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Diamond Industry Organizations: China Diamond & Gem Exchange

Diamond Industry Organizations: China Diamond & Gem Exchange

A very new organization, the China Diamond & Gem Exchange (MDGE) was established in 2018 in Macau as an international diamond and gem trading center. It was established against the backdrop of the growing diamond trade in China and a desire to attract a wider audience of traders to the Guangdong-Hong Kong-Macau Greater Bay Area by creating a recognized exchange for diamond and gem trading in Macau.

The new exchange aims to become “an innovative, premier diamond and gem trading platform built on state-of-the-art technology resulting in a highly efficient exchange with global reach,” as it stated upon its formation.

Unlike most other diamond exchanges that tend to focus on polished diamonds, the exchange in Macau has an emphasis on rough diamonds. “MDGE will actively develop concentrated rough-diamond trading, which will drive rough diamonds into the Shanghai Diamond Exchange and further promote the Chinese industry,” the organization explained at a briefing during the Hong Kong Jewellery & Gem Fair, quoted by the press.

Yet to be admitted as a full member of the World Federation of Diamond Bourses (WFDB), MDGE is very interested in becoming an established diamond exchange that is part of the Federation, and as such operates in compliance with the recognized practices of the international diamond and gem industry.

Because it is a new trading center under development, MDGE is promoting a variety of attractive features such as financing, low and simple taxation as well as an attractive free trade policy. Macau also has its own commercial and financial advantages to enter the global diamond industry. It is building upon China’s “one country, two systems” policy, and the strong support of Macau’s political leaders and business community.

In line with that, Macau is one of the world’s most open trading and investment regions, according to the World Trade Organization (WTO). It has a free port with a separate customs territory and has no foreign exchange control. Also, there is zero tariffs on imports, and the corporate income tax rate is only 12%. Further, Macau enjoys close economic relationships with Portuguese-speaking countries, which is of great benefit for the diamond industry. However, currently there are some fees on certain rough and polished diamond transactions, which may hurt business compared to other diamond trading centers that do not charge transaction fees at all.

To get started, the diamond exchange signed two key strategic partnerships. The first, with Shanghai Diamond Exchange. Under this partnership, SDE will take over operational management of the MDGE trading platform for the first five years of the exchange’s activity. The second strategic partnership is with the Industrial & Commercial Bank of China, which will offer professional financial services to global diamond and gem dealers coming to MDGE to do business.

January 2019 Market Report: Slow
A Shrinking Industry

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