaching maturity, Tier 3 cities become a more important driver of growth and contribute the most value.

CHINA VALUE AND VOLUME OF PIECES BY CITY TIER 2016 (%) TIER 1 TIER 2 TIER 3 26 26 30 37 43 37 VALUE PIECES

Sources: De Beers-commissioned consumer and retailer research, 2014–2016, and analyses.
Note: Some figures may not add up to 100 per cent due to rounding.