Diamond in the rough

Chinese industrialist says Zimbabwe has great potential if it took more steps to open its economy

Many Chinese doing business in Africa worry about political instability or social insecurity in the country they are working in, but in the case of Wang Jia, he says Zimbabwe's problem is that the country is too proud.

"Zimbabwean people are mostly well-educated. For example, President Robert Mugabe has several college degrees, so sometimes they look down on Chinese workers who cannot even speak English. Also, the country has very restrictive policies on bringing in overseas technicians," says Wang, vice-chairman of Supertrend Enterprises Limited.

Supertrend, which is now the only Chinese diamond processing factory in Zimbabwe, was established in 2012 in Harare, Zimbabwe's capital. Its parent company, Shenzhi Jinzhizuan Jewelry Limited, has started buying diamonds in other African countries such as South Africa and the Democratic Republic of the Congo since 1998.

While diamonds have been mined in Zimbabwe for decades, Wang says it was not until the beginning of 2007 that the country made one of the world's biggest diamond finds, when he was still a colonel in China's embassy to Zimbabwe.

Wang says that in Mutare, a city in eastern Zimbabwe, one family used stones that sparkled to build houses. One day a friend noted that the stones looked like they had diamonds in them. They later sent some of the stones to be tested, and it turned out that the sparkle came from diamonds.

"At the time, the diamonds were just scattered here and there, like sand on the ground" he says. "They twinkled like glass, and whoever picked them up owned them. It wasn't until several months later that the Zimbabwean government learned about it and took charge of the mine."

Wang retired from his work in 2011. After that, he saw an opportunity in the diamond business and started collaborating with Chen Xiaoxin, president of Jinzhizuan, who has lots of experience in the diamond industry and had been looking for raw diamond sources in Africa since the 1990s. With initial injected capital of over 5 million yuan ($807,000; 751,075 euros), and a 300 square meter factory, they started their processing diamond business.

Wang says Zimbabwe has very strict regulations for foreign investment, and preparing the factory meant meeting a lot of requirements, including a certificate for trading diamonds, one for processing and one for sales. Moreover, they have very strict regulations on security and other aspects of the factory, he says.

Regulations require a foreign company needs to have local partners that have a majority share of the joint venture. In Wang's company, four of the six major shareholders are locals.

As it enters its third year, the company now processes about $200, 000 of raw diamonds a month, and most of the diamonds are sent to Hong Kong and the Chinese mainland. They have mostly been provided to diamond wholesalers, and also to big brands including Cartier and Tiffany.

Wang says the cutting technique makes a huge difference in the quality of the processed diamond.

"Every cutting of the diamond can be different. For example, if you cut a five carat diamond of great quality, then this one diamond would be worth tens of thousands of dollars," he says. "But it is also likely that you cannot find even one good one to cut from a pack of raw diamonds."

"Diamonds rely on good cutting a lot. Good technicians can cut high-quality diamonds and produce a lot of added value. Otherwise, the value of a diamond can be ruined."

Wang says that he feels Zimbabwe is very safe and their factory has never had a security problem, even though diamond processing is usually considered a business with risks. The only problem is the visa issue for Chinese workers, who can get only a one-year work visa at a time, he says.

Zimbabwe encourages foreign companies to cultivate local talent, so they have very strict restrictions on bringing overseas talent into the country, Wang says. The companies have to prove that the work the overseas talent is doing in Zimbabwe is work that locals are unable to carry out.

Supertrend has eight diamond-cutting technicians and has enrolled 32 locals as apprentices, who they have taught cutting techniques in the past two years.

"Zimbabwean people are very smart and well-educated, so they have learned the techniques very quickly, and some people have already done good work," he says.

"It is understandable that the local government wants to cultivate local talent, but for us, diamond cutting requires high technology, and even though some technicians can do cutting, we need more experienced technicians because it has great influence on the value of the diamond products."

He adds that for other companies, such as those in the construction industry, it can be more difficult to get overseas workers into Zimbabwe.

Wang says that China had to experience the reform and opening-up of its economy, and given China's experience, it would be difficult to attract overseas investment if a country cannot overcome its pride and let more overseas talent in.

He says he is glad that the Mugabe government is now thinking of adjusting the laws to attract more foreign investment, which is quite inspiring.

Wang says that given that Zimbabwe's economy is in a downturn, and China's economic growth has also slowed, he sees the demand for diamonds from wholesalers in China declining. So the company is now looking for new sales channels rather than relying on wholesalers.

Jinzhizuan opened four brick-and-mortar stores in Shenzhen last year and four online stores to sell directly to customers. Because Chinese people's passion for Zimbabwean tourism is increasing, they will open two stores in Zimbabwe targeting foreign tourists.

The company is also looking for opportunities to get more involved in the diamond mines in Zimbabwe, Wang says. The company's final goal is to set up an industrial train of diamond mining, processing, design and sales. This year, the factory also will expand and move to a diamond center in the capital's suburbs.

"Mining requires long-term investment and has very high technical requirements. Our team now has people who understand identification, cutting and mine prospecting, so we will hope to end up building a complete industrial train," he says.

chenyingqun@chinadaily.com.cn

(China Daily Africa Weekly 03/20/2015 page19)