GIA’s Sun Rises In The Far East

The Gemological Institute of America’s sun is rising in the Far East.

With well-placed school sites in several major Asian cities; plans for growth in Hong Kong, China and India; and a growing number of Asian students, GIA is poised to become the leader in gemological education and standards for Asia’s burgeoning jewelry industries.

“Asia is driving the world economy and jewelry follows that,” says GIAPresident Bill Boyajian. “So we’re bullish on Asia’s jewelry industry, and we’re committed to it.”

A crucial element in GIA’s Asian strategy is Hong Kong. It is Asia’s most important jewelry and diamond trading center and the site of GIA’s newest overseas school, which opened in 1994. How important is Hong Kong to GIA? Almost all of GIA’s top brass visited the city in mid-September to attend the institute’s first GemFest Asia, an alumni dinner attended by some 200 people and an invitation-only reception for retailers, suppliers and leaders in the Pacific/Asian jewelry industry. For added emphasis, these occurred during the Hong Kong Jewelry & Watch Fair, the largest and most important in Asia.

“We want to make a strong statement [by doing this] that we believe in Asia’s jewelry industry and its development; we want to have a strong presence in Asia, and Hong Kong is the center,” says Boyajian. Indeed, Hong Kong may become the institute’s most important overseas operation in just a few years, says Lorenzo Yih, president of GIA Hong Kong and associate chairman of the Hong Kong Jewelry Manufacturers Association. He says Hong Kong’s growth will be spurred by Southeast Asia’s demand for gemological training and the increase in synthetic stones, which will increase the need for GIA training.

Growing interest: GIA is moving into Asia at a time when interest in professional training is beginning to mushroom. Even in China, “people are very hungry for gem knowledge,” notes Yih. (Several students of GIA Hong Kong are from China, their tuition paid by the government.)

It used to be the industry wasn’t interested in gemology, feeling that experience was enough, says Louis Lo, president of The Gemological Association of Hong Kong. “Now more people, especially younger people, see the need for such training to better serve customers and run professional operations.” This helps sales because consumers “want to know they are dealing with knowledgeable people,” says Lo. “That will give them confidence in spending their money.”

Evidence of this growing interest in gemology abounds. Last year, for example, internationally renowned Swiss gemologist Eduard J. Gubelin went to China to teach gemology classes attended by up to 200 students per class. This September, as a guest of trade and gemological organizations, he taught basic seminars in South Korea, Japan, Taiwan, Hong Kong and Thailand, often to standing-room-only audiences. “I’m very impressed by the explosion in gemology knowledge and interest in this region,” says Gubelin, who spoke with JCK during a recent visit to Taiwan. “When I came to Taipei [Taiwan’s capital] in 1980, there was just one gemologist. Now look,” he says, gesturing to a standing-room-only audience of retailers, suppliers, manufacturers and collectors, most under the age of 40. “My workshops are full, and there is real interest [in gemology].” This thirst for knowledge is also reflected in growing sales of new Chinese translations of his books and videos of his seminars.

Other examples of growing interest was evident at recent Asian trade shows. Almost all workshops and seminars at Malaysia International Jewelex ’96, the Hong Kong Jewelry & Watch Show and the Taipei International Jewelry & Timepiece Show have been on gemological topics, including those of special interest to the Asia/Pacific region, such as jade and pearls.

In addition, the Diamond High Council of Antwerp — the official organization of the Belgian diamond trade — held its first conference in Asia during the Hong Kong Jewelry &Watch Show. Titled “Gemological Update Conference,” it was attended by 200 invited major dealers and retailers.

Another sign is the growing number of small gemological schools inSoutheast Asia — two more gem labs opened in Hong Kong alone this year. One is cosponsored by the Gemological Association of Hong Kong and the Hong Kong Jewelers & Goldsmiths Association.The other — the first with an infrared spectrometer for jadeite identification — is sponsored by the Hong Kong Jade & Stone Manufacturers Association. Even consumers are getting educated: the new Taiwan Jewelry Trade Center, with more than 100 retailers, has a section just for classes for the public.

Inroads: Of course, some gemology schools in Asia have been operating for many years and the region even has its own diamond grading system (see related story on page 68). But GIA is making inroads to become — as one Asian diamond dealer put it — the “reference point” in Asia for gemological training and standards. Here are three examples.

First, one in four GIA students worldwide is Asian, a figure GIA officials expect to rise. Yi Sheen Lin, president of Lucky Jewelry Co., one of Taiwan’s leading luxury jewelers and manufacturers, sent his oldest son to study at GIA’s California campus. GIA is “more international [and has] the best knowledge available,” Lin says.

Second, while Hong Kong’s own grading system has been used in Southeast Asia’s diamond trading for years, the use of GIA’s system is growing. Some in Asia’s diamond trade have reservations about GIA’s system, says Gaston F. D’Aquino, chairman of the Diamond Importers Association — an organization that includes Hong Kong’s leading diamond merchants in its membership. He counts himself among the doubters. “GIA’s color and clarity standards have shifted several times over the years,” he says. “The tastes and demands of consumers are more important in marketing diamonds than imposing standards based on another country’s established preferences.”

He admits that GIA standards are making inroads. “More and more Asian students study with GIA and are very familiar with its terms,” D’Aquino says. “Since most of them work in the trade, GIA terms have become more popular… and will be even more well-known in the future in the developing Southeast Asian markets because they will be the standard they are introduced to.”

Third, GIA is influencing Asian consumer buying habits. In Southeast Asia, as in the U.S., more customers insist on buying only gems with GIA certificates, says Yih. D’Aquino agrees, pointing out that demand for certified stones has grown over the past 25 years. “GIA certificates have become popular among consumers of diamonds because they give an unbiased evaluation of quality grading of the diamond,” he says.

Slow & steady: GIA’s involvement in Asia isn’t new. The institute opened its first overseas site in Tokyo 25 years ago and now has two. But only recently has the organization accelerated its Asian strategy. GIA Korea (which also has two sites) opened in 1989, GIA Taiwan in 1992, GIA Thailand in 1993 and GIA Hong Kong in 1994. Indeed, of GIA’s eight overseas schools, seven are in Asia (the other is GIA Europe in Vicenza, Italy). Even so, GIA continues to move carefully. Though it has held classes in Hong Kong since the 1970s, for example, GIA resisted setting up a permanent location until two years ago. “It’s always a matter of the right time and the right situation,” says Boyajian. “We work very slowly and methodically to develop a relationship and become familiar with a market and culture. We don’t want to expand too far too fast. With Hong Kong, we did a lot of research before we knew we could do a lot of development with clients and new markets.”

Costs — to students and GIA — also affect the pace of growth. “Our biggest challenge is finding markets to penetrate which can afford GIA training,” says Boyajian. Tuition and fees can be steep for those in underdeveloped nations (tuition is the same overseas as in the U.S.).

GIA’s costs run between $500,000 and $1 million to acquire space, equipment and master stones for students to use and to set up a full-time, fully staffed operation overseas. Its Hong Kong site, for example, has 200 students, a fully equipped one-floor facility and a staff of six.

When entering a new market, GIA often enters into a partnership to smooth the way. A local industry leader or leaders underwrite the local equity and become licensees. GIA Hong Kong, for example, is located in a separate area of Lorenzo Yih’s Lorenzo Jewelry headquarters in Hunghum, Hong Kong’s jewelry manufacturing area.

Into China: Meanwhile, GIA is preparing to enter China. Its materials and catalog are available in Cantonese as well as English. The institute also advertises in the official Chinese government jewelry magazine. Sueng-hai Moon, GIA’s education director in Asia, is based in South Korea and has visited China. Boyajian visited Beijing a year ago, on a tour that included Taiwan, Hong Kong and Bangkok. And in October, GIA held its first extension class on diamonds in Shanghai.

The Shanghai class was a test, says Boyajian. “We’ve found the best way to enter a major market is with our extension courses, especially in diamonds, which are available at a more modest cost,” he explains. “It enables us to see what the students are like, their response and market potential.” Shanghai was chosen because it’s far enough away from Hong Kong and China’s Guangdong province (bordering Hong Kong and the site of much Hong Kong-operated jewelry production) to be a separate market and give a better sense of Chinese interest.

GIA is waiting until after July 1997 (when Hong Kong returns to Chinese sovereignty) before moving actively into China. Even so, GIA officials — like many in Hong Kong’s jewelry trade — expect a smooth transition and are already evaluating potential markets. Currently, there are three possibilities: Beijing; the region between Shanghai and Beijing; and Guangdong province, especially around Shenzchen. Shenzchen is the capital of the special economic zone where so much capitalist activity in China is located. One question still awaiting an answer is whether to concentrate on all, some or only one of these possibilities.

GIA continues to explore other markets. One is Russia, where GIA officials are working to establish a relationship with trade leaders in Moscow. Another is India, where GIA has had several offers of sponsorship.

“India could become our fastest-growing market,” says Boyajian, “due to the concentration of wealth and the active diamond business.” But as in all its Asian endeavors, “we’re moving slowly and methodically, waiting for the right time and situation.”

It is an axiom for success any wise Asian sage would endorse.

HONG KONG’S GRADING SYSTEM

Ask a group of U.S. jewelers to name a diamond grading system and you’ll hear “GIA,” “AGS,” perhaps “Diamond High Council,” “CIBJO,” even “Scandinavian.” But there’s another one that not many U.S. jewelers know: the Hong Kong grading system, in use since the early 1950s.

Because Hong Kong is the leading diamond center of Asia and supplies most other Southeast Asian markets, this system “was and is still used among the older generation of jewelers and merchants in the region,” says Gaston F. D’Aquino, chairman of the Diamond Importers Association, the oldest diamond regulating system in Hong Kong.

The Hong Kong system differs from GIA’s — the other widely used system in Asia — in at least two ways. First, color grading is based on a percentage scale, with 100% equal to a D in the GIA system, and moves down the scale as more yellow or brown is detected. To many diamond dealers and retailers in the Far East, the Hong Kong system is more comprehensive because colors are graded into finer categories, says D’Aquino.

GIA’s system is very good in the better colors, he says. “When their grading scale was established, the main colors produced and used in the U.S. were D/H.” But for lower colors, it seems less comprehensive, he says. What is simply O color in the GIA system is 81% to 84% in the Hong Kong system.

“Hong Kong was the main market of a lot of the Cape material coming out of South Africa,” explains D’Aquino, “and so lower colors were sorted into much finer grading to suit different markets. The quality of sunlight and the skin tones of people from different countries allowed the marketing of different colored diamonds to different countries.”

Cut is another major area of difference. “The Southeast Asian market was weaned on European and South African make, which is more widespread than what is preferred in the American market,” says D’Aquino. Thus, a stone described as Excellent and Ideal Cut by GIA “looks small and lumpy to Asian buyers,” he says.Use of those words may even make a consumer question whether he should buy that diamond, he says.

D’Aquino believes it’s better if measurements and percentages are listed on a certificate and aspects such as cut and finish are left to the jeweler to explain to consumers, giving them a chance to “sell” the diamond, he says. Otherwise, he warns, diamonds will succumb to branding. “We will be reduced to selling a branded item; consumers will aim for specific qualities, and other qualities won’t be salable,” he says.

EXAMPLES OF HONG KONG & GIA DIAMOND COLOR GRADING

Hong Kong GIA
Colorless 100% D
99% E
98%- F
97%+
Near colorless 97%- G
96%
95% H
94% I
93% J
Faint yellow 92% K
91% L
90% M
Very light yellow 89% N