In his long career in the diamond business Nissan Perla has met his fair share of celebrities. Wealth-X, an intelligence network on the wealthy, even describes him as the “Diamond King”, and points out he has a roster of famous clients from Hollywood and the music world.
Much longer ago, Perla remembers that he was once invited to an event held by famed American jeweller Lorraine Schwartz in which he was introduced to Elizabeth Taylor.
At a subsequent dinner the jewellery-loving Taylor told Perla how much she liked the bangle that Schwartz was wearing. To everyone’s surprise, he took it off her wrist and gave it to the movie icon.
“Something great happened, she placed me in her memory,” he recalls.
Delivering the punchline, Perla says that he and Schwartz – with whom he worked closely for many years – were invited by Taylor to a subsequent dinner and when he asked Schwartz if Taylor remembered him, he was told the Hollywood star exclaimed: “Well, Nissan – all he has to do is come waving a diamond bangle!”
These days Perla says he spends more of his time with Chinese clients. Speaking to WiC at the Hong Kong office of his firm Diamond Registry the CEO discusses the huge influence Chinese customers now exert on the diamond market.
How long have you been in the diamond business?
Almost 40 years. My first trip from New York to the Far East in the early eighties was to Tokyo. At that time China wasn’t on our map yet. Even Hong Kong wasn’t active till the late eighties.
When did demand from mainland China start to impact diamond sales?
It was around the new millennium, roughly 20 years after China started opening up, that the early birds began to appear and buy.
From that point on Chinese buying power became stronger and stronger. After 2005 we noticed China becoming a more dominant source of demand. The top people were really doing well, and we started to note the scale.
I like to say that if someone has a factory with 300 staff anywhere else in the world they are doing well; but at that size they would have been bankrupted in China. To do well there you need to have 10,000 employees. And when you have this sort of scale, your success also multiplies. That creates a group of people wealthy enough to be major buyers of anything, including diamonds.
How much of your time do you spend here in China and Hong Kong?
I would say 70-80% of my time. The Chinese people want our product. They want to show that they are doing well and for that they want to buy the best.
The beauty about the Chinese is they like very high-standard things. I call them “the umbrella of the world”. They are keeping the world alive. A few weeks ago I was in Paris for Fashion Week and in every store I walked into – Hermès, Chanel or Louis Vuitton – the customer base was 99.99% Chinese.
I say that figure because I was the only non-Chinese!
Yesterday my son in New York got a call from a client looking for a 5- carat, D colour, VVS clarity diamond. That’s top colour and top quality. He gave me the telephone number of the caller, and I felt something was off based on the New York area code. When I called up the lady, she told me her client was in China and everything then made perfect sense.
The order was the sort of language they use in China; it is not the same in America where the conversation focuses more on how much a customer wants to spend. For the wealthy Chinese, they specify their requirements in such a way that means they only want the best.
A lot of the Swiss watch companies have seen a slowdown in sales because of China’s anti-graft clampdown. Has that hurt diamond sales as well?
I would say it is changing how business is conducted; it has definitely had an impact. The super-expensive segment of the diamond market is growing less. The growth is coming more from the middle-class market. They are the new blood, the new buyers. But this gives us the chance to grow. If somebody already has 10 diamonds, they might buy one more. But if someone is new to diamonds, they may buy many. They are the new generation coming into play.
Do some Chinese buy diamonds for similar reasons to gold i.e. as a secure alternative currency?
One lady asked me to buy an important diamond that cost her $1.5 million. When I asked what made her buy it, she told me that her husband wanted to get her something for their 10-year anniversary. But she has a child and in her mind, it was all about security. If you want to spend a lot of money on gold, there are big issues with physical storage. But even if you want to buy a $5 million diamond, it isn’t a big item.
In the woman’s case, she thought it would be nice to wear as a piece of jewellery, but more importantly it was security for her daughter’s future. If the daughter needs something in the future – an apartment or a house – she can sell it.
Another lady called me up and wanted to sell a diamond. I asked for the details and she sent me the GIA certificate. She told me she had bought it from a shop in Singapore, whose owner had just passed away. It turned out that I had sold it to him 12 years ago, but I asked her how she knew what to buy. She told me every time she made some money she went to this jeweller, who was a very honourable man, and asked him to make something nice.
He had made the most gorgeous diamond ring for her from the stone I sold him. She bought it for $200,000 and I ended up paying her over $700,000.
I asked her what she did with it over the years and she said she had been wearing it. Then she explained she was selling it because her daughter was moving to San Francisco and she wanted to buy her an apartment.
What a beautiful story: she enjoyed the diamond for 12 years and then sold it for a gain of $500,000.
Unfortunately this is not always the case. I had the opposite story with a Chinese lady who bought a diamond 20 years ago for $300,000 and wanted to sell it. I had difficulty getting her what she paid originally because the person who sold it to her took advantage of the fact that she knew little about diamonds.
If she had bought it correctly, there is no reason why she couldn’t have gotten $2 million for it 20 years later.
There are so many details in the GIA certificate and you really need to know what to look for besides the size, the colour and the clarity. It’s like when you buy a car and you don’t realise that there is a dent in it. Or a car that has been flooded and the previous owner has vacuumed out all the water. Inside, the car is already rusted, but you don’t see it. It’s the same with diamonds, their cuts and so forth.
I felt so bad for this Chinese lady that she went to the wrong place and somebody took full advantage.
This is my business, by the way. I educate people about diamonds even if they don’t end up buying from me.
Does this put some buyers off in China – that they don’t have the knowledge?
No doubt in my mind. It is 100% what puts them off. But diamonds are not too complicated when you purchase them with GIA certification with laser inscription and you buy from an honourable person. If you do that, they have two big advantages: they are very easy to maintain and to move around. And if you buy correctly, in a cycle of 10 years you will always make money out of them.
So how much do diamonds tend to increase in price each year?
It is very hard to say per year, because there can be three or four years of downturn, but then six or seven years of upturn. But I make a calculation that if you hold a diamond for a period of 10 years, prices generally double or triple.
Right now we are not in a big upcycle because of how business is being done in China. I’d say prices are still going up but in a safer, more stable way.
Is the client base mostly female?
I’d say it is fifty-fifty. When it comes to pure jewellery there are more female customers. When it is more about investment, a very strong man can make the decision to purchase the diamond and then make it into fine jewellery afterwards.
There are two markets. One is completely fashion where you have garbage and you pay for the name. It has nothing to do with future monetary value.
The other type is investment- with-fashion, when you buy a beautiful diamond and you turn it into fine jewellery also.
In my 40 years of experience, almost everyone who buys a diamond needs to sell it at some point in the future. A reason always comes up. Sometimes to buy an apartment, sometimes to upgrade to a more expensive diamond. If you aren’t careful on the day you buy, it can be very painful many years later.
How do you get clients?
A lot come through the internet. If you go to Google and say you want to buy a 5 carat or 10 carat diamond, hopefully Google will recognise Diamond Registry as a very important information source and send you to me.
Unlike Blue Nile, I don’t sell anything online. I only give information online about things like diamond values and what should you look for. Then if you want me to look around the world and see what’s available for your budget, I can advise you what to buy.
Do Chinese customers prefer yellow over white diamonds?
Number one is white, because it is typically the first diamond you buy. Very rarely does someone buy a yellow diamond if they don’t already have a white diamond.
What size, colour and clarity are preferred in China?
The three top colours are D, E, F and the top clarities are IF, VVS1 and VVS2.
If someone wants security, it is usually a round-shape diamond as it is very safe shape and nobody can argue as long as the measurements are correct.
In other shapes, if the diamond is not 100% the way it should be, you may like it but someone else may not be so keen. A 5-carat, D colour, flawless diamond could cost around $500,000, and a 10-carat in the same colour and clarity could cost up to $2 million.
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