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Crisis to Co-operation
Diamond Future
By: Diamond World News Service
Aug 1 2016 3:02PM
Reference: 13294  

It is a strange situation. When the uncertainty of the economic crisis compelled players to prefer vertical or backward integration within the industry, powerful diamond producers, traditionally, controlling the production and sale of roughs, become manufacturers and retailers, competing against other segments of the diamond pipeline that supports them. Even more ironical is their crusade for cooperation and transparency, for mutual benefit. In this scenario, reeking of mistrust and the caution exercised by the banks, it is perhaps the right time for players, when their very survival is at stake, to join forces to build cooperation, to change a situation, now being termed as the new normal, writes AashaGulrajaniSwarup.

A crisis brings out the worst and often the best within us. The diamond industry, bogged down by the economic slowdown, is enduring the pressures of a severe cash crunch, stark competition, decline in demand, downfall in growth, and drop in revenues. Frauds are rampant and relationships between players, strained. Sympathy is easier to give than credit.

The industry is beat, its ethics or lack are being questioned, but love for the diamond that drives the industry has compelled players to quickly realign to this new normal and figure out that co-operation may well be the easier way out of the crisis.

Tough Times
“The last two years have been particularly tough, says Harsh Maheshwari, Director, Kunming Trading Company, Hong Kong.

The Chinese demand had compelled companies to participate in trade shows. Today companies participate but the demand is down.

“Each show involves time, effort and investment. The return on investment has fallen dramatically over the last two years. Stock values are down, expenses are high. Naturally, we are cautious with clients and suppliers and hesitate to give goods on credit. Those who are sincere, understand the liquidity crunch and put the cash on the table,” Maheshwari explains.

But many, not able to take on the credit uncertainty, have either shut shop or face bankruptcies and the prospect of closure. There is no clear vision of how long this situation will continue.

“Initially, we thought it’s just a phase. But it will take a while to dissipate. The Chinese demand will take time to revive. No one is making fresh investments,” Maheshwari warns.

This situation may well change the very thinking pattern and thought strategy of the industry.

The New Normal
“A cultural shift is necessary to meet the challenges,” Maheshwari comments.

Processes need to change. For example, in USA and Europe, providing business references is part of the professional culture. In Asia, this is viewed with suspicion. This needs to change.

“In India, we trust the familiar and prefer to do business with people who have been around, which has often backfired. There is even a risk when the clients are well-reputed. But people learn. The old ways are changing. This is the new normal,” Maheshwari explains, probably echoing the sentiments of Bruce Cleaver, the new chief executive officer of De Beers, since July 1, 2016.

Cleaver, in his first public statement, observed that “Volatility in the global political and economic environment is “the new normal.

Paying Partnerships
It is a time for cleansing. Industry leaders have been brainstorming, to face the new challenges, be it developing supply chain efficiencies, a credit rating system for industry players, forging new partnerships or preparing new marketing strategies in collaboration with other players. The crisis is making industry players close ranks and come together.

As Bruce Cleaver stated, “The industry’s ability to collaborate is one of the reasons it has been so resilient. It is partnerships, the cornerstone of the business, that will define our future.”

Agrees Caylee M. Kozak, fine jewellery worker and industry writer. “The industry is certainly in pain, but I would like to believe it's the pain of evolution, rather than implosion. The industry needs to unify, and foster a greater commitment to work together and share skills, strategies and markets, which cannot happen until we stop trying to tear down the competition and learn to work together. It is only through major cooperation and a re-energisation of modern sales and marketing will we see some forward, upward momentum. Only then, can we convince the consumer to trust in the intrinsic value of purchasing jewellery.

Investing In Industry

Long ago, to create demand, De Beers initiated the historically popular ‘A Diamond Is Forever’ marketing campaign, to boost the industry. The campaign was like the rising tide that lifts all boats. It worked because everyone could borrow the phrase and incorporate it into their own messaging. It also struck an emotional chord associating the diamond with love and commitment. “Nobody pointed to De Beers as the sole owner of the catchphrase. It worked for the industry,” observes Kozak.

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