Impact of Coronavirus on Diamond & Jewelry Trade Spreading Rapidly

India's diamond industry in particular is exposed to disruptions in China. It was expecting to see its supplies to China via Hong Kong for the New Year rise as a result of the partial lifting the China-U.S. trade dispute. Instead, China has been in lock-down mode, and the impact is not limited to the Mainland. As the Wall Street Journal writes, Chinese tourists are disappearing from major shopping capitals across the U.S. and Europe as a result of the new coronavirus, and their absence is hurting some of the world’s highest-profile luxury brands. As announced last week, simultaneous trade fairs in Hong Kong scheduled for March were postponed until May, while the Swatch Group has also canceled its 'Time to Move' event in Zurich, scheduled from Feb. 28 to March 2 for retailers and March 4–6 for the press.

It has been reported that in China, spending on watches and jewelry, apparel, accessories and cosmetics are down by more than 60 percent over the Lunar New Year period. Hong Kong's retail sales of jewelry and luxury items limped to the end an abysmal 2019, with December 2019 sales falling nearly 37% short of December 2018 earnings, as the region closed the year more than 22% lower than the year prior. Pandora, citing just one example, has closed nearly a third (70 of 240) of its stores in China as its business in China has ground to a halt. China is the world’s biggest luxury goods market and Pandora makes about 10% of annual sales from Hong Kong, China and its tourists. Pandora chief executive officer Alexander Lacik told Reuters there has been an “unprecedented” drop in business. “As I sit here and watch the Chinese business, it is in a standstill mode." China and Hong Kong represent about 10% of Pandora’s sales.

Concern about the impact of the coronavirus on the diamond and jewelry trade is growing, not only in China, but also in the markets that supply China, like Hong Kong and India. Events have been concelled, retail sales have plummeted and the outbreak of the virus in China has already had a ripple effect on diamond supply chains as the death toll passes 1,000. And this is just the tip of the iceberg. As the New York Times lead international story today reads, "more than two weeks after China locked down a major city to stop a dangerous viral outbreak, one of the world’s largest economies remains largely idle. Much of the country was supposed to have reopened by now, but its empty streets, quiet factories and legions of inactive workers suggest that weeks or months could pass" before the gears start turning again.