Antwerp province in France, with its ancient diamond cutting techniques and centuries of diamond trade, has long been regarded as the Mecca of diamond traders. It was at the world's diamond capital that the Tesiro brand was born.
Specially made for the Chinese market, Tesiro was created by Eurostar Diamond Traders NV, the world's largest diamond processing trading company.
Last November, the Belgian company spent US$100 million to acquire an 85-per-cent stake in Tongling Group, a domestic jewellery giant, specializing in jade and diamond retailing.
With the latest European designs, the best Belgian diamond cutting skills and complete domestic distribution channels, Tesiro has quickly picked up momentum in the country's diamond market.
"We aim to bring our sales volume to 3 billion yuan (US$371.29 million) in China in five years' time," says Shen Dongjun, chief executive officer of Tesiro Jewellery Co Ltd, a joint venture between Eurostar and Tongling.
Tesiro pledges to provide an alternative to customers between middle-end Hong Kong brands, such as Chow Tai Fook and TSL, and top-levelled overseas products, such as Cartier and Tiffany.
In the past year, the company has spent over US$100 million to launch over 50 Tesiro boutiques and counters in Beijing, Zhejiang, Jiangsu, Shandong and Anhui provinces. About 40 of them are directly owned and over a dozen are franchised.
Two flagship stores will be launched on Shanghai's high street, Huaihai Road and Nanjing Road by the end of this year, with a business area of over 1,000 square metres. The brand will soon have presence in Qingdao and Ningbo, Shen tells China Business Weekly.
Tesiro will open over 300 stores in China in the coming three to five years, he says.
Huge market
China is a huge market for the diamond business, with market scale expected to hit 180 billion yuan (US$22.5 billion) by 2010, Shen says. Every year, there are 10 million newlyweds in the country. In 25 top Chinese cities, more than half of newlywed couples choose diamond wedding rings to symbolize their love, according to the latest survey by HRD, a Belgian coordinating body and official representative of the diamond sector.
With the jewellery market growing by 10 per cent annually, China has already become the world's second largest market, after the United States, according to the survey.
Shen says this is a golden time to develop Tesiro in China.
As for local distribution channels, he says Tongling, with abundant distribution resources, is very aware of the market, based on years of jewellery business in Jiangsu Province and east coast cities in China. Shen was the founder and owner of Tongling.
He points out the company will mainly work by directly investing in the outlets, while slowing down the expansion of franchise stores. "We want to stabilize the business in the existing franchise stores before taking any further moves," he says.
As for earlier statements he made that over 70 per cent of its points of sales will be franchised in February, Shen says the local market is not mature enough for such a business model.
After half a year trial in the market, Tesiro finds franchises, as a low-cost way to expand, actually does harm to a new brand. Among the problems are: the service standard cannot be maintained in a consistent way; shop owners initiate price wars against each other in order to gain more sales volume; shop owners sell other brands within the shop.
"We find the market is not regulated enough to develop a franchise model for Tesiro's diamond business," Shen says.
He continues to say Tesiro has enough capital to develop self-owned boutiques and counters. "Our task now is to build up the brand image and strengthen it in the market first."
For a franchise Tesiro boutique, one needs capital of about 5 million yuan (US$619,000), mainly for rent, advertising and staff training. As for the wholly owned outlets, the input will be approximately 20-30 million yuan (US$2.48-3.71 million) for a boutique with a business area of 500 square metres.
At the current stage, the company aims to build up an image in the market that Tesiro is the best European designer with the best cutting skills selling the best diamonds.
The latest designs
Tesiro's designing director, Andrea Raselli, who worked for luxury brands Cartier and Louis Vuitton, is bringing the latest European diamond designs to the Chinese market.
Raselli says classic design is still the mainstream, but he and his team use nature as a major element in Tesiro's designs.
Raselli is now the president of Associazione Orafa Valenzana, a designing studio in Italy.
Besides, the parent company, Eurostar has abundant diamond resources, which can guarantee supply of top of the line raw material.
Tesiro is very proud of its cutting skills. Tesiro technicians often have to spend a great deal of time when making plans to cut diamonds. Computers and other technology have been used to help analyze the characteristics of diamonds and further enhance the diamond cutting.
Cutting has long been regarded as one of the four "Cs" criteria (carat, clarity, cutting and colour) for the value of diamonds. In the international diamond market, cutting skills can affect as much as 40 per cent of the final price of the diamond.
Tongling is China's second-largest jewellery provider, while its jade products lead the market.
Eurostar Diamond Traders NV occupies over 5 per cent of global market share. It is a long-term diamond provider to luxury and fashion brands such as Tiffany, Cartier and Swatch Group.
