As many of you may recall the WFDB created a group to engage young diamantaires around the world in a conversation and with meetings held in some of their Bourses and at the Hong Kong International jewellery show. Today, the group numbers are a little under 200 with 15 countries represented.
Our event in Hong Kong was very special as we had Leanne Kemp from Everledger speak to us about blockchain. Everledger leads the world in the luxury goods and insurance space. We held a meeting in Israel which was well attended and a lot of focus was on understanding blockchain and how it will affect our industry, but it was the meeting in Antwerp that I found confronting.
When I left the meeting in Antwerp, I stopped to ask myself what the future for the young diamantaire is? Is it exciting? Is it a minefield? or is it so uncertain that one doesn’t know where to begin.
So, for those who are of my generation or older, what would you say to a youngster (relatively speaking) if they asked you should I enter the diamond business? The question to some extent is too broad in that one would need to ask what segment of the diamond business they are applying too. Some will read this and automatically think of the diamond dealer, others will think diamond retailer, some will think of a web retailer or maybe services they can offer the diamond industry. Regardless of the choice, the question we must ask ourselves is can we see it as an enjoyable and profitable business to go into?
Of course, none of us have a crystal ball and to a large extent we all understand how the diamond pipeline has changed, so how does one answer such a question?
Some who will read this article are one or two removed from India, Antwerp and Israel, in terms of buying diamonds. However, are you aware or can you even begin to appreciate the insanity that exists today in the very diamond centre of the world. I just attended the 70th anniversary of the World Federation of Diamond Bourses, we we’re shown a book which proves unequivocally that diamonds have been traded in Antwerp for the last 570 years. So, you’re waiting to understand what insanity I’m speaking about, are you aware that an individual cannot open with a Flemish or European Union Bank a commercial bank account if the business has anything to do with the diamond trade, or has the word diamond in it. Yes, you read it correctly. The banking industry has taken such an extreme approach, not to mention that governments have allowed the imposition of such extreme measures, that these young people around the table are telling me we’re struggling to see a future in a business that has such ridiculous restrictions imposed upon it.
You might think this is isolated to Antwerp, but that’s not the case. In major diamond centres around the world, large banks have made the decision that it’s too difficult and risky to be involved with the diamond industry due to the anti-money laundering laws imposed by the US, hence, why they’ve demanded that accounts be closed and businesses find alternative facilities.
The Israeli diamond Exchange refused to except this situation and lobbied the government intensely showing them what a major contributor the diamond sector is to the GDP. Under Yoram Dvash the IDE managed to secure US$284 million dollars of government guaranteed bank loans to support the diamond industry. Added to that, the diamond exchange launched a technology incubator with the high-tech industry to develop solutions for the trade worldwide. These achievements are far reaching and show what’s possible when the vision determination is there.
Although the diamond industry isn’t under the monopolistic behaviour of yesteryear, it still is largely driven by 3 to 4 major producers and 30 large manufacturers. They themselves are heavily vertically integrated down the chain. These two factors alone should give cause for reflection as to what advice one would give to the next generation.
For those who know me, will be familiar with my style of writing. I like to begin with the problems, so I can then find solutions and opportunities.
The world cries foul of two aspects in our trade. The first is the robustness of the Kimberley Process and ensuring our resilience to eliminate wherever possible the chance that our precious products be tainted by blood diamonds’. The second, is that our industry has a cancer which has permeated in terms of money laundering, distorted accounting, and the illicit use of diamonds to move money around the world. In all cases, these problems are to our knowledge incredibly small in terms of the whole industry. Independent research believes that less than 2% of illicit diamonds can even enter the pipeline, and so we have shown single-handedly that we are very adept at managing the social responsibilities of our industry. I would suggest that the same would be true of the cancer mentioned above.
Yet the fact of the matter is, that the governments of the world are demanding tighter Kimberley process controls, and the financial sector is acting like a boa constrictor, to the point where one would be justified to perceive a conspiracy theory.
So, can we rewrite the book? And can we paint a positive and exciting future for the next generation?
The answer is yes. The tools in terms of technology that exist today mean that if executed and managed correctly could remove every reasonable iota of doubt and concern.
Use of blockchain technology to trace the birth and life cycle of a diamond, traceability and transparency (forgive me for not going into intricate detail now how this could work, as it’s a discussion for another day when we have more time) will mean that the integrity of the Kimberley process will be incredibly robust, that in combination of AI (artificial intelligence) and Blockchain the banking industry could clearly see the normal flow of goods and funds, and instantly be aware of anomalies and distortions caused by those who have alternative motives.
There are still major gaps in our market, America the biggest buyer of diamonds today with a population of 330 million compared with China and India whose combined 2.4 billion population shows that there is still an eight time multiple customer base untapped to a large degree. There is enormous opportunity entities to provide the funding for our industry, whether it be direct, or specialist funding all the way down to consumer level. The ability to collaborate with others around the world from different cultures and time zones makes it so easy, add video conferencing and the degree of personalisation becomes exponential. I personally feel we haven’t even scratched the surface of what’s creatively possible.
They say it takes 10,000 hours to be an expert of anything which equates to something like seven years. There are many youngsters who have been brought up in the diamond and jewellery business. Some have gone out into other fields but deep down would love to get back into an industry as exciting as diamonds. It’s our job to drive change, and to clean the slate. It’s their role with passion, technology (being second nature to them) and their desire to prove to us they can go one better, as each generation does, that they too can build successful and profitable diamond and jewellery businesses as so many of you have to date.
“The strongest steel is forged in the hottest fire”
Hey Dad should I enter the diamond business?
It’s probably the most exciting time to do so, because the next wave will not be a repeat of what so many have done for generations but you can rewrite the story.