An article about the Chinese diamond industry, which is dominated by Small and Medium Enterprises (SMEs). The purpose of this paper is to examine which of three business strategies prevalent in the global diamond industry is utilised by Chinese diamond SMEs compared to those used in other western countries. In so doing, it maps the major actors in the Chinese diamond industry and identifies the challenges faced by SMEs when entering the highly competitive but very lucrative Chinese diamond industry. A two stage approach is used. Step 1 involves exploratory field work with leading institutions. In the second stage a qualitative questionnaire was administered to members of 54 small to medium-sized international diamond enterprises operating in China. The difficulty of acquiring information on this secretive industry was further hindered by the equally secretive nature of Chinese culture. Guanxi was found not to be prevalent in the Chinese diamond industry. This is an interesting finding as China is a socially embedded and highly networked society. Chinese diamond SMEs conduct business by implementing a transactional-based approach to business strategy that centers on short-term cash-based transactions.
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