Last Tuesday, Russell Mehta, one of the leaders of the Indian and the world diamond industry, published an excellent blog ‘Collective Leadership: Crisis of The Hour For The Diamond Industry’, in which he singled out the lack of collective leadership in tackling the big issues as the biggest problem facing us all today.
I have been honoured to be among the leadership of the diamond industry for the last 25 years, first as President of the Diamond Dealers Club in South Africa, being the Executive member, then vice-President and the President of the World Federation of Diamond Bourses (WFDB), vice-Chairman of the World Diamond Mark Foundation (WDMF), sitting on the boards of World Diamond Council (WDC), CIBJO and other reputable industry bodies, committees and delegations, and being involved in other public duties. This allows me to address the issues from the point of view of the industry’s leadership.
To the outside world we can appear as a disparate industry, but this is a misconception based on the very essence of our diamond trade: individualism and entrepreneurial spirit as well as the family nature of our business. But times change, and with this evolution we must change too to keep up with new customer demands.
There is one organisation that unites almost 25,000 members in 21 countries, which together represent over one million workers who make a living from the diamond trade and manufacturing and their dependents. This organisation is the World Federation of Diamond Bourses, the 80-year-old body which has managed to survive every single crisis, war and other calamities, and always comes out stronger from each downturn.
Around 98 percent of manufacturers and traders, as well as several producers, are members of at least one diamond bourse. So are most service providers to the midstream of the diamond pipeline — labs, logistics companies, banks, insurers and others. The World Federation of Diamond Bourses welcomes associate members, such as banks and governmental bodies.
So, as individualistic and fragmented as we may seem, we are united and determined. There is no such unity in any other industry in the world. The example of the Kimberley Process is, indeed, the proof that the industry can and will take care of the issues when the need arises. The WDC was formed by the WFDB and the International Diamond Manufacturers’ Association (IDMA) in 2000, and after 15 years it includes representatives of all stakeholders and successfully defends industry interests vis-à-vis the governments and the NGOs.
Today, the industry faces several serious issues. As Russell Mehta rightly said, non-disclosure of synthetics is a problem that undermines trust, upon which our industry is based. This problem can only be solved by working together to develop the means of detection of synthetics and showing zero-tolerance towards fraudsters and expelling those found to be dealing in non-disclosed synthetics. The WFDB has led the industry by adopting the stringent policy of all these. We have witnessed the proliferation of state-of-the-art machinery to disclose synthetics and I am confident that in a very short time confidence will return at both the B2B and B2C levels.
Just as serious is the situation regarding uncontrolled debt and the industry’s non-bankability. Recent bankruptcies and the inability of even the best rated companies to finance rough purchases, let alone raise capital for modernisation and business development, is probably the most serious issue the midstream industry faces today. Although the erosion of profit margins due to high rough and low polished prices played a certain role, the manufacturing sector has to blame itself for most of this problem. We have failed to change with the times as other industries have done, and modern banks just can’t work with an industry which still lives in the past. Those of us who addressed the requirements of the new environment continue to enjoy bank services. Those who did not, will have to catch up as quickly as they can. The WFDB is taking all necessary steps to ease the transformation. We have set up a committee to tackle the relationship with banks, we work with FATF and law enforcement agencies on prevention of money laundering and create clear guidelines for those members who need help in putting their house in order. This is a long and painful process, but we are on the right track.
This brings me to Russell’s second burning issue — “a lack of generic promotions to enhance and maintain the ‘equity’ of diamonds”. A short trip back in history is needed to grasp the complexity and importance of the issue that the diamond industry leadership, represented by the WFDB, met head on.
In 2008 the effort to bring together different stakeholders by establishing the International Diamond Board failed after several months of preparations.
In 2010, the WFDB decided to develop a strategy to bring its Code of Conduct, integrity and trust to the downstream of the diamond pipeline. Soon we realised that going one step downstream is not enough and direct industry-consumer relationships should be established in order to preserve the value and “maintain the ‘equity’ of diamonds” and by 2013 the World Diamond Mark Foundation (WDMF) was established exactly for that purpose. To revive trust in and integrity of diamonds and to create the desire for diamonds and diamond jewellery. From the beginning, the WFDB presented the programme to other industry stakeholders and invited them to join in its implementation.
First IDMA, then GJEPC joined the effort, then major retailers started to support the programme. In 2014, the WDM initiated its first dialogue with the producers and in December 2014 held, together with GJEPC, the inaugural World Diamond Conference focused on diamond marketing with the participation of all stakeholders — from producers through manufacturers and bourses to retailers and brands. That was a unique demonstration of unity of our industry.
Less than a year after that historic occasion what do we see today? The industry is buzzing about generic promotion. The WDM has developed, successfully tested and proved the concept of retailers’ participation in the joint effort. All major stakeholders participated in two industry-wide think-tank meetings chaired by the WDM and WFDB. Advertising agencies and consultants are working around the clock to research and present their creative ideas to the industry. The WDM, together with the Turkish Jewellery Exporters’ Union, publishes the World Diamond Magazine with the emphasis on generic promotion. Major exhibition organisers, media and service providers have teamed up with the industry to give a hand to the joint effort. And, last but not least, major producers announced the formation of the Diamond Producers’ Association earlier this year.
The WFDB has led the march so far, but we need to put together a comprehensive financing plan that will be managed by a joint committee of the AWDC-DPA-GJEPC-IDI-IDMA-WFDB (in alphabetic order).
In the last issues of IDEX and WDMagazine, a comprehensive funding plan was unveiled by the WDMF for discussion among industry leaders. It gives the opportunity for producers, manufacturers and dealers to match the DPA’s contribution. This collective amount will enable the industry to double this money with retailer fees and contributions from service providers. The three main marketing organisations — the AWDC, IDI (Israel Diamond Institute) and GJEPC would need to put a certain percentage of their collected taxes towards the common cause as well.
So the proposal is on the table — a sizeable budget raised from across the spectrum of the entire pipeline, managed by all participants’ representatives. This, in itself, is an excellent start for a serious generic promotion effort with the kitty growing with the participation of more retailers and outside sponsorship for specific events.
Now I come back to the simple truth — if we do not help ourselves, nobody will. The WFDB started the process and will continue to do so. Everybody is invited to join us and lead the effort — this is what the World Diamond Mark is, the marketing arm of the entire industry.
The collective leadership is there. It is not confined to the start or to the end of the pipeline. We all are equal and we all cherish the diamond dream. If I may paraphrase what Russell Mehta said: “With collective leadership that is funded by the global industry, we are able to fully harness our potential in creating an effective and game-changing promotional effort. We are able to raise the value of our product.”