In Mainland China, the only legal channel for polished diamonds to be imported under normal trade category with favorable tax policy is through the Shanghai Diamond Exchange. Under this policy, in March 2010, Rapaport Shanghai formally announced its diamond importing agent service in Mainland China, enabling foreign suppliers to sell diamonds to local Chinese companies legally. Julius Zheng, CEO of Rapaport Shanghai, has a busy schedule and many business trips to make around China but we met and he told about his work and vision of the current situation in the Chinese market in this interview to Rough&Polished.

Please, tell a few words about yourself and describe your role at RAPAPORT Shanghai?

I was born in Shanghai and have international working background in the diamond business. I got my Graduate Gemologist diploma in the U.S. I have been the General Manager of Rapaport Diamond (Shanghai) Limited after its establishment in 2007. I am also the international correspondent for Rapaport Diamond Report Magazine and write China Market Report articles for the magazine every month. I am responsible for all China-related business of the Rapaport Group.

What was the main reason for setting up your company in Shanghai?

We think that Rapaport Group can support and serve the China diamond industry much more efficiently if we set up a legal entity in China.

What kind of services do you currently provide for your Chinese and overseas clients? Which services do you plan to develop in the future?

We provide importing agent services for the companies who are not member of the Shanghai Diamond Exchange. We also help foreign companies to sell diamonds to China legally with this service.

What are the challenges that you have to face in China?

China has its very unique character in terms of language, culture, social and business environment. There is no formula, nor textbook for foreigners to do business in China. Most newcomers will find the local regulations difficult to understand and it is not easy to manage risks. We face the same challenge as many other foreign invested companies do, however, the Rapaport Group trust people with local experience and appoint them to important positions. Their understanding of the market situation and business practice is the key to success in local markets, no matter it is China, India or some other region.

What kind of customers does Rapaport Shanghai’s target audience include?

We have big clients, but we also pay a lot of attention to small and medium companies as we think the industry is not so healthy if small-to-medium businesses cannot operate.

How did your company perform since its start-up last March?

Actually Rapaport Shanghai was established in December 2007. The business has been growing rapidly.

What are the hottest diamond goods on the local market currently?

GIA certified diamonds, with fine cuts.

Could you share your opinion about the Chinese diamond market in general?

China is a very young market but with amazing growth. The growth which was achieved in decades in other countries seems to be achieved in China in a relatively short period.

How do you assess the role of the Shanghai Diamond Exchange? Do you think it may outstrip Hong Kong in terms of trade?

The Shanghai Diamond Exchange plays a very important role in China’s diamond industry. It is a diamond bourse as a member of WFDB but it is also the only portal in China which enjoys favorable tax policies on the normal diamond trade. Only a Chinese company with membership at SDE can obtain the license to import diamonds into China. Hong Kong is a very important market itself serving many Asian countries and regions, including Mainland China. Each market is important in its own aspects and will not replace each other.

What are your plans for the nearest future?

We plan to organize the 2nd edition of Rapaport Buyers Group to the biggest Indian jewelry show (IIJS) in August.

Olga Patseva, Rough&Polished, Shanghai