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09 january 2018

li_zhiwei_xx.jpgLi Zhiwei, has been engaged in the Gems and Jewellery development management in China’s government department for the past 30 years. He served as Vice Chairman of Gems and Jewelry Association of China for more than 10 years and has effectively pushed forward Panyu’s gems and jewellery industry development. Under his administration, Panyu, which is an administrative district of Guangzhou, the capital of the Guangdong Province, has developed quickly as well as changed from a small unknown village in the 1980s to one of the most developed districts of China’s gems and jewelry industry. Since March 2016, Li Zhiwei has been serving as General Manager of the Guangdong Gems and Jade Exchange.

In an interview with Rough&Polished, Li Zhiwei elaborates on the workings of GDGJE, its agenda for the future, the current tax structure in China and more...

Please give us a brief history of the Guangdong Gems and Jade Exchange (GDGJE) from inception, services offered, etc., for our readers' benefit.

In order to promote China gems and jewelry industry, achieve effective communication between foreign suppliers and domestic buyers, reduce costs of logistics, customs clearance and procurement, and build a bridge for China’s gemstone trading and cooperating around the world, Guangdong Gems & Jade Exchange (GDGJE) was set up in Guangzhou, Guangdong in 2016, which approved by the China Guangdong provincial government.

As a comprehensive trade service platform specifically for colored gemstones, jades and organic gems, GDGJE is committed to preferential tax policy for gems and jewelry industry, the construction of a legitimate, convenient, low-cost trading channel for foreign resources into China. Now GDGJE has actively innovated nearly 20 trading products covering import and export agent services, supply chain finance service and industry value-added services, such as the easy clearance, bonded auction, bonded exhibition, bonded identification, sorting, IP-products, elite gem-diamond and other operations. Also, in the process of general trade import, custom clearance prices can be determined according to the final results of a transaction on our platform, which can provide a lot of convenience for the international gems and jewelry trade enterprises.

How successful has GDGJE been till date to attract traders from across the world? What is the current membership count and from which countries? What are requirements for an overseas company to become members of GDGJE?   

As an integrated service hub of the international jewellery industry supply chain, GDGJE provides a comprehensive service of the whole industry chain of jewellery industry from the aspects of import, processing, wholesale, brand and retail of jewellery, gathering together the resources from each major jewelry gathering area in China so as to build a bridge between domestic and international jewelry industry.

Presently, GDGJE’s major members are domestic enterprises. We have further cooperation with many countries and now most of our international strategic partners are mainly from Sri Lanka, India, Thailand, Pakistan, Malaysia and Myanmar.

The requirement to become our member for foreign companies is that they are supposed to belong to gems and jewellery industry and be honest and lawful in the local business system, and at the same time, they have to promise to abide by China laws and operate company legally in China.

GDGJE signed an MOU with the Gem & Jewellery Export Promotion Council (GJEPC) of India last year. What's the progress in the topics undertaken?

We keep cooperating in the field of promoting a positive relationship between two parties, intensifying dialogue on mutual in interest and development, inviting each other to meetings, exhibitions or conference, working together in training and capacity building programs.

Based on terms of cooperation, we sincerely invited India suppliers to participate in Guangzhou International Buyer-Seller Meets (Spring), Diamonds & Colored Gemstones on Feb. 2017. Besides, with GJEPC’s support, we organized domestic members to take part in India International Jewellery Show in July. Our deepen collaborations make a win-win situation come true as well as help boost a more effective connection for both countries’ gem and jewelry industry, which benefits both China and India greatly.

In the future, we will continually join hands to work for a better industry.

How does the tax structure in China make it convenient for traders from overseas? What is the percentage of VAT charged currently? Can you clarify?

Now the general trade import tax rate for gems and jewelry are slightly different in China due to its diversity and complex classification. In general, gems and jewellery are subject to pay customs tax, value-added tax (VAT) and consumption if it is the general trade import.

There are 8% custom tax, 17% VAT, 10% consumption tax for the polished gem and jewelry; and 3% custom tax, 17% VAT, 10% consumption tax for rough gems.

For the sustainable development of the jewelry industry in the Asia-Pacific region, and for the consideration of the Chinese government's effective regulation of the industry, I personally think that levying taxes on the main gem varieties according to the tax standard on the import of polished diamonds is more convenient for overseas traders. That is, free custom tax, 13% of 17% VAT will be refunded and consumption tax can be paid in the retail sector. This is also our direction for preferential tax in the future.

What other services are in the GDGJE's agenda for the future? Do you see trading in Exchanges becoming a way of doing business soon in the gem and jewelry industry worldwide?

Creating the integrated services in the supply chain will be our future plan. There are several key points. First one is financial services in the supply chain, which will provide price data and risk management by a way of three-in-one of exchanges. The second is the traceability of the product, which means to achieve the whole process of quality control of products.

The third is the protection of intellectual property rights. It will enable consumers to have more options through the protection of product style design.

It has a long history that the Exchange plays a significant role in the global jewellery industry. We can see that there are several diamond exchanges in Antwerp as well as Dubai and India also have very successful diamond exchanges. Also, Singapore has a rough gems Emporium, Myanmar has a jade Emporium. So definitely, the exchange is a central part of the supply chain, is a way of doing business. Whereas other forms of merchandise trade will continue to exist at the same time, such as exhibitions, some centralized wholesale centers and retail outlets.

Are Exchanges (trading floors) still relevant to the gem & Jewellery business worldwide? Most trading companies seem to do business in their offices. Your views?

Well, as the previous answer, the exchange will play a more important role. The whole industry’s information level is getting higher and higher nowadays. Of course, the traditional trade can be done continually in the office. Meanwhile, with the progress of information technology, the supply information of these products can be shared. The original business in the office will become a part of the platform likewise. For example, multiple offices’ business, services, and products can work successfully through the sharing trading platform system. With a common standard and rule of the system, it enables these transactions less costly, suppliers and consumers connect quickly.

From salesmen accepting an order to choosing the type of gems and jewellery, the system will produce a more efficient configuration, create more trade opportunities and facilitate more secure transactions.

Aruna Gaitonde, Editor-in-Chief of the Asian Bureau, Rough & Polished


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