Lab-grown diamonds shaking up the industry

"The number is growing. Spurred by technological advancement and rising consumer demand, an increasing number of diamond labs in China are eyeing the consumer market by offering inexpensive products to a wider consumer basis," said Li.

Paul Zimnisky, a New York-based independent diamond market analyst, told South China Morning Post that "Chinese producers have been upgrading existing equipment to produce larger, better-quality synthetic diamonds for use as jewellery. China already has the infrastructure in place which allows for high production scalability of higher-quality synthetic diamonds."

Zimnisky also told Xinhua News Agency: "If even a fraction of Chinese production is upgraded to jewelry-quality diamonds, it would have a significant impact on the global supply."

China's major diamond producers, Zhengzhou Sino-Crystal Diamond Co Ltd and ZhongNan Diamond Co Ltd, are planning to produce lab-grown diamonds for jewelry lines, in addition to those for industrial purposes.

Henan-based Zhengzhou Sino-Crystal Diamond, whose lab-grown diamonds are widely used in the aerospace and equipment manufacturing industries, increased its investment in R&D by 14.4 percent to 535.2 billion yuan ($75.2 billion) last year.

The increased investment was to develop artificial intelligence in manufacturing, and to tap China's growing consumer market for jewelry lab-grown diamonds.

The company said in recent interviews that its technological advancements in diamond making, refining, and polishing, as well as its equipment, have allowed it to produce gem-quality diamonds in white, pink and blue.

General Manager Liu Yongqi said in previous interviews that the company is positive about the consumer market for lab-grown diamonds, and that it had attracted an investment of 4.57 billion yuan for its gem-quality lab-gown diamond project earlier in 2016.

Another leading diamond producer ZhongNan Diamond, also showcased its gem-quality lab-grown diamonds at a recent industry forum.

"Despite efforts from various entities, the development of China's consumer market for lab-grown diamonds is still at an early stage," said Li from the Leadleo Research Institute.

"There are still a lot of questions. For example, how do you grade the quality of a lab-grown diamond and set a price for it?"

Currently in China, mined diamonds are graded by carat, cut, color and clarity. But scales to evaluate a lab diamond's quality and value have not yet been set.

Although the globally acknowledged Gemological Institute of America has started issuing certificates for lab-grown diamonds, it only specifies that they are lab-grown without specific grades, Li said.

"Besides, some diamond retailers have been known to sell lab-grown diamonds at the prices of mined diamonds without telling consumers. This will have a negative effect on the industry. Industry standards and regulations are needed for the industry's long-term development," said Tang of the Gem Appraisal Center of Peking University.

In July, the Gems and Jewelry Trade Association of China launched a sub-association for lab-grown diamonds, a step that was considered significant for the development of the industry in China.

"Spurred by technological advancement and rising consumer demand, the industry is developing rapidly. Going forward, the industry will see improved regulations and supervision with the establishment of associations and institutes," Tang said.