Workers cut raw materials into synthetic gemstones. In 1990, China became the world's largest cubic zirconia producer. Photo by Huo Yan / China Daily

Producing synthetic stones no longer delivering glittering profits, reports Li Yang in Wuzhou, Guangxi

Wuzhou city is located in a valley on the border between Guangxi and Guangdong, where three rivers converge into the big Xijiang River. Wuzhou prospered as a commercial hub of five neighboring provinces connected by the busy waterway from the 18th century to mid- 20th century.

The locals, speaking their Cantonese dialect, like to think of Wuzhou as the west gate of the better-off Guangdong rather than the east gate of the poorer Guangxi, to which it actually belongs.

From tea to gemstones

The city had not appeared on China's economic map, except for the production of black tea, until 1982, when a young Hong Kong businessman named Cui Fuming moved his artificial gemstone-processing workshop there from Guangzhou, tapping into a supply of cheap labor and hydroelectricity.

Cui had no way of knowing he was helping the city to become the world's largest synthetic gemstone base within a few short years.

In 2013, Wuzhou produced 100 billion of the stones, nearly 80 percent of the world's total. More than 90 percent are exported to developed countries.

The most popular are synthetic diamonds (cubic zirconia), which are made by cutting and polishing zirconia, a rare, transparent crystal that has a higher refraction index and slightly lower hardness than real diamonds.

Former Soviet scientists created the crystal for military purposes using high-temperature crucibles in the 1970s. Their use changed to daily life later on.

In the 1980s, Cui paid his Wuzhou workers about 100 yuan ($18) a month to make zirconia crystal bars, cut them into small pieces and polish them into customized shapes.

By 1990, China had become the world's largest producer of zirconia after Chinese factories successfully replicated the bronze electronic tubes used in Japan, which increased the output per crucible 20 times over.

Were it not for the cheap hydropower available in mountainous Guangxi, however, the industry probably would not have taken root in Wuzhou.

Business owners from Hong Kong and Taiwan flocked to Wuzhou in the late 1980s, bringing with them cutting and polishing machines with which one worker could make 100 finished stones a day.

"The dust and noise made from cutting, chiseling and polishing would be unbearable to workers today," said Meng Ying, who went from being a stone polisher to a businesswoman.

But, she said, "poverty deafened the people. We could not feel the pain when we desperately needed the money."

Nearly 10 years of workshop life has left her with scarred hands, poor eyesight and a curved spine.

Thanks to increased demand in the 1990s, a gemstone worker could earn 3,000 to 6,000 yuan a month in the factories, when the local average monthly income was only 300 yuan.

The locals began importing machines and starting their own family workshops. More than 100,000 people, one-third of the city's population, were employed in 600 enterprises and countless small workshops by the end of that decade, producing 6 billion stones worth about 3 billion yuan each year.

Even some civil servants and teachers quit their jobs and began working in the synthetic gemstone industry.

Most family workshops in the villa ges and communities ran around the clock to maximize output, causing serious damage to workers' health and the environment.

Older Wuzhou residents still can recall the raspy noise of the cutting and polishing machines that would drive the neighbors crazy.

"Making gemstones was all life was about then," said Wang Ying, secretary of the Wuzhou Municipal Chamber of Gemstone Commerce.

"But were it not for the gemstone industry, many families would have gone to Guangdong as migrant workers. People were happy they could make easy money at home," she said.

Nearly one-third of the zirconias were dumped in rivers, in the waste yard or near farmland in the form of scrap powder. It is estimated that the powder generated each year in Wuzhou amounted to hundreds of tons in the 1990s, when people were excited by the easy profits and had little awareness of recycling

Chen Biankun, artificial gemstone researcher for the Gems & Jewelry Trade Association of China, said: "The workers in Wuzhou did not have basic protection until new equipment was invented several years ago, and the industry's environmental cost over the past three decades is hard to estimate."

A local government spokesman responded that zirconia powder does not decompose easily and would not have entered the food chain.

Foreign investors from Thailand, India, South Korea, Malaysia and Italy joined the bonanza in the mid-1990s, when the Asian financial crisis happened. By 2013, there would be 28 foreign gemstone enterprises in Wuzhou with a total investment of $15.7 million.

Turning point

In 2005, Wuzhou produced 8 billion artificial gemstones, accounting for 40 percent of the world's total. But the profit margin plunged soon after. The cost of polishing a 0.5-millimeter artificial diamond fell from 0.11 yuan in 1990s to 0.03 yuan in 2005. With new automatic equipment, the price now stands at about 0.01 yuan.

The turning point was the introduction of the numerically controlled automatic polishing machine.

In 2011, Chen Bingzhong, a professor of mechanical forging at Wuzhou College, invented the machine, which achieved a tenfold increase in production efficiency.

With the advent of the machine, a single worker's daily output rose from 100 stones to about 900. In addition, the standard 57-facet gemstones polished by the machine reflected greater accuracy in terms of size and refraction index.

The number of workers in the industry declined to one-fifth of its record high even as annual gemstone output of the city skyrocketed to 100 billion. Yet the overall production value remained at 3 billion yuan, the same level as in 2005.

Wuzhou is now the world's largest wholesale market of synthetic gemstones.

"The technology advancement and renminbi's 35 percent appreciation against the US dollar since 2005 has made the profit margin so meager that I have had to resort to the online trade to save marketing costs," said businesswoman Meng.

Today, Wuzhou has 1,000 family workshops, 150 processing enterprises, 10 raw materials suppliers and 30 equipment makers.

After the synthetic gemstone industry disappeared in Hong Kong and Taiwan in the 1980s and in Guangdong in 1990s, Thailand and India also saw their traditional local industries quickly shrinking.

Palsani Laxman, a buyer from Jaipur, India, said: "We need not check the quality of a Wuzhou gemstone. Their production level and efficiency is much higher than the other producers."

"Since Wuzhou's equipment is now the most advanced, Wuzhou is the main supplier of cubic zirconia for many famous brands, such as Swarovski from Austria," said Liang Sujia, a gemstone businessman in Wuzhou since the 1980s.

Adapting to new ways

The city now consumes more than 4,600 tons of zirconia a year. The price of the raw material has risen from 80 yuan per kilogram in 2008 to more than 200 yuan per kg.

All waste powder is recycled into new zirconia bars. Some area farmers even get rich by selling the powder they dig up from the waste yard, which has been buried for the past 30 years.

Fierce price competition in raw materials and finished products, already "a zero-sum game", as some call it, in Wuzhou has forced business owners to move up the industrial chain to jewelry making and design.

But Wuzhou's gemstone industry's strength is its adaptability. Many people, including bosses like Meng and Liang, tried to make up for their missed lessons in jewelry design in 2008, when the industry was hit by slumping demand.

The people learned by copying, just as they did when they copied the Taiwanese polishing machines in the 1980s.

"If we do not copy designs from Italy, France, Austria, Hong Kong and Belgium, we have no chance of elbowing into the market," Liang said.

Wuzhou College, the only higher educational facility in the city, established its jewelry design department in 2005, and it has become the cradle for the Wuzhou design industry.

"I have designed jewelry for five years. I majored in advertisement in college and learned jewelry designing myself," said Pu Yanli, who works for Meng.

"The most difficult part is learning to use the designing software and getting familiar with all the designing elements popular among the famous brands. Then you just mix different elements together in your works."

But Liang believes the artificial gem-processing industry has reached the end of the road in Wuzhou and that turning to jewelry design will not revive it.

"The gem industry will move to the Southeast Asia because of cheaper labor costs," Liang said. "Without the raw material advantage, Wuzhou's weak designing ability will wither."